Psychological Contracts in Business Process Transformation Effect:

Structure of Psychological Contracts

Kayo Iizuka

1,*

and Chihiro Suematsu

School of Network and Information, Senshu University, Higashimita 2-1-1, Tama-ku, Kawasaki, Japan

Graduate School of Business Management, Kyoto University, Yoshida-honmachi, Sakyo-ku, Kyoto, Japan

Keywords: Business Process Transformation (BPT), Psychological Contract, Success Factor.

Abstract: This paper presents the result of analysis of the psychological contract structure in business process

transformation (BPT) project. Much research has contributed to improving the effectiveness of BPT. As for

cases in Japan, there are some unique issues around changing business processes, and the overall business

processes, including the work of back offices throughout all industries, are not always efficient, as Japan's

labor productivity was still the lowest among G7 members in 2018, according to the Japan Productivity Center.

Therefore, besides the BPT methodologies used in Western countries, it is necessary to seek a counterpart for

the unique issue of BPT in Japan. In this paper, the authors focus on the relationship between the psychological

contract and BPT effect as one of the success factors of BPT based on a survey they conducted in 2019 and

2020.

1 INTRODUCTION

It has been said for some decades now that the overall

quality and efficiency of production lines in Japan are

superior to other countries. However, the overall

business processes are not always efficient.

According to the Japan Productivity Center, Japan's

labor productivity was still the lowest among G7

members in 2018 (https://www.japantimes.co.jp).

Firms in Japan are trying to make their business

processes more efficient by using Information

Technology (IT). Business process transformation

(BPT) is one of the useful ways for companies or

other organizations to sustain themselves in order to

adapt to changes in the business environment. There

are many methodologies for BPT, including business

process re-engineering (BPR) or business process

integration (BPI) (Khosravi, 2005). However, it is

difficult to achieve effectiveness by conforming to an

ideal or to picture-perfect models. In this paper, the

authors focus on the relationship between the

psychological contract and the BPT effect as one of

the success factors of BPT through the survey

conducted in 2019 and 2020.

https://www.senshu-u.ac.jp/english/learn/network/

2 RELATED WORK

The concept of the psychological contract was

developed by Rousseau; it was defined as the

employees’ beliefs of their exchange agreement with

their employer and the organization (Rousseau, 1989

or 1995). The psychological contract is developed

within a dynamic environment in which the

individual is often interacting with multiple

organizational agents who may each be sending

messages both verbal and non-verbal (Shore, 1994).

It is impossible for employees to have a literal,

official contract with their employer or organization

for all possible scenarios. Therefore, considering the

influence of the psychological contract is important in

managing organizations, not only for managing

ordinary working organizations, but for tentative

organizing, such as for a project. A BPT project is

important for companies or other organizations in

order to realize change in their business processes and

IT to match a business environment that is rapidly

changing. BPT is an important factor for companies

or other organizations to consider in order to sustain

themselves during business environment changes.

Much research has contributed to improving the

effectiveness of BPT, including BPR, business

Iizuka, K. and Suematsu, C.

Psychological Contracts in Business Process Transformation Effect: Str ucture of Psychological Contracts.

DOI: 10.5220/0010526304290435

In Proceedings of the 23rd International Conference on Enterprise Information Systems (ICEIS 2021) - Volume 2, pages 429-435

ISBN: 978-989-758-509-8

429

process modeling, etc. Hammer and Champy define

BPR as the fundamental rethinking and radical

redesign of business processes to achieve dramatic

improvements in critical, contemporary measures of

performance, such as cost, quality, service and speed

(Hammer and Champy, 1993). In past studies on this

topic, Grover focused on the implementation problem

(Grover, 1995), Earl analyzed the relationship

between BPR and strategic planning (Earl, 1995), and

Attaran explored the relationship between IT and

BPR based on the capabilities and barriers to effective

implementation (Attaran, 2004). There are also many

studies that deal with BPR success and failure factors

(Larsen, 1997; Al-Mashari, 1999). Therefore,

focusing on the relationship between the

psychological contract and the BPT effect as one of

the success factors of BPT is appropriate for

improving BPT effectiveness.

