The role of psychological contract on employee commitment and organisational citizenship behaviour: A study of Indonesian young entrepreneurs in management action

Abstract

Orientation: This study aims to analyse the entrepreneurship-driven reasons and characteristics of employee management of the young generation, by analysing the role of psychological contract on employee commitment and organisational citizenship behaviour in the light of the characteristics of the millennial generation as the owners of small and medium-sized enterprises.Research purpose: The main objective of this study was to empirically analyse the effect of the psychological contract and organisational support on the organisational commitment and organisational citizenship behaviour of the employees of small-scale enterprises run by young entrepreneurs, especially in the cohort generation.Motivation for the study: This study attempts to analyse the characteristics of the millennial generation as the owners of small and medium-sized enterprises (SMEs) in running the business by examining their managerial characteristics in managing workplace relationship that aims to achieve the stakeholder expectations and improve both commitment and organisational citizenship behaviour of employees.Research design, approach and method: Data were collected in the SMEs owned by young entrepreneurs in a city in Indonesia involving 150 respondents. The research model was tested using Structural Equation Modelling with analysis of moment structure (AMOS).Main findings: The results showed that the employee citizenship behaviour is influenced by the organisational commitment. The commitment of employees was formed by the ability of business owners to understand the needs and expectations of employees regarding opportunities of self-development, pleasant working environment, the benefit as the workload and the work challenge.Practical and managerial implications: This study implies the need for academic institutions and policy makers to get involved in addressing the rising phenomenon of entrepreneurship among the young generation.Contribution and added-value: This study mainly considered the characteristics of young entrepreneurs as the main factor in explaining the success of employee management relationship of SMEs.

How Employee’s Organizational Citizenship Behaviors Get Affected by Characteristics of the Psychological Contract

“…indicating that there is no linear multiplicity problem among the study model variables. This agrees with results reached by Tufan and Wendt (2020); Barnhill and Smith (2019); Kishokumar (2018); Anggraeni, Dwiatmadja, and Yuniawan (2017) and Khan, Zhiqiang, Abubakari Sadick, and Ibn Musah (2018).…”

Invigorating the hospitality industry: What is the impact of psychological contract and psychological capital on employee commitment?

“…This relationship encapsulates the entire spectrum within an employment contract, ranging from a strictly legal one to a purely psychological relationship (Kim, Karatepe & Lee 2018). Psychological contract can be defined in terms of the beliefs of employers and employees regarding the reciprocal obligations that exist between them (Anggraeni, Dwiatmadja & Yuniawan 2017). The development of the 'psychological contract' concepts can be traced back to the 1960s (Argyris 1960) when two types of psychological contracts were identified: transactional and rational contracts.…”

“…Transactional contracts are also characterised by the limited involvement of parties and emphasise specific short-term monetary obligations. This type of contract provides tangible positive outcomes for both parties and has been linked to enhanced cohesion and organisational citizenship behaviour (Anggraeni et al 2017).…”

Strategies That Small Business Leaders Use to Motivate Millennial Employees

“…Also, managers must understand what satisfies and motivates millennial employees to attract the best talents and keep them employed (Smith & Nichols, 2015). If employees have a strong commitment to their organizations, they go above and beyond the expectations of their performance description (Anggraeni et al, 2017). Organizational commitment in essence is a psychological contract between the employer and the employee where personal and organizational values create results that inspire mutual trust.…”