The moderating effect of perceived psychological contract fulfillment on attitude toward organizational change

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The moderating effect of perceived psychological contract

fulfillment on attitude toward organizational change

Master’s thesis

January 26th, 2018

Guido Dekker - 11388749

MSc Business Administration: Strategy

Amsterdam Business School, University of Amsterdam Supervisor: A. Alexiou

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Statement of originality

This document is written by Student Guido Dekker who declares to take full responsibility for the contents of this document.

I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.

The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.

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PREFACE

It is such a delightful opportunity to present to you my thesis, the final work of my master’s degree Business Administration: Strategy at the University of Amsterdam, which I started in September 2016. After several months of hard work, consisting of long days and nights of cracking brains but also enjoying conducting research in a topic I am passionate about, all good things come to an end.

A year ago, the journey started by having a brainstorm session with Andreas Alexiou, my supervisor for this thesis project. Quickly, the idea of this study was born. After a few months and my wedding, I continued with the implementation of the research. The fact that organizational change had my interest before, triggered me to find useful insights about this relevant but also very controversial topic in business.

I would like to thank the people that played an important role for me in this process. First of all, many thanks go to Andreas Alexiou, who has been a committed sparring partner for me during this journey. I would like to thank him for his valuable advice, useful feedback and also for his flexibility in being available anytime. I also want to thank my family for all the help, support and positive energy during tough times and I also thank my close friends for inspiring me and helping me to keep focused on the finish line. Finally, I would like to express my gratitude especially to my lovely wife Sara, for her ongoing support and encouragement to persevere and her patience when I was disappeared behind my computer screen for hours. She really helped me to achieve this milestone!

Thank you for your interest in this study, enjoy reading! Guido Dekker BSc

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ABSTRACT

This study aimed to investigate organizational change from an individual change recipient’s perspective, by examining the effect of psychological contract fulfillment on the relationship between individual work engagement, change vision identification and articulation, and the affective, behavioral and cognitive dimensions of attitude toward change. Additionally, the direct influence of work engagement and change vision on change attitude were assessed. By adopting the individual change recipient’s perspective, employee attitudes and behaviors become are approached as determinants of the success of an organizational change. Using a research sample of 120 participants, this study found that an employee’s perception of the fulfillment of the psychological contract moderates the relationship between individual work engagement and the behavioral dimension of attitude toward change. Additionally, the importance of work engagement on the one hand and a clearly identified and articulated change vision on the other hand in realizing an employee’s positive change attitude was confirmed. For practitioners this study especially highlights the importance of effectively managing psychological contracts in order to get employees more engaged, eventually showing change-supporting behaviors and attitude that make organizational changes successful.

Keywords: Organizational Change, Attitude toward change, Employee responses to change

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INTRODUCTION

Despite the fact that organizational change is a universal topic in academics and still a central and enduring subject in management (Suddaby & Foster, 2017), an ongoing stream of academic research trying to clarify organizational change can let us carefully conclude that it still has the image of an incomprehensible and extremely challenging phenomenon, both in business literature and practice. Despite the massive increase of change literature over the years, organizational change is still lacking a clear and meaningful definition (Pettigrew, Woodman, & Cameron, 2001; Oreg, Vakola & Armenakis, 2011; Suddaby & Foster, 2017); basic questions such as when an organizational change can be considered as successful still remain unanswered.

Despite these conceptual ambiguity, the interest in organizational change within business environment keeps growing and therefore demands the academic world to further investigate the concept of change and to seek for clarification. An evident reason for this increasing interest is the fact that today’s world rapidly changes. In order to keep on track, organizations have ‘‘to manage and deal with rapid changes in technology, challenges to strategic capability and emerging trends in how employees as well as stakeholders (and customers) communicate and wish to engage with each other’’ (Shah, Irani & Sharif, 2017, p. 366). According to Van den Heuvel, Freese, Schalk and Van Assen (2017), technological developments such as big data and machine learning accelerates changes in the business environment. These developments result in increasing market and competitor demands and therefore confirm Drucker’s (1999) reasoning that the need for organizational change is an ongoing, inevitable and necessary process. In order to survive in this rapidly changing contexts, organizations needs to initiate anticipatory and adaptive changes (Brown and Eisenhardt, 1997; Huy & Mintzberg, 2003).

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8 Furthermore, Georgiades (2015) adds that organizational change is the essential factor in developing short-term competitiveness and realizing long-term organizational survival within the market. The inevitability of deploying and using advanced technologies requires firms to cut costs and enhance flexibility as much as possible (Leana & Barry, 2000). Managing changes that flow from these developments has become the ultimate managerial responsibility. Nonetheless, change projects deployed to adapt to the changing environments rarely claim substantial success (Taylor-Bianco & Schermerhorn, 2006). Piderit (2000) concludes that the adaption to change has been but will be even more a timeless and crucial challenge.

Because of the rising importance, the increasing frequency of organizational change has a cumulative effect on individuals in the organizations (Herold, Fedor & Caldwell, 2007). Nonetheless, most research has merely focused on the effective implementation of change as a key to success. Today, most organizational changes are still perceived as separate events that can be centrally managed, adopting Lewin’s (1951) process of freezing, unfreezing and refreezing of an organization in times of change (Van den Heuvel et al., 2017). This mechanic approach of implementing change from an organizational-level perspective (Pluta & Rudawska, 2016; Oreg et al., 2011) assumes that change agents and recipients share the same understanding (Bartunek, Rousseau, Rudolph, DePalma, 2006). However, this perspective no longer represents today’s reality of rapidly changing environments. In contrast and even revolutionary, Piderit (2000) denotes that successful change is increasingly dependent on generating change support, commitment and excitement. Eventually, the attitudes and behaviors of the individuals within the organization will make or break the success of desired change initiatives (Bartunek et al, 2006).

