Impact of Psychological Contract on Organizational Commitment- With reference to Government School Teachers in Batticaloa District, Sri Lanka

 Corresponding author: Sammunkutty Sithy Hamila Copyright © 2025 Author(s) retain the copyright of this article. This article is published under the terms of the Creative Commons Attribution Liscense 4.0. Impact of Psychological Contract on Organizational CommitmentWith reference to Government School Teachers in Batticaloa District, Sri Lanka Sammunkutty Sithy Hamila * Sri Lanka Institute of Advanced Technological Education, Batticaloa, Sri Lanka. World Journal of Advanced Research and Reviews, 2025, 27(02), 1482-1490 Publication history: Received on 12 July 2025; revised on 18 August 2025; accepted on 21 August 2025 Article DOI: https://doi.org/10.30574/wjarr.2025.27.2.3012 Abstract The relationship between employees and employers is increasingly being studied in research on psychological contracts. The purpose of this study is to investigate the impact to psychological contract on the organizational commitment of government school teachers in Sri Lanka. The research has drawn a sample of 191 teachers from Batticaloa Central Zone, using simple random sampling technique. As independent variables, the questionnaire distributed includes two major constructs of psychological contracts, namely transactional psychological contracts and relational psychological contracts, and organizational commitment (affective commitment) as a dependent variable. The data collected has been processed via structural equation modelling using the Smart-PLS version 4.0. The tests on the hypotheses reveal that both categories of psychological contract significantly contribute towards enhancing employee commitment of school teachers. The study also reveals that the impact of relational psychological contract on affective commitment of employees is higher than the transactional psychological contract of the teachers. This study offers some recommendations that the school management should seek to fulfill psychological contracts with the employees that will guarantee employee commitment. Keywords: Organizational commitment; Psychological contract; Structural equation modelling; Teachers; School. 1 Introduction In order to gain a competitive edge, corporations have been compelled to build special dynamic human resource skills. As a result, in a society where technology is pervasive and always changing, they are concentrating on the efficient use of their human resources. However, it has been argued by Goswami [9] that the relationship between an employer and an employee has been the most challenging of all relationships, characterized by a stressful work environment, a lack of communication, and a lack of trust. Therefore, a critical construct in understanding the employment relationship and managing the issue of attracting and retaining employees is the psychological contract [16]. Due to the changing nature of the employer-employee relationship and the current recession that has affected the world economy, many researchers have focused a great deal of emphasis on this subject [2], [3], [30],[20]. According to Dabos and Rousseau [6], the psychological contract refers to the expectations that are founded on promises made or implied about the reciprocal responsibilities that exist between the employer and the employee. It is obvious that if an employee is not psychologically connected to the organization, its development is greatly affected. Over the past years, a number of studies have provided empirical support for the psychological contract as a significant construct that is related to a number of HRM concepts, including employee engagement, motivation, opportunistic behavior, employer-employee relationships, commitment, etc. in Sri Lanka. However, there are few empirical research studies in the field of education, and there has been no reported research, particularly in the area of primary and secondary education. Therefore, this research was conducted with an objective of investigating the impact of psychological contract on the job commitment of teachers in Sri Lanka. World Journal of Advanced Research and Reviews, 2025, 27(02), 1482-1490 1483 Since 2019, the dramatic negative consequences of COVID19 have had a significant impact on almost all employment sectors worldwide, including Sri Lanka. Furthermore, Sri Lanka's recent economic downturn has made the situation worse. They have made major changes to the teaching profession that the school community and teachers are not accustomed to, as well as the manner duties are carried out in classrooms. The Sri Lankan schools have modified their systems (for instance, moving from traditional classroom teaching to online teaching) in order to meet and adapt to these changes, which raises the stress that teachers experience at work. This is due to the significant effects of COVID 19 and the ensuing severe economic crisis. On the other side, Sri Lankan teacher management has a number of challenges. Several areas of teacher management, including promotions, school inspections, and teacher performance reviews, are not carried out adequately in Sri Lanka, according to a policy research working paper published by the World Bank [22]. It is widely believed that Sri Lankan public school teachers need better compensation, benefits, and working conditions. When compared to advancements in these characteristics in potential occupations in Sri Lanka's private sector, teaching job traits