Owner-employee relations in small firms

Abstract

Purpose

The purpose of this paper is to shed light on the type of exchange relationship that small business owners establish with their employees. In particular, this study examines how the personality trait of “conscientiousness” among small business owners relates to relational “psychological contracts,” breach and violation that develop between owners and employees.

Design/methodology/approach

This was a quantitative survey design conducted in Canada. Participants were 253 employees and the 50 small firm owners for whom they worked.

Findings

Results indicate that owner conscientiousness was positively associated with a relational psychological contract with employees and perceived breach mediated a negative relationship between owner-rated relational contract obligations and feelings of contract violation among employees. Owner-rated relational contract obligations also mediated a negative relationship between owner conscientiousness and employee perceptions of breach and violation.

Practical implications

Given the link between conscientiousness and relational contracts, small business owners who get involved in selection and training ought to present to the newly hired employees an accurate picture of their role and job requirements in order to create successful organizations. In addition, less conscientious business owners, through training, should try to develop further skills, such as goal setting and performance appraisal, in order to increase their ability to establish effective relationships (i.e. relational contracts).

Originality/value

The current study is an initial attempt toward a better understanding of exchange relationships in small firms, thus strengthening the links between organizational behavior and small business research. It also contributes a quantitative perspective on issues that have typically been explored qualitatively.

Citation

Ntalianis, F., Dyer, L. and Vandenberghe, C. (2015), "Owner-employee relations in small firms", Journal of Managerial Psychology, Vol. 30 No. 7, pp. 832-846. https://doi.org/10.1108/JMP-01-2013-0028