Psychological Contract State, Employee Outcomes, Equity Sensitivity, Leadership Style and Performance of Public Water Service Providers in Kenya
Abstract
This study focused on psychological contract, employee outcomes, equity sensitivity, leadership
style and performance of water public service providers (WSPs) in Kenya. The studies linking
psychological contract state to organization performance are very few. The few studies indicate
that there is no clear relationship between psychological contract state and organizational
performance. Different from other studies, this study introduced employee outcomes as mediator
and equity sensitivity and leadership styles as moderators. The main objective of the study was to
determine the relationships between and among psychological contract, employee outcomes,
equity sensitivity, leadership styles and organizational performance of the WSPs. More
specifically, the study was set to establish effect of different combinations of predictor variables
such as psychological contract state, employee outcomes, equity sensitivity and leadership style
on the organizational performance. The study was founded on resource based theory of sustainable
competitive advantage and social exchange theories. A conceptual model and hypotheses that
guided this study were developed from the literature. The population of the study consisted of 100
water service providers companies (WSPs) in Kenya. The study used cross sectional survey design
where data was collected at one point in time across the WSPs. The primary data was collected
using a semi structured questionnaire. The secondary data on organizational performance was
obtained from the Water Services Regulatory Board’s (WASREB) performance review of
Kenya’s water service sector 2014. The respondents were the top and middle managers from
departments and sections. Data was analyzed and interpreted based on descriptive statistics,
correlations, linear, multiple and stepwise regression. The findings of the study comprised positive
significant relationship between psychological contract and organizational performance; there was
partial mediation effect of employee outcomes. The effect of psychological contract state on
organization performance is direct and not indirect through employee outcomes as was
hypothesized. Equity sensitivity did not moderate the relationships between psychological
contract (PC) state and organizational performance. There was no moderation effect of leadership
style on the relationship between psychological contract state and organizational performance.
Finally, the joint effect of psychological contract state, employee outcome, equity sensitivity and
leadership style on organization performance was supported. However, out of curiosity a post hoc
analysis was performed on hypothesis two that was not confirmed in the initial analysis. This
hypothesis is now confirmed. The results are presented in the table 5.1. There was positive
significant relationship between employee outcomes and organizational performance. There was
mediation effect of PC state in the relationship between employee outcomes and organizational
performance. The equity sensitivity did not moderate on the relationships between employee
outcomes and organizational performance. And the joint effect of psychological contract state,
employee outcomes, leadership style, equity sensitivity and organization performance was
supported. Managers may therefore use the findings of this study to improve the organization’s
performance. The findings of this study will assist the practitioners in formulating policies and
making decisions in the area of psychological contract, employee outcomes, leadership style,
equity sensitivity and, organizational performance. Future researchers could apply structural
equation modeling analysis methods for analysis instead of using step wise analysis. This will
enable the testing of moderated mediation while at the same time address the measurement error
which a major concern.
Publisher
University of Nairobi
Rights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
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