Impact Upon Psychological Contracts in the Workplace

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Introduction

Although the psychological contract as a concept in human resource management came into being in the 1960s, nevertheless, its re-emergence during the 1990s is especially remarkable, as it came at a time when several world economies were faced by the then economic recession. At the time, psychological contracts re-emerged as an outline for comprehending the manner in which changes within an organization could impact the behavior of the employees (Rousseau 2001), seeing that now an economic recession would lead to a possible loss of their jobs.

Psychological contracts may be defined as the “set of expectations held by the individual employee”, and which seeks to spell out the expected input by both the organization and an individual, during the time in which the two entities are in a working relationship (Sims, 1994). From such a perspective then, it is not hard to realize that indeed, psychological contracts are vital to both an individual and the organization as well, a relationship that has been described by several organization management authors (Mowday, Porter & Steers, 1982) as an exchange relationship that transcends the complete contract continuum from stringently legal to entirely psychological (Spindler, 1994).

Even as a majority of the aspects covered by this relationship could be well taken care of by legislation, inclusion in contracts of employment and which are signed by employees (may include salaries, working hours, and plans of benefits), still there is a high likelihood that some elements of the relationship of employment could as well be confined only to the subconscious (Spindler, 1994).

A number of authors have referred to this phenomenon as a ‘hidden’ element (Eisenberger, Huntington, Hutchison, and Sowa, 1986; Greenberg, 1990). Essentially, it is this ‘hidden element that Argyris (1960), Schein (1980), and Rousseau (1989) refer to as a psychological contract.

Psychological contract

A major argument that revolves around the psychological contract theory is whether or not it ought to be viewed as ‘contract’, at least when this is compared with other formal contracts, and which consists of comparison with predetermined content whose parameters are quite clear ( Arnold, 1996). Divergent outlooks have it that psychological contract provides a perspective on a base that is more pragmatic, based on the perceptions of the parties involved, and as such, tends to exhibit a more profound influence in comparison with a formal contract (CIPD, 2003).

On the other hand, Sparrow and Marchington (1998) maintain that an interaction exists between the psychological contract and contracts of employment since legal conditions and terms shall impact obligation perceptions. With regard to stringent comparison, psychological contract apparently appears to be an inherent reflection of the relationship of employment akin to legal contracts, though on a wider scale. Concerning power, the moment a breach of contract happens; this may adversely affect a firm, as well as its employees (Deery, Iverson, and Walsh, 2006).

In concept, previous literature seems to hold that psychological contract differs from both an implied and formal contracts as it takes into account the beliefs of an individual regarding the employment terms and conditions that exist between an employer and his/her employees (Argyris, I960; Levinson et al; 1962; Schein 1965; and Kotter 1973). This perception of the relationship existing between an organization and the employees in it has become notable and acceptable in a wide variety of forums, and this includes the academic journals as well (Guzzo, Noonan. and EIron 1994; Morrison and Robinson 1997; Robinson, Kraatz, and Rousseau 1994), management textbooks (Kolb. Osland, and Rubin 1995; Makin, Cooper, and Cox 1996; Schein 1980), and practitioners journals (Ehrlich 1994; Sims 1994; Wilhelm 1994).

The kinds of promises that may be contained in an employment contract of an employee could either be implicitly or explicitly communicated in a number of ways: oral discussion, written document, or through the procedures and practices of an organization (Rousseau 1989; Sims 1994). Owing to the invasive reciprocity norms that tend to accompany any kind of exchange agreement between an organization and an employee (Rousseau 1989), an employee usually seeks out, expects, and constructs “a psychological contract” as a way of comprehending and representing the relationship of employment with the managers

(Shore and Tetrick 1994). For instance, it is quite possible that employees could perceive that their organization could have promised them attractive benefits, fair pay, advancement, growth opportunities, adequate resources and tools, and a working environment that is quite supportive (Rousseau and Tijoriwala 1998).

Whereas it is likely that the large firms may promise their workforce careers development opportunity (such as specialized roles and jobs) and still deliver on the same given the availability of resources, the small firms on the other hand could offer their workforce a chance to learn a wide range of abilities and skills that cuts across various areas and functions of the firm {Aldrich and Auster 1986; Aldrich and Langton 1997).

