Impact of psychological contract breach on firm’s innovative performance: A moderated mediation model

Abstract

Organizations are seeking ways to be more competitive in the market. Globalization also paves the way for additional challenges for firms to compete in today’s knowledge-based economy and competitive corporate settings. The psychological contract breach (PCB) of employees could be a possible reason to slow down the firm’s innovative performance. Based on the social exchange theory, the present study assumes that a PCB negatively affects a firm’s innovative performance. The present study also assessed the mediating role of knowledge hiding (KH) and moral disengagement (MD) in the relationship between PCB and a firm’s innovative performance. This study also attempts to check the moderating role of perceived supervisor support (PSS) in the relationship between PCB and KH and between PCB and MD. For empirical investigation, the present study collected the data from 303 employees of various textile organizations in china through a structured questionnaire method using a convenient sampling technique. The present study applied partial least square structural equation modeling for empirical analyses using Smart PLS software. The present study revealed that a PCB does not directly influence a firm’s innovative performance. However, the results confirmed that KH negatively mediates the relationship between PCB and a firm’s innovative performance. On the other hand, results also confirmed that MD negatively mediates the relationship between PCB and a firm’s innovative performance. The finding also acknowledged that the PSS does not moderate the relationship between PCB and KH. Additionally, the findings confirmed that PSS positively moderates the relationship between PCB and moral disengagement. The present study offers important practical, theoretical, and managerial implications.