The Mediating Role of Trust Between Psychological Contract and Employee's Commitment: A Cb-Sem Analysis

Abstract

The Corona virus situation and resulting downsizing lead to the psychological contract breach among the workforce of many industries/sectors. The retail sector in Pakistan also experienced similar problems and faced pressure to meet the needs of its staff. In the present study, this issue is investigated by testing the employee perceived psychological contract and its attitudinal outcomes among the retail sector staff. The objectives of the study include measuring the effects of psychological contract on three dimensions of organizational commitment and staff trust level. Additionally, the objective of the study include measuring the effects of trust on three dimensions of organizational commitment and testing the mediating role of trust between the relationship of psychological contract and three dimensions of organizational commitment. The methodology of the study is based on quantitative approach and survey method for data collection from the retail sector staff using the sampling method. The key findings of the study are that there are positive and significant effects of perceived psychological contract on three dimensions of commitment and employee trust. Another finding is that trust has positive and significant effects on three dimensions of commitment (affective, continuance, and normative). Additionally, trust is tested as a mediator between the relationship of perceived psychological contract and three dimensions of organizational commitment. Results of mediation analysis indicate that there is an absence of support for the mediating nature of trust. Overall, we conclude that psychological contract is important and needs greater attention from the management of the retail sector.

 Keywords: commitment, psychological contract, trust, retail sector, Pakistan.