Journal of Business Research xxx (xxxx) xxx–xxx

Contents lists available at ScienceDirect

Journal of Business Research

journal homepage: www.elsevier.com/locate/jbusres

Fostering work engagement: The role of the psychological contract☆,☆☆

⁎
Maria Eduarda Soares , Pilar Mosquera
Universidade de Lisboa – ISEG – Advance, Lisboa, Portugal

ARTICLE INFO ABSTRACT

Keywords: Studies frequently refer to the psychological contract as an antecedent of work engagement. However, these
Psychological contract studies mainly analyze the effects of a psychological contract breach on engagement, and neglect the subject of
Work engagement how different types of psychological contracts affect work engagement. We analyze the relation between
Social exchange theory Rousseau's four types of psychological contract—relational, transactional, balanced, and transitional—and work
Human resource management
engagement. Specifically, we posit that both the relational and the balanced contracts lead to higher levels of
work engagement, while the transitional and the transactional contracts lead to lower levels of work engage-
ment. This study analyzes data on different types of psychological contracts in a Portuguese military organi-
zation undergoing significant change. Data analysis using partial least squares confirms the initial hypotheses.

1. Introduction become an important research stream. The literature includes a vast

array of empirical studies that focus on the impact of both job resources
Previous studies on work engagement find that it has positive effects and personal resources on work engagement (e.g., Bakker & Demerouti,
for both individuals and organizations. Work engagement is closely 2008; Lee & Ok, 2015; Mishra, Boynton, & Mishra, 2014; Rich et al.,
related to employees' physical and psychological well-being (Kahn, 2010; Vera, Martínez, Lorente, & Chambel, 2016).
1990), and studies also show that it is related to outcomes that are However, one aspect that has received relatively little attention is
important for organizations (e.g., Bakker & Demerouti, 2008; Harter, the psychological contract, that is, employees' beliefs about the mutual
Schmidt, & Hayes, 2002; Salanova, Agut, & Peiró, 2005). Several au- obligations between them and their employers (Rousseau & Tuoriwala,
thors have argued that work engagement is the means by which orga- 1998). Employees believe that the organization makes a promise (e.g.,
nizations can create competitive advantage (e.g., Bakker, 2017; to provide employment or career opportunities) and, in exchange, they
Chhetri, 2017; Heyns & Rothmann, 2018; Rich, Lepine, & Crawford, feel obliged to reciprocate (e.g., by accepting a position or foregoing
2010). Implicit in this argument is the view of engagement as a me- other job offers). Existing studies have mainly focused on the effect that
chanism that links employees' characteristics and organizational factors a breach in a psychological contract has on engagement. This breach
to job performance. Ever since the early definitions of this concept (e.g., occurs when employees believe that the organization has not fulfilled
Kahn, 1990), research has considered engagement as an important the obligations implicitly agreed on in the employment relationship
motivational issue that leads to the unlocking of employees' full po- (Rousseau, 1995). The literature frequently shows that, in situations of
tential that then increases the likelihood of achieving and sustaining a perceived breach in the psychological contract, employees are less
higher levels of performance (Heyns & Rothmann, 2018; Jain & Ansari, likely to feel dedicated, energetic, or absorbed in their jobs, that is, they
2018; Rich et al., 2010). A large number of studies on engagement tend to be less engaged in their work (e.g., Chambel & Oliveira-Cruz,
document this linkage (e.g., Bakker & Demerouti, 2008; Chhetri, 2017; 2010; Rayton & Yalabik, 2014). Conversely, Bal, De Cooman, and Mol
Gupta & Shukla, 2018; Gutermann, Lehmann-Willenbrock, Boer, Born, (2013) find that the fulfillment of a psychological contract is related to
& Voelpel, 2017; Halbesleben & Wheeler, 2008; Harter et al., 2002; a higher degree of work engagement.
Rich et al., 2010; Salanova et al., 2005). An interesting topic that studies neglect is the impact of different
Given that engagement is important to organizational success, the types of psychological contracts on engagement. Rousseau (2000) de-
identification of antecedent variables that foster work engagement has velops a typology of four dimensions of psychological contracts:

☆
The authors gratefully acknowledge the financial support from FCT- Fundação para a Ciência e a Tecnologia (Portugal), national funding through research grant
(UID/SOC/04521/2019).
☆☆
The authors would like to thank Lia M. D. Gordo for the data collection.
⁎
Corresponding author.
E-mail address: mes@iseg.ulisboa.pt (M.E. Soares).

https://doi.org/10.1016/j.jbusres.2019.01.003
Received 14 June 2018; Received in revised form 3 January 2019; Accepted 5 January 2019
0148-2963/ © 2019 Published by Elsevier Inc.

Please cite this article as: Soares, M.E., Journal of Business Research, https://doi.org/10.1016/j.jbusres.2019.01.003
M.E. Soares, P. Mosquera Journal of Business Research xxx (xxxx) xxx–xxx

