Psychological contracts in the virtual environment

Psychological Contracts in the Virtual

Environment

-“An in-depth research on the relationship between the

psychological contract and virtual team effectiveness.”

by

Hjalmar van Marle

2010

i

STATEMENT OF AUTHENTICITY

I have read the TiasNimbas Business School Regulations relating to plagiarism

and certify that this project is all my own work and does not contain any

unacknowledged work from any other sources.

I confirm that the Word Count as per the Regulations is 19.290 words.

Signed:

Date:

September 9th, 2010

ii

KEYWORDS & ABSTRACT

Name: Hjalmar van Marle

Title: Psychological Contracts in the Virtual Environment

KEYWORDSPsychological contract; Inferred Promises; Reciprocal Obligations;

Psychological contract Violation; Virtual team; Virtual Team effectiveness; Team

Dynamics.

ABSTRACTThis study involves research on the psychological contract of the members of a

virtual project team. Its aim is to define whether there is a relationship between

the psychological contract of virtual team members and their team’s

effectiveness. Working with virtual teams is becoming increasingly popular at

the beginning of the twenty-first century. Advances in technology and the

changes on the labour market enable organizations to be flexible on the one

hand, but threaten job security their employees on the other. Virtual teams are

an example of this increase in flexibility, facilitated by advanced technology.

This virtual environment however does introduce a new set of challenges to

members of virtual project teams.

The objective of this study is to gather information about the psychological

contract of virtual team members and gain more insight in its effects on the

virtual team’s effectiveness. An inductive approach is taken and qualitative data

will be gathered through in-depth interviews with twelve virtual team members

that have been working on the same virtual project.

Research results clearly show decreased levels of trust, commitment and

cohesiveness. This indicates a more fragile environment in which psychological

contract violation is more likely to occur. Team effectiveness will be negatively

influenced in the events of contract violation.

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Recommendations based on this research will include implications for human

resources and project managers. These groups will be concerned most with the

design of a virtual team and the success of the virtual project.

iv

PREFACE

After a period of seven years of study, everything I have learned will finally

come together in this thesis project. Seven years feel like quite a long time, but

they went by so fast. It has been a difficult, but an inspiring period, in which I

have put my dearest and myself to the test. A period in which sacrifices have

been made, but that brought many new opportunities as well.

The final two years at TiasNimbas have brought closure to this period, as I am

about to leave this business school as an International MSc in Business

Administration, specialized in Marketing Management. It has given me a

platform to not only broaden my knowledge, but to define the purpose for my

future career as well.

It is hardly possible to thank everyone, but some people deserve to be

mentioned. The very first person I would like to thank is my girlfriend Ingrid,

whom has had to endure the most difficult times with me. She has given me all

the support necessary. She has brought up the patience to review my work and,

even more important, she brought up the patience to live with me those years.

More thanks go to my family. My mother, brother, sister and father have made

this study possible by being patient and supportive at all times.

Of course, I would also like to thank my supervisor Prof. Alf Crossman for his

contribution to this piece of work. He has brought up the best in me and I could

not have had a better companion to work with.

This thesis describes the psychological contract and its implications in the

virtual environment. This subject has been of my interest ever since the lectures

of my supervisor and it will certainly stay that way for quite a while.

Hjalmar van Marle

Utrecht, September 9th 2010

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TABLE OF CONTENTS

STATEMENT OF AUTHENTICITY ...................................................................................................... i

KEYWORDS & ABSTRACT............................................................................................................... ii

PREFACE ....................................................................................................................................... iv

TABLE OF CONTENTS..................................................................................................................... v

LIST OF FIGURES .......................................................................................................................... vii

LIST OF TABLES ............................................................................................................................ vii

Chapter 1 INTRODUCTION ........................................................................................................- 1 -

1.1 Subject matter ...........................................................................................................- 1 -

1.2 Background information ............................................................................................ - 2 -

1.3 Aims & Objectives ......................................................................................................- 3 -

1.4 Theoretical relevance ................................................................................................ - 4 -

1.5 Thesis project structure ............................................................................................. - 5 -

Chapter 2 LITERATURE REVIEW.................................................................................................- 6 -

2.1 Introduction ...............................................................................................................- 6 -

2.2 The psychological contract ........................................................................................ - 6 -

2.2.1 Evolution of the psychological contract ............................................................ - 6 -

2.2.2 Formation of the contract ...............................................................................- 10 -

2.2.3 Reciprocal obligations & Inferred promises ....................................................- 12 -

2.2.4 Transactional vs. Relational.............................................................................- 13 -

2.2.5 Psychological contract violation......................................................................- 14 -

2.2.6 The psychological contract in its current state ...............................................- 15 -

2.3 Virtual Teams & The Virtual Team Environment .....................................................- 16 -

2.3.1 The virtual team environment ........................................................................- 16 -

2.3.2 Inputs...............................................................................................................- 17 -

2.3.3 Socio-emotional processes..............................................................................- 19 -

2.3.4 Task processes.................................................................................................- 20 -

2.3.5 Outputs............................................................................................................- 22 -

2.4 Virtual Teams and the Psychological Contract - Potential implications .................- 22 -

2.4.1 Team dynamics in a virtual environment........................................................- 22 -

2.4.2 Trust & Commitment.......................................................................................- 24 -

2.4.3 Research assumptions.....................................................................................- 25 -

2.5 Chapter Summary ....................................................................................................- 26 -

2.5.1 Psychological Contract Literature....................................................................- 26 -

2.5.2 Virtual Team Literature ...................................................................................- 26 -

2.5.3 Potential implications......................................................................................- 27 -

2.6 Research Question...................................................................................................- 28 -

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Chapter 3 METHODOLOGY......................................................................................................- 30 -

3.1 Introduction .............................................................................................................- 30 -

3.2 Research philosophy................................................................................................- 30 -

3.2.1 The research paradigm....................................................................................- 31 -

3.2.2 Epistemology ...................................................................................................- 32 -

3.2.3 Ontology ..........................................................................................................- 32 -

3.3 Research Approach - Deductive vs. Inductive .........................................................- 33 -

3.4 Research Strategy ....................................................................................................- 34 -

3.5 Data collection .........................................................................................................- 34 -

3.5.1 The pilot interview ..........................................................................................- 35 -

3.5.2 Primary data collection - research process .....................................................- 36 -

3.5.3 Profiling information .......................................................................................- 37 -

3.6 Chapter summary ....................................................................................................- 39 -

Chapter 4 RESEARCH RESULTS ................................................................................................- 41 -

4.1 Introduction .............................................................................................................- 41 -

4.2 Repeating themes around the two main variables..................................................- 41 -

4.3 The Psychological Contract ......................................................................................- 42 -

4.4 The Virtual Team Environment................................................................................- 47 -

4.5 Key Issues.................................................................................................................- 51 -

4.6 Chapter summary ....................................................................................................- 56 -

Chapter 5 REFLECTIONS ON THE PRIMARY RESEARCH PROCESS............................................- 58 -

5.1 Introduction .............................................................................................................- 58 -

5.2 Lessons.....................................................................................................................- 58 -

5.2.1 Making the contract emerge...........................................................................- 58 -

5.2.2 General consent ..............................................................................................- 59 -

5.3 Data display and analysis .........................................................................................- 59 -

5.4 Difficulties encountered ..........................................................................................- 61 -

5.4.1 Unilateral versus bilateral approaches............................................................- 61 -

5.4.2 Feature-, content- and evaluation-oriented approaches................................- 62 -

5.4.3 Operationalizing the psychological contract ...................................................- 64 -

5.4.4 Difficulties during the research process..........................................................- 64 -

5.5 Chapter summary ....................................................................................................- 65 -

Chapter 6 CONCLUSIONS & RECOMMENDATIONS .................................................................- 67 -

6.1 General conclusion ..................................................................................................- 67 -

6.2 Implications for policy and practice.........................................................................- 68 -

6.3 Implications for theory/research .............................................................................- 69 -

6.4 Limitations of the research ......................................................................................- 69 -

6.5 Recommendations for further research ..................................................................- 70 -

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Appendices LIST OF APPENDICES ............................................................................................- 71 -

Appendix I: Thesis Proposal ...........................................................................................- 72 -

Appendix II: Interview Schedule......................................................................................- 80 -

Appendix III: Interview Questions ....................................................................................- 81 -

Appendix IV: Interview Transcript (coded).......................................................................- 86 -

BIBLIOGRAPHY.........................................................................................................................- 96 -

LIST OF FIGURES

Figure I: “The psychological contract” (Crossman 2004). .......................................................- 11 -

Figure II: “Transactional vs. Relational contracts” (Rousseau 1990).......................................- 14 -

Figure III: “Psychological Contract - Past vs. Emergent Form” (Anderson and Schalk 1998)..- 16 -

Figure IV: “Virtual Team Dynamics and the Psychological Contract” (Crossman 2004). ........- 24 -

Figure V: “The research variables” (source: author). ..............................................................- 29 -

Figure VI: “Data Display” (source: author). .............................................................................- 60 -

LIST OF TABLES

Table I: “Research Results - Psychological Contract” (source: author). ..................................- 43 -

Table II: “Research Results - Virtual Team Environment” (source: author)............................- 49 -

Psychological Contracts in the Virtual Environment 9th of September 2010

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Chapter 1INTRODUCTION

This document is the result of the master thesis project, written as part of the

master program International Business & Marketing at the TiasNimbas

Business School in Utrecht. From July until September research has been done

on the relationship between the psychological contract and virtual team

effectiveness. This chapter provides an introduction on the subject matter,

background information, the aims and objectives, theoretical relevance, and

information on what to expect of the structure of this thesis project.

1.1 Subject matterMost people are not familiar with the term psychological contract. Most of us are

not even aware of the fact that we have one ourselves, until we find ourselves in

a situation in which it emerges. Imagine your latest performance appraisal. Did

you not feel betrayed your supervisor did not give you promotion? Did you not

feel, that you deserved that raise, because your manager said you have

performed excellent? Well then... You should have written it all down.

Psychological contracts are derived from inferred promises and obligations

between two parties. They include every unwritten agreement that resides in the

mind of an individual and to which each party is held responsible by the

individual. The psychological contract has been thoroughly researched by

academics. It is an increasingly hot topic in the field of HR, as the current

macro-economic situation opposes a threat to job security and stability.

Another macro-environmental factor becomes increasingly important. The

emerging virtual environment sets a new stage for organizations. A stage in

which internationally assembled teams can work on the same project, enabling

them to work across space, time and culture. Virtual projects are subject of

research since the 1980s, but due to the technological advances that have been


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made the last decades multinationals make increasing use of them. However,

virtual working does come with a new set of characteristics. Virtual project

teams are different than traditional project teams. They require different inputs

in terms of design, resources, skills and abilities. Socio-emotional and task

processes need a different approach as well.

These changes in the environment we do business in are bound to have an

effect on the productivity and effectiveness. This thesis project is concerned

with the relationship between the two variables described above and the way

they affect the results of virtual project teams.

1.2 Background informationAlthough the psychological contract has been introduced already more than four

decades ago, research on this topic received significant attention from the

beginning of the ‘90s (Rousseau 1989; Rousseau 1990; Robinson and

Rousseau 1994). Early research described the psychological contract as

reciprocal obligations between an employees and his/her organization.

Rousseau's research has set the basic framework around the psychological

contract, being individual employees’ beliefs about the mutual exchange

relationship between employer and employee (Rousseau 1989).

From the beginning of the 90s to later in the 90s, research on the psychological

contract was done on different subjects related to it, being violation, trust and

breach (Robinson 1996) and the perceptions of both parties and their offering

on the written contract (Herriot and Pemberton 1995). These perceptions,

together with the unwritten promises would lead to mutual obligations, which are

partly put on record in the written formal contract of employment, but are for the

most part implicit, covertly held and only infrequently discussed (Anderson and

Schalk 1998).

In the beginning of the 21st century, virtual teams became a topic in the field of

Human Recourse Management (HRM) and organisational behaviour. This has

led to numerous reports on how working virtually affected the outcome of the


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project (Maznevski and Chudoba 2000; Kayworth and Leidner 2002; Kirkman,

Rosen et al. 2004) and virtual team processes (Jarvenpaa and Leidner 1999;

Piccoli and Ives 2003).

Jarvenpaa and Leidner (1999) were the first to actually relate virtual teams with

trust, which in its turn is linked to the psychological contract. Their research

focussed on whether it was possible for trust, or swift trust, to exist between

virtual team members, concluding there were at least some forms of trust

created within virtual teams. Later on in the 2000s, several more articles have

been published, relating trust (Piccoli and Ives 2003; Coppola, Hiltz et al. 2004;

Crossman and Lee-Kelley 2004) to team dynamics and behaviour control.

Team effectiveness in virtual teams has only recently been a subject of study

(Maznevski and Chudoba 2000; Kayworth and Leidner 2002). Their studies

mainly focus on how working in a virtual environment affects the perceived team

effectiveness. In their research, the relationship with the psychological contract

explicitly, is not subject of study, forming the so called gap which this thesis

attempts to fill.

This report will contribute to the ongoing discussion on working with virtual

project teams and gives new insights on how the psychological contract is

related to team effectiveness. It involves reciprocal obligations and inferred

promises, and links these subjects to team effectiveness. This is done by giving

an in-depth practical example of a virtual project team and their experiences

with the topic and placing these experiences in the theoretical framework.