Regarding this shifting focus on individuals, this study advocates for an adoption of an individual change recipient’s perspective in trying to contribute to the clarification of the conceptof organizational change. Therefore, this study concerns the individual employee’s

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9 attitude toward change as important determinant of the eventual success of an organizational change. This study considers attitude toward change as a multidimensional construct (Piderit 2000, Oreg, 2006) and aims to provide more insights about the complexity of change attitude,

since it has not been studied extensively yet and therefore empirical evidence is scarce. This study argues that an extensive focus on the role of individuals in organizational change will

eventually result in more success. It seems logical that in order to get employees excited for the organizational change, it is important to provide a satisfactory and stable working environment. However, most organizational changes fail because the organization does not address the uncertainty that changes bring in going from the known to the unknown (Vakola & Nikolaou, 2005). Additionally, when employees do not have a feeling of satisfaction and excitement regarding the work they do, cynicism and negative responses to change plans will arise (Bommer, Rich & Rubin, 2005). Therefore, in this current study engaged workers and a clearly identified and articulated change vision are considered as two instruments that will reflect a sense of satisfaction and stability and eventually will lead to a more positive attitude toward change.

In line with this reasoning, recent research (Van den Heuvel et al., 2017; Van den Heuvel, Schalk, Freese & Timmerman, 2016) has focused on the concept of attitude toward change by investigating the role of psychological contracts. Therefore, this study adopts the innovative thought of perceiving a careful and constant psychological contract management as a key factor in realizing successful organizational change (Van Den Heuvel, Schalk, Freese & Timmerman, 2013). The objective of this study is to examine the interaction effect of perceived psychological contract fulfillment on the relationship between individual work engagement, change vision identification and articulation, and the multidimensional attitude toward change. With examining these constructs, the attempt of this study is to contribute to closing the empirical gap: the

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10 scarcity of the multidimensional attitude toward change as a construct on itself and in relation to individual work engagement, the change vision and the psychological contract.

The structure of this study is as follows: in the following chapter a review on the existing literature will be discussed and the conceptual model with research hypotheses that follow from this literature review are presented. Subsequently, in the methodology chapter the research approach and sampling procedure will be explained. This chapter also contains an in-depth explanation of the measurement of the research variables. After the methodology chapter, the results chapter addresses an analysis of the study findings. The final chapter contains a discussion of the implications and limitations of the study, recommendations for further research and an overall conclusion.

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LITERATURE REVIEW

In this section, a review of the theoretical constructs applied in this study is provided. First, the concept of multidimensional attitude toward organizational change will be discussed. Second, the concepts of individual work engagement and change vision identification and articulation by the management (one of the six elements of Transformational Leadership Behavior (TLB)) will be explained, and the resulting hypotheses will be presented, predicting a positive relationship with the affective, behavioral and cognitive dimensions of attitude toward change. In the third section, the concept of psychological contract fulfillment will be explained. In the final and fourth section, this study elaborates on the important role of psychological contract fulfillment in the organization’s pursuit of having employees with a positive attitude toward the initiated change. The hypotheses predicting an interaction effect on work engagement and change vision will be presented, comprising the important role of psychological contract fulfillment.

Attitude toward change

There has been a lot of interest in the concept of attitude toward organizational changes. The variety of every individual perceiving change in a unique way is also reflected in the variety of conceptualizations of employees’ responses toward change (Bouckenooghe, 2010). From the late 1940s onward, change attitude has been studied widely and it became conceptualized into two different streams: resistance to change (Coch & French, 1948) comprising a negative attitude toward change, and readiness to change (Jacobson, 1957) comprising a positive attitude toward change. According to Van den Heuvel et al. (2017), these conceptualizations marked the beginning of an ongoing debate about whether change should be defined in either negative or positive terms. In line with Van den Heuvel et al. (2017) and Oreg (2006), this study approaches

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12 attitude toward change representing a neutral stance, meaning that it can inhibit both negative and positive responses to an organizational change. Subsequently, Piderit’s (2000) multidimensional construct is adopted in this study, operationalizing attitude toward change as a multidimensional, mental state, comprising affective, behavioral and cognitive responses to change (Bouckenooghe, 2010).

The affective, behavioral and cognitive dimensions reflect three different manifestations of people’s evaluation of an object or situation (McGuire, 1985). According to Oreg (2006), the affective dimension concerns how the employee feels about the change (e.g. feelings of anger or fear versus feelings of happiness and excitement); the behavioral dimension regards the employee’s actions or intentions to act in response to the change, supporting or resisting it (e.g. intentions or actions of complaining or convincing others that the change is bad versus showing approval to the management or trying to advance the change process); the cognitive dimension

focuses on the employee’s evaluation of the worth and potential benefit of the change (e.g. thoughts about whether the change is necessary, whether it will lead to benefits for the

organization and the employee itself). In practice, approaching attitude toward change as a multidimensional construct makes space for the recognition of cross-dimensional ambivalence; instead of examining attitude as positive (change readiness) or negative (change resistance), examining each dimension as separate continuum enables to discover the possibility for different reactions along the different dimensions (Piderit, 2000). Oreg (2006) argues:

‘‘Whereas some variables may have their primary influence on how people feel about a change, others may have more impact on what they do, and yet others on what they think about it. Similarly, people’s feelings toward a change may lead to different outcomes than the outcomes of their behaviours or of their thoughts.’’ (p. 76)

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13 According to Oreg (2006), this multidimensional view is therefore more likely to capture the complexity of (ambivalent) attitudes toward change and may provide a better understanding of the relationships between attitude and its antecedents and consequences.

With respect to the application of the multidimensional construct of change attitude, so far quantitative research falls behind by merely focusing on intentional and behavioral responses to change (Bouckenooghe, 2010). Only a handful of empirical studies have conceptualized, operationalized and analyzed the multidimensional construct comprising the affective, behavioral and cognitive dimensions of employee responses to change. In other words, a broad application of the multidimensional construct in empirical research remains scarce (Van den Heuvel, 2017). Therefore, this study has empirically tested the multidimensional construct of attitude toward change, in the light of individual work engagement and change vision identification and articulation, as antecedents of a positive change attitude. Subsequently, we can examine the impact fulfilled psychological contract can have on the trial of having engaged employees on the one hand and effectively identifying and articulating a change vision on the other hand. Hence, the prediction is that these factors will eventually lead to an employee’s positive attitude toward the change. In line with this reasoning, for organizations this positive attitude of individuals is therefore indispensable because it will shape the ultimate success of the change initiative (Bartunek et al., 2006).