relational, transactional, balanced, and transitional. To the best of our meaningfulness and safety as well as when they are more psychologi-
knowledge, only three studies exist that relate different types of psy- cally available. May, Gilson, and Harter (2004) conduct an empirical
chological contracts to engagement (Bal, Kooij, & De Jong, 2013; study on these three conditions and find that they are indeed related to
Chang, Hsu, Liou, & Tsai, 2013; Yeh, 2012) and even these only con- engagement. Kahn (1990) does not develop an operational measure for
sider the relational and the transactional contracts. Their results in- employee engagement, but Rich et al. (2010) attempt to develop one
dicate that the relational contract is positively associated with en- that fully reflects Kahn's (1990) conceptualization of engagement as the
gagement, whereas the transactional contract is negatively associated simultaneous investment of physical, cognitive, and emotional energy
with engagement. This study intends to extend this literature by for- in work-related performance. This scale measures three components:
mulating the following research question: What is the relation between physical, emotional, and cognitive. However, it is considered to be
Rousseau's four types of psychological contracts and work engagement? unidimensional and it provides an aggregate score of overall employee
The relation between the psychological contract and engagement engagement.
can be approached from the perspective of social exchange theory. In Burnout researchers have developed a second approach to the
social exchange, the norm of reciprocity is a fundamental rule concept of engagement. Maslach, Schaufeli, and Leiter (2001) view
(Cropanzano & Mitchell, 2005), and the psychological contract is based engagement as the opposite of burnout. They argue that engagement
on the belief that there is a mutual sense of obligation between the comprises the three dimensions of energy, involvement, and efficacy,
employee and the organization (Rousseau, 1989). If individuals per- which are in direct opposition to the burnout dimensions of exhaustion,
ceive their organization as fulfilling the promised obligation implicitly cynicism, and inefficacy. While these authors consider that burnout and
agreed on in the employment relationship, that is, fulfilling their psy- engagement are two ends of a continuum, later empirical evidence in-
chological contract (Rousseau, 1995), they may feel obliged to repay dicates that, although there are substantial associations between en-
the organization. One way individuals can repay their organization is gagement and burnout, the two are distinct constructs (e.g., Byrne,
through their level of engagement (Saks, 2006). Peters, & Weston, 2016; Sonnentag, 2017).
This study focuses on a military organization in Portugal. The Shaufeli, Salanova, González-Romá, and Bakker (2002) provide a
contemporary Portuguese military context is a rich field of study for our third approach to the concept of engagement. The authors define
topic because there is a high likelihood that different types of psycho- workplace engagement as a positive, fulfilling, work-related state of
logical contracts co-exist within the same organization. Military orga- mind. They argue that it is a multidimensional concept and identify
nizations in Portugal are still using traditional career management three dimensions: vigor, dedication, and absorption. According to these
systems that are characterized by long tenure and advancement. authors, vigor conveys, “high levels of energy and mental resilience
However, these organizations are currently undergoing substantial while working” (p.74). Dedication is “a sense of significance, en-
changes. They no longer offer lifetime employment and are beginning thusiasm, inspiration, pride and challenge” (p.74). Absorption is “being
to expect career self-management (Soares & Vitorino, 2017). Further, fully concentrated and deeply engrossed in one's work, whereby time
they have reduced employee benefits and career advancement oppor- passes quickly and one has difficulties with detaching oneself from
tunities, and voluntary turnover rates have increased (Gordo, 2016). work” (p.75).
Therefore, it seems reasonable to expect that different individuals will The growing interest in work engagement over the last several decades
have different perceptions of the psychological contract. Whereas tra- is probably because research has shown that engagement is related to
ditional issues may be the main source for the perception of the psy- meaningful outcomes, both for business and for employees. Bakker and
chological contract for some military personnel, others may be more Demerouti (2008) review a few quantitative studies that show that work
focused on the novelties introduced by recent changes. This co-ex- engagement is positively related to job performance. Several other studies
istence of different types of psychological contracts in the same orga- have found a positive relation between engagement and different mea-
nization is a relevant opportunity for our purpose of analyzing their role sures of performance, such as productivity, profitability, employee per-
in engagement. formance, job performance, and task performance (e.g., Chhetri, 2017;
This article is structured as follows: The next section provides a Gupta & Shukla, 2018; Gutermann et al., 2017; Halbesleben & Wheeler,
review of the literature concerning work engagement and the psycho- 2008; Harter et al., 2002; Rich et al., 2010; Salanova et al., 2005). Mea-
logical contract. Subsequently, we present the hypotheses and the re- sures of organizational success also include customer satisfaction, cus-
search model of our study. We follow with the method and results of the tomer loyalty (e.g., Harter et al., 2002; Saks, 2006; Salanova et al., 2005),
empirical study. Finally, we provide a discussion of the results and a and safety (Harter et al., 2002). Measures more related to employees are
conclusion of the study, including contributions, limitations, and ave- the turnover rate and intentions to quit (e.g., Gutermann et al., 2017;
nues for future research. Halbesleben & Wheeler, 2008; Harter et al., 2002), organizational citi-
zenship behavior (e.g., Chhetri, 2017; Rich et al., 2010), organizational
2. Literature review commitment (Albdour & Altarawneh, 2014; Saks, 2006), and (low)
counterproductive work behavior (Chhetri, 2017).
2.1. Work engagement Given the growing evidence that engagement is the driver of out-
comes connected with organizational success, it is not surprising that
The concept of engagement is generally equated with positive or- the antecedent factors of engagement have become a focus of interest
ganizational behavior (POB) research. This research focuses on posi- and that several empirical studies have attempted to identify them.
tively oriented human resource strengths and psychological capacities Based on previous empirical studies, Bakker and Demerouti (2008)
that contribute to improving workplace performance (Bakker & propose two main drivers of work engagement: job resources and per-
Demerouti, 2008; Luthans, 2002). sonal resources. Job resources are physical, social, or organizational
The first approach toward the development of the engagement aspects of the job, such as social support from colleagues and super-
concept is generally attributed to Kahn (1990). According to this au- visors, supervisory coaching, performance feedback, skill variety, au-
thor, employee engagement is “the harnessing of organization mem- tonomy, and learning opportunities. Personal resources are positive
bers' selves to their work roles; in engagement, people employ and self-evaluations related to individuals' sense of their ability to control
express themselves physically, cognitively, and emotionally during role and influence their environment successfully. They include self-effi-
performances” (p. 694). In his qualitative study of conditions for en- cacy, self-esteem, optimism, resilience, and an active coping style.
gagement and disengagement at work, Kahn (1990) finds three psy- Over the years, researchers have extensively studied job resources
chological conditions: meaningfulness, safety, and availability. In- and personal resources to improve work engagement (Bakker, 2017;
dividuals feel more engaged under conditions of psychological Schaufeli, 2017), and added more variables to the initial list of Bakker