1.3 Aims & ObjectivesStudying the psychological contract in a virtual environment is relevant to

organizational studies today. The increasing use of virtual working in a new

virtual environment opposes virtual project teams to entirely different

challenges, than they were used to in traditional project teams. Academic

research has covered the topic of virtual teams broadly. However, the

relationship between virtual work and psychological contracts is limited. The


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psychological contract has been the subject of research for the past decades

and its implications have been broadly discussed. This study aims to close the

gaps in the published academic research on virtual team effectiveness and the

psychological contract. Existing literature does confirm that some of the unique

characteristics of the psychological contract can be found within virtual project

teams. Besides that, there is enough reason to believe that virtual team

members, as they are regular employees of an organization as well, hold their

own individual psychological contract. What we do not know, is how it is

influenced by virtual working and the effects it will have on the team’s

effectiveness.

For that reason, the principal aim of this thesis project is to learn more about the

psychological contract within a virtual environment. The objective is to define

this relationship and provide recommendations to those organizations that work

with virtual teams. Another aim is to define the relationship between the

psychological contract and virtual team effectiveness. The objective here is to

provide more insight on what variables have an either positive or negative effect

on the virtual team’s performance. The results of this research might be of

practical use for organizations working with virtual teams and those working in

the field of organizational behaviour. It might be of particular interest to the field

HR and project management, as these departments are most concerned with

the design and execution of virtual projects.

1.4 Theoretical relevanceThis thesis project will contrast classical theories on the psychological contract

with current theories on its implication in working in project teams. As different

variables of the psychological contract, like trust and commitment, will be

researched within a virtual environment, literature on these variables will be

included. Subsequently, this research will include team dynamics and the

differences between virtual and face-to-face team processes. It will identify gaps

in the existing literature, related to the research question. Interview questions

will focus on filling the gaps identified.


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1.5 Thesis project structureIn order to explore the concept of the psychological contract within the virtual

environment, a theory will be built to explain the relationship between both

variables. To accomplish the main research objectives, a theoretical as well as

an empirical study was conducted, which is structured into seven chapters.

The first three chapters are designed to introduce the reader to this thesis

project and the subject of study. This first chapter is the introduction to the

research. The second chapter is an overview of the aims and objectives

regarding the research. In this chapter, the connections between the

psychological contract and virtual team effectiveness are made. The literature

review, chapter three, is concerned with a thorough analysis of the available

literature. First, the psychological contract is explored, and then the virtual team

environment is analyzed. In both cases a definition is given first, after which the

main themes are elaborated on. The psychological contract literature will focus

on the definition of this variable and its unique characteristics. The virtual team

literature will focus more on the environmental context in which virtual teams

operate. At the end of the literature potential gaps will be explored, as both

psychological contract and virtual team literature are combined. Then the

research question is drawn up, that will enable us to close these gaps.

The fourth chapter includes the research methodology. Here the research

design is discussed. It consists of the research approach, the research

philosophy, the research strategy, methods of data collection and a detailed

research procedure. This chapter describes how the secondary data is

processed and in what way the data of the primary research will be gathered.

Final part of this research includes the last three chapters. These are concerned

with a presentation of the findings, reflections on the research and the

discussion of the results. The fifth chapter elaborates on the most important

findings. The sixth chapter includes the lessons learnt during the research

project and the seventh and final chapter will lead to the conclusions and

recommendations.


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Chapter 2LITERATURE REVIEW

2.1 IntroductionThis chapter reports the secondary data collection to map and assess the

existing intellectual scope of the relationship between the two variables at the

foundation of this research. The current academic background of the

psychological contract and the virtual team environment will be explored, in

order to develop a thorough understanding of previous research topics, related

to the subject of this thesis.

The literature review will first of all give a thorough theoretical background of the

psychological contract literature, in order to create a basic understanding of the

holistic research topic. Then, the environment in which virtual teams operate will

be outlined, listing its challenges and benefits. The final paragraph of this

literature review will discuss current literature on the relationship between both

variables in order to identify the knowledge gaps. These will then be

summarized, leading to the research question of this thesis project.

2.2 The psychological contract

2.2.1 Evolution of the psychological contract

During its history, the psychological contract has evolved from “an implicit

understanding between a group of employees and their foreman” (Argyris 1960)

to “an individual’s beliefs regarding the terms of conditions of a reciprocal

exchange agreement between the focal person and another party” (Rousseau

1989). It is an exchange concept providing a broad explanatory framework for

understanding employee-organization linkages (Anderson and Schalk 1998).

The first definition of an implicit understanding has been further developed by

several academics. This development presents the evolution this topic has gone

through, while it has been criticized and refined throughout its academic history.


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This paragraph is designed to explore this evolution and provide the reader of

this thesis of a basic understanding of this research topic. Its complexity will

become clear by discussing the definitions that academics have used in the

past.

It is about fifty years ago, that the first definition of the psychological contract

can be found in academic literature. Argyris (1960), an academic in the field of

organizational behaviour, is considered to be one of the founders of this subject.

He (1960) defined the psychological work contract as:

“employee and employer expectations of the employment relationship, interms of mutual obligations, values, expectations and aspirations thatoperate over and above the formal contract of employment.” (Argyris1960)

He used this concept of the psychological work contract to describe the

relationship between employees and their leaders. During his research Argyris

found that relationships could evolve between employees and their foremen.

These obligations would not be written in the formal contract. Argyris found that

the foremen realized that the employees were most likely to produce optimally

under passive leadership. They reacted accordingly and in exchange for

passive leadership, the employee would maintain high production and good

work ethic (Argyris 1960).

As Argyris (1960) did not explicitly mention the concept of the psychological

contract, Levinson et al (1962) could, two years later, claim to be its designer.

They changed the concept fundamentally by focussing on implicit and unspoken

expectations prior to the employee-employer relationship, regarding

expectations of salary or promotion prospects (Levinson, Price et al. 1962).

Levinson et al. (1962) used the following definition:

“a series of mutual expectations of which the parties to the relationshipmay not themselves be dimly aware, but which nonetheless govern theirrelationship to each other.” (Levinson, Price et al. 1962)


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The difference between Argyris’ definition and the one of Levinson et al. is to be

found in the perception of both parties to the relationship. Levinson et al. argue

that both parties might not be aware of each other’s expectations, though they

do hold each other responsible for them. This suggests that these expectations

arise in the perception of one party, based in the individual experiences and

feelings of this party.

Kotter (1973) has done research on the role of the psychological contract in the

process of assimilating new employees into an organization. During his

research, he created lists of expectations between the employee and the

employer and matched them to study job satisfaction, productivity and reduced

turnover. The approach of Kotter is criticized of being oversimplified, as it is

virtually impossible to list the amount of expectations involved (Anderson and

Schalk 1998). When Kotter mentions the psychological contract, he defines it

as:

“An implicit contract between an individual and his organization whichspecifies what each expect to give and receive from each other in theirrelationship.” (Kotter 1973).

Kotter puts more emphasis on the individual and agrees that parties might not

be aware of the other’s expectations. Although Kotter is criticized for

oversimplifying things, he acknowledges the individual perception on an

exchange agreement. Furthermore he argues the perception of the individual

includes expectations from the organization as well. Kotter’s approach might

have been oversimplified, but his definition is very specific.

Another contributor to the development of the psychological contract construct

is Schein. According to Schein (1978) the psychological contract exists on two

different levels: the individual and the organizational. Another determinant of the

psychological contract, first mentioned by Schein, is the term ‘reciprocity’

(Schein 1978). Both parties to the relationship believe that their expectations

towards the other are reciprocal, making the psychological contract an

important determinant of behaviour in organizations. Schein (1978) defines the

psychological contract as:


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“... a set of unwritten reciprocal expectations between an individualemployee and the organization.” (Schein 1978)

Schein does not mention the perception of the individual in which the

psychological contract resides. Instead he argues that the organization has a

contract with the employee and vice versa. In academic literature this is referred

to as a bilateral approach. Another element mentioned by Schein is, that the

expectations are reciprocal. Hereby he agrees with the previous definitions, that

at least one party to the contract holds the other accountable for its contents.

The most commonly accepted definition of the psychological contract is the one

of Rousseau. Rousseau sets the basics of the modern understanding of the

psychological contract, breaking with two of the earlier arguments: a focus on

the individual level, instead of the level of a relationship and a shift from

expectations to obligations (Roehling 1997).

“An individual's belief regarding the terms and conditions of a reciprocalexchange agreement between the focal person and another party. Apsychological contract emerges when one party believes that a promiseof future returns has been made, a contribution has been given and thus,an obligation has been created to provide future benefits.”(Rousseau 1989)

In comparison to the other definitions, Rousseau argues that in the perception

of one party a promise of future return has been made by the other. The first

party inferred this promise from the relationship with the other party and the

experiences that have come forth from this relationship. In return this party is

obliged to fulfil the expectations that are connected to this promise and thus

feels obliged to deliver.

The most recent view on defining the psychological contract is the one of

Herriot and Pemberton (1995). This view is again bilateral, as it includes the

perceptions of both parties, instead of the individual.

“The perceptions of both parties to the employment relationship,organization and individual, of the obligations implied in the relationship.


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Psychological contracting is the process whereby these perceptions arearrived at.” (Herriot and Pemberton 1995)

Harriet and Pemberton (1995) are the first to include the process of

psychological contracting. This process entails that the perception is arrived at,

meaning that one or both parties to the contract become aware of its existence.

One understanding shared by all of the approaches above, is that the

psychological contact concerns an exchange agreement between both parties

of the employment relationship. It resides in the perception of each individual

party and includes inferred promises or assumptions of a future return. As it is

unwritten and as it merely exists within the perception of an individual, the

parties might not be aware of the contents. Not of their own, neither of the other

party.

This thesis project takes a unilateral approach, meaning it will focus on the

perception of one individual, instead of the perception of both parties to the

exchange relationship. This choice has been made due to the difficulties in

defining the role of the organization as a uniform set of expectations (Anderson

and Schalk 1998). As different agents of the organization are more likely to hold

different sets of expectations, a unilateral approach would increase

measurability. A more narrow definition is preferred for this project. It is

therefore Rousseau’s (1990) definition that will be used in this thesis.

2.2.2 Formation of the contract

As discussed earlier, the psychological contract resides in the perception of the

individual. The previous paragraph highlighted the definitions that have set the

scene of academic literature during the past decades. This paragraph will

provide an explanation on how the psychological contract is formed and what

the determinants are for its contents. The model below visualizes the process of

psychological contract formation and will be used as the bases of this

paragraph.


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Figure I: “The psychological contract” (Crossman 2004).

The psychological contract is founded upon three principal constructs: the

exchange relationship, trust and commitment. The psychological contract exists

in the virtue of these three constructs and each of them interacts.

The exchange relationship includes the needs, motives and expectations of the

parties that hold the contract. The employee needs pay, or a social platform,

while the organization needs labour, or knowledge. The drivers of both parties

to engage in the relationship are included in the motives. The expectations of

both parties are a product of their motives and needs.

The amount of commitment to and trust in this relationship, by the party that

holds the contract, are determinants of how tight the exchange relationship is

and thus how strong the psychological contract will be held. When, at a certain

moment in time, the employee experiences that the contract is misaligned, for

example by not getting promotion during an evaluation of his work, as a

consequence, in the perception of the employee, the psychological contract is

either broken, or enhanced. After experiencing breach, the employee will review

the contents of the contract and decide whether or not to terminate it. If not, the


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contract will again be shaped by the degree of trust and commitment and the

process will start all over again. This dynamic element suggests that items can

be discarded or added over time, as perceptions of the employer’s trust and

commitment evolve (Daniels, Lamond et al. 2000). In the model, the

environmental and the organizational context are included as moderating

internal and external factors contributing to how the psychological contract is

formed.

2.2.3 Reciprocal obligations & Inferred promises

According to Robinson and Rousseau (1994), the psychological contract

emerges when one party believes that a promise of future return has been

made, and therefore a contribution has been given, and thus an obligation has

been created to provide future benefits (Robinson and Rousseau 1994). This

exchange relationship of promises and obligations can be inferred from “any

communication of future intent” (Rousseau 1989; Montes and Zweig 2009).

Reciprocal obligations, or reciprocal agreements, together with inferred

promises, are the basis of the psychological contract, as beliefs in reciprocal

and promised obligations between employee and employer, when violated,

generate distrust, dissatisfaction, and possibly the dissolution of the relationship

itself (Argyris 1960; Rousseau 1989).

An important understanding of a psychological contract is that the beliefs

comprising the contract result from promises (Rousseau and Tijoriwala 1998).

By believing in a promise, the individual beliefs in a future return, in turn for a

contribution. The other party is, in his perception, obliged to reward him. This

reward might be an incentive bonus for a certain performance and the

contribution can be an employee’s input on a project. For example, when a

project manager, tells one of his employees, that after a successful ending of

the project, the project member will be rewarded for his input, the project

member might infer this as a promise for a financial reward. Although the

project manager does not explicitly state what the reward will be and what the

terms are in order to make the project successful, in the perception of the

employee the psychological contract has been formed and he or she will react


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accordingly. It is a promise for which the project manager will be held

accountable and is therefore reciprocal in the mind of the employee. A basic

premise of the psychological contract framework is the notion of reciprocity

whereby employees reciprocate their employer on how well they have been

treated. Consequently, employees will target their reciprocation toward the

source of the fulfilled or unfulfilled obligations, being their perceived employer

(Coyle-Shapiro and Kessler 2000).

Rousseau (1998) found that fulfilment of psychological contract obligations

contributed independently and more substantially to the prediction of trust,

commitment, and satisfaction when compared with broader expectations

(Rousseau and Tijoriwala 1998).

2.2.4 Transactional vs. Relational

Differences in the content of the psychological contract tend to cluster around

the extent to which they are transactional, based on transactions, or relational,

based on the relationship with another party. Differences between both types of

contracts will be outlined in the next paragraphs.

