Coevolution of Interorganizational Psychological Contract and Interorganizational Relationship: A Case Study of Manufacturing Company in China

Abstract

As the belief of the beholder in an exchange about the obligations that another party should have, interorganizational psychological contract (IPC) from a micro perspective provides a new angle to study interorganizational relationship (IOR). This paper studies the interrelation and coevolution of IORs and IPCs by building a system dynamics (SD) model. Firstly based on the structural analysis of the interrelations of IPC and IOR, this paper builds the qualitative causal loop diagram of the interrelations. Based on investigation of 55 manufacturing enterprises in China we further draw the stock and flow diagram. Then we apply the data of Jiangxi Motors Co., Ltd., to simulate the model. The results reveal the development and evolution of IORs and IPCs and their interrelations. Furthermore, the sensitivity analysis is conducted and the influences of trust on IORs and IPCs are discussed. Finally managerial implications and some recommendations are provided for the decision-making of developing IORs.