2
M.E. Soares, P. Mosquera Journal of Business Research xxx (xxxx) xxx–xxx

and Demerouti (2008). Job resources include perceived organizational and mainly focused on economic exchange. Lastly, the transitional type
support and social support (e.g., Chhetri, 2017; Gupta, Agarwal, & is a short-term arrangement that refers to a cognitive state due to or-
Khatri, 2016; Rich et al., 2010; Saks, 2006; Vera et al., 2016), internal ganizational changes and transitions. In this arrangement, performance
communication (e.g., Balakrishnan & Masthan, 2013; Mishra et al., terms are not specified (Rousseau, 2000).
2014; Ruck, Welsh, & Menara, 2017), organizational justice (e.g., He, Rousseau (2000) subdivides these four dimensions to produce scales
Zhu, & Zheng, 2014; Lyu, 2016), job autonomy (e.g., Fujimoto, with high convergent and discriminant validity. According to the au-
Ferdous, Sekiguchi, & Sugianto, 2016), and organizational learning thor, the relational type is divided into two components: stability and
(Lara & Salas-Vallina, 2017). Studies have also researched leadership loyalty, related to remaining and supporting the organization. The three
issues, such as leaders' behaviors and styles as well as the quality of the components of the balanced type of arrangement are external em-
leader–member exchange (e.g., Gutermann et al., 2017; Qing & Zhou, ployability, internal advancement, and dynamic performance. The first
2017; Sousa & van Dierendonck, 2017). More recently, studies have two are related to the employees' career development on the external
started to examine the negative aspects of the job environment, such as and internal labor market, respectively. The employee is obligated to
organizational politics (e.g., Jain & Ansari, 2018). develop skills that are marketable or valued by his employer and, in
Personal resources include core self-evaluations (e.g., Chhetri, 2017; turn, the employer commits to promoting career development oppor-
Lee & Ok, 2015; Rich et al., 2010), moral identity centrality (e.g., He tunities within or outside the organization. In the third component of
et al., 2014), individual spirituality (e.g., Roof, 2015), optimism (e.g., the balanced type, the organization promotes training in exchange for
Lu, Xie, & Guo, 2018), as well as the need for autonomy and volitional the employee's performance. The two components of the transactional
trust (Heyns & Rothmann, 2018). employment arrangement are narrow and short-term. Narrow means
little commitment from both the employee and the employer and short-
2.2. Psychological contract term means that neither the organization nor the employee feels ob-
liged to maintain their relationship for a long period. The three com-
As previously mentioned, the psychological contract is based on the ponents of the transitional arrangement represent negative exchanges,
belief that there is a mutual obligation between the employee and the which occur frequently during organizational changes: mistrust, un-
organization (Rousseau, 1989). Rousseau and Tuoriwala (1998, p. 679) certainty, and erosion.
define a psychological contract as “an individual's belief in mutual ob- As far as the relation between different types of psychological
ligations between that person and another party such as an employer contracts and engagement is concerned, we are only able to find three
(either a firm or another person).” According to Rousseau (2001), pre- studies: Yeh (2012), Bal, Kooij, and De Jong (2013), and Chang et al.
employment experiences and organizational socialization (anticipatory (2013). These studies are conducted, respectively, with the cabin crew
or early on-the-job) form the basis of the psychological contract. Unlike of one Airline Company in Taiwan, with employees of one healthcare
the legal employment contract, the psychological contract has a sub- organization in the Netherlands, and with engineers and managers in
jective character since it is not explicit but relies on individual percep- 30 high-tech companies from Taiwan. In all three studies, results in-
tions. The formation of a psychological contract starts during the early dicate that the relational contract is positively associated with en-
phase of the recruitment and selection processes and evolves over the gagement. Given this evidence, we formulate the following hypothesis:
employee's tenure in the organization. It evolves according to develop-
H1. The higher the extent to which employees experience a relational
ment and career opportunities and through both performance feedback
contract, the higher their work engagement.
and related incentives provided by the organization. The fulfillment or
breach of the psychological contract also depends on human resource We are unable to find studies relating the balanced psychological
management (HRM) practices, which affect employee engagement contract to work engagement. However, as the balanced contract pro-
among other work-related outcomes (Aggarwal, Data, & Bhargava, 2007; vides socio-emotional and career support, it should lead to higher work
Kraak, Lunardo, Herrbach, & Durrieu, 2017; Paillé & Raineri, 2015). engagement. Pohl, Bertrand, and Ergen (2016) conduct a recent study
Although the concept of psychological contract appeared in the in a military context where they find that the relational and develop-
literature in the 1960s, relevant theoretical advances only appeared in mental dimensions of the psychological contract lead to higher orga-
the late 1980s and the 1990s, mainly based on Rousseau's empirical nizational commitment. Therefore, we propose that:
research (Freese & Schalk, 2008). This theory remains a fruitful con-
H2. The higher the extent to which employees experience a balanced
struct in the field of employee relations. Psychological contract theory
contract, the higher their work engagement.
is used to explain employees' reactions to organizational changes and
arose from the numerous restructuring processes that took place over Results from the above-mentioned studies (Bal, Kooij, & De Jong,
the last two decades (Zhao, Wayne, Glibkowski, & Bravo, 2007). The 2013; Chang et al., 2013; Yeh, 2012) also indicate that the transactional
resulting profound changes in the labor relations altered the essence of contract is negatively associated with engagement. Accordingly, we
the traditional psychological contract that was based on values such as formulate the following hypothesis:
stability and job security that were associated with long contractual
H3. The higher the extent to which employees experience a
relationships. Consequently, a new psychological contract emerged
transactional contract, the lower their work engagement.
and, nowadays, employees no longer expect a job for life but rather
training and career development opportunities that increase their fu- Contrary to the relational and the balanced contracts, the transi-
ture employability (Pate, Martin, & Staines, 2000). tional contract does not provide socio-emotional and career support. On
Based on a characterization of employment arrangements that re- the other hand, its components of mistrust, uncertainty, and erosion are
flected variations in psychological contracts, Rousseau (2000) devel- clearly at odds with Kahn's (1990) psychological conditions for en-
oped a typology comprising the dimensions of duration (short-term gagement—namely safety, meaningfulness, and availability. Therefore,
versus long-term) and performance-reward contingencies (highly con- we propose that:
tingent, low or non-contingent). The resulting four dimensions are re-
H4. The higher the extent to which employees experience a transitional
lational, balanced, transactional, and transitional. The relational type is
contract, the lower their work engagement.
a long-term employment arrangement based on mutual trust and loy-
alty, and where contingency rewards are not specified. The balanced As the main purpose of this study is to analyze the effects of dif-
type is also a long-term arrangement, but more dynamic, where re- ferent types of psychological contracts on work engagement, we de-
wards to employees depend on individual and organizational perfor- veloped a research model that depicts the relations presented in the
mance. The transactional type employment arrangement is short-term four hypotheses (Fig. 1).

