Social contract and perceived justice of workplace practices to cope with financial crisis

Abstract

This study examined the influence of type of social contract (i.e., transactional vs. relational) on how organizations responded to financial crisis in Turkey. Moreover, it examined the role of social contracts in moderating the relationship between type of response strategies organizations used and justice perceptions of employees. Participants were 132 full-time employees from 85 different business organizations. Results showed that as the social contract tended to be more transactional, there was less focus on cost-cutting strategies in production, marketing, and financial practices (PMF), whereas when the social contract tended to be more relational, there was less focus on cost-cutting strategies in human resource management practices (HRM). Cost-cutting in PMF areas yielded low procedural justice when employees were in organizations that were high rather than low on transactional contracts, whereas cost-cutting in HRM areas resulted in low distributive justice when employees were in organizations that were high rather than low on relational contracts.