Exchange vs Provision – a Conceptual View of Psychological Contract Formation of Family and Non-Family Employees in Family Firms

This conceptual paper proposes psychological contract theory (PC) as an appropriate lens to advance our understanding of employment relationships in the unique context of the family firm. By focusing on the formation of the PC in family and non-family employees in family firms through episodes of pre-entry and post-entry, we contend that family and non-family employees create their PCs in different ways. The development of a process model demonstrates the process through which family and non-family employees form their psychological contract with the family firm. Building on the propositions developed throughout the paper and the model, we suggest future research directions to advance the knowledge of the PC in family firms