1. a basic source of competitive advantage

1.
Introduction

 

The hospitality sector constitutes
an essential and dynamic component of Travel and Tourism Industry.  Tourism Industry is one of the most important
sectors for the Greek economy, and contributes to the national income and to
the country’s employment more than other sectors of the economy. According to the
World Travel & Tourism Council, tourism generated 423,000 jobs directly in
2016 (11.5% of total employment in Greece)
(Travel & Tourism Economic Impact 2017 Greece).

 

However, a distinct feature of the hospitality
industry is the very labour-intensive nature of the sector and employment relationships
are very different compared to other service sectors. Hospitality sector faces
a lot of challenges in terms of employment, such as employment of young
workers, seasonal work, variable working hours, and undeclared work. With
regard to employment contract type in the hospitality sector, typically there
are two major types of contract, full-time and part-time contracts. The
hospitality sector is dominated by flexible forms of employment, and has a high
rate of part-time workers. This focus on short-term or pat-time contracts has
many implications for employees, and especially in the form of the relationship
they develop with their employers (Barling and Gallagher, 1996; McGinnis and
Morrow, 1990; Pfeffer and Baron, 1988; Steffy and Jones, 1990).

 

Taking into account on the one hand that
the human capital in the hospitality constitutes a basic source of competitive
advantage and on the other the critical contribution of employees to the effectiveness
and quality of services provided in the hotel industry, we can conclude with
certainty that efficient human resources management becomes an important issue
for the sector. It must also be noted that the shift in demand for temporary
employees makes even more important the development and management of the right
kind of the of psychological contract with their employees.

 

The psychological contract refers to
“individual beliefs, shaped by the organization, regarding terms of an exchange
agreement between the individual and their organization” (Conway and Briner,
2005; Rousseau, 1995). Unlike formal contracts, psychological contract has been
generally used to describe unwritten obligations between employees and managers
(Argyris, 1960; Levinson, 1962; Schein, 1980). The psychological contract is
perceptual and different employees have different interpretations/expectations regarding
the obligations of each party, such as  competitive
wages, advancement opportunities, job security, fairness and loyalty (Lester
and Kickul, 2001, Lester, Turnley et. al., 2002).

 

Though unwritten, the psychological
contract is an important antecedent/determinant of employee behavior. It has
captured the attention of many researchers, as the psychological contract
elements/content can be linked/are associated with various outcomes. Psychological
contract influences psychological well-being (Anderson & Schalk, 1998; Sverke,
Galagher & Hellgren, 2000), job satisfaction (Guset & Conway, 1997),
organizational commitment (Pearce, 1993; Coyle-Shapiro & Kessler, 2000), performance
and intentions to stay and absenteeism (Lester & Kickul, 2001; Turnley et
al., 2003; Turnley & Feldman, 1999, Raja et al, 2004).

 

Understanding the content/elements
of psychological contracts is important for organizations in the hospitality
sector, as the psychological contract fulfillment regarding employers’
obligations to employees would lead to a highly satisfied and committed
workforce.

 

 

 

2. Theoretical Framework and Research Hypotheses

 

 

2.1.
Psychological Contract

 

The traditional system of industrial
relations has changed due to major changes in the field of work, and it becomes
necessary to incorporate new and different frameworks in order to explain and
understand contemporary employment relationships and behavior in organizations (Randmann,
2013). The concept of psychological contract is one of these frameworks that
gained increasing popularity in the early 1990s as it considers subjective and unwritten
aspects in the relationship between employees and employers in contrast with
the elements of a legal contract (Arnold,
1996).

 

Psychological
contracts was first mentioned by Argyris (1960) who
described the psychological contract as an unwritten agreement that
exists between an individual and the organization regarding terms of
employment. The concept was further discussed by Levinson et al. (1962) who defined
psychological contract as ‘unwritten contract, the sum of the mutual
expectations between the organization and employees. Many researchers (Farnsworth, 1982;
MacNeil, 1985) also used the term to describe and explain what was
implicit in the agreements made between employee and employer. Schein (1965, 1980) also
concerned about the psychological contract, and he also mentioned
“although it is not explicitly written, it is a powerful determinant of
organization behavior.”

Although the psychological contract originally defined
by Argyris (1960), Levinson (1962), and Schein (1980) was characterized by the
subjective nature of employment relationships, according to more recent
definitions the present conceptualization focuses on individuals’ beliefs and
interpretation about the terms and conditions of a reciprocal exchange
agreement (not the reciprocal obligations themselves) between that individual
and another party (Rousseau, 1989, 1990; Lester, Turnley et. al.,
2002). Psychological contracts refer to employees’
perceptions of the existence of mutual obligations (Rousseau, 1990) or
reciprocal obligations between the individual and the organization (Rousseau,
1995) that develop through interactions and experiences.