3
M.E. Soares, P. Mosquera Journal of Business Research xxx (xxxx) xxx–xxx

Fig. 1. Research Model.

3. Method - The 40-item Psychological Contract Inventory (Rousseau, 2000,

2008) which included four types of psychological contracts: rela-
We use partial least squares analysis (PLS) to test the hypotheses under tional (8 items), balanced (12 items), transactional (8 items), and
study and, accordingly, carry out our data analysis by using SmartPLS, transitional (12 items).
version 3.0. PLS is a structural equation modeling (SEM) method that is - The 17-item Utrecht Work Engagement Scale (Shaufeli et al., 2002).
designed to estimate composite factor models. The choice of PLS is mainly
because it is a valuable tool for exploratory research, as it estimates a less 4. Results
restricted model—the composite factor model (Henseler et al., 2014). This
model provides reliable estimates in situations where other SEM methods 4.1. Descriptive analysis
fail, and it is less prone to the consequences of misspecifications in subparts
of the model because it adopts a limited-information approach (Henseler The initial analysis with PLS show cases of poor item reliability that
et al., 2014). On the other hand, preliminary normality tests that use the lead to the exclusion of these items from the analysis. Table 1 shows the
Kolmogorov-Smirnov test with Lillefors significance correction in the SPSS final items that will be used for each construct as well as their means and
(Statistical Package for Social Sciences) show that a large majority of the standard deviations. Furthermore, none of these items follows a normal
original variables in our study do not follow a normal distribution, which distribution according to the Kolmogorov-Smirnov test mentioned above.
also indicated the need to use PLS (Ringle, Wende, & Becker, 2015).

4.2. Measurement validity and reliability

3.1. Data collection and sample
As far as reliability is concerned, all Cronbach's alphas for the latent
After obtaining the necessary authorizations, questionnaires were
variables are above the acceptable internal consistency level of 0.7
distributed in paper format to 28 heads of military departments to give (Hair, Ringle, & Sarstedt, 2011; Nunnally & Bernstein, 1994). Except for
to all members of their units. The researcher who distributed the the transactional contract, all alphas are above 0.8, while engagement
questionnaires also collected them in person. Of the 300 questionnaires is above 0.9 (Table 2). The composite reliabilities for all latent variables
sent, we received 217 responses, which is a rate of 72.3%. are higher than the 0.7 threshold, and all without exception exceed 0.8,
In the total sample, 201 participants (92.6%) were male and only 16 which indicates construct reliability (Fornell & Larcker, 1981). The
(7.4%) were female. The average age was 39.6 years and the majority of standardized loadings for indicators are all larger than 0.7 (Table 1),
participants (n = 139, 64.1%) were married. As for military rank, 71 thus confirming indicator reliability (Hulland, 1999).
participants were officers (32.7%), 84 were sergeants (39.2%), and 61 Subsequently, we analyze the convergent and discriminant validities.
were soldiers (28.1%). For education, 105 participants (48.4%) finished For convergent validity, we find that the average variance extracted (AVE)
secondary education (12 years of schooling), 15 (6.5%) had a bachelor's for each latent variable exceeds the threshold of 0.5 (Fornell & Larcker,
degree, and 52 (24%) had a master's degree. 1981) and in all cases is higher than 0.6 (Table 2). These values indicate a
high convergent validity and the uni-dimensionality of the constructs. To
3.2. Measures complement the analysis of convergent validity, we calculate bootstrapped
t-statistics of the indicators' standardized loadings (Anderson & Gerbing,
Two measures were chosen based on their good psychometric 1988). They are all significant at the 1% level (Table 1), which verifies the
properties and because they had been previously tested in Portuguese: high convergent validity of the measurement model.