Transactional contracts are characterized by limited involvement of the parties

taking part in the contract, and emphasize specific, short-term, often monetary

obligations. They involve an exchange of economic currency wherein the

organization provides adequate compensation, a safe working environment,

and reasonable short-term guarantees of employment in exchange for the

employee’s fulfilment of narrow, specified role responsibilities (Thompson and

Bunderson 2003). In their research, Rousseau and McLean Parks state that

“because employees are concerned about themselves as the primary

beneficiaries of the exchange, transactional contract imply an egoistic or

instrumental model of human nature”.

In contrast, relational contracts emphasize broad, long term, socio-emotional

obligations, such as commitment and loyalty, consistent with collective interest,

and have a pervasive effect on personal as well as work life (Thomas, Au et al.


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2003; Thompson and Bunderson 2003). Relational contracts entail the

exchange of socio-emotional currency, involving the organization’s provision of

training and professional development, as well as long-term job security, in

exchange for the employee’s fulfilment of generalized role obligations.

Employees with such contracts, contribute their commitment and involvement to

the organization often in the form of organizational citizenship behaviours

(Robinson and Morrison 1995).

In the figure below, Rousseau has summarized the contractual continuum, in

which the differences between the transactional and the relational contract are

described (Rousseau 1990).

Figure II: “Transactional vs. Relational contracts” (Rousseau 1990).

2.2.5 Psychological contract violation

The misalignment between the individual’s expectations of how things should

be, compared to how they really are is called psychological contract violation

(Crossman and Lee-Kelley 2004). It is the perception of employees that their

organization has failed to adequately live up to its promises (Rousseau 1989;


- 15 -

Morrison and Robinson 1997). In other words, a gap between the desired and

the actual state has been identified in the perception of the employee.

According to Robinson and Rousseau, the impact of psychological contract

violation can have serious individual and organizational implications, as it

decreases the level of trust between the employee and the employer and the

level of satisfaction with the job and the organization. Contract violation can

negatively impact the perceived obligation to the organization and the intention

to remain within the current job (Robinson and Rousseau 1994). It is considered

to have a more intense effect than not living up to an expectation, as “broken

promises produce anger and erode trust in the relationship” (Robinson and

Rousseau 1994).

Whenever the employee perceives the employment situation as not consistent

with the standard, control theory suggests that an individual will respond to

reduce the discrepancy (Shore and Tetrick 1994). As a result, the employee

might not live to his part of the obligation to adequately fulfil the assigned task.

2.2.6 The psychological contract in its current state

The psychological contract becomes increasingly important, as recent trends of

restructuring, downsizing, demographic diversity and foreign competition

threaten the traditional assurance of job security and steady rewards in return

for hard work and loyalty (Sims 1994; Hiltrop 1995; Guest 1998). Guest

proposes another issue, being the state of turbulence and uncertainty, which

makes it difficult for organizations to fulfil the obligations that it has made to its

employees. The result of both issues is a perception on the part of many

employees that the terms of their psychological contracts have not been

adequately fulfilled.

In his research, Hiltrop suggests that a shift is taken place within the

psychological contract construct. The psychological contract is moving from a

long-term and stable contract to “one which is more situational and short-term”

(Hiltrop 1995). This shift implies that commitment to corporate goals is


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decreasing and job security and company loyalty might well be at their lowest

levels. Hiltrop has identified this shift in 1995, which means that by now, the

year 2010, this shift must already have taken place. In the figure below, which is

an extension from Hiltrop’s original figure made by Anderson and Schalk, sets

out the changing factors of the psychological contract as they would develop in

the future.

Figure III: “Psychological Contract - Past vs. Emergent Form” (Anderson and Schalk 1998).

Taking this new situation into account, Hiltrop expects implications for Human

Resource Management (HRM), as it is bound to have consequences for

attracting, retaining and motivating talent, management style and the way to

gain commitment (Hiltrop 1995).

2.3 Virtual Teams & The Virtual Team Environment

2.3.1 The virtual team environment

The virtual team is currently considered to be one of the building blocks of a

successful organization. Increasingly, these successful organizations are

organised in a dynamic network form that can more quickly adapt to ever-

changing competitive landscapes and customer requirements. Enabled by the

use of Information Technology (IT), virtual teams can operate across

organizational boundaries in a geographically, organizationally and/or time


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dispersed environment (Jarvenpaa and Leidner 1999; Powell, Piccoli et al.

2004; Lin, Standing et al. 2008). In general, virtual teams are defined as “groups

of geographically, organizationally and/or time dispersed workers brought

together by information and telecommunication technologies to accomplish one

or more organizational tasks” (Jarvenpaa and Leidner 1999; Powell, Piccoli et

al. 2004; Fiol and O'Connor 2005). Virtual teams differ from the traditional team,

by the limited amount of face-to-face interaction, which in its turn will have

profound effects on the development of interpersonal relationships,

communication, task processes and performance (Warkentin, Sayeed et al.

1997; Jarvenpaa and Leidner 1999; Coppola, Hiltz et al. 2004; Fiol and

O'Connor 2005; Bjørn and Ngwenyama 2009).

In his work on virtual positions, Mackenzie describes the virtual team as a

virtual position, involving three or more persons from different parts of an

organization working together on a recurring task process (Mackenzie 1986).

Due to the considerable amount of literature available, virtual team literature

can best be categorized in four sections, being inputs, socio-emotional

processes, task processes and outputs (Powell, Piccoli et al. 2004). Each

section will be elaborated on in the following paragraphs.

2.3.2 Inputs

Virtual team inputs represent the design and composition of the virtual team and

the donation of resources, skills and abilities with which the team begins its

work (Powell, Piccoli et al. 2004). They can be grouped under design, culture,

technical expertise and training.

The design of the team and the structuring of its interactions have been found to

impact the development of a shared language and shared understanding by

team members. Designs vary by the level of face-to-face interaction, planning of

activities and the use of communication media, and the articulation of goals,

structures, norms and values (Powell, Piccoli et al. 2004). In general, traditional

teams have been found to outperform virtual teams, regarding their ability to


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exchange information in an orderly and effective manner and their effective

planning (Galegher and Kraut 1994). Research on limiting these threats has

found that team-building exercises, establishing shared norms, and the

specification of a clear team structure contribute to the team’s success (Kaiser,

Tullar et al. 2000; Sarker, Lau et al. 2001). Another crucial factor, contributing to

the virtual team’s success, is the amount and rhythm of face-to-face meetings

during project planning (Maznevski and Chudoba 2000). The more often the

virtual team meets in person, and the more these meetings are focussed on

team-building, the higher the team’s effectiveness.

As virtual teams are generally geographically dispersed, they will most likely

contain different cultures. Inevitably, virtual team members will experience this

as a challenge, hence cultural differences often lead to coordination difficulties

(Maznevski and Chudoba 2000). Besides that, they can create obstacles to

effective communication (Kayworth and Leidner 2002). Cultural differences can

negatively impact the team’s effectiveness. Even in virtual teams, that are

dispersed by subtler differences than globally, like regionally or by function,

culture can have a negative impact on the team’s effectiveness (Robey, Khoo et

al. 2000).

The need of technical expertise among team members has an effect on the

overall team performance and a team member’s individual satisfaction (Powell,

Piccoli et al. 2004). Modern technological communication solutions come with

possible technological challenges. A range of challenges can be found, from

software errors to connecting the right hardware. Especially the lack of technical

expertise and the inability to cope with technical problems can have a negative

effect on the individual satisfaction with the team experience and performance

(Kayworth and Leidner 2002). When team members are able to deal with

technical uncertainty and technology related challenges, high trust develops.

Overcoming these challenges together can result in a more cohesive team

(Jarvenpaa and Leidner 1999).

As virtual teams are opposed to a significant amount of challenges, sufficient

training will be a critical factor to the success of a virtual project (Duarte and


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Snyder 2000). Early research results suggest that consistent training among all

team members improves the team’s performance, while virtual teams

characterized by diverse technology skills may experience conflict when

members are unable to resolve differences (Warkentin and Beranek 1999).

Early and uniform training has also been found to foster team cohesiveness,

trust, teamwork, commitment to team goals, individual satisfaction and a higher

perceived decision quality (Kaiser, Tullar et al. 2000; Van Ryssen and Godar

2000). The most effective way of training at the start of the project, is concerned

with team-building. In their research on training to improve virtual team

communication Warkentin & Beranek (1999) found that in most cases, virtual

team members receive little or no training to improve the virtual team’s

effectiveness. When training is used, it often consists on skills to improve

software utilization. Interpersonal dynamics are rarely the subject.

2.3.3 Socio-emotional processes

Virtual team researchers define relationship building, cohesion, and trust as

“fundamental processes that foster team effectiveness, while suggesting that

virtual teams face significant difficulty in achieving them” (Powell, Piccoli et al.

2004). Although these socio-emotional processes are hardly measurable, they

are at the heart of an effectively functioning virtual team.

Compared to traditional teams, virtual teams develop weaker relational links

between teammates (McDonough, Kahn et al. 2001), due to their reliance on

electronic communication and the difficulties associated with it (Powell, Piccoli

et al. 2004). In order to provide an answer to this problem, face-to-face

communication among virtual team members early in the project has been

found to foster the ability to form closer interpersonal relationships (Maznevski

and Chudoba 2000). Improved performance and enhanced learning, leading to

an increase in team effectiveness, can be stimulated by early face-to-face

meetings, focussed on relationship building (Kaiser, Tullar et al. 2000).

Cohesion is an important aspect of the virtual team. It has been associated with

better performance (Maznevski and Chudoba 2000) and greater satisfaction


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(Chidambaram 1996). Compared to traditional teams, team cohesiveness in

virtual teams is considered to be lower, due to collaborative technologies that

hinder the development of cohesion (Warkentin, Sayeed et al. 1997). However,

strong cohesion in virtual teams has been found in a later stage of the project,

as virtual team members exchange enough social information over time

(Chidambaram 1996).

As the development of trust is difficult to assess between virtual team members,

because they hardly meet in person, it forms another challenge in virtual teams

(McDonough, Kahn et al. 2001). Yet, trust development is crucial for the

successful completion of virtual team projects (Sarker, Lau et al. 2001). Virtual

teams, especially those assigned to a short-term project, do seem to develop a

form a swift trust, enabling the team to achieve high levels of trust (Meyerson,

Weick et al. 1996; Jarvenpaa and Leidner 1999). Swift trust can be described

as the process of assuming that team members are trustworthy at the start of

the project and seeking conformation throughout the duration of the project they

are in (Meyerson, Weick et al. 1996). Trust combines both feelings and beliefs

regarding the extent of confidence to be placed in another’s words and actions

and is derived from reliable acts and communications.

2.3.4 Task processes

Task processes consist of the categories communication, coordination and

task-technology-structure fit and contain every team process, contributing to

accomplish the given task (Powell, Piccoli et al. 2004).

At the core of any team process is communication. In fact, the level of

interaction largely determines team performance, as it facilitates information

exchange among group members (Potter and Balthazard 2002). The virtual

environment presents considerable challenges to effective communication

including time delays in sending feedback, lack of a common frame of reference

for all members, differences in salience and interpretation of written text, and

assurance of participation from remote team members (Cramton 2001). In

addition, nonverbal communication, which is just as important, is usually


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missing as well. Therefore traditional teams tend to communicate more

effectively, than virtual teams. Technology tends to restrict the communication

process because electronic media are intrinsically leaner than face-to-face

communication and convey a limited set of communication cues (Sproull and

Kiesler 1992).

Coordination represents the degree of functional articulation and unity of effort

between different organizational parts and the extent to which the work activities

of team members are logically consistent and coherent (Cheng 1983).

Coordination is linked to team performance and comes with several challenges

to the virtual team, as it attempts to coordinate across time zones, cultural

differences and divergent mental models (Warkentin, Sayeed et al. 1997). The

traditional social cues and mechanisms that facilitate human interaction and

decision-making are absent or altered by technology and creates problems in

finding reference points for coordinating the work flow (Massey, Montoya-Weiss

et al. 2003). A distinction can be made between synchronous and

asynchronous coordination. Asynchronous coordination refers to virtual work

that is carried out at different times, while synchronous coordination takes place

in the same space and time. As virtual teams cannot necessarily rely on

traditional social cues and mechanisms, it opposes a threat to handling

problems of team functioning (Montoya-Weiss, Massey et al. 2001).

The fit between the various technologies available to the virtual team and the

task the team has to accomplish, along with the role of face-to-face meetings,

are crucial to the team’s functioning (Powell, Piccoli et al. 2004). The choice of

technology is often subject to the team’s own preference, though in all

situations, the team will first have to successfully develop a shared language to

communicate effectively. The proper fit between technology and communication

goals will lead to increased performance. When media capabilities are aligned

with communication processes, performance will be enhanced (Massey, Hung

et al. 2001).


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2.3.5 Outputs

Virtual team outputs are described their effectiveness. This variable

encompasses all virtual team characteristics mentioned before and evaluates

each aspect on its impact on how well the team is performing as a whole.

Measures of these can be in decision quality, number of ideas generated, and

time it took team members to reach a decision (Powell, Piccoli et al. 2004).

Maznevski and Chudoba (2000) propose that “effective global virtual team

outcomes are a function of appropriate interaction incidents and the structuring

of those incidents into a temporal rhythm”. In their research they found that an

effective team is characterized by effective interaction incidents, within the

structure of available technology. The interaction incidents have to take place

by intense face-to-face meetings at regular moments in time, followed by less

intensive, shorter interaction incidents, using various media (Maznevski and

Chudoba 2000). Depending on the level of interdependence required by the

task, the degree of a common perspective and the strength of interpersonal

relationships among team members, the team will, or will not, meet more

frequent.