Psychological contract formation

Through an observation that the building blocks as well a the antecedents of psychological contracts have attracted comparatively limited attention, at least from the scholars and researchers, Rousseau (2001), came up with a psychological contract cognitive proposal, whose basis is the schema. Further, Rousseau (2001) opines that the origin of contract schema is the past histories of an individual, and this tends to evolve progressively as time goes by, in tandem with cumulative extra information regarding the obligations of a contract within the confines of a workplace.

Moreover, Rousseau has noted that various contract schema could build up evolve in the same firm, based on information clarity, consistency, and trustworthiness of sources of information available. In addition, a schema that is either heard or observed from extra sources could greatly impact psychological contract development, especially in a situation whereby persons are in the possession of partial information regarding the setting of a new job. As such, it is possible that an employee could integrate schema aspects that others uphold (for example, managers or co-workers), to assess what she or he owes a firm, as well as the obligations of affirming to her or him.

A majority of the literature appears to lay more emphasis on the importance of trust within firms, especially from the perspective of a manager. An explicit assessment of the issue of trust within the organization was carried out by Alan Fox, who dwelt on the relationship between high-trust and low-trust, as well as a distinction between on the one hand, ‘high discretion work’ and ‘low-discretion work’, on the other hand. From the perspective of a work that is low- discretion, conformity, and obedience are often called for.

The obligation here seems to be that the subordinate ought to hold to the instructions and procedures that have been laid down. By way of contrasting the ‘high discretion work’ with one that is low, this is seen as a call for radically diverse behavior forms, and which can vividly be witnessed in terms of alterations in the control forms within an organization. Generally, work with low discretion is vulnerable to external control. On the other hand, work that is high discretion appears not subject to such a control. Rather, control, in this case, is perceived to be that of self (Covey 2006).

Psychological contracts violations

A vital component with regard to the literature of psychological contract is the issue of violations of a contract, as well as the ensuing cost (Rousseau 1995; Morrison & Robinson 1997). Frequently, research tends to emphasize the perceptions of the employees with regard to how their employers may view a contract breach, for instance, in respect of developmental opportunities, job security, or even principles of ethics (often regarded as contract violation). A contract violation could result in injustice feelings, betrayal, or deception amongst the various employees (Morrison & Robinson 1997).

Such definite situations as factors of the labor market (for instance, if there exists a felt for cutbacks or redundancies in the market), and organizational timing, bears a correlation with feelings of the employees that their psychological contracts could have been dishonored (Turnley & Feldman 1999). Evidence does exist to support the notion that employees that are characterized by various psychological contracts understanding react in a different way to the violation of contracts, as well as to planned changes within an organization ( for example, Rousseau 2001).

Renegotiating psychological contracts

Brewster and Larson (2000) have dwelt on the issue of psychological contracting as a process that enables employees within an organization to re-negotiate their existing relationship with their employer. In this regard, a contract symbolizes ‘a meeting point’ between two diverse promises sets, expectations, as well as foreseen values that both the employees and the organization as a whole hold dear to.

The psychological contract renegotiation on both a thorough and continuous basis becomes quite vital especially for the firms whose career systems are fairly formal (Rousseau 2001). This is particularly the case when a given firm pinpoints candidates in possession of enormous potentials in their work, early enough. This would thus enable such candidates to enjoy systematic programs of development, such as a career ladder characterized by training reward promise, or even assignment rotations.

Psychological contracting in small firms

Wilkson (1999) has noted that almost in all cases, most of the work regarding psychological contracting seems to lay more emphasis on the larger firms, to the detriment of the smaller ones. Nonetheless, attempts have also been made to explore the relationship of employments as it appertains to the smaller firms. From the outset, perhaps it would be in order if a proper definition of the terms smaller firms could be provided. A majority of the standard definitions of these firms rests on the basis of how many employees certain firms have enlisted. Besides size, small firms tend to generally be viewed as having some vital unique characteristics.