are seen as actually getting less desirable over time. Hence, as stated by Zhou et al. [31], today's fast altering life styles have altered individual values, leading to an increase in the preference of the transition contractual relationship and independence over various alternative options. Teachers' engagement and commitment to their jobs have decreased as a result, alarming school administration. As a result, it becomes important to establish the right organization-member relationship. Consequently, the psychological contract has become a major concern for scholars. An innovative approach to teacher management is the integration of psychological contract and job commitment. Even though there are few empirical studies that concerned psychological contract of academics, still there is a research gap on how this psychological contract influences job commitment of school teachers in Sri Lanka. As such, this study was aimed at answering the research question of what effect psychological contracts have on job commitment among Sri Lankan teachers. 2 Theoretical Framework and Research Hypothesis 2.1 Psychological contract Different writers define psychological contract using various methods. The phrase "psychological contract" was originally used by Argyris in 1960, who defined it as an agreement in which both parties must have a common understanding of what they are expected to contribute to one another [15]. The organization and the individual worker's awareness of their mutually fulfilling tasks and obligations is highlighted by the psychological contract's general definition. A psychological contract (PC), when viewed narrowly, is a compilation of employee perceptions of the duties and commitments of both parties based on perception, commitment, and trust in the job relationship. In addition, it has been argued that breaching a psychological contract negatively impacts job performance, job satisfaction, and employee commitment. Consequently, organizations today try to maintain a good psychological bond between them and their employees [20]. Psychological contracts fall into two basic categories: transactional contracts and relational contracts. According to Rousseau [25], the relational psychological contract is defined as the employees' perception of a long-term stable relationship with the organization, while the transactional psychological contract is defined as the employees' perception of economic, material, and developmental responsibilities and obligations provided by the organization. Zhou et al. [31], stated that a transactional contract is one in which both parties receive material benefits. As a result, employees do not actually become members of the organization; instead, they are primarily interested in the immediate money rewards and personal benefits. They also contend that the fulfillment of social attachment on both sides, such as organizational support and organizational loyalty, is the foundation of the relational psychological contract. Employees' affective participation and belief in organizations is reflected in the relationship contract because organizations ensure their work safety, skill development, and career advancement in addition to giving them the material benefits they need. Relational and transactional contracts are independent of one another because of their differences. Therefore, certain psychological contracts depend on both relational and transactional duties, whereas others depend on both (Philipp & Lopez, 2013, as cited in Gharib and Khairy) [8]. Therefore, these two aspects of PC have been substantiated by a large body of empirical research. 2.2 Organizational commitment Robbins defined organizational commitment (OC) as a stage in which the employee recognizes a certain group with the goals, and hopes to maintain the status as the group member [23]. Fatoni, et.al., argue that commitment to the organization means more than just formal membership, because it includes an attitude of loving the organization [7]. It has three dimensions: affective commitment (reflecting employees' affective dependence on, identification with, and involvement in organizations, as well as their willingness to remain there as a sign of their affection for the company), normative commitment (reflecting employees' commitment to remain in their organizations as a sign of their sense of social responsibility an (reflecting employee commitment to stay in organization based on utilitarian consideration). According to Singh and Gujral, the employees who are committed to their organization have higher value as compared World Journal of Advanced Research and Reviews, 2025, 27(02), 1482-1490 1484 to the ones who are not committed to their organization since they tend to be more effective, efficient, determined and proactive as they put in all their strength and do their work in a trustworthy manner [29]. 