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Background: Psychological contracts, and particularly the honouring of these contracts – are central to employee behaviour and organisational success. The interest of academics and practitioners in this construct is therefore understandable. However, due to the immense amount of information on the topic, a comprehensive review of the literature is necessary. Aim: The aim of this article is to present a critical review on the conceptualisation of the psychological contract, distilling and operationalising the concept, to ensure that debate and future research are linked to a dominant body of knowledge. Setting: Present literature on psychological contracts is fragmented as no conceptual standardisation exists. Method: A comprehensive literature review was conducted to obtain a large quantum of conceptualisations of the construct and evaluate these for breadth of adoption, consensus, and operationalisation. Results: After reviewing reputable sources published between 1960 and 2020, a standard definition proposed, the most recognised typologies specified, and sound measures identified. It was found that Rousseau’s (1995) definition and typologies (transactional and relational contracts) are still widely used, and that the measuring scale for transactional and relational contracts by Millward and Hopkins (1998) demonstrates good psychometric properties and broadly utilised. Conclusion: Since its inception, several amended definitions, typologies, and measurement of the psychological contract have been presented. Nonetheless, the original conceptualisations still seem to prevail. Managerial implications: Researchers and practitioners are now aware of the most widely adopted definitions, typologies and measuring instruments relating to psychological contract and these should guide them in future discussions and research in the field.

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The literature is clear that maintaining psychological contracts between employers and employees is important, and that psychological contract breach often leads to negative outcomes, including the withdrawal of discretionary activities such as innovative work behaviour. Although most literature suggests that a psychological contract breach affects the desired outcomes negatively, the same literature is silent about under which type of psychological contract these outcomes occur. This research aims to empirically determine the way in which psychological contract breach affects the relationship between different psychological contracts (relational and transactional) and innovative work behaviour. A cross-sectional survey design was used, with respondents answering questions on psychological contracts, psychological contract breach and innovative work behaviour. Three results were dominant: transactional psychological contract did not correlate with innovative work behaviour, whereas relational psychological contract did so in a significant way; psychological contract breach correlated positively and significantly with transactional psychological contract and negatively and significantly with relational psychological contract, but not with innovative work behaviour; and psychological contract breach did not moderate the relationship between relational psychological contract and innovative work behaviour. The psychological contract type (relational psychological contract) therefore has a direct effect on innovative work behaviour, but psychological contract breach did not relate significantly to innovative work behaviour. Managers are alerted to the importance of relational psychological contracts when innovative work behaviour is the desired outcome, given the omnipresent psychological contract breach. Researchers are encouraged to investigate through which mechanisms psychological contract breach influences innovative work behaviour, as this link seems well supported by the literature.