3 PREVIOUS STUDY

In order to clarify the relationship between the

psychological contract and the BPT effect, the

authors developed the research model shown in

Figure 1.

Figure 1: Initial Research Model of Previous Study.

The hypotheses constructed for this survey (2019)

were as follows:

H1: The BPT psychology contract has a positive

impact on BPT effectiveness.

H2: The psychology contract of the ordinary work

environment (Work Psychology Contract) has a

positive impact on the BPT psychology

contract.

H3: The work psychology contract has a positive

impact on BPT effectiveness.

Hypotheses 1 and 2 will show the indirect

relationship between the work psychological contract

and BPT effectiveness. The authors thought there

would be a direct relationship. The survey was

conducted in February 2019 (182 valid responses, and

the number of respondents who answered that they

had the experience of engaging in more than one BPT

projects excluding on-going project were 32).

However, in the analysis results in 2019 (Figure2),

the direct relationship between the work

psychological contract and the BPT effect was not

significant (Table1). Following this, the authors tried

to improve the model as shown in Figure 3and 4.

Figure 2: The Initial Path Coefficient Map of the Survey

2019 (Iizuka and Suematsu 2019).

Table 1: Regression Weight of Figure2 Model.

S.E.: Standard Error C.R.: Critical Ratio *** significant result (P value <1%)

Figure 3: Revised Path Coefficient Map of the Survey 2019

(Iizuka and Suematsu 2019).

Figure 4: Revised Research Model of Previous Study.

Table 2: Regression Weight of Figure2 Model.

S.E.: Standard Error C.R.: Critical Ratio *** significant result (P value <1%)

Estimate S.E. C.R. P

BPT_PsyCon

<---

Work_PsyCon 0.767 0.164 4.662 ***

Q5S2

<---

Work_PsyCon 1.022 0.177 5.774 ***

Q5S6

<---

Work_PsyCon 0.805 0.182 4.426 ***

Q5S5

<---

Work_PsyCon 0.697 0.197 3.533 ***

B P T _ E ffe ct

<---

Work PsyCon -0.295 0.464 -0.635 0.525

B P T _ E ffe ct

<---

BPT PsyCon 1.039 0.525 1.98 0.048

Q7Q2

<---

BPT PsyCon 1

Q7Q4

<---

BPT PsyCon 1.179 0.184 6.418 ***

Estimate S.E. C.R. P

BPT_PsyCon <--- Work_PsyCon 0.748 0.165 4.527 ***

Q5S2 <--- Work_PsyCon 1.037 0.176 5.885 ***

Q5S6 <--- Work_PsyCon 0.81 0.182 4.463 ***

Q5S5 <--- Work_PsyCon 0.675 0.198 3.407 ***

BPT_Effect <--- BPT PsyCon 0.738 0.18 4.097 ***

Q7Q2

<---

BPT PsyCon 1 ***

Work

Psychology

Contract

BPT Psychology

Contract

BPT

Effectiveness

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The adopted variables in the revised model are as

follows.

 Psychological Contract of Usual Working

Environment [Work_Phy_Con]

-I believe that my employer gives me appropriate

performance feedback for my work. [Q5S2]

-I believe that my employer assigns me suitable jobs

-I believe I can engage in work that I feel it is

intriguing. [Q5S5]

-I believe that there are appropriate career options for

me in my company. [Q5S6]

 Psychological Contract of BPT [BPT_

Psy_Con]

-I believe that I can obtain feedbacks regarding the

total BPT effect on the company. [Q7S2]

-I believe that I can obtain feedback regarding to my

contribution. [Q7S4]

 BPT Effect [BPT_Effect]

-BPT projects have succeeded in my company.

[Q10S1]

From this analysis result, the existence of 1) direct

relationship between the psychological contract of the

usual working environment and BPT, 2) direct

relationship between the psychological contract of

BPT and BPT effects was clarified. However, the

direct relationship between the psychological

contract of the usual working environment and BPT

effect was shown not to exist. This result shows the

importance of the psychological contract both in the

usual working environment and BPT projects.