2.3 Relationship between psychological contract and organizational commitment Most academics agree with Meyer and Allen's [17] assertion that organizational commitment represents the psychological relationship between employees and organizations. As Meyer and Allen defined the organizational commitment as the employee's psychological perception of the link between people and organizations, reflects the employee's psychological status of being loyal to the organization. Therefore, the perception of psychological contract is the internal root of organizational commitment [26] and it influences the decision of employees to stay in the organization and changes the degree of emotional dependence and investment on the organization [21]. According to Nishanthi and Mahalekamge, Psychological contract reflects the beliefs system of employees to mutual responsibility and obligation between individuals and organizations [20]. Cassar and Briner also emphasized that the employees' understanding and perception of psychological contract is based on an arbitrary interpretation of organizational commitment [5]. According to Schalk and Roe [27], the presence of a psychological contract indicates that the employee is dedicated and committed to the company and is ready to accept the roles and responsibilities that are provided by the company and perform them in line with specified criteria. They further assert that a more favorable contract will likely result in the employee having a more favorable perception of the organization, leading to greater commitment. Various studies have evidenced that more favorable psychological contracts are associated with higher levels of organizational commitment [20],[29], [5], [30, [14], [13], [11]. However, this research considers affective component of job commitment of employees in this study as the dependent variable. Antonaki and Trivellas (2014), as cited in Bravo, et.al. noted that the affective component of the psychological contract is used in most studies involving organizational commitment as a study variable, because it is more representative of a work attitude that appears to directly influence employee response to the organization [4]. Affective commitment, according to Herrera and De Las Heras-Rosas, is based on a psychological perspective that emphasizes the bond between individuals and organizations [12]. Therefore, based this literature review, the research hypothesis was developed as follows, With respect to the teachers working in Batticaloa district, • H1: There is a positive association between transactional psychological contract and affective organizational commitment. • H2: There is a positive association between relational psychological contract and affective organizational commitment. Figure 1 Conceptual Framework 3 Methodology The study employed the positivist philosophical paradigm, which believes in an objective reality. Research approach was quantitative and research design was explanatory. 3.1 Study population and sample The target population comprised of all government school teachers employed in Sri Lanka's Batticaloa Central Zone. According to the Ministry of Education of Sri Lanka, there are 1824 teachers working in Batticaloa Central Zone schools [19]. Participation was voluntary. Through the cooperation of all school principals, participants were given a structured questionnaire which was presented in google form. Questionnaire link was given to the school principals and through World Journal of Advanced Research and Reviews, 2025, 27(02), 1482-1490 1485 them it was shared to the teachers. Participants were informed that their anonymity was granted. The instrument was completed by 203 of the 225 teachers that were expected. Twelve of the 203 surveys retrieved were highly incomplete. The remaining 191 completed questionnaires which is approximately 10% of target population were used for data processing and analysis. 3.2 Data collection Aside from secondary data, this study used a pre-planned questionnaire survey to collect primary data to assess the research hypothesis. The questionnaire was dealt with the psychological contract scale and the organizational commitment scale, respectively. In this study, the psychological contract was operationalized as participants' assessments of how well the organization met the psychological contract. The psychological contract scale in this study comprised of 12 items divided into two parts: assessment of transactional psychological contract (6 items) and measurement of relational psychological contract (6 items). This set of six items for transactional psychological contract was adapted from Millward and Hopkins' [18] "psychological contract scale," and another set of six items for relational psychological contract was adapted from Robbinson and Morrison's scale [24]. Also, to measure organizational commitment, a shortened version of Allen and Meyer's organizational commitment scale with six items per each of three dimensions was adopted from Abdulla [1. Every response was scored on a 5-point Likert scale, ranging from 1 (strongly disagree) to 5 (strongly agree). 3.3 Data analysis The researcher's hypothetical model was analyzed using partial least squares (PLS) analysis with SmartPLS4.0 software. Experts advocate double-stage analytical approaches for running structural equation model, which should comprise both testing of the outside measurement model and assessment of the inner structural model. PLS has long been recognized as a reliable approach for calculating absolute path-coefficients in a wide range of research models, including organizational behavior studies [28]. This has been developed and evaluated by modern researchers because it has the unique ability to shape latent constructs underlying a wide range of situations, including non-normality in data and small to medium sample sizes [10]. 4 Results The data was analyzed in two stages; measurement model analysis and structural model analysis. 