The majority of research that has been done on virtual team performance, has

detected no difference between the traditional and the virtual team (Powell,

Piccoli et al. 2004). Examples of factors contributing to successful performance

of a virtual team include training, strategy/goal setting team building (Kaiser,

Tullar et al. 2000), team cohesiveness, coordination and commitment to the

team (Maznevski and Chudoba 2000) and communication (Kayworth and

Leidner 2002).

2.4 Virtual Teams and the Psychological Contract - Potentialimplications

2.4.1 Team dynamics in a virtual environment

As discussed in the previous chapter, socio-emotional and task processes can

strongly impact the effective functioning of a virtual team. They are related in a

way that socio-emotional factors, like trust and cohesion, can have


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consequences for task-related processes, like coordination and communication

(Powell, Piccoli et al. 2004). Several researchers have studied the effects of

team dynamics and their influence on team effectiveness (Meyerson, Weick et

al. 1996; Robinson 1996; Jarvenpaa and Leidner 1999; Coppola, Hiltz et al.

2004; Crossman and Lee-Kelley 2004; Robert, Denis et al. 2009). These

researchers point out that virtual project teams face unique difficulties in

meeting the socio-emotional needs of virtual team members. Even though these

researches incorporate trust, cohesion and interpersonal relationships, none

have explicitly studied the effects of the psychological contract and related this

element to the virtual team’s effectiveness.

In their study, Maznevski and Choduba (2000) defined virtual team dynamics by

using a series of interaction incidents, each incorporating a set of decision

processes via a particular medium and shaped by a limited set of structural

characteristics. Their research shows that the amount of face-to-face

interactions correlate with the degree of trust and socialization between team

members (Maznevski and Chudoba 2000). Early face-to-face communication

fosters closer interpersonal relationships within a team, leading to a higher

degree of effectiveness. The same relationship exists with team cohesion.

Warkentin et al. (1997) found that collaborative technologies had a negative

effect on the development of team cohesion in comparison to higher levels of

cohesiveness in traditional teams (Warkentin, Sayeed et al. 1997).

In a virtual environment, team dynamics oppose a completely new set of

challenges for the virtual team. Still, little is known to what extent they will

influence the contents of the psychological contract of team members and what

effect that will have on the team’s effectiveness. In order to effectively study this

phenomenon, the following model of Dr. A. Crossman (2004) will be adopted

(figure 4).


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Figure IV: “Virtual Team Dynamics and the Psychological Contract” (Crossman 2004).

This model visualizes the virtual project team and the relationships between

team members, their psychological contract and the agent of the organization,

being a project manager or virtual team leader. It shows that each team

member holds a psychological contract, in which the agent of the organization

will be held accountable for the contents of the contract. Next to this direct

relation, team members influence each other, and each other’s contract,

indirectly. How strong these indirect relations are, is determined by the level of

team cohesiveness, described earlier.

2.4.2 Trust & Commitment

According to Piccoli and Ives (2003), psychological and behavioural aspects of

virtual team working can not at all be compared to those of traditional teams

(Piccoli and Ives 2003). Their research on behaviour control mechanisms

shows that situations can be found where individuals perceive team members to

have failed to live up to their obligations. This perception arises when other

members of the organization ‘knowingly fail to follow through on their obligation’,

or when the perception of obligations differs between team members and the

individual responsible held accountable for them (Morrison and Robinson 1997).


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Without trust a certain form of exchange is impossible to uphold, as it requires

one party to accept vulnerability, based on the positive expectations of the

intentions of behaviour of another. The notion of a trustworthy relationship is

reciprocal (Crossman and Lee-Kelley 2004).

The concept of trust and commitment are at the foundation of the psychological

contract. Commitment is central to the psychological understanding between

the organization, the manager and the individuals (Crossman and Lee-Kelley

2004). It reflects the trustworthy relationship between the employee and the

employer. As virtual teams require high mutual commitment between team

members, as well as high trust levels, the psychological contracts of team

members become increasingly important.

As discussed in the previous chapter, communication in virtual teams is

hindered by the absence of regular face-to-face meetings. It is therefore

acceptable to argue that communication about mutual responsibilities and

obligations is hindered as well, developing incongruent perceptions of each

party’s commitment to its obligations, again creating the potential for trust

decline (Piccoli and Ives 2003).

2.4.3 Research assumptions

Based on earlier research, it is expected that lower levels of trust and

commitment will be found within the virtual environment. The difficulty of

establishing well-founded interpersonal relationships in the virtual environment,

along with lower levels of trust and commitment is expected to negatively

impact the psychological contract of team members. The interviews will most

likely indicate lower levels of trust and commitment. Furthermore they will

demonstrate the difficulties in establishing interpersonal relationships and the

effects this will have on virtual team effectiveness.


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2.5 Chapter Summary

2.5.1 Psychological Contract Literature

As the first pillar this literature consists of, the psychological contract literature

has been fully elaborated on in this first chapter. During the last fifty years it has

been researched intensively, eventually leading to the generally accepted

definition of “An individual's belief regarding the terms and conditions of a

reciprocal exchange agreement between the focal person and another party.”

(Rousseau 1989).

Reviewing the psychological contract shows that it consists of inferred promises

and reciprocal obligations, forming an exchange agreement in the perception of

the employee. The strength of this exchange agreement is determined by the

amount of trust and commitment the employee has towards it. Next to that, the

contract is influenced by internal and external factors, which to some extent

moderate the contents of the psychological contract.

The contract’s content can either be transactional or relational. Transactional

contracts refer to an economic focus, while relational contracts focus on

economic and socio-emotional conditions. When being violated, the

psychological contract can have profound consequences to the employment

relationship, as it affects the amount of trust and commitment the employee

instils in the relationship.

The psychological contract is becoming increasingly important, as current

trends of downsizing, restructuring and foreign competition threaten the extent

to which factors like job security and steady rewards can be assured by the

employer.

2.5.2 Virtual Team Literature

In accordance with the work of Powell, Piccoli et al. (2004), virtual team

literature can be dissected in four categories, being inputs, socio-emotional

processes, task processes and outputs.


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Virtual team inputs represent the design and composition of the virtual team and

the donation of resources, skills and abilities with which the team begins its

work (Powell, Piccoli et al. 2004). They can be grouped under design, culture,

technical expertise and training.

Socio-emotional processes consist of the fundamental processes of relationship

building, cohesion, and trust. These socio-emotional processes are hardly

measurable, but they are at the heart of an effectively functioning virtual team.

Task processes consist of the categories communication, coordination and

task-technology-structure fit. They contain every team process, contributing to

accomplish the given task.

Virtual team outputs are described their effectiveness. This variable

encompasses all virtual team characteristics mentioned before and evaluates

each aspect on its impact on how well the team is performing as a whole.

2.5.3 Potential implications

As the previous two chapters have given us more insight in the foundations of

the psychological contract and the virtual team environment, this last chapter of

the literature review has combined both subjects and discussed available

literature on aspects of the psychological contract and the way in which they

relate to the virtual environment.

The psychological contract has not yet been studied within the virtual team

environment. Tough, elements contributing to the existence of the psychological

contract have. Team dynamics is a subject broadly researched in virtual teams.

Most of these studies recognize the challenges a virtual team faces, in

comparison to traditional teams. These challenges consist of task-related

challenges as well as socio-emotional challenges. In order to visualize the role

of the psychological contract within a virtual team, a model has been drawn up,

in which these interpersonal relationships become visible.


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Trust and commitment, representing the core of the psychological contract,

have been thoroughly researched within a virtual team environment. As

communication is hindered by being tied within virtual media, it becomes difficult

to establish a high amount of trust and commitment.

Altogether, the virtual environment opposes considerable challenges to

establishing trust and commitment within a virtual team. As a consequence, the

parties involved in the exchange agreement will invest less to uphold their

obligations.

2.6 Research QuestionIn order to achieve the aims and objectives discussed in chapter one and after

critical evaluation of the academic background of both variables, it is

hypothesized that there is a relationship between the psychological contract and

virtual team effectiveness. As this research is inductive, its goal is not to look in

any specific direction in order to avoid biased answers. Therefore a choice has

been made to keep the research question as general as possible.

“What is the relationship between the psychological contract and team

effectiveness of virtual teams?”

As this research question suggests, it evolves around two main variables. The

independent variable is the psychological contract. When changed, it is argued

to affect the dependent variable: virtual team effectiveness. In order to measure

this causal relationship, both variables are measured within the virtual

environment in which they are present. The figure below visualizes the

relationship just described.


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Figure V: “The research variables” (source: author).

The way in which the information is gathered, that will later on provide more

insight in the relationship described above, is discussed in the next chapter.

This chapter entails the research methodology. It explains the way in which this

research is designed in order to provide an answer on the research question.


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Chapter 3METHODOLOGY

3.1 IntroductionDuring the previous chapters the research problem has been introduced and

the foundation of available literature on the subject has been given. In this

chapter, the research methodology will be described. In the following

paragraphs, first the research philosophy will be outlined in order to provide an

understanding of the researcher’s view of the process by which knowledge is

developed. Second, the research approach will be discussed by explaining the

most suitable approach for conducting research on the psychological contract

within a virtual environment. Finally, this chapter finishes with the research

strategy, providing detailed information on how the research question is going to

be answered. The last two paragraphs of this chapter describe the way in which

data is collected and by which procedure this is done.

The purpose of this chapter is to provide an answer to the research question:

“What is the relationship between the psychological contract and team

effectiveness of virtual teams?” Eventually its aim is to close the gaps in the

published academic research on virtual team effectiveness and the

psychological contract. The objective is to define this relationship and provide

recommendations to those organizations that work with virtual teams.

3.2 Research philosophyThe research philosophy includes the researcher’s philosophical assumptions

about the way in which he interprets the world around him. These assumptions

will underpin the research strategy and the data collection methods. It is the

way in which knowledge is developed.


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3.2.1 The research paradigm

Saunders et al. (2007) describe the research paradigm as “a way of examining

social phenomena from which particular understandings of these phenomena

can be gained and explanations attempted” (Saunders, Lewis et al. 2007). In

other words, it is the way in which the research is done. A way that leads to

understanding and explaining a phenomenon. Describing the research

paradigm can be helpful in clarifying the epistemology and ontology. Four

paradigms can be distinguished: functionalist, interpretive, radical humanist

and radical structuralist (Burrell and Morgan 1979). These paradigms

correspond to four conceptual dimensions, being radical change and regulation,

and, subjectivist and objectivist. The radical change dimension approaches

organizational problems from the viewpoint of overturning the existing state of

affairs, while the regulatory dimension seeks to work within the existing state of

affairs (Saunders, Lewis et al. 2007). The latter two terms will be discussed in

the ontology.

The functionalist paradigm is a combination of the objectivist and regulatory

dimensions. Objectivism is the ontological position a researcher is most likely to

adopt, when operating within this paradigm. The regulatory dimension suggests

that a rational explanation is sought to explain the subject. The interpretive

paradigm refers to the researcher’s aim to understand the fundamental

meanings of a subject. The principal concern is to discover irrationalities and to

understand and explain what is actually going on. A radical humanist paradigm

is a combination of the subjectivist and radical change dimensions. Working

within this paradigm, a researcher would be concerned with changing the status

quo. The ontological perspective attached to this paradigm would be the

subjectivist. Finally, the radical structuralist paradigm is involved with structural

patterns with work organizations and the extent to which these may produce

dysfunctionalities. It adopts an objectivist perspective because it is concerned

with objective variables, unlike the radical humanist paradigm which attempts to

understand the meanings of social phenomena.

Research on the psychological contract requests an understanding of the

fundamental meanings of the subject. Within a virtual environment, the aim is to


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identify irrationalities and explain what the impact on team output. The proper fit

between the type of research and the research paradigm, in this case, is taking

an interpretivist perspective.

3.2.2 Epistemology

The epistemology is concerned with what is accepted as reality within the

paradigm of the researcher. For one researcher reality represents facts. The

data collected is argued to be less open to bias, or more objective. Other

researchers perceive reality as the feelings and attitudes that play a role in the

research environment. Of course, these feelings can be quantified, but they can

also be expressed in narrative form.

The researcher that strives for objectivity by looking for quantitative data

embraces a so called positivist epistemology; a positivist position to the

development of knowledge. On the opposite side is the interpretivist

perspective, taken by the researcher that perceives reality in terms of feelings

and attitudes.

As the psychological contract is held in the perception individuals who develop

subjective meanings of their experiences, a narrow approach, where these

experiences are reduced to just a few categories, will risk the consequence of

losing valuable data. An interpretivist perspective, where data is not quantified,

is therefore taken towards the subject of this thesis.

3.2.3 Ontology

Where epistemology is concerned with the meaning of reality in a field of study,

ontology is concerned with the nature of that reality. It is about assumptions of

the researcher about the way the world operates. Two aspects of ontology can

be described, objectivism and subjectivism, both of which are widely accepted

as producing valid knowledge by many researchers.

The ontology is aligned to the epistemology, following the chosen interpretivist

paradigm. As the word says, objectivism follows the perception of the scientific


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approach, whereas the subjectivist view is concerned with the social

phenomena. Taking an interpretivist perspective towards the subject

automatically means that a subjectivist view is followed.

3.3 Research Approach - Deductive vs. InductiveDefining a research approach means looking for a fit between the research

paradigm and research subject. During the previous paragraphs, the

interpretivist perspective has been elaborated on. In this paragraph the way in

this perspective approaches the research is discussed.

The specific approach for this study is qualitative research, in which the

researcher identifies human experiences about the phenomenon of the

psychological contract. The purpose is to clearly identify the phenomenon and

how it is perceived by people that are in the specific situation in which it is

researched. Because research is done on the experience of people, which are

difficult to be gathered by surveys, information will be gathered through

inductive, qualitative methods, such as interviews that represent data from the

perspective of the people involved.

