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Creating Psychological and Legal Contracts Through HRM Practices: A Strength of Signals Perspective

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Abstract

We integrate the concept of signaling theory to propose that organizations create psychological and legal contracts through their human resource management practices (HRM). Focusing on the strength of the signal generated by HRM practices, we develop a framework for contract creation. Specifically, we define and outline how weak signals generate psychological contracts and strong signals develop legally binding contracts. We provide several examples of HRM hiring practices, the weak and strong signals which they emit and the psychological and legal contracts which they create. Our key contribution is to provide a precise model for understanding the distinction between a psychological and legal contract.

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Authors and Affiliations

  1. Department of Management and International Business, Raj Soin College of Business, Wright State University, Dayton, OH, USA

    Mark M. Suazo

  2. Department of Management, College of Business Administration, Loyola Marymount University, Los Angeles, CA, USA

    Patricia G. Martínez

  3. Department of Management, College of Business, University of Texas at San Antonio One UTSA Circle, San Antonio, TX, 78249-0634, USA

    Rudy Sandoval

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  1. Mark M. Suazo
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  2. Patricia G. Martínez
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Correspondence to Patricia G. Martínez.

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Suazo, M.M., Martínez, P.G. & Sandoval, R. Creating Psychological and Legal Contracts Through HRM Practices: A Strength of Signals Perspective. Employ Respons Rights J 23, 187–204 (2011). https://doi.org/10.1007/s10672-011-9169-z

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