PSYCHOLOGICAL CONTRACT BREACH AND ITS IMPACT ON EMPLOYEE LOYALTY AND INTENTION TO STAY
Main Article Content
Indria Sri Retnaningrum
Dhenny Asmarazisa
Catur Fatchu Ukhriyawati
This study examines the impact of Psychological Contract Breach (PCB) on employee intention to stay, investigating the mediating role of employee loyalty. Based on social exchange theory, we hypothesized that PCB would negatively impact retention intentions both directly and indirectly through eroded loyalty. Data were collected via a cross-sectional survey from a sample of employees across various industries. The results, analyzed using structural equation modeling, confirmed that PCB is a significant negative predictor of intention to stay. Furthermore, employee loyalty fully mediated this relationship, revealing that the primary mechanism through which PCB influences turnover is by damaging the emotional bond and allegiance employees feel toward the organization. The findings highlight that the breach of implicit agreements triggers a destructive affective process. Practical implications suggest managers must actively manage psychological contracts through transparent communication and trust-building to foster loyalty and retain talent.
Bankins, S. (2019). A narrative approach to psychological contracts. In Handbook of Research on the Psychological Contract at Work. Edward Elgar Publishing. https://doi.org/10.4337/9781788115681.00030
Bankins, S., & Formosa, P. (2020). When AI meets PC: exploring the implications of workplace social robots and a human-robot psychological contract. European Journal of Work and Organizational Psychology, 29(2), 215–229. https://doi.org/10.1080/1359432X.2019.1620328
Bankins, S., Griep, Y., & Hansen, S. D. (2020). Charting directions for a new research era: addressing gaps and advancing scholarship in the study of psychological contracts. European Journal of Work and Organizational Psychology, 29(2), 159–163. https://doi.org/10.1080/1359432X.2020.1737219
Baruch, Y., & Rousseau, D. M. (2019). Integrating Psychological Contracts and Ecosystems in Career Studies and Management. Academy of Management Annals, 13(1), 84–111. https://doi.org/10.5465/annals.2016.0103
Botha, L., & Steyn, R. (2021). Conceptualisation of Psychological Contract: Definitions, Typologies and Measurement. Journal of Social Science Studies, 8(2), 1. https://doi.org/10.5296/jsss.v8i2.18703
Braganza, A., Chen, W., Canhoto, A., & Sap, S. (2021). Productive employment and decent work: The impact of AI adoption on psychological contracts, job engagement and employee trust. Journal of Business Research, 131, 485–494. https://doi.org/10.1016/j.jbusres.2020.08.018
Carroll, M., & Tribe, R. (2020). Psychological contracts. In The Handbook of Professional, Ethical and Research Practice for Psychologists, Counsellors, Psychotherapists and Psychiatrists (pp. 23–36). Routledge. https://doi.org/10.4324/9780429428838-3
Coyle-Shapiro, J. A.-M., Pereira Costa, S., Doden, W., & Chang, C. (2019). Psychological Contracts: Past, Present, and Future. Annual Review of Organizational Psychology and Organizational Behavior, 6(1), 145–169. https://doi.org/10.1146/annurev-orgpsych-012218-015212
Griep, Y., & Cooper, C. (2019). Introduction to the Handbook of Research on the Psychological Contract at Work. In Handbook of Research on the Psychological Contract at Work. Edward Elgar Publishing. https://doi.org/10.4337/9781788115681.00007
Handy, J., Gardner, D., & Davy, D. (2020). Relational Expectations and Transactional Obligations: Incompatible Psychological Contracts and Triadic Employment Relationships. Sage Open, 10(2). https://doi.org/10.1177/2158244020932672
Herrera, J., & De Las Heras-Rosas, C. (2021). The Organizational Commitment in the Company and Its Relationship With the Psychological Contract. Frontiers in Psychology, 11. https://doi.org/10.3389/fpsyg.2020.609211
Isaksson, K. (2020). Psychological Contracts and the Employment Relationship. In Oxford Research Encyclopedia of Psychology. Oxford University Press. https://doi.org/10.1093/acrefore/9780190236557.013.556
Johnston, A. (2025). Academic citizenship through the lens of the psychological contract: A qualitative study of UK business schools. Applied Psychology Research, 4(1), 1773. https://doi.org/10.59400/apr1773
Kappelides, P., & Jones, S. K. (2019). Ideological components of psychological contracts: future directions for volunteer and employment research. In Handbook of Research on the Psychological Contract at Work. Edward Elgar Publishing. https://doi.org/10.4337/9781788115681.00015
Knapp, J. R., Diehl, M.-R., & Dougan, W. (2020). Towards a social-cognitive theory of multiple psychological contracts. European Journal of Work and Organizational Psychology, 29(2), 200–214. https://doi.org/10.1080/1359432X.2019.1709538
Lopez, P. D., & Fuiks, K. (2021). How COVID-19 is shifting psychological contracts within organizations. Industrial and Organizational Psychology, 14(1–2), 45–49. https://doi.org/10.1017/iop.2021.59
Soomro, A., Ramendran, C., & Moona Haji Mohamed, R. K. (2025). The Role of Psychological Contracts in Enhancing Employee Retention Strategies. Semarak Advanced Research in Organizational Behaviour, 3(1), 1–20. https://doi.org/10.37934/sarob.3.1.120a
Topa, G., Aranda-Carmena, M., & De-Maria, B. (2022). Psychological Contract Breach and Outcomes: A Systematic Review of Reviews. International Journal of Environmental Research and Public Health, 19(23), 15527. https://doi.org/10.3390/ijerph192315527
Yale, A. (2020). What’s the Deal? The Making, Shaping and Negotiating of First-Year Students’ Psychological Contract With Their Personal Tutor in Higher Education. Frontiers in Education, 5. https://doi.org/10.3389/feduc.2020.00060
Yan, Z., & Mansor, Z. B. D. (2019). Reviews of Psychological Contract Researches. Proceedings of the 1st International Symposium on Education, Culture and Social Sciences (ECSS 2019). https://doi.org/10.2991/ecss-19.2019.14