A small firm has been defined as an organization that may be deemed small with respect to potential market size. In addition, such an organization is under the management of an owner-manager and is not associated in any way with any larger organization (Mihail, 2004). This being the case, it is important also to appreciate that we cannot rely wholly on a single definition of what a small firm is made up of. However, what we have in place is a standard definition, which holds that a small organization is that which is made up of less than 100 employees.

The responsibility of an owner-manager in a small firm, as well as the influence that they tend to have on their business entity, rests on perception, personality, and on the whole, peculiarity (MacMahon, 1997; Cully et al., 1999; Beardwell et al., 2004). Owing to their small size, the level of closeness between say, a manager and his/her employees in small firms tends to be considerably more in comparison with the larger firms (Goffee and Scase, 1987; Cully et al., 1999; Marsden, 2004). Employees of larger firms tend to have limited interaction with those responsible for instituting decisions within the business. As a result, the business environment is both impersonal and ‘cold’, given that the firm’s issues can only be transmitted to the employee’s vial an appropriate section manager. On the other hand, it is quite possible to have the employees working together with their owner-manager, thereby cementing a closer relationship with each other (Eurofound, 2001).

A fascinating argument is positioned in the literature as appertains to the impact of the proximity in the relationship among employees and a manager, with regard to the small firms. For instance, Ingram (1970) and Bolton (1971) opine that small firms seem to promote an environment that is aimed at nurturing mutual respect between, on the one hand, the employer and on the other hand the employees, friendliness, as well as an overall pleasant collaboration.

The issue of a pleasant collaboration has also received the backing of Schumacher (1973), through his ‘beautiful house’ theory, in reference to the small firms. Conversely, Rainnie (1989) disapproved of this concept asserting that in reality, it is the same businesses that were ‘bleak houses’, subjugated by oppressive, autocratic, and dictator managers that in fact oppressed their employees. All the same, this notion was assessed as one-dimensional and wholly distrustful pointing in reality that it calls for a comprehensive assessment in the significantly intricate environment surrounding small firms (Ram, 1994).

Experimental studies Welter (1999) and Pohlmann (1999) Germany and Canada in that order offered opposing evidence to the position of Rainnie. At their core, these researchers believed that small firms do indeed supply considerable support that would enable cultivation of an environment of working that is positive, and also employment relationships that are positive as well. Furthermore, the researchers argued that such an employment relationship ought to be attained via informal channels which tend to be ideal for smaller businesses.

There are a number of sources that have endeavored to explore the financing decisions as practiced by small firms, thanks to the application of modern financial theory. It has been suggested that compared to their larger counterpart, small firms tend to be characterized by proportionately reduced debts (Wilkinson, 1999). The reason behind this is that their marginal tax rates are also lower. However, small firms have also been seen to have exceedingly higher costs of bankruptcy, relative to the larger firms. Further, these firms could have it rough when attempting to indicate their ‘business health’ to creditors. As such, small firms tend to be characterized by elevated costs of debt (Ram, 1994).

The agency theory has also been applied while attempting to offer an explanation to the financial behavior that small firms usually exhibit (Wilkinson, 1999). According to the agency theory, individuals with debt or equity in a certain firm need costs to be able to check the funds which they have invested. What this view appears to suggest is that financing hinges upon the ability of a manager or owner to critically evaluate these kinds of agency costs. Thereafter, such an owner/manager is then expected to make a choice of the methods of financing that bears the lowest costs, for purposes of the activities of the firm. However, not many firms are able to evaluate their agency costs.

The existing informality level within an organization is yet another significant element of the small firms, especially with regard to the issue of psychological contracting. The style of management within a firm is the chief residing place of informality, a management style that could as well be in attunement with the working environment needs (Ram, 1994; Marlow and Patton, 2002; Mihail, 2004). According to Mihail (2004), the existing informality in small firms apparently gives their owners the ability to instill suppleness into the firm, and which appears to be a necessity, at least with regard to the viability of such a business.