Individual work engagement; the first hypothesis

For decades, business leaders and change agents have been interested in what determines employee responses to organizational changes (Van den Heuvel et al., 2017). There is no doubt that there is a great deal of interest in the concept of employee engagement in business and

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14 management fields (Saks, 2006; Shuck & Wollard, 2010). Despite the fact that a lack of academic and empirical research makes the concept of engagement somewhat ‘faddish’ and typified as ‘old wine in a new bottle’ (Saks, 2006), recent research has shown that work engagement is of utmost importance in striving for successful organizational change (Van den Heuvel et al., 2017). Van den Heuvel, Demerouti, Bakker & Schaufeli (2010) even state that work engagement has shown to be contagious: it can be used as a counterforce for possible change cynicism and therefore it has a special importance in and during organizational changes.

According to Schaufeli, Bakker and Salanova (2006), work engagement – which is considered as counterpart of burnout – is one of the important pillars of a ‘‘positive psychology’’: a new approach entailing ‘‘positively oriented human resource strengths and psychological capacities that can be measured, developed, and effectively managed for performance improvement in today’s workplace’’ (Luthans, 2002, p. 698). Focusing on the conceptualization of work engagement, we can discover that it has been defined in several different ways and the definitions seem to overlap with concepts such as organizational commitment and organizational citizenship behavior (Saks, 2006). In this study, engagement is defined as ‘‘a positive, fulfilling work-related state of mind that is characterized by vigor, dedication, and absorption.’’ (Schaufeli, Salanova, González-Romá & Bakker, 2002; Schaufeli et al., 2006). Rather than being limited to a momentary and specific state, engagement refers to a more persistent and pervasive affective cognitive state, not limited to any object, event, individual or behavior (Schaufeli et al., 2006).

As mentioned, in Schaufeli et al.’s (2002) conceptualization of work engagement, three dimensions are addressed. The first dimension or characteristic is vigor. Vigor points out the aspect of energy, it denotes high levels of energy and mental resilience while working. When individuals show vigor, they have the willingness to invest effort in their work, they have the ability to not be easily tired and they show persistence in facing difficulties. The second

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15 dimension or characteristic dedication refers to someone’s strong involvement in the work the individual does. This sense of strong involvement is accompanied by feelings of enthusiasm and significance; a person feels that the work is meaningful and that it matters. Furthermore, this sense of involvement and significance is accompanied with a sense of pride and inspiration. Finally, the third dimension or characteristic absorption comprises the state in which individuals are fully concentrated and engrossed in what they are doing. They got carried away in their work activities, realizing that time passes quickly and they can find it hard to detach themselves from the work (Llorens, Schaufeli, Bakker & Salanova, 2007).

Focusing on the role of work engagement within organizations, several studies (Harter, Schmidt & Hayes, 2002; Baumruk, 2004; Markos & Sridevi, 2010) found empirical evidence of a positive relation between engagement and organizational performance. An engaged employee is aware of the business context and effectively cooperates with direct colleagues to improve performance as a benefit for the entire organization. Engagement is therefore interwoven with important business outcomes, supported by recent studies that discovered positive relationships between employee engagement and employee retention, productivity, profitability, customer loyalty and safety (Markos & Sridevi, 2010). An engaged employee contributes to the effective functioning of the organization and not in particular to his or her own performance or appraisal (Organ, 1988). This focus on bringing the organization to a higher level and therefore identifying with the goals of the organization will be an important factor in times of organizational change (Van den Heuvel et al., 2017).

Shifting toward the role of the employer itself in developing and nurturing work engagement, Piderit (2000) argues that there should be a proper climate in which employees can develop their potential. Failure to provide this will result in frustration, poor performance, less satisfaction and withdrawal from the organization (Steers & Porter, 1983; Cartwright & Holmes

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16 2006), in times of change even resulting in a negative, resisting attitude toward the change. Wollard and Shuck (2011) add that it is important to focus at the employee’s direction of energy. They state that organizations should create an environment in which employees will direct their talents, skills, abilities and motivation toward organizational goals, in this case the goals and vision of the desired organizational change.

Whenever there is an organizational environment in which individuals are engaged to their work, they will go the extra mile in seeking what is most beneficial for the organization (Van den Heuvel et al., 2010). This is also reflected by Avey, Wernsing and Luthans (2008). In their study, the positive psychology is evident in arguing that engagement as positive emotion will lead to exhibiting a positive attitude toward a change. Despite possible minor discrepancies in opinion regarding the process of the change or thoughts about the desired future, especially these positive emotions may help individuals to cope with the initiated change. By ‘‘broadening the options they perceive, maintaining an open approach to problem solving, and supplying energy for adjusting their behaviors to new work conditions’’ (Baumeister, Gailliot, DeWall & Oaten, 2006, in Avey et al., 2008, p. 50), work engagement leads to positive attitudes and behaviors, expressed in positive feelings toward the change, actual intentions or behaviors to support the change, and a personal belief that the change is beneficial for the organizations as a whole. Furthermore, the already mentioned contagious effect (Van den Heuvel et al., 2010) of individual work engagement becomes visible in the possible impact it can have on other team members’ motivation and emotions, which eventually results in a positive influence on the effectivity of an organizational change. Following this reasoning, I predict a positive relationship between individual work engagement and attitude toward change and I will address the following hypothesis in this study:

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Hypothesis 1. Individual work engagement is positively related to the

affective, behavioral and cognitive dimensions of attitude toward change.