4
M.E. Soares, P. Mosquera Journal of Business Research xxx (xxxx) xxx–xxx

Table 1
Means, standard deviations and standardized loadings of indicators.
Construct Indicators Mean Std deviation Loading Bootstrap t-test p-Value

Relational Loyalty1-Make personal sacrifices for this organization 3.51 1.114 0.805 35.950 .000
Loyalty2-Take this organization's concerns personally 3.31 1.139 0.825 27.661 .000
Loyalty4-Commit myself personally to this organization 3.55 1.247 0.904 61.213 .000
Balanced Advancement1-Seek out developmental opportunities that enhance my value to this employer 3.54 1.151 0.848 25.772 .000
Advancement2-Build skills to increase my value to this organization 3.57 1.231 0.892 40.676 .000
Performance2-Accept increasingly challenging performance standards 3.71 1.185 0.899 52.108 .000
Transactional Short-term4-I am under no obligation to remain with this company 2.45 1.315 0.785 25.810 .000
Narrow2-Do only what I am paid to do 2.67 1.330 0.863 41.215 .000
Narrow4-Only perform specific duties I agreed to when hired 2.82 1.355 0.833 32.528 .000
Transitional Mistrust3-Introduces changes without involving employees 3.46 1.221 0.741 14.766 .000
Uncertainty2-An uncertain future regarding its relations with me 3.15 1.300 0.839 39.434 .000
Uncertainty3-Uncertainty regarding its commitments to me 3.58 1.069 0.761 16.888 .000
Erosion1-Demand more from me while giving me less in return 3.51 1.151 0.791 19.917 .000
Erosion2-Decreased benefits in the next few years 3.70 1.205 0.793 22.309 .000
Engagement Vigour2-At my work, I feel bursting with energy 4.39 1.707 0.849 29.315 .000
Vigour3-When I get up in the morning, I feel like going to work 4.07 1.710 0.885 53.642 .000
Dedication1-To me, my job is challenging 4.51 1.956 0.843 32.516 .000
Dedication2-My job inspires me 4.06 1.832 0.917 59.039 .000
Dedication3-I am enthusiastic about my job 3.94 1.723 0.875 30.334 .000
Dedication4-I am proud on the work that I do 4.55 1.503 0.861 49.644 .000
Dedication5-I find the work that I do full of meaning and purpose 4.30 1.909 0.886 37.332 .000
Absortion3-I get carried away when I am working. 4.15 1.820 0.847 29.682 .000
Absortion4-It is difficult to detach myself from my job 4.58 1.492 0.851 42.396 .000
Abortion5-I am immersed in my work 4.23 1.594 0.713 25.772 .000

Table 2 order to test the hypotheses under study (Henseler, Ringle, & Sinkovics,
Reliability and validity measures. 2009).
Latent variables Cronbach's Composite Average variance Using bootstrapping and pseudo t-tests to analyze the significance of
Alpha reliability extracted (AVE) the path coefficients, we find that all of them have a t value above 1.96
(p < 0.05). Table 4 shows that the path coefficients between the four
Relational 0.801 0.883 0.715
types of psychological contracts and work engagement are all statisti-
Balanced 0.855 0.911 0.775
cally significant at the 1% level. Both the relational contract and the
Transactional 0.769 0.867 0.685
Transitional 0.851 0.890 0.618 balanced contract have a significant positive impact on engagement,
Engagement 0.958 0.964 0.730 thus confirming H1 and H2. Similarly, both the transactional contract
and the transitional contract have a significant negative impact on
engagement, which also confirms H3 and H4 (Fig. 2).
For discriminant validity, we compare the square root of the AVE We analyzed the coefficient of determination (R2) of the en-
with the correlations for each pair of latent variables (Fornell & Larcker, dogenous construct in order to evaluate the explanatory power of the
1981). Since the square roots of the AVE for all pairs are higher than the model (Sarstedt, Ringle, Smith, Reams, & Hair Jr, 2014). The model
correlations (Table 3), we can conclude that each latent variable shares explains 65.4% of variance for engagement and shows a high ex-
more variance with its own measurement than with other constructs, planatory power (Table 4). However, the effect size of each predictor
which is evidence of discriminant validity. (f2) is weak (Cohen, 1988).
As all measurements were obtained from participants' perceptions, Finally, we analyze the predictive relevance by using blindfolding to
our model could be contaminated by common method bias. To test for calculate Stone-Geyser's Q2. When the values of Q2 are above zero, the
this, we follow the assessment approach proposed by Kock (2015) and model is considered to have predictive relevance (Hair et al., 2011).
conduct collinearity tests. We find that all factor level VIFs (variance This was the case for the endogenous construct in our study, where
inflation factors) are equal to or lower than 3.3, the larger being be- Q2 = 0.427 (Table 4).
tween engagement and the balanced contract (3.311). This result in-
dicates that the model is free from common method bias.
5. Discussion and conclusion

4.3. Model estimation results Work engagement and its antecedent—the psychological con-
tract—is undeniably important for both organizations and individuals.
Since there is evidence of reliability and validity in the measure- Therefore, an understanding of how different types of psychological
ment models, we proceed to the analysis of the structural model in contracts relate to work engagement is a relevant issue both in

Table 3
Correlations between latent variables and square roots of average variance extracted.
Relational Balanced Transactional Transitional Engagement

Relational 0.846
Balanced 0.819 0.880
Transactional −0.624 −0.637 0.827
Transitional −0.317 −0.249 0.312 0.786
Engagement 0.727 0.735 −0.671 −0.388 0.854

Note: Numbers in bold denote the square root of the average variance extracted.