Aside from the ‘bleak house’ and the ‘small is beautiful’ concepts, a third perspective of the size of a firm in relation to the psychological contract could touch on employees developing negative aspects as a result of the proximity of their relationship with their employer, and this could in the end offer the employees a balance. As such, this could be thought of as a middle ground, in which the employees of a firm could also get involved in the decision making process, as well as effectively relaying their view to the management in a more efficient manner, as opposed to large firms, while also making provisions for getting involved in the organization of the business environment on the basis of ‘familial’ and informality relationship that is needed for small firms to remain viable (MacMahon, 1996; Moule, 1998; Mihail, 2004). In a majority of the situations, small firms lack the financial capability of their bigger counterparts, or event the same authority and power to endure the pressures of competition (Herriot & Pemberton 1996; Eurofound, 2001).

Concerning employment relationships, two major lines of argument could be assumed, the first of which is quite significant the small firms. This argument asserts that by having employment relationships within an organization, the employees in effect gets overburdened, seeing that the owners may not try to enhance labor turnovers, while; at the same time also awarding reduced salaries and wages, in comparison with the larger firms (Brown and Medoff, 1989; Ram, 1994; Cully et al., 1999). The second argument seeks to question better monetary benefits and higher wages as sufficient employment relationship measures (Herriot & Pemberton 1996).

Even though larger firms by and large offers better payment packages, this approach fails to adequately cover job satisfaction levels. Pohlmann is of the opinion that employees working for small firms not only feel more talented, they also are held in regard by the owners of the business based on their performance. For this reason, such employees tend to derive more satisfaction from their jobs.

Another aspect of note within the small firms, and which impacts on the psychological contract, is the issue of heterogeneity that exists amongst the different ‘clusters of small firms’. Curran (1991), Curran and Kitching (1993), and Abbot and Mills (1993) have observed that there do exist considerable disparities among small firms that belong to various sectors such as services or manufacturing. This is chiefly as a result of the environmental elements gap that is quite explicit to an individual sector, and this is what in essence impacts the relationship betw3ene the employees and the firm. Essentially, this shed light on underlying complexity that seems to engulf an assessment of the small firms, seeing that profound changes could mp0act on the employment relationship, based on the particular sector that such a firm under investigation operates from, the relative nation, and a manager’s peculiarity (Eurofound, 2001).

Aside from sector variations, distinctions have also been identified in small firms from a global perspective, and which are attributed to legislative, societal, and mentality frameworks (Thomas et al., 2003). Typically, size is a vital categorization criterion of a firm especially with regard to small firms (Bolton, 1971; Cully et al., 1999). As nations differ with regard to population, size, and economies, so do firms as well. For instance, an enterprise in Greece that employs say, 5o0 employees could be categorized as being large, but a similar firm in Germany could only be considered medium-sized (Eurofound, 2001). Aside from an illustration of impending variations from a global perspective, a practical issue does exist as well; the difficulty of amassing enough data regarding small firms in the various countries (Curran 1991; Curran et al., 1993), as well as international (Eurofound, 2001) heterogeneity levels.

There is a need to appreciate that the environment under which small firms operate is both complex and possesses a number of idiosyncratic characteristics, and which could hinder research. Despite small firms existing in quite a large number, coupled with their economic importance to their individual countries on a global scale (Overell, 1996; Cully et al., 1999; Mihail, 2004), this area has over the years received limited research (Cooper and Otley, 1998; Wilkinson, 1999; Michail 2004). This may be attributed to the uniformity and complexity that oversees the small enterprises field, since it is quite hard to generate comprehensive assumptions owing to the copious unreliable factors (Storey, 1994).

Factors impacting on psychological contract in the workplace

Both organizational and individual factors seem to be connected with psychological contract development at the workplace. In terms of the individual factors, these entail the expectations and experiences that could have come about as regards the employment relationships, before employees have been enlisted into a firm, upon their recruitment, during their maiden orientation into the firm, or even out of experience that accompanies employment (Rousseau, 2001). Such expectations and experiences could differ based on such personal difference elements as gender age, education level, membership to a union, commitment not related to their work, among other reasonable differences.

