On the Theory of Psychological Contracts in Family Firms‪.‬

ABSTRACT Issues of fairness, justice, trust, integrity, and agency relationships are widely discussed in the family business literature as they relate to family member and non-family member employees. To date, however, psychological contracts have not been utilized to address the obligations between employees and the family firm. Psychological contracts are individual beliefs in a reciprocal obligation between the individual and the organization including perceived promises, valued payments, and acceptance of exchanges. Examining psychological contracts in family firms is essential in light of these two unique groups. This paper addresses the topic by providing a theoretical model of the role of psychological contracts in family firms supported by propositions. We believe this provides a more comprehensive approach to issues such as fairness, trust, and justice because of the element of reciprocity, where mutual and cooperative relationships are examined.