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Causes and Consequences of Psychological Contract Breach among Grassroots Employees in Shanghai's Manufacturing Industry During the Pandemic

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The appearance of the pandemic has led to a temporary paralysis of the world's manufacturing industry. Measures such as lowering employee wages, canceling employee promotion mechanisms, adopting remote work, uncompensated remote overtime, layoffs, and canceling employee benefits were mainstream methods at the time. Shanghai, where China's manufacturing industry is most concentrated, has to conduct online courts to deal with a large number of disputes between employees and companies. This study used the SEM structural equation model to conduct statistical analysis on 303 valid questionnaires of Shanghai grassroots employees to identify the factors that affect employees' perception of psychological contract violation and the complex consequences caused by such psychological contract violation. The final study found that the lack of distributive justice led to an increase in some employees' perception of corporate psychological contract violation, which in turn reduced their satisfaction and increased their willingness to leave. Satisfaction positively and significantly affects employee performance. However, the intention to leave does not affect employee performance. The research results call on companies to pay more attention to distributive justice and improve satisfaction and performance by reducing employees' perception of psychological contract violation.
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Colquitt, J. A. (2021). Organizational justice. Annual Review of Organizational Psychology and Organizational Behavior, 8, 53-78. https://doi.org/10.1146/annurev-orgpsych-012420-055322
Lee, A., Thomas, G., Martin, R., & Guillaume, Y. (2022). When fairness fails: Linking distributive injustice to psychological contract breach during COVID-19. Journal of Applied Psychology, 107(8), 1321-1337. https://doi.org/10.1037/apl0001023
Conway, N., & Briner, R. B. (2022). Fifty years of psychological contract research: What do we know and what are the challenges? Annual Review of Organizational Psychology and Organizational Behavior, 9, 281-307. https://doi.org/10.1146/annurev-orgpsych-012420-091634
Zhang, L., Wang, H., & Li, X. (2023). Resource allocation inequity and psychological contract violation in Chinese manufacturing: The mediating role of distrust. International Journal of Human Resource Management, 34(5), 912-935. https://doi.org/10.1080/09585192.2022.2032264
Chen, S., Lin, W., & Lu, L. (2023). COVID-19, power distance, and employee outcomes: A cross-national study of healthcare workers. Applied Psychology, 72(1), 200-225. https://doi.org/10.1111/apps.12345
Azeem, M. U., Bajwa, S. U., Shahzad, K., & Aslam, H. (2020). Psychological contract violation and turnover intention: The role of job dissatisfaction and work disengagement. Employee Relations: The International Journal, 42(6), 1291-1308.
Lee, A., Thomas, G., Martin, R., & Guillaume, Y. (2022). When fairness fails: Linking distributive injustice to psychological contract breach during COVID-19. Journal of Applied Psychology, 107(8), 1321-1337. https://doi.org/10.1037/apl0001023
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