4.1 Measurement Model Analysis Based on the conceptualization of the construct and the research objectives, PLS-SEM uses two types of constructs: reflective and formative [10]. A reflective measurement model was used in this study. In order for the study to be considered reflective, all latent constructs must be reflective. A reliability and validity test must be performed on the reflective measurement model to ensure its appropriateness for PLS-SEM investigations [28]. Therefore, as part of the measurement model evaluation, five items (AC2, RPC6, TPC1, TPC2 and TPC6) was removed from the analysis because of low factor loadings (<0.600). To test the reliability of the constructs, the study used Cronbach’s Alpha and composite reliability (CR). Cronbach Alpha of each construct exceeded the 0.700 threshold. All the CRs were higher than the recommended value of 0.700. Convergent validity was acceptable because the average variance extracted (AVE) was over 0.500. VIF value for the all the items showed that there is no multicollinearity between the items. The results for reliability and validity along with the factor loadings and VIF for the items are presented in Table 1. Table 1 Loadings, Reliability and Validity Items Loadings VIF Cronbach’s Alpha CR AVE TPC3 0.736 1.370 0.703 0.765 0.620 TPC4 0.834 1.376 TPC5 0.719 1.360 RPC1 0.772 1.729 0.818 0.820 0.579 RPC2 0.745 1.652 RPC3 0.743 1.578 RPC4 0.722 1.511 World Journal of Advanced Research and Reviews, 2025, 27(02), 1482-1490 1486 RPC5 0.800 1.845 AC1 0.801 1.854 0.827 0.828 0.591 AC3 0.759 1.716 AC4 0.731 1.552 AC5 0.745 1.575 AC6 0.797 1.873 Discriminant validity was assessed by FornellLarcker Criterion. The tables below show that square root of AVE for the construct was greater than the interconstruct correlation. Discriminant validity was also assessed by heterotraitMonotrait ratio of correlations with values below the threshold of 0.90. Hence discriminant validity was established (see Table 2 and Table 3) Table 2 FornellLarcker Criterion TPC RPC AC TPC 0.787 RPC 0.295 0.761 AC 0.467 0.545 0.769 Note: Values in italic represent square root of AVE. Table 3 HTMT Ratio TPC RPC RPC 0.383 AC 0.584 0.660 4.2 Structural Model Analysis Structural model is the inner composition of the relations among different constructs of a study. It reflects the paths hypothesized in the research framework. A structural model is assessed based on the R2, Q2 and significance of paths. The goodness of the model is determined by the strength of each structural path determined by R2 value for the dependent variable (Briones Penalver et.al., 2018). The value of R2 should be equal to or over 0.1 (Falk and Miller, 1992). The results in the table 4 shows that all R2 values are over 0.1. Thus, these two constructs (TPC and RPC) collectively explain 40% variance in affective commitment. Hence the predictive capability was established. Further Q2 establishes the predictive relevance of the endogenous constructs. Q2 value above zero shows that the model has predictive relevance. The results show that Q² is 0.366 which means that there is a significance in the prediction of the constructs (see table 4). World Journal of Advanced Research and Reviews, 2025, 27(02), 1482-1490 1487 Figure 2 Structural Model Table 4 Goodness of model Q² R2 R2 adjusted AC 0.366 0.400 0.393 Furthermore, the model fit was assessed using SRMR. The value of SRMR was 0.091, this is below the required value of 0.10, indicating acceptable model fit [10]. Table 5 Model Fit Saturated model Estimated model SRMR 0.091 0.091 d_ULS 0.761 0.761 d_G 0.369 0.369 Chi-square 398.223 398.223 NFI 0.645 0.645 In addition to the assessment of the goodness of fit, hypotheses were tested to ascertain the significance of the relationship. H1 states that there is a positive association between TPC and AC. The results revealed that TPC has a significant positive impact on AC (β=0.336, t= 5.225, p<0.05). Hence, H1 was supported. The results for second hypothesis which stated that there is a positive association between RPC and AC showed that RPC has a significant positive impact on AC (β=0.446, t= 5.805, p<0.05). Hence, H2 was also supported. Further, the effect sizes were also assessed by F square values. The values smaller than 0.02 propose small effects, 0.02 to 0.15 reflect medium effect and 0.15 to 0.35 and greater values imply large effect sizes (Cohen, 1988). Therefore, it is evident in Table 6 that both the H1 and H2 have a large effect size. World Journal of Advanced Research and Reviews, 2025, 27(02), 1482-1490 1488 Table 6 Results of Hypotheses Testing Beta Standard Deviation T Statistics P Values Decision F2 Effect size H1: TPC-> AC 0.336 0.064 5.225 0.000 Accepted 0.172 Large H2: RPC -> AC 0.446 0.077 5.805 0.000 Accepted 0.302 Large 5 Discussion The purpose of this research was to explore the association among psychological contract on affective commitment among the school teachers. As observed in all direct effect findings, relational and psychological contracts appear to be strongly associated with affective commitment. Based on the results, it would appear that a psychological contract where employees' expectations are met will enable them to be loyal and committed to the organization. It has been shown that psychological contract is strongly linked with affective commitment by a number of past research scholars and that this relationship has been established. The results of such studies indicate that higher organizational commitments occur when the psychological contracts are more favorable. According to Guest and Conway (2000), psychological contracts are employees’ beliefs concerning mutual