Types of Psychological Contracts

Psychological contracts can be either transactional or relational and are often depicted as opposite ends of a continuum, as illustrated by Figure 1.1. Most of the research on psychological contracts suggests that contracts can range from an extremely transactional contract to an extremely relational contract. Transactional contracts are instrumental, predominantly motivated by self‑interest seeking, where goods and services exchanged are tangible, and contracting parties can be replaced easily with alternative contracting partners. "Transactional contracts focus more on quid pro quo or direct exchange of one good or service for another"—in other words, honoring the word of the contract (Kidder & Buchholtz, 2002, p. 602). Eddleston, Kidder, and Litzky (2002) define extremely transactional contracts as those that "involve no trust and most likely occur in one-time exchange relationships, such as a temporary employment assignment, or a one-time visit to a roadside restaurant in another state" (p. 87).

 

Kidder and Bucholtz (2002) point out that "in contrast, relational contracts are more subjective, with longer time horizons and a higher level of personal commitment" (p. 602). Relational contracts tend to rely more on the principles of generalized reciprocity and trust (i.e., honoring the intent of the contract). The most extreme example of a relational contract is a marriage contract. However, "the traditional employment relationship, where an employee exchanges commitment and loyalty for long tenure and promotions also exemplifies a form of relational contract" (Eddleston, Kidder, & Litzky, 2002, p. 87). The key difference between the two forms of psychological contracts involves the presence or absence of trust.