The impact of psychological contracts on trust and commitment in supplier-distributor relationships

Abstract

Purpose – The nurturing of trust within firm-customer relationships highlights the significance of social exchange theory in helping to explain the relational paradigm. By focusing upon this theory it was hypothesized that psychological contracts also play an important role in helping manage customer relationships. The principal purpose of this study is to explore the role of the psychological contract within the firm-customer relationship, and its effects on trust. Design/methodology/approach – A sample of 343 distributor firms within the motorized vehicle industry was used to test a model developed on the basis of social exchange theory. Findings – Psychological contracts are perceptual in nature and encompass reciprocal obligations stemming from the relational marketing efforts between suppliers and distributors. This construct was shown to have a positive impact upon the level of trust and commitment within the relationship; however, perceived violations of the contract terms were found to reduce the distributor’s level of trust. Originality/value – Given that trust was found to increase commitment, these findings have important managerial implications as they show that psychological contracts will erode important customer relationships if not factored into the customer decision-making processes within the firm.