Change vision identification and articulation; the second hypothesis

The reason of changes being complex and hard to manage is the fact that almost every organizational change brings a lot of uncertainty for change recipients. Jacobs, Christe-Zeyse, Keegan and Pólos (2008) argue that change may often result in a misalignment with the existing organizational culture. Such misalignment can feel as a threat to the organizational identity, generating uncertainty and evoking distrust among the employees of the organization. Despite that humans naturally seek change, the uncertainties that an organizational change can bring may even result in fear (Senge, 1990). When the desired change is poorly communicated it will lead to a rise of widespread rumors that reinforce resistance to the change (Bordia, Hunt, Paulsen, Tourish & DiFonzo, 2004; Johansson & Heide, 2008). Therefore, proper communication of the change initiators is undeniably important in order to avoid uncertainty and fear (Burnes, 1992). Lewis (1999) even argues that communication processes are inextricably linked with organizational change initiatives and Ford and Ford (1995) adds that change is created, sustained and managed in and by communication. Change communication can be used to carry out the need for change, to help employees discovering the new desired state relative to the current status quo (Battilana, Gilmartin, Sengul, Pache & Alexander, 2010). Emphasizing the need for change is what Kotter (1995) denotes as establishing a sense of urgency, the first of Kotter’s well-known eight step change model. Furthermore, this sense of urgency is also reflected in the vision behind the change, which has shown to result in more openness toward the change if it is carried out

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18 properly (Wanberg and Banas, 2000; Axtell et al., 2002). Because of the important role communicating change vision plays in organizational change initiatives this study further elaborates on change vision as theoretical construct related to an employee’s attitude toward the change.

Identifying and articulating a vision is one of the dimensions of Transformational Leadership Behavior (TLB) (Podsakoff, MacKenzie, Moorman & Fetter, 1990). TLB and especially the vision dimension are highly relevant with respect to attitude toward change, because ‘‘transformational leadership ‘transforms’ individual employees to make them more receptive to, and build capacity for, bringing about organizational change’’ (Bommer et al., 2005, p. 734). In their study, Bommer et al. found that TLB was an effective means in reducing change recipients’ cynicism or resistance about organizational change. Especially a clear change vision can have a positive impact on the employee’s perception that current, organizational conditions will improve (Bommer et al., 2005). It can be defined as ‘‘an ideological goal that describes a better future for followers’’ (House & Shamir, 1993, in Bommer et al., 2005, p. 739). Subsequently, with articulating the identified vision managers should simultaneously focus on improving the perceptions of future success and building faith in those responsible for the change (Bommer et al., 2005). Eventually this will lead to the absence of cynicism and a positive attitude toward the change, but only if the identified and articulated vision is built upon a felt need or urgency to actually change the current status quo (Kotter, 1995; Bommer et al., 2005; Battilana et al., 2010). When the proposed change is communicated clearly to an employee as ‘‘an exciting and viable opportunity from which they will benefit’’ (Zimbardo & Leippe, 1991, in Bommer et al., 2005, p. 739), then it will be more likely that the employee will accept and commit to the initiative. Openness to the change will be realized, visible in an employee’s positive feelings, actual behaviors and a belief that the change is beneficial for everyone. Possible questions of the

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19 employee about the motives of the change are answered as much as possible, uncertainty is avoided and the employee is well-prepared for what will come (Van den Heuvel et al., 2017). Following this reasoning, I predict a positive relationship between change vision identification and articulation by the management and an employee’s attitude toward change and I will address the following hypothesis in this study:

Hypothesis 2. Change vision identification and articulation is positively related

to the affective, behavioral and cognitive dimensions of attitude toward change.

Psychological contract fulfillment

Moving to the third factor, the concept of psychological contract fulfillment was already introduced in the 1960s, the concept gained increasing interest in the 1990s because of its perceived value in explaining employees’ responses to changes in the employment relationships; different internal and external factors (e.g. global competition, cost-cutting activities) caused breaches of psychological contracts, because organizations were not able or willing to live up all the previously made promises. From the 1990s onwards, a lot of empirical research has been conducted on psychological contracts. However, the main focus remained on how organizational changes impacted the content and state of psychological contracts. Empirical research about the influence of the psychological contract on attitudes toward a particular change (the other way around) is scarce (Van Den Heuvel et al., 2017). With researching the outcomes of the extent of perceived psychological contract fulfillment on the relationship between individual work engagement, change vision identification and articulation, and attitude toward change, this study examines the relevance for organizations of effectively ‘managing’ psychological contracts in the

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20 light of gaining the benefit of employees showing positive attitudes toward the change. According to Rousseau (1990), the psychological contract concerns an individual’s beliefs about mutual obligations in the context of the relationship between an employee and an employer. The contract is a belief structure of what is expected to occur in the organization and what is expected of the employee in return (Shore & Tetrick, 1994; Rousseau, 2001).

According to Van Der Smissen, Schalk and Freese (2013), the theoretical construct of psychological contracts can be studied in many different ways. Furthermore, there is currently no consensus about the most appropriate approach. In general two approaches are present: the content-oriented approach and the evaluation-oriented approach. The content-oriented approach examines the specific terms of the contract (e.g. opportunities for training, security, flexible working hours) (Guest, 2004), where the evaluation-oriented approach assesses the degree of fulfillment or possible violations of the psychological control (Morrison & Robinson, 1997). This study takes the evaluation-oriented approach since this study is examining the effect of a fulfilled or violated psychological contract on the relationship between individual work engagement, change vision identification and articulation, and attitude toward change. However, this study also addresses the different specific terms of the contract to clarify and evaluate to what extent fulfillment was realized. Despite that, this study is merely based on the evaluation-oriented approach and this study does not examine the interrelations between different terms (a focus which characterizes the content-oriented approach).

Regarding the content of the psychological contract, Morrison and Robinson’s (1997) recommend to specify the psychological contract into practical terms or elements, rather than different contract types. Freese, Schalk and Croon (2011) denote the following six dimensions: (1) job content (challenging, varied and interesting work), (2) career development (opportunities for promotion and development), (3) social atmosphere (a pleasant and cooperative work

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21 environment), (4) organizational policies (open communication, clear and fair rules, supervising and feedback), (5) rewards (appropriate rewards and good benefits), and (6) work-life balance (flexibility and understanding of the employee’s personal situation). In this study, we examine the perception of the employee about to what extent the promises has been fulfilled or not. In order to examine what impact the fulfillment or violation has on engagement, change vision and change attitude, this study is particularly interested in the extent of fulfillment so far until the change was initiated, because this experience will shape the future attitudes and behaviors. If the employee has experienced a history of unfulfilled promises then it would be likely that it resulted in a negative attitude toward change.

