Psychological Contracts and Informal Networks in Organizations: The Effects of Social Status and Local Ties

Informal social networks in organizations shape how employees understand their employment relationship. Networks can aid or undercut HR efforts to promote psychological contracts that benefit both employees and the employer. Data collected from 96 university faculty members demonstrate that network influence from both social status in the organization's larger informal structure and local ties with socially proximate colleagues shape psychological contract beliefs. Specific effects, however, vary by type of contract term. When contract terms involve resources employees compete for (e.g., opportunities for career advancement), effects are found for social status, such that those who are better positioned in the advice network hold more positive beliefs regarding the extent of the employer commitment. When contract terms involve noncompetitive resources broadly available to all employees (e.g., concern for employee well-being), network effects reveal comparable beliefs between those who share a direct friendship tie (cohesion) or the same friends in common with other faculty members (structural equivalence). Implications for research and HR practice are discussed.