5
M.E. Soares, P. Mosquera Journal of Business Research xxx (xxxx) xxx–xxx

Table 4
Structural model results and effects sizes (f2).
Criterion Predictors R2 R2 adjusted Q2 Path coefficients Bootstrap t-test p-Value f2

Engagement Relational 0.654 0.648 0.427 0.249 2.643 .008 0.094

Balanced 0.329 3.780 .000 0.054
Transactional −0.261 4.959 .000 0.108
Transitional −0.146 3.337 .001 0.054

academia and in the business world. Given the scarcity of research into enhances loyalty to the organization (relational contract) and allows for
the relation between different types of psychological contracts and continuous development and meaningful performance challenges (ba-
work engagement, especially the transitional and the balanced types, lanced contract). They should also take into account the negative im-
this study presents a contribution to fulfill this gap in the literature. pact of short-term arrangements and narrow job descriptions (transac-
Results show that both the relational and the balanced contracts tional contract) as well as the negative impact of limited involvement,
have a significantly positive impact on work engagement, while both uncertainty about the future, and the erosion of previous conditions
the transactional and the transitional contracts have a significantly (transitional contract).
negative impact on work engagement. Previous studies are unclear Our study's findings have potential applications for human resource
whether the effects on work engagement are due to the dimension of managers. Several authors (e.g., Aggarwal et al., 2007) have argued
duration (short-term versus long-term) or the dimension of perfor- that HRM practices play an important role in the formation of the
mance–reward contingencies (highly contingent, low or non-con- psychological contract. Therefore, human resource managers are en-
tingent) because only the relational and the transactional contracts couraged to assess employees' perceptions of the psychological contract
were analyzed. In our study, results indicate that the two contracts with and to identify which HRM practices contribute positive and/or nega-
a positive impact on work engagement are included in the long-term tive aspects to these perceptions. Promoting HR practices that enhance
dimension. On the other hand, psychological contracts that provide the relational and the balanced psychological contracts appear to be
socio-emotional (relational contract) and developmental support (ba- good conditions for fostering engagement at work.
lanced contract) lead to higher work engagement, whereas psycholo- The main limitation of this study is that, since only one military
gical contracts without these elements lead to lower work engagement. organization was studied, the results must be interpreted with caution.
Our findings are similar to those of Pohl et al. (2016) in their study of The military context presents several specificities, which may account
soldiers undergoing training. Those authors concluded that both socio- for the results found in the measurement model. It is noteworthy that
emotional and developmental psychological contract dimensions were none of the items of the stability component in the relational contract
related to organizational commitment. and none of the items of external employability in the balanced contract
Therefore, to promote work engagement, managers should consider were retained in the measurement model. Given the recent changes in
providing work arrangements with a long-term orientation, which the military career management systems, stability and external mobility

Fig. 2. Final structural model.