The research approach can be defined in terms of deductive or inductive

research. A deductive approach works from a general assumption to a more

specific research question. This type of research begins with a theory and then

narrows down to more specific hypotheses that can be tested. Ultimately, the

hypotheses are, or are not, confirmed. Inductive reasoning works the other way.

It moves from specific observations to broader generalizations and theories

(Saunders, Lewis et al. 2007). This type of research begins with observations

and detecting patterns and regularities, then some tentative hypotheses are

formulated which can be explored, and finally, this research ends with

developing some general conclusions or theories (Saunders, Lewis et al. 2007).

When comparing both research approaches, the inductive reasoning is more

open-ended and exploratory, when deductive reasoning is narrower in nature.

As most social studies do, this thesis will follow an inductive approach. A


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deductive approach relates more to the positivist research philosophy, whereas

an inductive approach better relates to the interpretivist philosophy.

3.4 Research StrategyThis section of the thesis, different research strategies will be discussed, after

which the most suitable strategy for this thesis will be outlined. Saunders et al

(2007) distinguish seven different ways to gather data. Some of them fit the

deductive approach, other would belong better to the inductive approach. What

is most important in choosing a suitable strategy is whether it will enable the

researcher to answer the research question. The seven strategies are the

experiment, the survey, the case study, action research, grounded theory,

ethnography and archival research (Saunders, Lewis et al. 2007).

The strategy used in this dissertation process is based on grounded theory.

This means that the theory of this thesis is built on a combination of the

inductive and the deductive approach. It is particularly helpful to predict and

explain behaviour. Data is collected without the formation of an initial theoretical

framework. A series of observations form the foundation on which the theory will

be developed. Then predictions are made and tested with continual reference to

the collected data. The predictions that are made in this thesis are to be found

at the end of the literature review. After that, these predictions are tested

through interviews, as the source of qualitative data. The interviews are

conducted within a virtual organization, based on a specific case study. Their

main objective is to explain behaviour, developing a theory on the bases of

experienced professionals in the virtual environment.

3.5 Data collectionAfter having analyzed the secondary data, on which is reported in the literature

review, primary data will be collected through the use of interviews. This kind of

data collection is chosen because it fits the chosen research paradigm. With

exploratory research, the key challenge is finding out what is really happening.

The researcher needs to be open to all possible perspectives that concern the

researched variable. In-depth interviews are a helpful method to identify and


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analyse these perspectives and infer causal relationships between these

variables (Saunders, Lewis et al. 2007).

Interviews can be highly structured, using standardised questions, or they can

be informal and unstructured conversations. Three types of interviews can be

categorised: structured, semi-structured and unstructured, or in-depth,

interviews (Healey and Rawlinson 1994). Because this study aims to explore

the area of the psychological contract in-depth, the unstructured interview will

be used as a primary data collection instrument. The unstructured interview,

also called the in-depth interview, allows the interviewee to talk freely about

events, behaviour and beliefs. The interviewee’s perceptions guide the conduct

of the interview. It is up to the researcher to later categorize and dissect the

generated data.

3.5.1 The pilot interview

Prior to conducting the actual interviews a pilot interview has been scheduled.

Pilot studies are used to pre-test a particular research instrument, like the

interview schedule of this thesis (Teijlingen and Hundley 2001). It is a crucial

element that increases the likelihood of success.

The pilot interview of this thesis project involved an in-depth interview with the

project manager. The objective during the interview was to identify potential

problems in following the research procedure. During the interview several

points received special attention. The functioning of the recording device was

more like a practical issue, as well as reducing the amount of noise in the area,

the distance between the researcher and the participant, timing and a glass of

water on the table.

In order to assure the validity of the interview, the participant of the pilot

interview has been asked for feedback. An important finding here was the need

to clarify the psychological contract construct to participants, prior to the

interview. It turned out, that without proper definition of the subject, the

interviewee would try and give meaning to the subject. This caused attribution


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errors that needed clarification before proceeding with the interview. To improve

this, the concept of the psychological contract has been put in the introduction

and continual reference is made to it during the interview, using the case study

as an example.

3.5.2 Primary data collection - research process

As mentioned, the primary method of data collection will be the use of in-depth

interviews. Several stakeholders to a virtual project will be interviewed, some of

which are members of the same virtual team. The group of participants are

mainly situated in the Netherlands, however one participant is located in

Germany. The project team consists of members from a similar functional

background, IT, and work within one large multinational organisation. By limiting

the variables of location, culture, language and functional background, the

variables relevant to this thesis project are isolated. This contributes to the

validity of the project.

The setting in which the interviews take place, is located in the HR department,

situated in a different area than the one the participants work in. Participants are

scheduled for an hour and are offered a drink at the start of the interview. As the

interview’s aim is to identify behavioural, emotional and social patterns, the

interviewer needs to succeed in gaining the maximum amount of trust of the

interviewees in order to have them talk freely about the subject. During the

drink, the interviewer will introduce himself and the subject, state the anonymity

of the participant, and explain the purpose of the interviews. In order to prepare

the participant for interview, a cased is provided a week in advance, which the

participant is required to read (Case: “The Confidence Trick” - Appendix III). The

case involves a virtual team undergoing the challenges of working in a virtual

environment. By reading the case, the interviewee will be able to relate to the

subject. During the interview both the interviewer and the interviewee can

switch back and forth to case, in order to support their arguments. For the

interviewee it might provide a safe haven as well, when it feels uncomfortable to

talk directly about the work environment.


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The interviews are recorded and transcribed afterwards. The transcriptions will

then be coded and categorized in order to find causal relationships.

3.5.3 Profiling information

In order to assure the richness of the gathered data, the interviews have been

held with different stakeholders to the virtual project. All of them are contributing

to a very large and comprehensive IT project, involving a new workflow system

for the complete organization. The group of thirteen interviewees consists of two

virtual teams, project management, the Executive Vice President IT, one

business analyst and an external stakeholder. This paragraph provides

background details of each participant, though due to confidentiality restrictions,

the participants’ names are left out.

Manager Development Team (external partner)

From the beginning of the project, the organization chose to include an

external partner to guide the virtual project. First a partner from the

Philippines was attracted, based on costs. Due to difficulties in

communication and the capabilities of this partner, a Russian partner was

attracted. The relationship with this partner did not work either, so the

organization chose to approach a native partner in the Netherlands. The

project manager of this partner has been interviewed as he was concerned

with the implementation of the project. The external project manager took

the project in 2009 and is still involved with the process.

IT Manager Application Support

The IT Manager provides support for the online systems of the organization.

This employee reports directly to the IT Vice President and is involved in the

functional design. Next to that, he or she describes the functionalities of the

interface and has direct communication with the end user to gather

information.


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IT Consultant

Two IT consultants have been interviewed, that belong to a team of German

and Dutch employees. One of them has been with the organization for over

15 years and started as a developer. During the period he has work for the

organization, several mergers have taken place. Collecting the requirements

for the project and implementing them is the main objective of this

employee. The other IT consultant is concerned with the development and

design of the software and again implementing it. Both IT consultants report

to the head of software engineering.

Business Analyst

Amongst the group of participants there was one business analyst. This

employee entered the project in a later phase. His main objective was to

create contracts and analyze the contract process. Next to that he was

responsible for writing the requirements.

Team Leader

Two virtual team leaders have been interviewed. The first was responsible

for executing the acceptation test and developing test cases. His team

compared the test results with the requirements and was responsible for

writing system documents. The other virtual team leader was promoted

recently and his team of application managers was responsible for

increasing the technical quality of the project.

Head of Software Engineering

The head of software engineering leads a team of software engineers that

consists of employees from Germany, the US and the Netherlands. This

employee has got years of experience with virtual work within the

organization.

Application Manager

Two application managers have participated in the research. Both of them

have got several years of experience with IT projects. They are responsible


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for the execution of the software and customization of the end users’ needs.

Another responsibility of them is to design user interfaces and execute

programs and updates. In order to achieve this, a lot of communication is

necessary between them and the development team.

Software Engineer

In this particular project, the software engineers were responsible for

identifying problems in the new system. The software engineer that has

been interviewed has got a long history within the organization. She has

worked in support, design, databases, training and engineering. Due to her

background, the software engineer will be able to provide additional

information on different disciplines.

Project and Project Support Manager

The project and project support manager has got 10 years of experience

within the organization. By the time he joined the organization, the company

had just started working with virtual projects. Currently his team gathers

requirements and passes these requirements through to the software

development team. Another duty is to plan the IT-projects. His virtual team

consists of members from the Netherlands, the US and Germany.

3.6 Chapter summaryThis chapter of the thesis project described the research methodology being

used to gather and analyse data, which will later on enable the researcher to

answer the research question. The purpose is to provide a solid plan to

effectively gather all necessary data on the relationship between the

psychological contract of virtual team members and the team’s effectiveness.

As with most social studies, an inductive research approach will be taken, due

to its exploratory nature. Qualitative data will be gathered by using in-depth

interviews. This type of research serves the purpose of understanding people’s

interpretation on a holistic subject.


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The research philosophy underlying this thesis is described by the research

paradigm. An interpretivist ontology is chosen to approach the subject, which

allows for in-depth research on the virtual project team members and correct

assessment of their interpretations on the subject. Accordingly a

phenomenological epistemology is applied through the collection and analysis

of qualitative rather than quantitative data.

The research strategy used in this dissertation process is based on grounded

theory. Though, a specific organization is used as a case study in order to

conduct the necessary interviews. The main objective here is to explain

behaviour, developing a theory as we go along. The researched phenomenon

can only be studied in an organizational context.

As a method of data collection, conducting interviews seems to realize the best

fit with the research paradigm. As we want to explain behaviour, emotions and

feelings, in-depth interviews will provide the richest amount of data. However, a

strict procedure has to be in place to ensure the project’s success. Different

perspectives of different stakeholders need to be obtained, to provide a

complete picture of the situation. The variables that are researched are isolated

as much as possible, to avoid the research being contaminated with irrelevant

variables. Finally, by conducting a pilot interview, a first impression can be

taken, after which possible flaws can be corrected.


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Chapter 4RESEARCH RESULTS

4.1 IntroductionIn the second chapter of this dissertation project, the theoretical framework was

developed, based on the literature review on the psychological contract in the

virtual team environment. As this research revealed some aspects of the

psychological contract playing a role in the virtual environment, the possible

effects on team effectiveness could be discussed. In this section, the theoretical

framework is refined, based on the results of the empirical study.

The first section contains some general considerations derived from the

interviews. These descriptions also hold an understanding and analysis of the

records. Quotes from the interviews are intended in the text, and written in

cursive. The explanation of the empirical results, and the insights gained from

the interviews, will form the foundation for the concluding chapter, in which the

conclusions will be formulated.

4.2 Repeating themes around the two main variablesThe coding of the interviews has resulted in a number of statements that can be

related to our research question. Many statements have been expressed

several times by the same and by different participants and evolved around the

key themes, or categories, below:

I. Psychological contract - limitations and implications of the virtual

environment on the psychological contract.

a. Exchange relationship; incorporating trust and commitment as the

main factors influencing the exchange relationship.

b. Context; elaborates on the internal and external environment of

the case, in which the virtual team operates.


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c. Contract variation; describes the enhancement and breach of the

contract within the virtual environment.

II. Virtual Team Environment - includes an analysis on the virtual team

characteristics found during the case.

a. Inputs

b. Socio-emotional processes

c. Task processes

d. Team effectiveness

The tables presented in the next paragraphs are derived from the results of the

interviews, summarizing the key issues that emerged from them. Each table

represents a category with its own codes. Then, the codes are derived in

relevant dimensions, which represent the range of issues found in this research.

The aim of each table is to summarize the results and highlight important

aspects that enable a structured analysis and discussion.

4.3 The Psychological Contract

Category Code Key issues found

Psychological contract

Foundation

Trust Trust, as a main element of the exchange relationship, enforcesthe strength by which each party is held to the contents of thecontract.

Trust can be expressed by the degree to which the employeeexpects the organization to fulfil its promises, related to thevirtual project. Confidence and faith in the project outcome is onemain determinant.

External partners are perceived as more difficult to trust. Unclear/unrealistic planning decreases trust levels. Trust levels decline due to geographical distance. Lower trust levels due to unclear task division. Lack of trust in management capabilities leads to reduced

motivation.Exchangerelationship

Employees participated especially to secure their job within theorganization.

Employees were given the opportunity to participate in achallenging and prominent project.

The project was said to increase efficiency of the workflowprocess, leading to a more effective way of working.

As a result, employees expected increased job satisfaction and afair reward for their participation.

Commitment Geographical distance reduces commitment to the project. As project members need to split their responsibilities between

their day-to-day work and the project, commitment exists on


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project- as well as organizational level. In general employees were committed to the organization, but

exceptions were found in commitment to the project and -team. Due to virtual interaction a certain degree of intimacy is lost,

negatively impacting commitment to the project.

Context

Internal factors Less job security was experienced due to the organization’shistory of outsourcing and merging.

The internal communication structure increased confusion on theassigned tasks, negatively affecting work pleasure.

Incremental project planning negatively affected task clarity,resulting in reduced commitment and trust.

External factors The current labour market shows negative prospects for senior ITpersonnel, creating ‘lock in’

Trends of downsizing, outsourcing and reorganizing negativelyaffects job security

Contract variation

Breach Reduced commitment and lack of trust creates an environment inwhich the psychological contract becomes fragile, chances ofcontract breach increase.

Promises in terms of efficiency, building knowledge andincreasing work pleasure have not been delivered on.

