Toward Relationship Resilience: Managing Buyer-Induced Breaches of Psychological Contracts During Joint Buyer–Supplier Projects

Abstract

This research examines buyer–supplier relationship resilience associated with a psychological contract breach by the buying organization. Our study covers the span of buyer-induced negative events from pre-breach to post-repair. Specifically, we investigate the role of the nature of the interorganizational and interpersonal relationships in preventing initial trust loss (pre-breach) and the effectiveness of different repair processes (penance and regulation) in promoting subsequent trust repair (post-breach). The effects are analyzed on two levels: interorganizational and interpersonal. We use social exchange theory to derive the study’s hypotheses and a scenario-based role-playing experiment to test them. The results suggest that effective interorganizational trust repair can help to transform the nature of an interorganizational buyer–supplier relationship from adversarial to collaborative. Furthermore, initially adversarial interpersonal ties exacerbate the extent of interorganizational trust loss in collaborative interorganizational buyer–supplier relationships, while collaborative interpersonal ties help prevent initial interorganizational trust loss. Our study makes three contributions. First, it extends the psychological contract literature by investigating purchasing managers’ mitigation strategies in response to a buyer-induced negative event. Second, it accounts for the role of interpersonal ties in buyer–supplier relationship resilience. Third, it underscores the effectiveness of trust repair mechanisms, such as penance and regulation, in actually improving buyer–supplier relationship resilience after a psychological contract breach.

Keywords: psychological contract breach; buyer–supplier relationship resilience, trust, social exchange theory, scenario-based experiments