On the other hand, the organizational factors that impact psychological contract development in a firm entail the policies of the human resource department, as well as practices that could illustrate certain obligations or promises from the perspective of employers, and also the employees’ expectations (Guest & Conway, 1998). According to Noer (2000), a majority of the firms “are operating a cultural lag from the conventional psychological contract”. Such firms wish to have the flexibility that characterizes “new” contracts, while at the same time also hold on to such conventional contract artifacts as benefits and career paths. What this seems to illustrate is the employers require being more open with regard to mutual; obligations, as well as to be clearer on the same, not to mention their unambiguous communication.

Within the realm of human resource management in organizations, there has been a lot of debate regarding how useful the psychological contract concept in useful to this department. For instance, Sparrow and Marchington (1998) are of the opinion that the concept of psychology contract has proved useful; in as far as a capturing of intricate changes at the workplace during uncertain times is concerned. In this regard, the psychological contract assumes the role of a framework of analysis that cuts across the entire firm, and at the same time capture concerns relating to novel practices of employment. Nevertheless, Guest (1998) asserts that this concept has been operationalized to take into account a lot of psychological variables, of which little is known as regards the relationship between these.

For this reason, then, the psychological contract has turned into one analytical nightmare. The suggestion offered by Guest and Conway (1998) is that the psychological contract concept ought to be viewed best as a valuable metaphor that facilitates in making sense out of the relationship of employment, as well a facilitating in plotting of valuable changes in such a relationship. Furthermore, the psychological contract debate also appears to be shifting towards measure issues. Frequently the psychological contract gets an indirect measurement, for instance through loyalty and commitment, and this is quite controversial. The psychological contract could also be measured in terms of a breach of contract (for example Kickul, 2001; Kic Kul, Neuman, Parker & Finkl, 2001). Although recent research appears to have devised techniques for measuring the concept of psychological contract (Westwood, Sparrow & Leung 2001), there still lacks a consensus amongst the researchers on the best way of measuring it.

A research study by Coyle-Shapiro & Kessler (1999) that focused on non-contingent versus contingent workers proposes that the status of a contract has a vital role as regards how persons are able to view the relationship exchange, as well as the manner in which they respond to the stimulus emanating from this form of a relationship. Given that contingent employees do not spend a lot of their time within a firm, this could imply that these employees may possess a limited knowledge as concerns the functions of an organization, while at the same time also harboring a higher level of tolerance for the policies of an organization, in comparison with permanent employees (Coyle- Shaprio & Kessler 1999). While personal characteristics may seek to persuade the psychological contract, it may however develop even as individuals and organizations interact (Herriot & Pemberton, 1996; Westwood et al., 2001).

Available research findings have also indicated that the structures of an organization, and specifically HRM, are vit6la grounds for enabling interaction of the employees, thereby paving way for the formation and evaluation of psychological contract the human resource department within an organization, via policies, actions, and practices, occupies the frontline with regard to employment relations.

Such, these are mainly considered as influential in an assessment of psychological contracts (Rousseau & Greller, 1994; Rousseau, 1995; Westwood et al., 2001).

Rousseau (1995) opines that procedures articulating future plans, indicating future contributions and inducements usually take place during HRM actions (socialization, hiring, development activities, promotion), and even when organizations are experiencing a change (restructuring, downsizing). According to Rousseau & Greller (1994) the creation as well as the maintenance of a psychological contract between, on the one hand, employees and on the other hand the firm, ought to be the responsibility of the HRM. Therefore, the state in which the practices of HRM transmit future intent promises “in exchange for contributions of employees” hence persuades the evaluation and formation of the psychological contract.

Harvard HRM model

The Harvard HRM model entails the fundamental four Cs of competence, commitment, cost-effectiveness, and congruence. According to Price (2007), when managers arrive at suitable practices and policies of the human resource within their organizations, there is a need for techniques to be in place, that shall help in determining the effectiveness and appropriateness of such policies. In light of this, the human resource management Harvard model was developed by Beer et al in 1984 (Price 2007).