The psychological contract can be negatively affected by internalenvironment, like the lack of clarity and the lack resourcesavailable.

Resistance has been found in terms of reluctance to shareinformation, not willing to communicate with certain stakeholders,and reduced effort.

Employees perceive outsourcing as unfair.Enhancement Reward systems were linked to project outcome, in terms of

volume. Leadership providing a common vision and clear goals was

lacking

Table I: “Research Results - Psychological Contract” (source: author).

The table above visualizes the psychological contract as it is measured in the

virtual environment. A categorization has been made between the foundation of

the psychological contract, its context and variation. The foundation of the

psychological contract consists of its three pillars trust, commitment and the

exchange relationship. The category context consists of the internal and

external contextual factors that influence psychological contract formation.

Contract variation, the third category, entails the output of an employee

evaluating the psychological contract. This results in either contract breach,

after which the employee will most likely leave the organization or has to

reconstruct the psychological contract, or contract enhancement. Contract

enhancement entails the positive experience after evaluation.

The overall picture that emerges corresponds with the assumptions made in

chapter two. The foundations of the psychological contract seem more fragile


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within the virtual environment, compared to the traditional setting. The

interviews revealed that due to the geographical distance, and the limited

amount of face-to-face contact accordingly, virtual team members experience

lower levels of trust. The fact that virtual team members cannot see each

other’s expressions and non-verbal signals when communicating virtually,

negatively impacts the amount of trust they instil in each other. Examples of this

have been found in the following statements:

“I would really prefer face-to-face meetings, because it creates a strongerrelationship. The amount of trust increases because the employee willget a better image of the project team you work with.” - Business Analyst(translated by author)

“Trust is often an underestimated variable in IT-projects. They usuallyconcern result-driven people, experts in their own field. Especially then, ithas a profound effect on teamwork. Teamwork without trust is verydifficult, almost impossible. It creates an environment of resistance andtherefore negatively impacts the project outcome.” - Software Engineer(translated by author)

“The amount of trust will definitely have an effect on the psychologicalcontract. It is crucial and will have intense consequences. A virtualproject will fail, when trust cannot be established.” - Project and ProjectSupport Manager (translated by author)

Another factor influencing the degree of trust is the complexity of planning and

coordination. Due to the complex nature of the virtual project, virtual team

leaders found it difficult to coordinate their teams. Directly related to this, was

employee distrust with its management. All virtual team leaders stated that they

had difficulties managing employees abroad...

“... and because of that, I tend to ignore my colleague in Germany. I haverelieved him of any serious project activities, because I cannot be surethat he will follow up on them. I simply do not have the time to do that,because of the complex nature of this project.” - Virtual team leader(translated by author)

”The way management coordinates the project has caused me to losefaith in them. They do seem to know where they want to end up, but howto get there is unclear. Because of this, several external partners camewith wrong estimates, while the set of requirements increased by theminute.” - IT Consultant (translated by author)


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In line with trust levels, the levels of commitment are affected as well. Due to

communication difficulties employees are more likely to lose commitment to the

virtual project. The different responsibilities a team member has, often enables

the project employee to chose and prioritize. Research has shown that this

choice enables the employee to opt the easiest way. In relation to the case

study participants had to read prior to the interview, one of the respondents said

that “... the effect from the person who gets mailed ‘Don’t ask these silly

questions anymore’, the amount of commitment goes down. Eventually you

would see that, as this person does not know what to do, in some cases it will

negatively impact the results. It increases the amount of misunderstandings

about the fulfilment of the task.” (virtual team leader). Virtual team members can

chose to ignore an e-mail, or an incoming call, a stronger preference for their

regular job can be tempting in some situations. Team members that work on the

same location can gain more commitment by meeting face-to-face. One of the

virtual team leaders stated that “... commitment can only be established by

meeting physical, instead of virtual. There is no other way.”

“The more physical the medium, the higher the commitment. If you talk toa person face-to-face, and this person can see how honest it is that youwant to get this thing done, with all the ways in which you can express awish, by voice, word, the face, then I think commitment is much biggerthan when you just send an email. People can easily toss a mail aside.Even with a reminder you can still say you just didn’t have time to do ityet. But if you physically meet another person, this person will feel howurgent it is and it adds to the amount of commitment.” - Project andProject Support Manager (translated by author)

Although lower trust levels have been found, several participants had different

opinions about the level of commitment. Participants did acknowledge the

importance of commitment and the lack of it would often be attributed to the

organizational agent.

“Trust and commitment influence each other. If there is no trust betweenteam members, you cannot understand each other’s problems. Withoutthis mutual understanding you will lose commitment.” - ManagerDevelopment Team (translated by author)


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“Miraculously I do feel my team is still highly committed to its task. Thefact that my colleagues sometimes work until 00.30h, says enough.” -Application Manager (translated by author)

“... and the next day it turned out we could not meet the deadline thatweekend. So I wrote them an email this morning saying I did not believeit was possible, although they thought it would be. ‘You said it would bepossible, I don’t think it is, and we will certainly not do it this weekend.’We are going through the whole mess all over again.” - Virtual TeamLeader (translated by author)

Contextual factors had an impact on the psychological contract as well. Both the

internal and the external environment indicated challenges to the psychological

contract. Examples of this relation are the increasing use of virtual technologies

and management capabilities to effectively manage and coordinate virtual

projects. The interviews did identify job security and the failing communication

system of the organization as internal factors relevant to the forming of the

psychological contract. Even though the organization has been working with

virtual technologies since the 1990s, it still experienced difficulties in setting up

a sound communication network. According to some of the senior personnel,

this has had a negative effect on project outcome. “After years of experience,

the organization still does not get it right!” (senior virtual team leader).

“Because of distortion in our communication system, the informationtransmitted was unclear. There were a lot of teams on different locationsand although they often had their vision right, they did not take the rightsteps to achieve their objectives. This caused friction between some ofthe teams.” - Manager external partner (translated by author)

“Because the virtual environment demands other forms ofcommunication, like email, it takes more time. If you have thread of morethan 10 emails, you really need a meeting to gather all the information. Itis very often that people address less attention to emails. People areoften better prepared for meetings and it is more difficult to ignore adirect question.” - Virtual team leader (translated by author)

Another topic of this research has been whether the virtual environment would

have an impact on contract breach or enhancement. Elements supporting

breach have been identified, being the fragile foundation on which the contract

is formed, the increased complexity of virtual communication and the internal

structure of the organization that facilitates it. Contract enhancement is a factor


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of which management should be extra aware within a virtual environment. As

the psychological contract is more liable to breach, management might think of

proper control mechanisms, like reward systems and HR practices in terms of

more suitable leadership. In terms of the increased complexity of virtual

projects, one could argue that reward systems based on merely output are less

likely to be achieved. Again this creates an environment that supports breach,

rather than it motivates the employee. Concerning this particular project, one of

the virtual team leaders stated that “... for some targets it became the situation

where they could not be reached. The project was behind and some

functionalities had not yet been implemented in the environment. Some of the

employees had targets that could therefore not be achieved, because the

project did not run in time.” (Virtual team leader).

4.4 The Virtual Team Environment

Category Code Key issues found

Virtual team environm

ent

Inputs

Team design Teams consist of members from different disciplines and(sub)cultures in the IT sector. This results in increasedcomplexity in terms of leadership, coordination, interpersonalrelationships.

Different cultures require different approaches. Many different communication channels complicate interaction at

different levels. Mix of F2F and virtual interaction locally, virtual interaction with

different countries.Resources Limited amount of personnel available leads to coordination

issues, reducing commitment to either project or functional tasks. Limited amount of resources increases the level of work-related

stress. Availability of resources influences employee motivation. Lack of knowledge/experience with similar projects results in less

effective problem-solvingSkills Lack of experience with complex virtual projects decreases

individual satisfaction with the given task. This reducesmotivation and increases the amount of stress.

Employees were not empowered to make decisions, causingthem to avoid taking responsibility.

Different leadership skills are required in the virtual environment.Abilities Employees were unable to cope with unexpected problems, due

to the lack of experience with complex virtual projects. Language barrier reduces the ability to quickly react to problems. Employees found themselves unable to solve technical virtual

problems, like installing webcams. The ability to adequately react to conflicts within the virtual

environment


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There is no indication that any team member received propertraining to deal with these issues.

Socio-emotionalprocesses

Interpersonalrelationships

All interviewees confirmed that relationships with team memberswere valued stronger F2F, compared to virtual.

Conflicts are more difficult to manage in a virtual environment. Variety of (sub)cultures increases difficulties in building a

relationship.Cohesion Lack of a shared vision reduces the degree of cohesiveness.

Difficulties in building relationships have a negative effect oncohesion.

Amount functional disciplines and (sub)cultures participating inthe project negatively influences cohesion.

Trust Trust enforces the strength by which each party is held to thecontents of the contract.

Lack of trust in the project outcome leading to the assumptionthat the organization will not fulfil its promises.

External partners are perceived as more difficult to trust, as theydo not share the organization’s values.

Lack of trust in management’s capabilities to adequately plan theactivities related to the project.

Geographical distance reduces the amount of trust instilled inteam members abroad. Their efforts are not visible to othermembers.

Task processes

Communication Lack of technological skills negatively influences interaction. Within the virtual environment it is more difficult to get the full

message across. F2F interaction is considered to be moreeffective.Lack of F2F interaction

The amount of channels to communicate through increases thedifficulty to manage the information communicated.

Information loss can occur due to the variety of media available. Importance to create and repeat a shared vision. Tasks were

communicated, but it was unclear what they should lead to. Multiple contacts creates confusion whom to communicate to.

Coordination Difficulties in coordinating due to geographical spread ofmanagement.

Role ambiguity due to lack of clarity on the assigned tasks. Incremental planning lead to the lack of time to prepare different

parts of the project. Lack of direction due to absence of a shared vision. Managers tend to avoid virtual coordination, because the lack of

control. Local teams were coordinated effectively, but were not

synchronized with overall objectivesTask-technology-structure fit

The complexity of the project did not fit with the technology.Complex virtual projects need regular F2F meetings.

The virtual project did not fit the organizational structure, as theamount of hierarchical layers reduced the self-learning effect andempowerment of employees.

Teameffectiveness

Task performance Complex projects require a certain amount of skill andpreparation in order to become successful.

Coordination problems negatively affected overall performance. Highly skilled and trained personnel are necessary to perform

well on complex projects.Quality-/quantityeffectiveness

Individual backgrounds; experience and education increaseeffectiveness.

The experienced learning effect on the individual level isconsidered almost none.


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New knowledge Acquiring new knowledge is made difficult due to the distancebetween team members, as it is more difficult to shareinformation.

Table II: “Research Results - Virtual Team Environment” (source: author).

Table II presents the research results regarding the virtual team environment. It

includes includes the virtual team characteristics of the researched teams and

expert opinions about the differences between virtual and traditional teams. In

accordance with the literature, the virtual team environment has been

categorized in inputs, socio-emotional processes, task processes and team

effectiveness.

Concerning virtual team inputs, the researched team consisted of members

from different functional disciplines and different cultures. The virtual project

originated from the production department and involved redesigning the

workflow of publishing content online. As the organization did not have any

experience with this type of project, it soon turned out, that planning had

underestimated the scope of the project, as it started to involve the complete

organization. When specifically looking at the difference between traditional and

virtual teams, the virtual team has faced several communication challenges.

Technological issues consist of the variety of different media that have been

used by the organization, and the way in which they operate. The virtual teams

used MSN, Microsoft SharePoint, Skype, email, teleconferencing,

videoconferencing, SMS, telephone, fax and face-to-face communication. This

variety of media creates confusion and reduces the clarity of the information

that is shared. All participants favoured face-to-face interaction against virtual

interaction due to the reduction of possible complications. The research results

suggest a different set of abilities is necessary to work within a virtual

environment.

The socio-emotional processes are closely related to the contents of the

psychological contract. Interpersonal relationships, cohesion and trust are its

subcategories. Although not identified before by academics, commitment might

well be added as a fourth. The virtual environment has been found to negatively

influence the strength of relationships. Virtual team leaders experienced it to be


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more difficult to manage conflicts and the amount of subcultures involved made

it difficult to establish a well-founded team. One of them mentioned that “... due

to the difficulties in communication, conflicts are probably more likely to occur.

When they do occur, how do you then solve the problem if you cannot approach

each employee directly? You just don’t bring bad news over the telephone.”

(Virtual team leader). Team cohesion is more difficult to establish within a virtual

environment, as managers experienced difficulties in communicating clear

goals. Because of that, employees felt left out and besides that, lost trust in

management capabilities. Concerning team cohesion, the next statement was

made by one of the virtual team leaders:

“The project is that complex, and so many disciplines are involved, eachat a different location. Each discipline on itself has its problems withworking together. Due to this geographical spread, you cannot speak of acohesive team anymore.” - Virtual team leader (translated by author)

The amount of trust instilled in the project has been one of management’s main

challenges. When external partners gave wrong estimates on the amount of

time involved, trust levels were harmed when it turned out that employees could

never meet the given deadlines. This even happened twice. The technical

background of the project and the software it was founded upon was questioned

as well. Software developers believed it would never be possible to build the

new environment on the bases of the old platform. These developers had no

faith in the project from its very start.

Communication, coordination and task-technology-structure fit are the three

codes, used to define the task processes. Participants have indicated that again

the lack of face-to-face interaction limited the ability to clearly coordinate tasks.

A supporting communication system should be in place. Multiple channels were

accessible to communicate through, however this seems to create more

confusion. Also, the amount of disciplines involved made it difficult to effectively

share all information. Interviewees stated that the online information database

was chaotic. Finding a way around the database would be too time-consuming.