Perceived psychological contract fulfillment as moderator; the interaction hypotheses

As mentioned before, empirical research on the multidimensional attitude toward change remains scarce. Therefore, this study contributes to the deepening, broadening and extending of research on change recipient’s attitude toward change (Van den Heuvel et al., 2017) by examining the decisive antecedents that determine whether an individual will have a positive or negative attitude toward change. Because the extent of perceived psychological contract fulfillment can eventually determine the success of an organizational change, this study approaches psychological contract fulfillment as a construct that impacts the relationship between individual work engagement, change vision identification and articulation, and attitude toward change. By approaching perceived psychological contract fulfillment as moderator, this study tries to contribute to the understanding of what is important for an employee during times of change and what ultimately will lead to a positive attitude toward change. More practically, examining perceived psychological contract fulfillment as moderator will give us insight in whether it would be essential for organizations to invest time and effort in constantly ‘managing’

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22 the psychological contracts, so that in the case of a change initiative the employees will more likely support and advance the change rather than resisting it.

Individual work engagement and attitude toward change

With respect to the causal relationship of individual work engagement and attitude toward change, De Vos, Buyens and Schalk (2005) argue that the psychological contract is an important motivator for employees. They state that when a psychological contract is perceived by the employee as fulfilled, the employee is more committed, willing to remain with the organization and the employee will be engaged with the work and the organization as a whole. According to Rousseau (2003), the psychological contract is a reciprocal exchange agreement between the employee and the employer. This process of reciprocation explains changes in employees’ attitudes and behaviors; employees weigh their “employment deals” and respond to their employer by adjusting their attitudes and behaviors. This means that when employees perceive a breach of promises, ‘‘their motivation and commitment to the organization decrease and they become more likely to leave their jobs’’ (De Vos et al., 2005, p. 41). Conway and Briner (2005, in Parzefall & Hakanen, 2010) add this breach has been linked to several downward adjustments in employees’ attitudes, for example in satisfaction, commitment and organizational citizenship behavior. Hence, it is important for organizations to manage the norm of reciprocity by meeting employees’ expectations of satisfying job conditions and rewards. This will encourage employees to reciprocate with positive attitudes and behaviors to their jobs, the organization and what the organization has in mind for the future (De Vos et al., 2005). With adopting this approach, effectively managing the psychological contract of an employee becomes a ‘job resource’ that drives work engagement (Parzefall & Hakanen, 2010; Bal, de Cooman & Mol, 2013). Eventually, these particular positive emotions of work engagement will lead to a positive attitude toward the

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23 initiated change. As mentioned before, work engagement triggers an employee to have a more open-minded cognition and positive affection, and supplies for more energy in adjusting work behaviors to the new situation (Avey et al., 2008). Following this reasoning, I predict a positive interaction effect of perceived fulfillment of the psychological contract on the relationship between individual work engagement and the affective, behavioral and cognitive dimensions of attitude toward change. I will address the following hypothesis in this study:

Hypothesis 3a. Perceived psychological contract fulfillment moderates the positive

relationship between individual work engagement and the affective, behavioral and cognitive dimensions of attitude toward change, such that the relationship is stronger when the extent of perceived psychological contract fulfillment is higher.

Change vision identification and articulation and attitude toward change

Regarding the causal relationship between the identification and articulation of the change vision and an employee’s attitude toward the change, a clear identification and articulation is essential in avoiding uncertainty on the one hand (Senge, 1990; Burnes, 1992; Vakola & Nikolaou, 2005) and in establishing a sense of urgency on the other hand (Kotter, 1995; Bommer et al., 2005; Battilana et al., 2010). As mentioned before, Bommer et al. (2005) argue that a clear change vision can positively shape the employee’s perception that the current situation will improve. Additionally, they state that it is essential to build faith in those responsible for the change. Especially this perception of a better future and having faith in those who are responsible for the change are related to the psychological contract fulfillment,. leading to positive attitudes and behaviors (De Vos et al., 2005; Parzefall & Hakanen, 2010). Two positive outcomes of psychological contract fulfillment that determine whether an employee can actually perceive the future as better and have faith in the change agents are commitment and trust. Commitment and

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24 trust are indispensable for organizations or managers in order to be able to effectively dispatch the change vision across the employees. When the the employee has experienced (so far until the moment of change initiation) a fulfillment of the obligations or promises, the employee will most likely perceive the change as an exciting, viable and beneficial opportunity (Bommer et al., 2005). On the contrary, when the psychological contract has been violated, then it will be likely that trust in the employer is diminished (Robinson and Rousseau, 1994). Based on this mistrust, the effectiveness of the change vision will decrease because the employee mistrusts the employer and therefore the employee probably will not perceive the change as exciting, viable and beneficial. Therefore, this study perceives the fulfillment of the psychological contract as essential for managers in order to come up with a clear vision. As mentioned before, this study advocates the adoption that it is essential for organizations to effectively manage the psychological contracts in het light of possible change initiatives in the future. This reciprocity will encourage employees to have a positive attitude toward the change (De Vos et al., 2005), what will eventually make the success of the desired organizational change. Following this reasoning, I predict a positive interaction effect of perceived fulfillment of the psychological contract on the relationship between change vision identification and articulation by the management and the affective, behavioral and cognitive dimensions of an employee’s attitude toward change. I will address the following hypothesis in this study:

Hypothesis 3b. Perceived psychological contract fulfillment moderates the positive relationship between change vision identification and articulation, and the affective, behavioral and cognitive dimensions of attitude toward change, such that the relationship is stronger when the extent of perceived psychological contract fulfillment is higher.

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25 The conceptual model regarding the expected relationships is presented in figure 1 below. Finally integrating the hypotheses and research problem comes together in the following research question this study addresses:

What is the moderating effect of perceived psychological contract fulfillment on the relationship between individual work engagement, change vision identification and articulation, and attitude toward change?

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METHODOLOGY

In this chapter, the methodology of this research will be discussed and the research design is explained. First, table 1 is presented below to provide an overview of the research question and underlying hypotheses, describing the expected relationships between the independent and dependent variables. Second, the research approach will be discussed in order to clarify the empirical goals and strategy of this study. Third, the research sample and the underlying sampling procedures will be explained and finally, this will elaborate on the quality and credibility of this study.