 

Since psychological contract refers
to individuals’ beliefs about the obligations between employers and employees,
it is more than clear that the psychological contract is inherently perceptual,
reflect subjective perceptions and may differ between the two parties in an
agreement.

 

While all the above mentioned
empirical work defined and limited the psychological contract to an employees’
perception, a growing body of literature in recent years has focused on the
employer’s perception of the employment relationship (McClear, 1996; Coyle-Shapiro, & Kessler, 2000; Guest & Conway,
2002 and Tekleab & Taylor, 2003). The bilateral approach that consider the
contract to be the employer’s and employees’ perceptions as a whole, is very
useful for the clarification of differences in perceptions between employees
and employers in a business environment, and would lead to more effective
resolve of conflicts. Despite the practical usefulness of a bilateral approach,
many writers argue for a unilateral measurement of the psychological contract. Freese
and Schalk (2008) argue that the bilateral approach is more preferable, firstly
because it is by definition an individual perception and secondly because the
organisation consists of many actors who may have diverse and differing
expectations (Freese & Schalk, 1993).

 

 

2.2. The content
of the psychological contract

 

Many researchers have described features of the psychological contracts and
characterised them as transactional, balanced, transitional, relational,
instrumental, weak or strong (Macneil, 1985; McFarlane Shore, & Tetrick,
1994; Rousseau & McLean Parks, 1993; Rousseau & Wade Benzoni, 1994;
McLean Parks, Kidder, & Gallagher, 1998; Rousseau & Tijoriwala, 1998;
Van den Brande, 2002). The distinction between transactional and relational
contract types have been addressed in many studies (Robinson and Rousseau, 1994;
Robinson, Kraatz, and Rousseau, 1994; Rousseau, 1990, 1995; Rousseau and Parks,
1993). Transactional and relational
contracts have been argued to differ on five dimensions (Rousseau & McLean
Parks, 1993), the focus of the contract, time frame, stability, scope and
tangibility. Macneil (1985) argue that the distinction between transactional
and relational type of contracts are the two opposite ends of a continuum in
contractual arrangements. Many
empirical studies have supported these two dimensions of psychological
contract, the transactional dimension which primary focuses on remuneration and
short-term economic exchanges and the relational dimension which focuses on social
and emotional exchanges, such as employees’ work safety, skill training and personal
and career development.

 

The above feature-oriented
measurement of psychological contract is mainly useful when comparing
psychological contracts across organizations or countries. Because of the
conceptual problems (e.g. “training loading on a transactional factor in one
research and on relational factor in another study = instability of the
transactional and relational factors) associated with feature approaches of
psychological contracts (Arnold, 1996; Raja, Johns & Ntalianis, 2004), many
researchers studied the content of the psychological contract by trying to
describe the specific terms/obligations included, such as provision of
opportunities for training, security, childcare, challenging tasks, flexible
working hours; confidentiality, working overtime when needed, and delivering
good services. Robinson, Kraatz, Rousseau (1994) studied the content of the
psychological contract and they ended up to seven factors that employees
believe that are the responsibility of the organization, enrichment work, fair
wages, growth opportunities, promotion, adequate tools and resources to support
the work environment, and attractive benefits.

 

In our study, we focus on the content and the degree
of fulfilment of the psychological contract. We used certain items regarding
the content of the psychological contract and we assess the perceived degree of fulfilment within the context of the contract, e.g.
the fulfilment of the provision of training by the employer. The focus of the present
study is on the individual-level psychological contract, as it measures the employee’s
perspective regarding employer’s obligations.

 

Individual’s
beliefs regarding the content of the psychological contract are affected by
individual’s characteristics. More specifically, employees’ perceptions about their
psychological contract may differ for men and women, for different age groups
and for employees with different employment experience. Research on possible age
and gender differences regarding terms of the employment relationship are
scarce (Scandura and Lankau, 1997; D’Art and Turner, 2006). Most researchers on
the content of the psychological contract have mostly examined age and gender as
control variables (Cavanaugh and Noe, 1999; Turnley and Feldman, 2000; Flood,
Russell and Cooper, 2001; Edwards, Rust, Mckinley and Moon, 2003; Lo and Aryee,
2003; Sels, Janssens and Van den Brande, 2004). Scholars suggest that a substantial part of the
workforce in the hospitality industry consists of women (Riley 1991;
Charlesworth 1994; Deery and Iverson 1996). Within this study, the
expectation is that the perceived content of the psychological contract will
not be the same for all employees and variations in employees’ beliefs based on
employees’ age, gender and years of experience will exist.

 

Arising from the above review, the
following hypothesis is tested:

Hypothesis 1: Employees’
perception of the fulfillment of certain employer’s obligations will differ  based on membership in groups, namely age,
gender and years of working experience  in hospitality sector.