6
M.E. Soares, P. Mosquera Journal of Business Research xxx (xxxx) xxx–xxx

may have been perceived in different ways, by different participants criteria-based review of measures. South Africa Journal of Psychology, 38(2), 269–286.
(older/new; administrative/operational), which may explain the low Fujimoto, Y., Ferdous, A., Sekiguchi, T., & Sugianto, L. (2016). The effect of mobile
technology usage on work engagement and emotional exhaustion in Japan. Journal of
reliability of these items. For example, for some military personnel, Business Research, 69, 3315–3323.
stability may be taken for granted and individuals are not much con- Gordo, L. M. D. (2016). O contrato psicológico e o engagement dos militares da marinha
cerned with external employability because they do not foresee a need Portuguesa. Master's Degree DissertationLisboa, Portugal: Academia Militar.
Gupta, M., & Shukla, K. (2018). An empirical clarification on the assessment of engage-
for inter-organizational mobility. For others, however, stability may be ment at work. Advances in Developing Human Resources, 20(1), 44–57.
a major concern, and they may be increasingly worried about their Gupta, V., Agarwal, A. A., & Khatri, N. (2016). The relationship between perceived or-
employment prospects, should they need to leave the organization. ganizational support, affective commitment, psychological contract breach, organi-
zational citizenship behavior and work engagement. Journal of Advanced Nursing,
The results for the structural model are in line with previous studies,
72(11), 2806–2817.
but they are still tentative, as effect sizes are weak. However, these Gutermann, D., Lehmann-Willenbrock, N., Boer, D., Born, M., & Voelpel, S. C. (2017).
results may be a very interesting starting point for reflection on other How leaders affect followers' work engagement and performance: Integrating leader-
member exchange and cross-over theory. British Academy of Management, 28,
military organizations that are undergoing changes in their career
299–314.
management practices, whether or not they are located in Portugal. Hair, J. F., Ringle, C. M., & Sarstedt, M. (2011). PLS-SEM: Indeed a silver bullet. Journal of
Another limitation of our study is that it does not include data on Marketing Theory and Practice, 19(2), 139–152.
Halbesleben, J. R. B., & Wheeler, A. R. (2008). The relative roles of engagement and
HRM practices that may play an important role in fulfilling the psy-
embeddedness in predicting job performance and intention to leave. Work and Stress,
chological contract as well as inducing employee engagement. As 22, 242–256.
mentioned earlier, several authors (e.g., Aggarwal et al., 2007) have Harter, J. K., Schmidt, F. L., & Hayes, T. L. (2002). Business-unit level relationship be-
tween employee satisfaction, employee engagement, and business outcomes: A meta-
argued the importance of including these practices in empirical re-
analysis. Journal of Applied Psychology, 87(2), 268–279.
search concerning the psychological contract. He, H., Zhu, W., & Zheng, X. (2014). Procedural justice and employee engagement: Roles
We suggest that future research on the topic should also include the of organizational identification and moral identity centrality. Journal of Business
four types of psychological contracts in different organizational con- Ethics, 122, 681–695.
Henseler, J., Dijkstra, T. K., Sarstedt, M., Ringle, C. M., Diamantopoulos, A., Straub, D. W.,
texts where different types of psychological contracts are likely to be ... Calantone, R. J. (2014). Common beliefs and reality about PLS: Comments on
found. The selection of contexts should also take into consideration the Rönkkö & Evermann (2013). Organizational Research Methods, 17(2), 182–209.
need to match those variables that could possibly constitute alternative Henseler, J., Ringle, C. M., & Sinkovics, R. R. (2009). The use of partial least squares path
modeling in international marketing. Advances in International Marketing, 20,
explanations for the psychological contract (e.g., organizational size, 277–319.
age, and strategy). Heyns, M., & Rothmann, S. (2018). Volitional trust, autonomy satisfaction, and engage-
We also suggest that future research should include HRM practices. ment at work. Psychological Reports, 12(1), 112–134.
Hulland, J. (1999). Use of partial least squares (PLS) in strategic management research: A
This inclusion would facilitate research into whether the psychological
review of four recent studies. Strategic Management Journal, 20(2), 195–204.
contract is the link between HRM practices and work engagement. We Jain, L., & Ansari, A. A. (2018). Effect of perception of organizational politics on em-
therefore hope that this research contributes to achieving the challenge ployee engagement with personality traits as moderating factors. The South East Asian
Journal of Management, 12(1), 85–104.
proposed by Mintzberg (2009, p.140) that “Companies must remake
Kahn, W. A. (1990). Psychological conditions of personal engagement and disengagement
themselves into places of engagement.” at work. Academy of Management Journal, 33, 692–724.
Kock, N. (2015). Common method bias in PLS-SEM: A full collinearity assessment ap-
References proach. International Journal of e-Collaboration, 11(4), 1–10.
Kraak, J. M., Lunardo, R., Herrbach, O., & Durrieu, F. (2017). Promises to employees
matter, self-identity too: Effects of psychological contract breach and older worker
Aggarwal, U., Data, S., & Bhargava, S. (2007). The relationship between human resources identity on violation and turnover intention. Journal of Business Research, 70,
practices, psychological contract and employee engagement – Implications for 108–117.
managing talent. IIMB Management Review, 19(3), 313–325. Lara, F. J., & Salas-Vallina, A. (2017). Managerial competencies, innovation and en-
Albdour, A. A., & Altarawneh, I. I. (2014). Employee engagement and organizational gagement in SMEs: The mediating role of organizational learning. Journal of Business
commitment: Evidence from Jordan. International Journal of Business, 19(2), 192–212. Research, 79, 152–160.
Anderson, J. C., & Gerbing, D. W. (1988). Structural equation modeling in practice: A Lee, J., & Ok, C. (2015). Drivers of work engagement: An examination of core self-eva-
review and recommended two-step approach. Psychological Bulletin, 103(3), 411–423. luations and psychological climate among hotel employees. International Journal of
Bakker, A. B. (2017). Strategic and proactive approaches to work engagement. Hospitality Management, 44, 84–98.
Organizational Dynamics, 46, 67–75. Lu, X., Xie, B., & Guo, Y. (2018). The trickle-down of work engagement from leader to
Bakker, A. B., & Demerouti, E. (2008). Towards a model of work engagement. Career follower: The role of optimism and self-efficacy. Journal of Business Research, 84,
Development International, 13(3), 209–223. 186–195.
Bal, P. M., De Cooman, R., & Mol, S. T. (2013). Dynamics of psychological contracts with Luthans, F. (2002). Positive organizational behavior: Developing and managing psycho-
work engagement and turnover intention: The influence of organizational tenure. logical strengths. Academy of Management Executive, 16, 57–72.
European Journal of Work and Organizational Psychology, 22(1), 107–122. Lyu, X. (2016). Effect of organizational justice on work engagement with psychological
Bal, P. M., Kooij, D. T. A. M., & De Jong, S. B. (2013). How do developmental and ac- safety as a mediator: Evidence from China. Social Behavior and Personality, 44(8),
commodative HRM enhance employee engagement and commitment? The role of 1359–1370.
psychological contract and SOC strategies. Journal of Management Studies, 50(4), Maslach, C., Schaufeli, W. B., & Leiter, M. P. (2001). Job burnout. Annual Review of
545–572. Psychology, 52, 397–422.
Balakrishnan, C., & Masthan, D. (2013). Impact of internal communication on employee May, D. R., Gilson, R. L., & Harter, L. M. (2004). The psychological conditions of
engagement – A study at Delhi international airport. International Journal of Scientific meaningfulness, safety and engagement of the human spirit at work. Journal of
and Research Publications, 3(8), 1–13. Occupational and Organizational Psychology, 77, 11–37.
Byrne, Z. S., Peters, J. M., & Weston, J. W. (2016). The struggle with employee engage- Mintzberg, H. (2009). Rebuilding companies as communities. Harvard Business Review,
ment: Measures and construct clarification using five samples. Journal of Applied 87(7), 140–143.
Psychology, 101, 1201–1227. Mishra, K., Boynton, L., & Mishra, A. (2014). Driving employee engagement: The ex-
Chambel, M. J., & Oliveira-Cruz, F. (2010). Breach of psychological contract and the panded role of internal communication. International Journal of Business
development of burnout and engagement: A longitudinal study among soldiers on a Communication, 51(2), 183–202.
peacekeeping mission. Military Psychology, 22, 110–127. Nunnally, J. C., & Bernstein, I. H. (1994). Psychometric theory (3rd ed.). New York:
Chang, H.-T., Hsu, H.-M., Liou, J.-W., & Tsai, C.-T. (2013). Psychological contracts and McGraw-Hill.
innovative behavior: A moderated path analysis of work engagement and job re- Paillé, P., & Raineri, N. (2015). Linking perceived corporate environmental policies and
sources. Journal of Applied Social Psychology, 43, 2120–2135. employees eco-initiatives: The influence of perceived organizational support and
Chhetri, S. B. (2017). Antecedents and consequences of job engagement: Empirical study psychological contract breach. Journal of Business Research, 68, 2404–2411.
of bank employees. Business Perspectives and Research, 5(2), 167–179. Pate, J., Martin, G., & Staines, H. (2000). Exploring the relationship between psycholo-
Cohen, J. (1988). Statistical power analysis for the behavioral sciences (2nd ed.). Hillsdale, gical contracts and organizational change: A process model and case study evidence.
NJ: Lawrence Erlbaum Associates. Strategic Change, 9(8), 481–493.
Cropanzano, R., & Mitchell, M. (2005). Social exchange theory: An interdisciplinary re- Pohl, S., Bertrand, F., & Ergen, C. (2016). Psychological contracts and their implications
view. Journal of Management, 31, 874–900. for job outcomes: A social exchange view. Military Psychology, 28(6), 406–417.
Fornell, C., & Larcker, D. F. (1981). Evaluating structural equation models with un- Qing, G., & Zhou, E. (2017). Bidirectional work-family enrichment mediates the re-
observable variables and measurement error. Journal of Marketing Research, 18(1), lationship between family-supportive supervisor behaviors and work engagement.
39–50. Social Behavior and Personality, 45(2), 299–308.
Freese, C., & Schalk, R. (2008). How to measure the psychological contract? A critical Rayton, B. A., & Yalabik, Z. Y. (2014). Work engagement, psychological contract breach