Change vision identification and articulation

+

H3b Figure 1: Conceptual model

_{Individual work} engagement

Attitude toward change

Affective dimension Behavioral dimension Cognitive dimension Perceivedpsychological contract fulfillment H1 H2 H3a

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Table 1: Overview of the research question and hypotheses

Research question Hypotheses

What is the effect of perceived psychological contract fulfillment on the relationship between individual work engagement, change vision identification and

articulation and attitude toward change?

H1: Individual work engagement is

positively related to the affective, behavioral and cognitive dimensions of attitude toward change.

H2: Change vision identification and

articulation is positively related to the affective, behavioral and cognitive dimensions of attitude toward change.

H3a: Perceived psychological contract

fulfillment moderates the positive relationship between individual work engagement and the affective, behavioral and cognitive dimensions of attitude toward change, such that the relationship is stronger when the extent of perceived psychological contract fulfillment is higher.

H3b: Perceived psychological contract

fulfillment moderates the positive relationship between change vision identification and articulation, and the affective, behavioral and cognitive dimensions of attitude toward change, such that the relationship is stronger when the extent of perceived psychological contract fulfillment is higher.

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Research approach

In this research, a positivist research approach is embraced in order to test the hypotheses and ultimately answer the research question. This means that this study is based on a observable reality with the eventual goal to produce law-like generalizations (Remenyi, 1998). From this perspective, the ontology of this study entails the assumption of an external objective reality, independent of social actors or subjective experiences. This objectivity is also reflected in the axiology of this study; an independent and objective position of the researcher toward the data of this study. In line with this view, the chosen data collection technique in this study is a quantitative questionnaire. This research technique supports the positivist epistemology of this study of obtaining observable phenomena only, focusing on causality and law-like generalizations; making use of a highly structured methodology in order to facilitate replication (Saunders, Lewis & Thornhill, 2009).

Subsequently, this positivist research approach is based on deductive reasoning; it involves the testing of existing theory. Deduction possesses several essential characteristics. First, it contains the search to explain causal relationships between variables, in this research especially between individual work engagement, change vision identification and articulation, perceived psychological contract fulfillment, and the affective, behavioral and cognitive dimensions of attitude toward change. In order to test the hypotheses, the second characteristic of the deductive approach is the inclusion of controls that allow to test the hypotheses. Subsequently, deductive research can be characterized by facilitating replication by using a highly structured methodology, an important issue to ensure reliability. Furthermore, it is important that the concepts are operationalized in such a way that it enables facts to be measured quantitatively. Finally, an important characteristic of the deductive approach is generalization; obtaining

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29 like findings that are relevant for wider populations (Saunders et al., 2009). To follow this deductive reasoning, the progress of this study followed the five sequential stages of Robson (2002): (1) deducing hypotheses from the theory; (2) expressing the hypotheses in operational terms (how the variables are to be measured); (3) testing these operational hypotheses; (4) examining the specific outcome; and (5) if necessary, modifying the theory in the light of the findings.

This sequential process of deductive reasoning is also reflected in the research strategy. A clear research strategy is important in order to coherently establish causal relationships and test correlations. In this study the survey strategy is used, since this strategy is in line with the purpose of this research to obtain explanatory findings. This strategy allows to collect and analyze quantitative data using descriptive inferential statistics. Furthermore, these quantitative data are standardized, allowing easy comparison (Saunders et al., 2009).

Finally, the strategy of this study has been translated into several research activities. First, desk research has been conducted in order to examine the existing literature about the constructs. Second, on basis of this literature review, the conceptual model including the research problem and underlying hypotheses has been presented. Third, the sampling and variable measurement procedure has been discussed and the online questionnaire has been conducted. Fourth, quantitative data has been collected and analyzed by performing several statistical analyses. Fifth and final, the results have been discussed and conclusions have been drawn.

Sample and procedure

To test whether the posed hypotheses are empirically supported, this study is concerned with employees that recently were involved in an organizational change project that was initiated

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30 by a higher organizational level or management layer. The data of this study was gathered via a self-administered internet questionnaire. The questionnaire was publicly accessible, but in order to participate in the study, the respondents had to meet the following contextual requirements: (1) the specific participant had to be an employee; (2) the organization had recently initiated a change project (no longer than 3 months ago); and (3) the employee did not have any direct responsibilities for the process or outcome of the change project; the change project was initiated by a higher organizational level. Even though the sample obtainment was based on these self-selected requirements, the sample was not limited to a specific type of organization or job sector and therefore it was mainly obtained via convenience sampling. Since it is most likely that organizations are occupied with multiple change projects, the beginning of the questionnaire included a request to keep the most recent change project in mind. Regarding the unit of analysis in this study, this research primarily focuses on the individual employee, since it aims to provide empirical support for the importance of having a individual change recipient’s perspective in seeking successful organizational change. This means that work engagement, the opinion about the change vision of the management, the psychological contract fulfillment and the eventual attitude toward change are all measured by using scales that are developed for gathering information about the individual employee only.

After three weeks of collecting data, 210 responses were administered. From 210 responses, 90 respondents were excluded from participating because they did not meet one or more of the requirements; 54 respondents reported that the change was initiated longer than 3 months ago, 30 respondents were directly responsible for the outcome or process of the change project, and 6 reported that they were not an employee of the organization. Ultimately, the final sample consisted of 120 valid responses. From this dataset no missing values arose since all of

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31 the items contained a forced response in order to proceed and ultimately completing the questionnaire.

Measurements

Except for perceived fulfillment of the psychological contract, all scales were measured by using a 7-point Likert scale (according to the original scale), most of the scales had items ranging from ‘‘Strongly disagree’’ (1) to ‘‘Strongly agree’’ (7). An overview of all items can be found in Appendix C. The dependent variable denotes the participant’s eventual attitude toward the change initiative, after investigating conditions of work engagement, change vision and Table 2: Overview of all scales and statistical descriptives

Construct Name α Items N Mean S.D. Skewness Kurtosis

Independent SC_IndWorkEng 0,926 9 120 48,767 9,702 -1,109 1,600

Independent SC_ChangeVisMT 0,849 4 120 17,525 4,947 -0,388 -0,566

Moderator SC_PsyConFulfil 0,800 4 120 11,042 2,392 -0,035 1,262

Moderator Mod_PsyCon_IndWorkEng(z) N.A. N.A. 120 0,137 1,167 N.A. N.A. Moderator Mod_PsyCon_ChangeVisMT(z) N.A. N.A. 120 0,478 1,219 N.A. N.A.