 

 

2.3. Effects of Psychological Contract on Job
Satisfaction and Turnover Intention of employees in the hospitality sector

 

The discussion so far suggests that
the psychological contract is a concept that characterizes the exchange
relationship between employee and employer; it’s subjective in nature, focuses
on employees’ experience and definitely is an important determinant of
employees’ attitudes and behavior.

 

Because psychological contracts are
employees’ subjective perceptions of reciprocal obligations between the
employee and the organization, when employees perceive a lack of fulfillment of
psychological contract elements, namely a violation of employer’s obligations
to them, their response may manifest as job dissatisfaction, with resultant
increase in absenteeism and higher intention to leave the organization
(Rousseau, 1989; Morrison and Robinson, 1997; Griffeth, Hom, and Gaerther,
2000). Intention to leave is a widely researched attitudinal job outcome
regarding psychological contracts (Hess & Jepsen, 2009; De Hauw & De
Vos, 2010). Many researchers approach the understanding of employee turnover in
the employer– employee relationship from the perspective of the psychological
contract (Rousseau 1989; Shore and Tetrick 1994; Robinson 1996; Morrison and
Robinson 1997; Lester, Turnley, Bloodgood and Bolino 2002; Shore and
Coyle-Shapiro 2003; Tekleab and Taylor 2003; Ten Brink 2004). Research has
found that a violation or a breach of an employee’s psychological contract is
positively related to the employee’s intention to leave the organization (Robinson
& Rousseau, 1994; Suazo, 2009; Zhao et al., 2007).

 

The fulfillment of the psychological
contract depends on the degree of employees’ perceived fulfillment of specific employer’s
obligations. When employees perceive that the psychological contract has been
largely fulfilled, this in turn leads to positive outcomes such as high
commitment, low absence, higher levels of job satisfaction and an intention to
stay with the organization (Rousseau, 1995; Anderson and Schalk, 1998).

 

Employees who perceive relational
psychological contracts are characterized as being highly committed to their
organizations, and are less likely to quit their job than those with transactional
psychological contracts (Herriot, Manning and Kidd, 1997; Millward and
Brewerton, forthcoming; Millward and Hopkins, 1998; Robinson, Kraatz and
Rousseau, 1990; Rousseau, 1995). Few more studies have examined the
relationship between turnover intention and psychological contract, and
concluded that relational psychological contract is negatively related with
turnover intention, while the transactional psychological contract is
positively related with turnover intention (Raja, Johns and Ntalianis, 2004; Mc
Ulhaq, et al, 2011; Innis, 2012). Based on the above findings, the psychological
contract may determine whether employees will leave their organization
following a perception of lower level of fulfillment.

 

Although a significant number of
empirical studies have examined whether violation of the psychological contract
can lead to turnover intention (Robinson & Rousseau, 1994; Robinson, 1996;
Millward & Hopkins, 1998; Turnley & Feldman, 1999; Westwood, Sparrow
and Leung, 2001), little research has been done in the hospitality industry regarding
the impact of the perceived level of fulfillment of the psychological contract to
employees’ turnover (Lucas & Deery, 2004).

 

The purpose of the present study was
to determine whether the employees’ perceptions of the content of the
psychological contract can predict attitudinal job outcomes, and more
specifically the level of their job satisfaction and turnover intention in the
hospitality sector. We need to provide an insight on how a perception of low
level of psychological contract fulfillment may lead to low levels of
satisfaction and to what extent does the same perception affect in turn the
turnover intention of employees in the hospitality sector in Greece.

 

Thus, the research
hypotheses are as follows:

Hypothesis
2: Perceived psychological contract
fulfillment has a significant positive effect on job satisfaction of employees
working in the hospitality sector.

Hypothesis
3: Perceived psychological contract
fulfillment has a significant negative effect on turnover intentions of
employees working in the hospitality sector.

 

Or

 

Apart from examining the impact of
the psychological contract on turnover intention, it is interesting to assess
job satisfaction as a mediator between the psychological contract and the
intention to leave. Job satisfaction is a strong predictor of turnover
intention (Chaubey & Bist, 2016) and strongly related to psychological
contract (Rousseau 1990; Herriot et al. 1997; Morrison and Robinson 1997; Zhao
et al., 2007). As such, it can be assumed that job satisfaction is a mediator
in the relation between the psychological contract and turnover intentions.

 

Thus, the following hypotheses are
set:

Hypothesis
3a: Job satisfaction is negatively
related to turnover intentions of employees in the hospitality sector.

Hypothesis
3b: Job satisfaction is a mediating
variable for the relation between the perceived psychological contract fulfillment
and the turnover intentions of employees in the hospitality industry.

