Question

In: Operations Management

(a)Distinguish between ‘over-investment’ and ‘under-investment’ in the context of unbalanced exchanges between the employer and employee....

(a)Distinguish between ‘over-investment’ and ‘under-investment’ in the context of

unbalanced exchanges between the employer and employee.

(b)Under what circumstances does reneging and incongruence occur?

(c)Should organisations take the psychological contract seriously? Justify your

answer using theory and evidence.

Solutions

Expert Solution

Answer-(a)The exchange can be of the following four types between the employer and employee-

  • The mutual high obligation psychological contract concern, many promises or high fulfilment of promises on part of both employer and employee.
  • Few promises and low fulfilment of promises on part of both the employer and employee.
  • Few promises and limited fulfilment on part of employee and many promises and high fulfilment on part of employer.
  • Many promises and high fulfilment on part of employee and limited promises and fulfilment on part of employer.

Thus over investment and underinvestment in context of these exchange will be differentiate as

The under-investment e,ployment relationship approach that offers a competitive advantage if the firm pursue the prospector strategy, the domestic privately owned enterprise reported highest firm performance when they use underinvestment approach with their manager in contrast to state owned or foreign owned enterprise and vice versa happens in case of over-invesment

Answer-(b) when the employee feel betrayed on part of the organization for whom they are working for, as it occurs when an organization fails to fulfil its obligation as to what an emplyee has been promised and what it actually receives results in the occurence of reneging and incongruence.

Answer-(c) An organisation should take the psychological contract seriously as it refers to the beliefs about the obligations which an organisation has towards its employee and the violation of any of those obligation on behalf of the organization towards the employee results in the employee's feeling of anger and betrayal that is experience by an employee evidence- (Conway &Briner, 2009)


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