Dependent SC_AttToChange_AffDim 0,903 4 120 17,217 5,385 -0,346 -0,536

Dependent SC_AttToChange_BehDim 0,766 3 120 13,250 3,334 -0,375 -0,418

Dependent SC_AttToChange_CogDim 0,908 3 120 15,058 3,916 -0,957 0,356

Control Age N.A. N.A. N.A. N.A. N.A. N.A. N.A.

Control EducationalLevel N.A. N.A. N.A. N.A. N.A. N.A. N.A.

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32 psychological contract fulfillment. Within this study I did not measure the eventual outcome of the change initiative, rather I focused on the individual attitude of an employee as endpoint, which eventually can be typified as a starting point of successful organizational change.

Regarding the requirement that the change initiative has taken place, the survey had been administered afterwards and therefore the items were phrased in the past tense. It was beneficial for this study that the experience of the actual impact of a change initiative on the daily work practice could be strong for a long time, because that particular ongoing impact and influence made it easy and pleasant for participants to share their feelings and thoughts about the change initiative and the role of their managers in it. Despite the retrospective character of the scales, this study is particularly concerned with the direct actions or responses of employees after the change was initiated: the attitude toward the change, resulting from a level of individual work engagement (the work-related state of mind of the employee at the moment of the change plan) and the way the change vision was identified and articulated by the management (at the time of the change plan). The participation criteria that the start of the change initiative was recently and no longer than 3 months ago, made it easy for participants to reproduce the change process; their behaviors and experiences were still fresh in their minds. The only but logical exception to this time frame is the perceived fulfillment of the psychological contract. The evolvement of psychological contracts and the mutual agreements between employer and employee that reshape these contracts cannot be limited to the time frame of the change, because it is an ongoing process. Therefore, to coherently measure the effect of the fulfillment of the psychological contract on work engagement, change vision and change attitude, in this study the participants had to indicate to what degree the employer has fulfilled the obligations so far at the time of initiating the change (launching the change plan). This particular measuring point enables the study to draw conclusions about the degree to which the employee’s experiences about the

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33 psychological contract has a direct influence on the causal relationship between work engagement, change vision and change attitude.

Individual work engagement. To measure individual work engagement, I used the

shortened nine-item version (a selection of the items that characterized all of the study’s cross-national populations the most) of the Utrecht Work Engagement Scale (UWES) of Schaufeli et al. (2006) which I rephrased in the past tense. The scale is divided into the three subscales vigor, dedication and absorption, and the 9 items that were used in the study were “At my work, I felt bursting with energy”, “At my job, I felt strong and vigorous”, “When I got up in the morning, I felt like going to work”, “I was enthusiastic about my job”, “My job inspired me”, “I was proud of the work I did”, “I felt happy when I was working intensely”, “I was immersed in my work” and “I got carried away when I was working”. The reliability was evaluated by applying the measure of Cronbach’s Alpha. For the scale individual work engagement (SC_IndWorkEng) the reliability coefficient (Cronbach’s α) was 0,926, which indicated an excellent level of internal consistency, meaning that the scale is acceptable and reliable (given the rule that α should at least be 0,700 in order to indicate internal consistency). Furthermore, the scale was also evaluated for reasonable assumptions of normality by means of skewness and kurtosis. The skewness and kurtosis coefficients of respectively -1,109 and 1,600 were high compared to the coefficients of the other scales. Nonetheless, the normality is still acceptable bearing in mind the sample size (N = 120) and the fact that the coefficients are within the range of ≥ -1,960 and ≤ 1,960. An overview of α and other relevant descriptive statistics is presented in table 2 above.

Additionally, a Principal Component Analysis (Exploratory Factor Analysis) was executed in order to control whether the variables were loaded on the same and correct components. All variables of the model were included in the analysis and a Varimax rotation was used. The result of the Kaiser-Meyer-Olkin Measure of sampling adequacy (see Appendix A)

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34 was 0,833, a good score which indicated an adequate sample. The result of the Bartlett’s test of Sphericity (see Appendix A) was 0,000 and therefore significant. An overview of the factor loadings after rotation is shown in Appendix B. Regarding individual work engagement, all items loaded to their respective component with loadings > 0,500 and there were no cross loadings.

Change vision identification and articulation. To value the clearness of the management’s

identification and articulation of the change vision, I used the scale “Identifying and articulating a vision’’, a dimension of Transformational Leadership Behavior (TLB), assessed in the Transformational Leadership Inventory (TLI), developed by Podsakoff et al. (1990; Bommer et al., 2005). The participants had to indicate to what extent they agree with observing transformational leadership behavior of the change initiators: seeking new opportunities, painting an interesting picture of the future, clearly understanding where they were going, inspiring others with their future plans and being able to get others committed to that plans and their dreams of the future. After deleting one item within the scale, the reliability coefficient of the scale

(SC_ChangeVisMT) was 0,849, which indicated a good level of internal consistency. The skewness and kurtosis coefficients of respectively -0,388 and -0,566 were acceptable. The

principal component analysis that was mentioned before showed that all items of this scale loaded to their respective component with loadings > 0,500, there were no cross loadings found.

Perceived psychological contract fulfillment. In line with recent work of Van den Heuvel

et al. (2017), I measured the perceived fulfillment of the psychological contract by using the six-dimensional scale of Freese et al. (2008, the English translated items can be found in Van der Smissen, 2015), also known as the Tilburg Psychological Contract Questionnaire (TPCQ). In this scale, the concept of psychological contract has been built up around the previously discussed six content areas that are prevalent in many previous operationalizations of the psychological contract: job content, career development, social atmosphere, organizational policies, rewards

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35 and work-life balance. In line with Van den Heuvel et al. (2017), every dimension consisted of four possible obligations, the participant had to indicate to what extent they felt that the employer was obliged to offer the particular obligation. To properly introduce the obligations the following question was stated with every dimension: “In the employment relationship employees have expectations about what the organization will offer. To what extent is your organization obliged to offer you the following?”. In line with Van Den Heuvel et al. (2017), the purpose and therefore reason of including these items in the questionnaire was to properly frame each dimension so that participants knew what the psychological contract dimension comprised. These items were therefore not included in the scales and the eventual regression analyses.