Most participants relied on good colleagues to share important information with

them, instead of looking for it on the intranet. Other indicators of coordination


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difficulties were the lack of clear planning, the lack of a common goal/shared

vision, and the lack of control over an employee abroad.

All the categories just described directly influence the effectiveness of virtual

teams. If the team does not have a unique set of abilities to cope with the virtual

environment, team effectiveness can be negatively influenced. Especially

communication and coordination problems can arise, due to the difficulties in

coordinating the project and communicating shared vision. This has, in its turn,

a negative effect on socio-emotional processes. Participants suggest that highly

trained and educated employees are a prerequisite of virtual working. Only

then, it is possible to fully use its benefits.

4.5 Key IssuesThis paragraph aims to identify the relationship between the psychological

contract and virtual team effectiveness. In this perspective a choice has been

made to build the theory around the components of the psychological contract

and describe how they fit within the virtual environment.

In general, an individual can have multiple psychological contracts. Research

has shown that the employee has at least one contract with the organization, or

its agent. During the interviews, it seems as though the participants had a

second contract within their own virtual team. During the next paragraphs this

phenomenon, along with the possible implications on virtual team effectiveness

will be further elaborated on.

As stated in chapter two, the psychological contract is founded upon an

exchange relationship that consists of the needs of both parties to the contract.

Trust and commitment, along with the exchange agreement contribute to the

construction and reconstruction of the psychological contract. Considering this

specific project, the exchange relationship evolved around job security. The top

level of management had the choice to either outsource the project, or to

execute it themselves. Eventually, when employees were asked whether or not

to participate, they did. It offered them job security and the opportunity to


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participate in a challenging and prominent project. Next to job security, the

organization promised them, and other stakeholders, a more efficient way of

working, leading to an increase in effectiveness. As a result, employees

expected increased job satisfaction and a fair reward for their contribution.

The degree to which the organization was held to the exchange agreement is

determined by the amount of trust and commitment instilled in its content. Trust,

as a main element of the exchange relationship, enforces the strength by which

each party is held to the contents of the contract. It can be expressed by the

degree to which the employee expects the organization to fulfil its promises,

related to the virtual project. Participants experienced lower trust levels within

the virtual environment. Especially trust in the project outcome was harmed, as

the first project deadline turned out to be impossible to reach. An external

agency was initially asked to guide the process and gave an initial estimate of

six months. At that time, they had not foreseen that the project would have

consequences for the complete workflow of all functional departments of the

organization. As it did, the employees lost trust in the external partner. Along

with that, they found that their initial expectations of the project could never be

met. They had been working overtime for weeks in order to meet a deadline that

had not been set realistically.

Another factor, negatively impacting the amount of trust instilled with the virtual

project, was the geographical distance between team members. Employees

were divided in team, each with their own responsibility. Most of the teams had

at least one member from abroad in it. As a kick-off, participants of the project

were invited to meet face-to-face at the company’s headquarters, the aim of

which was to build a relationship. However, as the project grew out of

proportion, more and more people were assigned to the teams. Most

participants experienced it was more difficult to trust someone you cannot

physically meet. This lead to result that foreign colleagues were excluded from

particular information and they were given less responsibilities.

As the project grew out to affect the workflow of all functional departments,

planning shifted to a more incremental approach. The coordination was more a


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reaction to the effects the former plans had resulted in. Because of this,

management faced the challenge of dividing workload, of which they did not

have a clue to where it would lead the organization. This caused employees to

lose trust in their leaders’ capabilities and the coordination activities of the

organization.

The amount of commitment to the project turned out to differ from the amount of

commitment to the organization. Though participants showed reduced amount

of commitment to their project activities, they seemed highly committed to their

role within the organization. However, some of them argued that there was no

other option, because leaving the organization at an age above thirty-five years

old, did not provide an advantage on the labour market. It might thus be out of

necessity. Commitment to the virtual project has been found to be negatively

influenced by the virtual environment. The geographical distance, the balance

between regular- and project activities, and virtual communication were the

main influencing factors.

Research results show, that geographical distance had a negative effect on

commitment. Being invisible to colleagues abroad provides employees the

opportunity to prioritize different than they would in traditional teams. As it

became less attractive to work on the project, employees favoured their routine

work above the project, meeting the demand of other colleagues. During the

initial phase of the workflow project, employees were supposed to divide their

time between the virtual project and their regular work. This lead to a demand in

time from direct colleagues on the one hand and from the project team on the

other. The employee can shift this balance as pleased, providing a tool of

resistance. Eventually, top management decided that the workflow project was

top priority, attempting to solve this problem.

Virtual interaction was yet another threat to commitment. Virtual team members

favoured face-to-face interaction against virtual interaction. They argue that

building a relationship with merely a voice, or an image, is just not the same as

a physical appearance. Part of the message just does not come across with


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virtual communication. This statement was shared by all participants during the

interviews.

Looking at the environmental context of the psychological contract, several

factors can be distinguished that influence virtual team effectiveness. First of

external factors can be related to the labour market and other macro-economic

elements. The current trend of downsizing, due to the global economic

recession, is a factor that influences job security. Mergers and acquisitions

share that effect.

Another macro-environmental trend, outsourcing, has left its mark on the

internal organization. The organization’s history of outsourcing in this case has

a profound effect on the psychological contract. One of the main issues before

this project had started was whether to outsource the project, or not. It had

happened before, that the organization outsourced certain projects that had

eventually replaced complete departments. Employees at the IT department

therefore feared they would lose their jobs when they did not participate. And

this was a realistic fear, as the current labour market does not provide good

opportunities for aged senior IT personnel. Technological advances seem to

occur at an increasing speed and this specific group of people has not got the

amount of skills, compared to young high potentials, threatening their position

on the labour market.

Another internal factor was the existing communication system. A large variety

of media was available to share information through. Teleconferencing was

used to conduct weekly meetings. E-mail was the main day-to-day medium to

discuss objectives that were the result of the periodic meetings. Telephone,

surprisingly, was used as a medium, when e-mail seemed ineffective. Then the

organization used SharePoint as the main database to store information that

can be accessed by all departments. MSN was used by some teams as an

alternative to e-mail. Finally, the organization started videoconferencing in an

attempt to increase cohesiveness between geographically dispersed teams.

This chaos of available media seemed to increase confusion among the

employees. Information was not managed at all and it could take ages to find


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something. You had to trust on employees sharing information with you, and

otherwise you would miss out on essential information. The unstructured flow of

information resulted in employees not knowing what they were supposed to do.

It became increasingly unclear what was expected of them and this resulted in

them “... doing the minimum that was necessary”.

Now the psychological contract within the virtual team has been defined,

contract variation in a virtual context can be elaborated on. During the

interviews, contract breach or violation, has been found in numerous occasions.

This was found with the psychological contract that is held between the

employee and the organization, and the employee and the virtual team.

As mentioned earlier, the virtual environment includes challenges to maintaining

trust and commitment within the virtual team. The research findings showed that

indeed with reduced levels of commitment and trust, an environment is created

in which the underpinnings of the psychological contract are more fragile than in

the environment in which traditional teams operate. As a direct consequence,

the chances of breach increase.

During the interviews, participants gave clear examples of contract breach. The

most outspoken example was from one of the virtual team leaders. This

manager lost trust on the project and did not believe it would ever become a

success. According to him, the basic elements on which the new workflow

system was built were never going to achieve the same performance estimates

as the former system. It was the commitment to the organization that kept him

in the organization, but to him the project was lost effort.

Broken promises in terms of efficiency, a positive experience and an increase in

work pleasure all lead to contract violation. Contract violation becomes visible in

employee resistance. During the interviews at least the reluctance to share

information and consciously delivering less input in the project have been found.

Some of the participants even avoided talking to stakeholders abroad because

they perceived it to be too difficult to get the message across.


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Factors that enhance the psychological contract were sought in acts of fairness,

outspoken trust, exceeding expectations and promises preceding employee

contribution. The enhancing factors found were mainly by rewarding output

volume and individual goals. Other attempts to positively reconstruct

psychological contracts were done through a display of leadership by the

project leader visiting all end users and actively discussing the challenges

during meetings.

4.6 Chapter summaryThis chapter has provided an overview of the main research results. At first the

repeating themes around the two research variables have been projected. It has

shown that trust and commitment are the two main variables influencing the

exchange relationship at the foundation of the psychological contract. Next to

that, the context in which the psychological contract is measured is taken into

account. Finally, contract variation is discussed. The second main variable

includes an analysis on the virtual environment, in which this research has

taken place.

Concerning the first theme, participants have confirmed the importance of trust

and commitment. All interviewees indicated that building a relationship without

actually being able to meet in person, opposes a threat to trust and

commitment. By being able to only communicate virtually, relationships are

considered to be less cohesive. A less cohesive team was thought of to be less

committed to the project. Other factors that threaten the degree of trust are the

complexity of planning and coordination. Managers experience more difficulties

in coordinating and planning a virtual project. This causes a threat to

employees’ trust in management capabilities.

The second theme has shown that team input is an important determinant for

project success. Participants argue that when engaging in a virtual project, the

backgrounds of team members, their location and experience need to match in

order to increase project success. Virtual teams that lack the ability and skill to

work in a virtual environment are considered to be less effective in their work.


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The virtual team’s socio-emotional processes are linked to the psychological

contract. Participants indicated that compared to traditional project teams,

virtual teams face difficulties on a socio-emotional level. Virtual communication

decreases the level of cohesiveness. High trust levels are more difficult to

establish without face-to-face contact. The virtual environment limits the ability

to establish interpersonal relationships. The team’s task processes include

communication- and coordination processes. Next to that, the fit between task,

technology and structure is included. Within the virtual environment both

communication and coordination processes are different. They request new

skills and abilities of team members, in order to create an effective team.

Participants indicated that the amount of media available hinders effective

communication. Other remarks have been made about the contents of the

message. Participants indicated that missing physical cues of the message

meant that the full message did not come across. Coordination is considered to

be more difficult due to the geographical spread of team members. As

communication is hindered, coordination is perceived to be more difficult as

well. Communicating shared vision and concrete objectives is considered to be

more difficult.


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Chapter 5REFLECTIONS ON THE PRIMARY RESEARCH PROCESS

5.1 IntroductionDuring this chapter the most important lessons learned during this thesis

project, will be outlined and discussed. Primarily, it will include the most

important findings. Then the difficulties encountered during the project will be

discussed. The third paragraph will provide some suggestions on additional

research that could have been undertaken to support this thesis project. Finally,

the lessons learnt from the research process will be outlined.

5.2 LessonsThe aim of this research has been to gather qualitative data on the relationship

between the psychological contract and virtual team effectiveness. In

accordance with the research of Rousseau (1990) and Rousseau and Tijoriwala

(1998), the interviews are focussed on identifying the psychological contract

and describing the interviewee’s virtual experience. After that, the participants

were asked for their personal opinion on the subject. The question that needs to

be answered in this paragraph is whether the interviews provide sufficient

information to identify the relationship between the psychological contract and

virtual team effectiveness. The interview questions have been included in the

appendix (Appendix III: Interview Questions).

5.2.1 Making the contract emerge

During the pilot interview it became clear, that a short introduction to the

concept of the psychological contract is necessary, for participants to

understand the background of this research. Most participants were not aware

of its existence. In order to prepare them for the interview, each participant has

been asked to read a case prior to the interview (Case: “The Confidence Trick” -

Appendix III). During the interview, the case study was used to allow

participants to project their feelings to. Another objective of this case was to


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introduce the concept of the psychological contract. At the beginning of the

interview, the participants were asked in general what was going on in the

situation described in the case. This was then placed in the context of the

psychological contract. As participants learned about the psychological contract,

it was easier for them to relate it to their own experiences.

5.2.2 General consent

As the psychological contract had emerged, participants seemed to agree, that

contract breach and enhancement could have a profound effect on the overall

project outcome. The variables at the foundation of the contract, being trust,

commitment and the exchange relationship, were experienced differently in the

virtual environment. Participants explained that it is hard to trust someone you

cannot physically experience. The level of commitment seemed decreased as

well. The main issues here were the balance between regular and project-

related activities. Overall, the participants clearly indicated that contract breach

negatively affects project outcome.

The secondary data analysis revealed the topic of the psychological contract

and the one of virtual teams as an increasingly popular theme in academic

literature. Current topics in virtual team literature include the notion of trust and

commitment in the virtual environment, building shared vision and resolving

conflicts. This research contributes to the existing academic literature as it

includes the complete context of the psychological contract and places it in the

virtual environment.

5.3 Data display and analysisDue to the large amount of gathered data and the complexity of the research

results, an inductive-based procedure will be adopted to visualize relationships.

The technique called ‘Data display and analysis’ (Saunders, Lewis et al. 2007),

supported by CAQDAS, is adopted to realize this. It is the second and third step

of the three step procedure, described by Saunders et al (2007) that enable the

researcher to effectively structure and analyze data. The step prior to data

display and analysis, data reduction, has already been undertaken in the


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previous chapter. This chapter provided an overview of the most significant

findings

The main categories, their relationships and patterns are presented in the

following data display.

Figure VI: “Data Display” (source: author).

The figure shows the relationship between the contents of the virtual

environment and which element of the psychological contract is influenced by

each of them. Elements like perceived fairness, expectations and promises, that


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influence the contents of the exchange relationship, are part of the input of

virtual teams, which in their turn have an impact on the psychological contract,

as they include internal factors. Interviews revealed that virtual team input

indeed has an effect on the psychological contract. Employees derive their

expectations from the resources that are provided by the organization. The

same is applicable to the skills and ability of the team. The amount of trust and

commitment that form the foundation of the psychological contract, together

with the exchange relationship, are part of the virtual team’s socio-emotional

processes. Participants linked cohesion and interpersonal relationships to trust

and commitment. They indicated that misalignments between these variables

could have an intense effect on the team’s effectiveness. Task processes, next

to virtual team inputs, are part of the internal factors that influence the

psychological contract as well. This element includes the communication and

coordination difficulties that participants experienced in the virtual environment.