This model hinges on a diagnostic approach and also facilitates a wide underlying portrayal of the ‘determinants and consequences of HRM policies’ (Price 2007). This model portrays that policies of the human resource are often subjective to two fundamental deliberations. First, there are situational elements, which could either be within or without the environment of a business. These include societal values and laws, conditions in the labor market, characteristics of the workforce unions, management philosophy, organizational strategies, as well as task technology.

As per the observations by Price (2007), these elements have the potential to hinder the development of the policies for HRM, albeit to varying levels. Conversely, these could also be predisposed to the policies of the HRM. Secondly, the interests of the various stakeholders, such as the firms’ shareholders, management team, the government, unions, and the community also play a part, in as far as the fundamental deliberations of HRM policies are concerned. To this end, Price (20070) is of the opinion that all the interested stakeholders within an organization should be in a position to influence the policies of the HRM.

Psychological contract and the perception of owner-managers

A majority of managerial practices either explicitly or implicitly place emphasis on employment relations as a justification for ‘harder’ outcomes of employment. In fact, the assumption is that small firms tend to enjoy good communications, as a result of the close proximity and flexibility that the owner-manager and the employees have. Unlike some other terms that revolve around an employment contract, a psychological contract is extensively skewed, is not recorded or explicit, nor has it been bound legally.

Nevertheless, psychological contracts put forth a greater influence n the behavior of the employees, and especially in the eyes of their employer, seeing that such employees harbor a belief that what you give is what you receive. During these competitive and difficult economic times that organizations are facing, owner-managers are in dire need of those employees that are ready to overstretch themselves, going that extra mile to ensure that they deliver for the firm.

Whenever solid psychological contracts within a firm exist, these tend to hinge more on open communication lines, clarity of purpose, trust, and mutual respect. These are the qualities that the owner-managers want their employees to pose4ss if at all their businesses are to remain viable.

The LXM theory came into being as a way of helping to explain the interpersonal relationship quality that exists between a manager and his/her employees (Graen & Uhl-Bien, 1995). According to this theory, leaders develop various relationship qualities with the various employees. The relationship of the LXM theory vary on a continuum, ranging from relationship exchanges between employees and their managers, up to and including those relationships that are based on respect, mutual trust, and obligation (Graen & Uhl-Bien, 1995).

Existing research indicates that the value of a relationship that could develop between a manager and their employees is foretold such outcomes as increased satisfaction, commitment, and performance (Duchon, Green, & Taber, 1986; Graen, Novak, & Sommerkamp, 1982; Wakabayashi & Graen, 1984; Wayne & Green, 1993). Managers are in a position to assist their employees with resource-based and effective support. When this is done, then it could be expected that the value of the ensuing relationship shall impact the level to which s breach of the psychological contract involves the performance of the subordinates.

Even as there exist variations between the large and small firms, (Welsh and White, 1981), perhaps a more befitting description of the concept of the employment relationship of such a varied sector would be that of a “one size fits all”. Towards this end, the psychological contract concept seems to offer an option for the addressing of this seems problem (Atkinson, 2005). This is because the psychological concept is adequately supple to support an assessment that cuts across a diverse sector, while at the same time also providing a hypothetical model that enables an assessment of the internal outcomes and dynamics that have been addressed by Ram and Edwards (2003).

Internal dynamics could be exploited by taking into account the psychological contract content, principal aspect of which are the insights of the to parties involved in the contract ( an individual and the firm), of the implied mutual commitments in a relationship of this kind (Guest and Conway, 2002). These kinds of perceptions necessarily do not have to be shared by the two parties involved in a psychological contract, with the effect that divergent mutuality levels could emerge (Arnold, 1996), and fragile mutuality interpreting a failure to accomplish a commitment, that is a breach of a contact becoming more likely (Kotter, 1973).

Another key aspect of the psychological contract is the issue of reciprocity. From the context of an owner-managed small firm, reciprocity here refers to the actions of an employer or manager creating a perception to the employees to respond in kind (Gouldner, 1960). An assessment of the connection between performance outcomes and internal dynamics could be accomplished via the psychological contract model as depicted by Guest and Conway (1998), a model that proposes that commitments contained in a psychological contact and their scope of fulfillment shall be reflected on the outcome of such a contract. An example of a psychological contract outcome is the employees’ performance. Evidence supporting the connection between the content and the outcomes of a psychological contract seems to be quite limited. Even then, available research does in fact imply that the “nature” of such a contract is quite applicable.