commitments. Employers consider what they owe to organizations, and organizations believe what they owe employees. In such a case, individuals feel frustrated and will distance themselves from the organization if the organization breaches its promises. The current finding is in accordance with those scholars who have found that psychological contracts are closely related to affective component of organizational commitment. Also, from the findings, it was noted that both the socio-emotional gratification component of relational contracts and opportunities for growth and learning components of transactional contracts are valued by school teachers. As a result, teachers seem to place greater expectations on socio-emotional incentives that strengthen their long-term relationships with schools, as well as tangible incentives that their workplace may be able to provide, such as a good deal of compensation, well-defined working hours, and a sense of personal fulfillment. Therefore, to succeed, school administrators must carefully consider psychological contract expectations and ensure they align with organizational goals. According to the results, a better employee relations strategy and proper tangible motivational strategies results in a stronger psychological contract between school management and teachers, which reinforces interpersonal bonds. Consequently, school management must emphasize the importance of mutual obligations in order to build a positive school climate. 6 Conclusion The study examined the relationship between psychological contract and organizational commitment. It aimed to determine how different parameters of psychological contract impact organizational commitment, especially affective commitment. The study found that both a transactional and a relational psychological contract have positive relationships with teachers' affective commitment. As a result of the findings, this study emphasizes the importance of psychological contracts in ensuring commitment. Consequently, this study concludes that the concept of the relational contract captures very well the primary mechanism by which commitments are affected: exchange and transactional contracts emphasize specific, short-term monetary obligations. Further, the study also concludes that the relational contracts in the current study had a much stronger effect than transactional contracts. 7 Implications of the study 7.1 Theoretical implication The theoretical implication of this work is that it extends and supports the empirical evidence that already exists regarding the origins of the PC and OC relationship. It has given a wider foundation for determining how PC dimensions affect OC. Specifically, the two forms of psychological contracts are found to positively influence organizational commitment. As a result, the empirical findings from this study support the claim that strengthening their PC can increase their levels of commitment. 7.2 Practical implication The results of this study have significant consequences for school management from a practical standpoint. The management has to ensure a harmonious environment within the schools. When people feel comfortable working within an environment, they are more likely to be committed. As well as how they are treated within the organization, World Journal of Advanced Research and Reviews, 2025, 27(02), 1482-1490 1489 and how they are motivated by their work and the organization, determine the psychological contract between them and their employer. School administrators should closely monitor teachers' opinions of the terms of their psychological contracts and make them clearer. Numerous kids' lives are impacted by the teaching profession, thus there is much to be gained by understanding the expectations of teachers place on their employers. The relationship will improve and organizational commitment will be increased if teachers are informed about their psychological contracts and what is really expected of them. The impression of psychological contracts is crucial in fostering and strengthening commitments at work since there is a strong positive association between relational contracts and affective commitment. Limitations of the study and Direction for future research The first limitation of this study is that the sample size of this study might not be sufficient because of the time constraints on the research. For this study, a total of 191 questionnaires were included for the study. This would restrict the generalizability of the study's findings. In order to boost sample representativeness and conclusion generalization, future studies may consider gathering samples from a wider variety of school teachers from other educational zones in the district. Moreover, the second limitation of this research is, it employed a quantitative approach. When doing a qualitative exploratory study, researchers might gain teachers' more succinct opinions on the psychological contract. The third limitation of this study is that it only considered independent and dependent factors when drawing its conclusions. The link between the psychological contract and organizational commitment, however, may be moderated or mediatized by a number of other elements, including motivation, the quality of the work environment, work-life balance, organizational support and trust, etc. By considering these variables in future research, we can gain more insight into this relationship. References [1] Abdulla M. 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