 

 

2.4. Type of Contract Form as a Moderator of the
relationship between the psychological contract – satisfaction relationship

 

Across Europe there is a substantial
amount of flexible working amongst organizations and that there has been a continuing increase in its use (Brewster, Mayne, Tregaskis, 1997), while traditional employment contracts which
guaranteed a job for life are becoming more and more rare (Millward, 2000). The
use of flexible contracts, such as part-time workers, temporary work, and fixed-term
contracts is widespread in a variety of sectors. According to Eurostat, 14, 2%
of all employees had a temporary contract in the EU in 2016. The likelihood of
occupying a temporary job is significantly higher in tourism than other
sectors. Especially, in the accommodation sector, one in four employees does
not have a permanent contract. (Eurostat, 2015)

 

In an increasingly competitive
environment, many organizations are seeking ways to avoid commitments and to
maintain maximum flexibility in working relationships. A temporary employment
contract is a low-risk mechanism and can be used to increase flexibility and reduce
uncertainty in organizations (Brady
& Briondy, 2017).1 On the other hand, temporary
contracts, compared with permanent ones, have an impact on employees’ attitudes
and behaviors, such as demotivation, turnover intention and organizational
citizenship behavior (Xiaoye Qian, Qian LiE, Qiong Wu, Yilun Wu,
2017) 2

 

Psychological contracts arise in the
context of a relationship that can be either short-termed or of long duration. Whether
employees joining an organization anticipate working there for a short or a
long term affect the way they perceive the employment deal. The absence of
long-term commitments is a major characteristic of transactional psychological contracts.
Transactional contracts involve specific economic exchanges between parties
over a specific time period as in the case of temporary employment (Miles and
Snow, 1980). In contrast, the establishment and maintenance of a long-term contract
is positively related to a perceived relational contract with the employer involving
economic and non-economic exchanges. McLean
Parks et al.
(1998) suggests that transactional psychological contracts are most common
among temporary employees, while relational psychological contracts dominate
amongst permanent employees.

 

 

Although a large number of studies
have examined the relationship between psychological contract and employees’
work satisfaction, no one has examined how the type of contract form (short-term
or long-term contract) mediates the relationship between psychological contract
and employees’ behavioral reactions. This present study tries to reveal whether
the type of contract form, short-term or long-term, is expected to moderate the
relationship between the perception of the psychological contract elements and
job satisfaction in hospitality sector, a sector that has a tradition of employing
people with temporary contracts. More specifically, the study attempts to
examine, in the case of an employee who experiences a low level of
psychological contract fulfillment by his/her employer, the influence of
employees’ type of contract type to employees’ working behavior. It is expected
that an employee with permanent type of contract will tend to perceive more
positively the fulfillment of relational aspects of psychological contract and
thus will have a higher level of satisfaction. Furthermore, an employee with a
permanent contract will be able to maintain a high level of job satisfaction,
despite the perceived lower level of fulfillment of the psychological
contract.  In a similar way, an employee
with temporary contractual relationship will tend to perceive the level of
psychological contract’s fulfillment in a more negative light. Hence, the temporary
employee will experience lower level of satisfaction following a perceived non-fulfillment
of psychological contract aspects.

 

Thus, the final hypothesis is as
follows:

Hypothesis
4: Type of contract form (short-term
or long-term contract) will moderate the relationship between employees’
perception of psychological contract fulfillment and job satisfaction in
the hospitality sector such that permanent employees who perceive a certain
level of psychological contract’s fulfillment will experience a greater level
of job satisfaction than employees with a temporary contract.

 

 

Similarly, there has been no
empirical evidence of the moderator effect of the type of contract form to the
relationship of the perception of the psychological contract and the turnover
intention to the hospitality industry.

Organizations that make use of
temporary workers may also experience unscheduled turnover when temporary
employees perceive lack of fulfillment in psychological contract.

 

The following hypothesis derives
from the same processes operating in hypothesis 4; that is employees with
different types of contract form will explain variance in intention to leave
the organization. Contractual status can moderate the relationship between job
satisfaction and turnover intention.

Hypothesis
5: Type of contract form (short-term
or long-term contract) will moderate the relationship between employees’
perception of psychological contract fulfillment and turnover intention of
employees in the hospitality sector such that permanent employees who perceive
a certain level of psychological contract’s fulfillment will experience less turnover
intentions than employees with a temporary contract.

1
“Strategic use of Temporary Employment Contracts as Real Options”

 

2 “The
Impact of Temporary Employment on Employees’ Organizational Citizenship
Behavior and Turnover Intention: The Moderating Effect of Organizational
Identification”, Proceedings
of the Eleventh International Conference on Management Science and Engineering
Management, pp 791-803

 

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