Research Design – Methodology, Data Collection, and Proposed Analysis

The main purpose of this research is to analyze the impact of psychological contracts on small firms in Portuguese. Thus, a methodology and a data collection plan must be set up in order for the researcher to be able to reach the goals of this research. For a better understanding of the reality of a situation in question, it is necessary for the researcher to be aware of each little detail.

It is essential to develop an understanding of the personal example of the author as this informs the chosen research method. The manner in which the author sees and analyzes some situations will also impact on results obtained. The most important research methods views in the literature are positivism and phenomenology and both of them play an important role in this kind of research. (Saunders et al., 2000).

Research Methodology

Research methodology has been defined as “the application of science-based procedures with a view to acquiring solutions to a number of research questions (Adams & Schvaneveldt 1991). A research methodology supplies the necessary tools to aid in the carrying out of research, whose goal is to obtain the needed information.

A research methodology entails the whole conceptualization process, an observation of the problems that need to be studied, research questions formulation, the collection of data, data analysis, and the eventual generation of the research findings. Nevertheless, there are a number of authors who have come up with alternative methods of research (Ghauri et al., 1995; Yin 1994).

The availability of literature as regards the methods of research assists in the process of classifying the suitable and appropriate methods necessary to conduct a specific kind of research. Moreover, Ghauri et al (1995) opine that the method often selected for use in a given research study is determined by the objectives and problems that such a research presents.

Furthermore, selecting a desirable method of research is determined by the context of the potential research. In addition, the availability of adequate literature material to warrant such a study shall also determine the research method that is adopted for a given research study, so that the relevant topics can be adequately assessed. In a situation whereby this does not happen, then there is a need for the conduction of further studies so as to fill in the remaining gap.

Research design

According to Creswell (2008), a research design is a framework for collecting and utilizing sets of data that aim to produce logical and appropriate findings with great accuracy and that hopes to adequately and reasonably rest a research hypothesis, especially in a case whereby a quantitative study is being undertaken. A research design could either be qualitative, or quantitative.

Quantitative research is mainly concerned with the quantification of the findings Qualitative research on the other hand is defined as a research strategy that emphasizes words rather than quantification in the collection and interpretation of the data. The quantitative strategy applies a deductive approach whereas the qualitative strategy makes use of induction (Lee, 1999). The former aims to test a theory and the latter builds it.

Qualitative research usually provides a more detailed and profound analysis of the specific situation. The openness between the parts is much higher than with the quantitative method which can facilitate the generation and creation of new theories. The participation of both parts is evident and they can discuss problems and explain uncertainties or ambiguities. This level of depth and detail is not achievable in quantitative research if the individual only answers closed questions.

It is not quite easy to define qualitative research; given that the term lacks its own distinctive paradigm or theory. Additionally, qualitative research lacks a discrete set of practices of methods that could entirely be attributed to it (Benzin & Lincoln, 2000, P. 6). According to Patton (1987, p. 301), qualitative methods offer detailed events description, interactions, and situations between things and people providing detail and depth.

Other scholars (for example, Covaledki & Dirsmith, 1990) have viewed qualitative methods as a strategy that could be utilized in the analysis of the social truths of say, a phenomenon. Despite there being variations as far as the definitions of qualitative research go, nevertheless, these definitions all seem to have a common feature; they are aimed at providing a richer perceptive of social realities and processes.

The philosophical background of qualitative methods lays emphasis on the benefits of better understanding the social interactions from an organizational context, as well as the human behavior meaning. This shall often entail the development of an emphatic understanding grounded on a subjective experience, and also an understanding of the links between behaviors and personal perceptions.

Flick (2002) offers that those research studies that tend to stick to strategies that are inductive are best conducted using a qualitative strategy. Furthermore, qualitative research assists a researcher to embrace contextual conditions while at the same time also acting as a tool for detecting novel issues, and aiding in the development of theories that are grounded on empirical evidence.