7
M.E. Soares, P. Mosquera Journal of Business Research xxx (xxxx) xxx–xxx

and job satisfaction. The International Journal of Human Resource Management, 25(17), Sarstedt, M., Ringle, C. M., Smith, D., Reams, R., & Hair, J. F., Jr. (2014). Partial least
2382–2400. squares structural equation modeling (PLS-SEM): A useful tool for family business
Rich, B. L., Lepine, J. A., & Crawford, E. E. (2010). Job engagement: Antecedents and researchers. Journal of Family Business Strategy, 5, 105–115.
effects on job performance. Academy of Management Journal, 53(3), 617–635. Schaufeli, W. B. (2017). Applying the job demands-resources model: A ‘how to’ guide to
Ringle, C. M., Wende, S., & Becker, J.-M. (2015). SmartPLS 3. Bönningstedt: SmartPLS measuring and tackling work engagement and burnout. Organizational Dynamics, 46,
GmbH. 120–132.
Roof, R. A. (2015). The association of individual spirituality on employee engagement: Shaufeli, W. B., Salanova, M., González-Romá, V., & Bakker, A. B. (2002). The mea-
The spirit at work. Journal of Business Ethics, 130, 585–599. surement of engagement and burnout: A two sample confirmatory factor analytic
Rousseau, D. M. (1989). Psychological and implied contracts in organizations. Employee approach. Journal of Happiness Studies, 3, 71–92.
Rights and Responsibilities Journal, 2, 121–139. Soares, M. E., & Vitorino, M. (2017). Protean career management in military context. 7th
Rousseau, D. M. (1995). Psychological contracts in organizations: Understanding written and GIKA conference proceedings – “Innovation, knowledge, judgement and decision-making as
unwritten agreements. Thousand Oaks, CA: Sage. virtuous cycles” (Lisboa).
Rousseau, D. M. (2000). The psychological contract inventory. Technical report, CCER, Sonnentag, S. (2017). A task-level perspective on work engagement: A new approach that
Heinz School of Public Policy. Pittsburgh, PA: Carnegie Mellon University. helps to differentiate the concepts of engagement and burnout. Burnout Research, 5,
Rousseau, D. M. (2001). Schema, promise and mutuality: The building blocks of the 12–20.
psychological contract. Journal of Occupational and Organizational Psychology, 74, Sousa, M., & van Dierendonck, D. (2017). Servant leadership and the effect of the in-
511–541. teraction between humility, action, and hierarchical power on follower engagement.
Rousseau, D. M. (2008). The psychological contract inventory – Employee and Employer Journal of Business Ethics, 141, 13–25.
Obligations. The Heinz School, Carnegie Mellon University. Vera, M., Martínez, I. M., Lorente, L., & Chambel, M. J. (2016). The role of co-worker and
Rousseau, D. M., & Tuoriwala, S. (1998). Assessing psychological contracts: Issues, al- supervisor support in the relationship between job autonomy and work engagement
ternatives and measures. Journal of Organizational Behavior, 19, 679–695. among Portuguese nurses: A multilevel study. Social Indicators Research, 126,
Ruck, K., Welsh, M., & Menara, B. (2017). Employee voice: An antecedent to organiza- 1143–1156.
tional engagement? Public Relations Review, 43, 904–914. Yeh, C.-W. (2012). Relationships among service climate, psychological contract, work
Saks, A. M. (2006). Antecedents and consequences of employee engagement. Journal of engagement and service performance. Journal of Air Transport Management, 25,
Managerial Psychology, 21(7), 600–619. 67–70.
Salanova, M., Agut, S., & Peiró, J. M. (2005). Linking organizational resources and work Zhao, H., Wayne, S. J., Glibkowski, B. C., & Bravo, J. (2007). The impact of psychological
engagement to employee performance and customer loyalty: The mediation of service contract breach on work-related outcomes: A meta-analysis. Personnel Psychology, 60,
climate. Journal of Applied Psychology, 90, 1217–1227. 647–680.