The purpose of this paper is to trace McGregor’s X-Y theory and its relationship with fulfillment of psychological contract. This is a review article relying on literature reviews and synthesizing concepts and ideas from related sources. McGregor’s X-Y theory is a natural rule for managing people. McGregor’s ideas suggest that there are two fundamental approaches to managing people. Theory X management style generally get poor results compare with managers use theory Y, which produces better performance and results, and allows people to grow and develop. This paper argues that Theory Y managers are the effective leaders who could fulfill the psychological contract of employees. Therefore, psychological contract fulfillment is closely related to theory Y management’s style. Furthermore a modern idea of management style; the autocratic style of management is closely related to traditional McGregor’s theory X and the democratic is related to Theory Y management style. This area of study is suggested for future research.
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