Besides, qualitative methodologies tend to have high validity levels, while at the same time also preserving data flow in a chronological manner. In any case, qualitative data is rarely vulnerable to retrospective alterations (Ghauri et al., 1995, p. 85).

In terms of data collection for this particular research study, the researcher shall make use of in-depth qualitative interviews with the owner-managers and some employees of 10 micro Portuguese firms of the private sector. To these, the in-depth interviews shall be administered, so that the research can gain an insight as regards the perceptions of the owner-managers concerning the issue of psychological contracts in small firms, as well as the perceptions of the employees in these organizations too. Furthermore, the owner-managers and the employees shall also assist to depict the role of psychological contract especially during the time of, for example, an economic crisis. Ultimately, these interviews are meant to assist in exploring the possible ways in which being a small firm, as well as the associated factors, impacts psychological contracts in the workplace.

Sample

A sample is defined as “the individuals who come from a larger group, the so-called target population, and who are supposed not to have important differences in their characteristics” (Remenyi et al, 1998). According to Creswell (2008), sampling is one element of the statistical practice that concerns itself with the selection of unique observations that are anticipated to surrender some knowledge about a population in question, specifically for purposes of forming some statistical inference.

This research study shall seek to target the employees as well as the manager of Lerastil-constructed, LDA Company in Portugal. To these, in-depth qualitative interviews with owner-managers as well as some of the employees shall be administered in order to facilitate the collection of the necessary data.

Methods

According to Saunders et al (2007), when both qualitative and quantitative data collection techniques are used to analyze and understand a given situation, then the researcher of such a technique could be said to be utilizing a mixed method. This kind of method provides a better understanding and more reliable results for the researcher. For this particular study, this researcher hopes to make use of the in-depth interviews for purposes of gathering data. The in-depth interviews shall in this case be self-administered, whereby the interviews will be sent to the mail addresses of the respondents taking part in the survey.

In-depth interviews have been seen to be valuable especially in a situation whereby the researcher wishes to acquire detailed information regarding the behavior and thoughts of an individual (Creswell 2008). In this particular case, the researcher wishes to gain an insight as to how the psychological contract has impacted the small firms. For this reason, it is prudent that the owner-managers of such small firms are interviewed for their perceptions on the issue, and also the employees, to also gain insight into the same issue.

Primary Data

Primary data will be collected through the carrying out by the researcher of in-depth interviews, directed at the owner-managers of the micro Portuguese firms so identified, as well as some of their employees. Through this form of primary data collection, and insight shall have been gained from both the perspective of the owner-managers, as well as the employees, with regard to the issue of psychological contracts in the workplace.

Secondary Data

Secondary data is a valuable tool within a research study since it can provide insights into the research area and can also lay the foundation for further research. Secondary data will be collected from the literature and it is targeted to reveal the areas of both employee motivation and the management of employee behavior in organizations. The main sources for obtaining secondary data will be the existing literature such as books, journals, articles, as well as records and company (Larestil constructed, LDA) reports and publications. During the process of collecting secondary data, special caution will be required in order to locate the precise data that fit the objectives of the research.

Ethical Considerations

The researcher will explain to all participants the purpose of this study and also guarantee all participants that their identity will be maintained anonymously and that the interviews and questionnaires will be realized individually.

According to Sekeran (1992), a researcher should not “ use the research results to the disadvantage of the participants, or for purposes that participants will not like; not allowing them to withdraw from the research when they want to; exposing participants to physical and mental stress; deceiving subject by deliberately misleading them as to the true purpose of the research; asking demeaning questions that diminish their self-respect and putting pressure on individuals to participate in the research”.

In keeping with Sekeran’s directives, this researcher wishes to point out to the respondents from the start that their participation is on a voluntary basis. As such, there shall be no coercion to remain in the study. Furthermore, the respondents shall also be free to leave the research study at any point of participation. Moreover, the use of any information given by all participants will be used only with their consent for purposes of this research study, and they will be always informed before that. Their answers will be elaborated anonymously. Ultimately, the self-administered in-depth interviews shall be destroyed once the data collected has been compiled and analyzed.

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