The fit between task, technology and structure needs to be aligned to the

communication systems and coordination mechanisms in order to maximize

project success. The figure visualizes the way in which the virtual environment

can impact the psychological contract and the effect it can have on virtual team

effectiveness.

5.4 Difficulties encountered

5.4.1 Unilateral versus bilateral approaches

According to Freese and Schalk (2008), psychological contract research can be

categorized in unilateral and bilateral approaches. The first considers the

psychological contract as an individual’s belief of mutual expectations and

obligations, while the latter considers the contract to be the whole of the

employer as well as the employee perceptions on exchanged obligations. In

terms of measurement a unilateral view is preferable. Freese and Schalk (2008)

mention two reasons for this. First, psychological contracts are literally

psychological and should be measured accordingly. It is by definition an

individual’s perception. Methodologically, a bilateral view is problematic, as the

side of the organization is represented by many actors who do not necessarily

communicate a uniform set of expectations. Second, the definition of the


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psychological contract suggests it influences behaviour. However, as

organizational agents have differences in perception, it is unclear what the

psychological contract would include. Freese and Schalk (2008) therefore argue

that measurement needs to be limited to the unilateral perspective.

This thesis project has measured the psychological contract in a unilateral

perspective. The interviews did include organizational agents, but they were

seen as employees that contribute to the project team. As this the particular

interest of this thesis is team effectiveness, the perspective of the organizational

agent needs to be incorporated.

5.4.2 Feature-, content- and evaluation-oriented approaches

Rousseau and Tijoriwala reviewed assessments used in psychological contract

research and proposed an organizing framework for future research on the

topic. They distinguished three forms of measurement: the feature-, content-

and evaluation-oriented approaches (Rousseau and Tijoriwala 1998).

The feature-oriented approach compares the psychological contract to some

attribute or dimension. Contracts can, for example, be characterised as short

term, having an extended scope and influencing non-work activities, as

transactional, and as flexible arrangements.

The content-oriented approach examines the specific terms of the contract. This

includes the specific mutual obligations based on inferred promises made by

the employer and the employee. Examples of this approach are the provision of

opportunities for promotion, security, challenging work, working overtime when

needed and the delivery of good services.

The evaluation-oriented approach provides an assessment of the degree of

fulfilment, change or violation experienced within the context of the contract.

The provision of promotion opportunities by the employer, or working overtime

by the employee, can be assessed.


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According to Freese and Schalk (2008) research into features attracted much

attention, due to the problem involved when studying the content of the

psychological contract by trying to describe the terms included (Freese and

Schalk 2008). Psychological contracts can contain a large amount of different

items, specific to an individual. Developing a standardized measure to study the

content of the contract is therefore impossible. Freese and Schalk (2008)

furthermore argue that the results of empirical research on psychological

contracts still remain inconclusive and the results often do not cross-validate.

Examples of this are given in terms of feature-oriented characteristics that are

attributed to the psychological contract. Differences between relational and

transactional contracts have been measured by the factor training in several

studies. Though, these different studies have categorized this factor under both

types of contracts. Academics did not seem to agree on the attribution of

characteristics to either one type of contract.

Freese and Schalk have outlined criteria that should ideally be met when

measuring the psychological contract, based on the general principles for

assessing content and construct validity for scale development in psychological

measurement. They argue that first a psychological contract measurement has

to be theory-based or inductively developed. Second, a psychological contract

measurement should assess mutual obligations/promises. Third, the

psychometric properties of the psychological contract measurement and the

appropriateness for the sample have to be assessed. Four, the evaluation of the

psychological contract has to be assessed for separate items to ensure the

reliability of the measure. Fifth, in the evaluation of the psychological contract, it

should be assessed whether a certain item is important. The evaluation should

be direct. The sixth criterion includes the violation of the psychological contract

has to be distinguished from fulfilment and from contract breach. Freese and

Schalk argue that most studies, and mainly questionnaires, do not meet all of

the criteria.

Although this research project does not include the use of questionnaires, the

measurement criteria of Freese and Schalk have been noticed and adopted in


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order to ensure the reliability of this project. A sample of the interview questions

has been included in the appendix (Appendix III: Interview Questions).

5.4.3 Operationalizing the psychological contract

Rousseau (1990) and Rousseau and Tijoriwala (1998) have written about the

operationalization of the psychological contract. This entails the assessment of

the contract by allowing the focal individual to report on beliefs regarding his or

her own obligations as well as the beliefs regarding reciprocal obligations owed

by another (Rousseau 1990). In their research, they make three concluding

remarks. First, subjective and self-reported measures are the most direct

source of information on the nature and content of the psychological contract.

Second, the focus on promises and reciprocal exchanges are preferred forms of

assessment. Finally, the information needs to be limited to promissory

interpretation and information about merely expectations needs to be excluded

(Rousseau and Tijoriwala 1998).

5.4.4 Difficulties during the research process

Freese and Schalk (2008) argue that “...a complete psychological contract

measurement needs to be manifold.” (Freese and Schalk 2008). According to

them, it needs to include perceived obligations, a breach and violation scale and

a global assessment of fulfilment. The research that Freese and Schalk

conducted is based on questionnaires only. It does not include in-depth

interviews. The objective of this particular thesis is therefore not to measure the

psychological contract, but to identify possible relationships between this

variable and the virtual team environment.

Another challenge during this research has been to get the virtual team

members’ time and to place them in an environment in which they could talk

freely. As the project had just gone live, most virtual team members still had

project-related duties to perform. The advantage of this was that their

experiences were still fresh and as genuine as possible. On the other hand,

they were limited in the amount of time they were able to spend on the

interview. Therefore the interview needed to be conducted within the team


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members’ direct work environment. This could have influenced their judgement

about the more sensitive topics. To limit the chance of biased answers,

participants were assured the interviews would be done anonymously.

5.5 Chapter summaryThis chapter mainly elaborates on the primary research process and the

difficulties that have been encountered during it.

It starts with the most important lessons, learned during the process. This

includes the lesson that identification of the participants’ psychological contract

was necessary in order to explain the contents of it. Participants were generally

unaware of the presence of a psychological contract. Once they were, most of

them argued that contract breach and enhancement has an effect on project

outcome. Next to that they argued that, as the virtual environment comes with a

new set of challenges, the effect would be even stronger.

The data display and analysis presents both research variables in the virtual

environment. It visualizes the relationship between the contents of the virtual

environment and to which extent they relate to the contents of the psychological

contract.

During the primary research process, several difficulties have been identified.

Academic literature makes a distinction between unilateral and bilateral

approaches to measuring the psychological contract. This study takes a

unilateral approach, as it is limited to the employee perspective on the

exchange relationship. Feature-, content- and evaluation-oriented approaches

are different approaches to measuring the psychological contract as well. These

approaches mainly evolve around questionnaires and do not exactly apply to

this thesis. However, in terms of reliability and validity, they do share important

elements that apply to interviews as well.

The operationalization of the psychological contract contains information about

psychological contract measurement as well. This theory states that


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measurement of the psychological contract needs to be limited to promissory

content and it is unilateral, as it reflects an individual’s perception.

The difficulties to this project relate to the absence of literature on measuring

the psychological contract through the use of interviews. Next to that, it has

been difficult to get full dedication of participants. Due to time restraints, the

participants had to be interviewed in their working environment, possibly

creating the threat that they could not fully pay their attention to the research.


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Chapter 6CONCLUSIONS & RECOMMENDATIONS

6.1 General conclusionThe current body of academic literature consists of research on many of the

elements related to the psychological contract and virtual team effectiveness.

Yet none have actually compared both variables. This thesis does, by stating

that psychological contracts do influence virtual team effectiveness.

This study has examined the way in which psychological contracts develop

within the virtual team environment and whether this relationship has a positive

or a negative effect on virtual team effectiveness. It has demonstrated that the

foundations on which the psychological contract is built are weakened by the

environment in which they are held. Whereas several studies on virtual teams

do not recognize differences in team effectiveness between traditional and

virtual teams (Galegher and Kraut 1994; Warkentin, Sayeed et al. 1997;

McDonough, Kahn et al. 2001), this study supports the theory that psychological

contracts are more fragile in the virtual environment. Virtual team inputs are

associated with fairness, expectations and promises. They incorporate the

team’s design of different team member. In its turn, the virtual team inputs

shape the internal factors that contribute to psychological contract construction

and deconstruction. The second factor that impacts an employee’s perception

on the internal factors is the virtual team’s task processes. This variable

consists of communication systems and coordination. Interpersonal

relationships, trust and commitment are strongly associated with the virtual

team’s socio-emotional processes. They are the prerequisites of the

psychological contract and determine the contents of the psychological contract

and the extent to which each party is held to the agreement. Finally, virtual team

effectiveness is associated with breach and enhancement of the psychological

contract. As argued in the literature review. Project teams can only succeed,

when the team is motivated. Contract breach demotivates the employee and

opposes a considerable threat to project success. Therefore it is argued that the


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as the foundations of the psychological contract are more fragile in the virtual

environment, it creates a situation in which contract violation is more likely to

occur. This does affect virtual team effectiveness.

Other relationships that have been identified, add to the academic literature on

socio-emotional processes in virtual teams. Virtual teams face significant

difficulties in achieving high levels of cohesion, trust, commitment and

interpersonal relationships. Interpersonal relationships are argued to foster

trust, cohesion and commitment (Powell, Piccoli et al. 2004). This research

indicated that traditional face-to-face communication is still preferred, above

virtual communication. Participants argued that it is hardly possible to build and

maintain a relationship with another party in the virtual environment. High levels

of cohesion, trust and commitment are essential to a project team’s success.

When these levels are not established in virtual teams, this is bound to have an

effect on the team’s performance.

6.2 Implications for policy and practiceThe implications of the outcome of this research will mainly appeal to the field of

organizational behaviour and HR. It closes gaps in current academic literature

on the psychological contract and its implications in the virtual environment. In

that perspective it is unique, as the link between socio-emotional processes in

the virtual environment and the psychological contract had not yet been made.

The research findings of this thesis project suggest that when engaging in a

virtual project, some thought needs to go to the design of the virtual team and

the presence of psychological contracts. When selecting the project team

members that contribute to the virtual project, the background of each team

member and the presence of psychological contracts need to be considered,

next to their skill and ability to work in the virtual environment. Later on during

the project, this will reduce inefficiencies and possible errors in team working.

This will improve the team’s effectiveness and increases the chance of success.


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6.3 Implications for theory/researchIn general, the theoretical implications of this research exceed the practical

ones. The literature review indicated that academic literature fell short on

explaining the psychological contract construct in relationship to the

performance of virtual project teams. This research closes this gap in the

academic background of this topic. It provides an in-depth view on the subject

and clearly shows how both variables are related in the virtual environment.

Furthermore this thesis project provides suggestions for future research. The

research findings have not yet been confirmed by quantitative research and

although this thesis provides suggestions on practical implications for project

management, this has not been the explicit topic of research.

6.4 Limitations of the researchEven though the research approach, design, strategy and analysis in this thesis

are carefully developed in a conscious manner, there are limitations that need

to be emphasized.

This study resulted in a theoretical description of the relationship between the

psychological contract and virtual team effectiveness, in line with the main

objective of this thesis project. In order to achieve this, twelve virtual team

members of several virtual project teams working on the same virtual project,

have been interviewed. Although the sample size of twelve interviewees is

sufficient, the interviews have been conducted within the IT industry. Even

though the results might be generalizable, results might differ in other industries

and sectors. Further research in different sectors may be necessary.

This study takes on a unilateral approach, as the psychological contract resides

only in the perspective of the individual. This is as well a limitation, as the

different perspectives of the organization, as the other party to the contract, is

not taken into account.


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6.5 Recommendations for further researchBased on the findings of the research that has been undertaken for this thesis

project, and the limitations of the study already discussed earlier in this chapter,

there are several areas in which additional research needs to be conducted.

Some of these areas have already been addressed in the literature review,

others still need attention.

In general little research has been done on the practical application of

psychological contract literature. Further research might address this topic from

a management and HR perspective. This research has focussed on identifying

the relationship between the psychological contract and virtual team

effectiveness. It does not entail research on leadership, neither does it provide

recommendations in terms of how to manage this relationship.

Another issue interviewees addressed was the use of reward systems to

enhance the project member’s psychological contract. This area of interest and

its effects on team effectiveness could provide new insights on employee

motivation in the virtual environment. According to the participants, reward

systems need a different approach when working with complex virtual projects.

Instead of rewarding employees on project outcome, interviewees suggested a

more flexible approach, focussed more on the individual.

Finally, another fascinating question arose while conducting the interviews.

Based on the academic literature, it is known that individuals hold different

psychological contracts next to each other. Interviewees clearly indicated that,

to them, their experiences with the project did not really harm the way they felt

about their employer. It did not affect the reason why they joined the

organization. Other examples indicated that the level of commitment to and trust

in the project could differ from those in the organization. This makes it

particularly interesting to study the relationship between different contract and

how they influence each other.


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AppendicesLIST OF APPENDICES

Appendix I: Thesis Proposal

Appendix II: Interview Schedule

Appendix III: Interview Questions

Appendix IV: Interview Transcript (coded)


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Appendix I: Thesis Proposal


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Appendix II: Interview Schedule


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Appendix III: Interview Questions


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Appendix IV: Interview Transcript (coded)


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