To actually measure the construct psychological contract fulfillment, the participants had to evaluate to what extent they felt or experienced that their employer had generally fulfilled the obligations regarding the particular dimension of the psychological contract. Per dimension the following question was stated: “To what extent did your employer so far fulfill these obligations at the time of kicking off the change plan?’’. Integrating the specific time of initiation made it comprehensible for participants to evaluate their experiences from that specific moment back to their first day of employment. The TPCQ also addresses the opposite aspect of the matter: the employee’s fulfillment of the psychological contract. However, since the study merely focuses on the fulfillment by the employer it has not been integrated in this study.

Eventually, six items measuring psychological contract fulfillment (one for each dimension) were included in the analysis. After deleting two items (that evaluate the fulfillment of the dimensions ‘‘Rewards’’ and ‘‘Work-life balance’’) the reliability coefficient of the scale (SC_PsyConFulfil) was 0,800, which indicated a good level of internal consistency. The skewness coefficient of this scale was -0,035; the kurtosis coefficient was somewhat higher (1,262), but within the range of ≥ -1,960 and ≤ 1,960 and therefore still acceptable. The principal

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36 component analysis supported the choice to delete the two items, since one had a cross loading of > 0,400 and the other loaded to another component than the other four dimensions. Therefore, after deleting ‘‘Rewards’’ and ‘‘Work-life balance’’, all items loaded to their respective component with loadings > 0,500 and there were no cross loadings anymore.

Affective, behavioral and cognitive dimensions of attitude toward change. To finally

measure the dependent variable of this study, Oreg’s (2006) scale of attitude toward change has been used in this study, in which three separate scales measured the affective, behavioral and cognitive dimensions of attitude toward change. In Oreg’s (2006) study the focus is on resistance to change and therefore he uses negatively phrased items (e.g. ‘‘I am afraid of the change’’). On the contrary, this study focuses on a possibly positive effect on change attitude and therefore the original items of Oreg (2006) were reversely phrased beforehand (e.g. ‘‘I had a good feeling about the change’’); a higher correlation of the variables indicated a more positive attitude toward the change. Finally, the item ‘‘I complained about the change to my colleagues’’ was skipped, because the reversely phrased version would seem to overlap with ‘‘I spoke rather highly of the change to others’’.

After deleting one item, the reliability coefficient of the scale that measured the affective dimension of attitude toward change (SC_AttToChange_AffDim) was 0,903, which indicated an excellent level of internal consistency. After deleting one item, the scale of the behavioral dimension of attitude toward change (SC_AttToChange_BehDim) had a reliability coefficient of 0,766 and therefore an acceptable level of internal consistency. Finally, the reliability coefficient of the scale that measured the cognitive dimension (SC_AttToChange_CogDim) was 0,908 after two items were deleted, which also indicated an excellent level of internal consistency. Finally, all of the three scales showed acceptable normality. The skewness and kurtosis coefficients were

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37 respectively -0,346 and -0,536 for the affective scale, -0,375 and -0,418 for the behavioral scale, and -0,957 and 0,356 for the cognitive scale.

Regarding the principal component analysis, all items of the affective scale loaded to their respective component with loadings > 0,500. The analysis showed no cross loadings. The behavioral scale of originally four items, was rebuilt into a scale of three items; one of the items did not load to the same component as the other three items and also showed a cross loading of > 0,400. Regarding the cognitive scale, one item had a cross loading of 0,465. Since two items were already deleted, the cross loading approached the ≤ 0,400 rule and the two loadings differed > 0,200 (the item had a loading of 0,725 in the respective component), the decision was made to include it in the scale of the cognitive dimension.

Control variables. In this study, the control variables were age, educational level and

period of employment. Especially the period of employment at the company could have a large influence on behavioral-related variables such as work engagement and attitude toward the change. It seems plausible that someone who recently started working for the company will probably have been less occupied with the psychological contract, since most obligations evolve over time. On the other hand, it will be most likely that recently started employees are engaged with their new company and therefore probably have a more positive attitude toward new changes.

To measure age, this study used a 6-point scale ranging from ‘‘18 years or younger’’ (1) to ‘‘60 years or older’’ (6). The variable educational level was measured using a 5-point scale ranging from ‘‘Secondary school; VMBO, HAVO, VWO’’ (1) to ‘‘ PhD, post-doc or similar’’ (5). Finally, period of employment at the company was measured using a 5-point scale ranging from ‘‘Less than 6 months(1) to ‘‘5 years or more’’(5).

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Quality and credibility of the research findings

To assess the quality and credibility of the research finding of this quantitative study, the following four criteria (Saunders et al., 2009; Frambach, Van Der Vleuten & Durning, 2013) have been addressed: internal validity, external validity, reliability and objectivity. The four criteria represent the quality principles of respectively a truth value, applicability, consistency and neutrality of the evidence, resulting from conducting empirical research (Frambach et al., 2013).

First of all, internal validity is concerned with whether the findings about causal relationships are really about what they appear to be about, the truth value of the evidence (Frambach et al., 2013). In other words, it entails the ability of the research method to actually measure what is intended to measure and concerns that what has been found actually represents the reality of what is measured. Increasing internal validity highly depends on the design and structure of the questionnaire, which will minimize the likelihood that the research findings can be attributed to any flaws in the research design (Saunders et al., 2009). With replicating existing measurement scales, this study had the opportunity to develop a questionnaire that measures the constructs clear and thorough. Despite the fact that it will be beneficial to further develop the existing scales, they have proved to adequately measure the constructs of individual work engagement, change vision, psychological contract fulfillment and attitude toward change in previous research.

Second, external validity concerns the extent to which the research findings are generalizable; whether the findings can be applicable to other research settings and contexts (Saunders et al., 2009); retrieving evidence with applicability from the research sample to the population (Frambach et al., 2013). As mentioned in this chapter, the sample of this study

The moderating effect of perceived psychological contract fulfillment on attitude toward organizational change