However, the observed variables adapted to this

model are quite limited because of the sample size of

the data. In order to improve this situation, it was

important to survey for collecting data with much

more numbers of sample size and detail level, so the

authors decided to conduct another survey in 2020.

4 RESEARCH METHOD

4.1 Purpose of the Research

The purpose of the research conducted in 2020 was to

clarify the detailed structure of the psychological

contract model in BPT. In order to form the detailed

model of the psychological contract-BPT model, the

number of observed variables must be increased to a

significant level in statistical analysis. Therefore, the

survey conducted in 2020 had to increase the number

of respondents compare to the survey conducted in

2019. Also, some questionnaire items were added in

order to variables in order to increase the number of

the variables adapted for the model. Some interviews

with the researchers from the perspective of many

research fields, such as psychology, management

organization, and information systems, were

organized to determine the adding variables.

4.2 About Survey 2020

An overview of the survey conducted in 2020 is as

follows.

 Data collection: February 2020

 Survey method: Internet Survey

 Target of data collection: about 300 in number

(about 150% of the survey in 2019)

 Questionnaire items: The major hypotheses are

based on the authors’ research model of 2019

(Figure 1). Questionnaire items are also based on

the survey of 2019. In addition, some items as

follows are included in the questionnaire.

- Whether there is a labor union in your

company/organization or not

- Length of service

- Industry

- I cognize that I can gain a raise and promotion

corresponding to my contribution. [BPT_

Psy_Con]

- The level of coordination and communication

between the divisions has increased. [Q13S4]

- The trust between divisions has increased.

[Q13S5]

- The trust within each division has increased.

[Q13S6]

- I think working conditions have become better.

[Q13S7]

- I want to keep working in this organization.

[Q13S8]

- I want to keep contributing to make this

organization better. [Q13S9]

4.3 Process of the Analysis

After the data was collected, the analysis aimed to

develop detail model of the psychological contract for

BPT. At first, a multi-regression analysis conducted

to examine the variable relationship between

[Work_Phy_Con] and [BPT_Psy_Con], and the

relationship between [BPT_Psy_Con] and

[BPT_Effect]. Variables include new items added in

this survey. From the results of these multi-regression

analyses, the a new and detail model would be

formed. Based on this model, covariance structure

analysis would be conducted. In addition, analysis to

examine differences in the psychological contract

according to the presence or absence of labor unions

are conducted.

Psychological Contracts in Business Process Transformation Effect: Structure of Psychological Contracts

431

5 RESEARCH RESULT

5.1 Overall Model

Data was collected in February 2020 through the

internet. The respondents were people working for

companies or other organizations. There were 275

valid responses, and as for respondents who answered

that they had experience engaging in BPT projects

that had already ended, there were 52.

At first, the authors tried multi-regression analysis

to examine the variable relationship between

[Work_Phy_Con] and [BPT_Psy_Con], and the

relationship between [BPT_Psy_Con] and

[BPT_Effect]. From the results of these multi-

regression analyses, they found that both

[BPT_Psy_Con] and [BPT_Effect] can be formed into

two groups. Therefore, they divided the variables of

both categories into two groups as shown in figure 5.

Figure 5: Research model of Study in 2020.

Based on this result, the researchers developed a

structural equation model as shown in Figure 6.

Figure 6: The Path Coefficient Map of Psychological

Contract and BPT Effect.

Table 2: Regression Weight of the Model in Figure 5.

S.E.: Standard Error C.R.: Critical Ratio *** significant result (P value <1%)

Table 3: Standardized Regression of the Model in Figure 4.

Adopted variables in this study are as follows.

 Psychology Contract of the Usual Working

Environment [Work_Phy_Con]

- I cognize that my employer gives me appropriate

performance feedback on my work. [Q8S2]

Estimate S.E. C.R. P

BPRPC2 <--- WorkPC 1.085 .068 15.881 ***

BPRPC1 <--- WorkPC 1.076 .069 15.627 ***

BPREffect1 <--- BPRPC1 .773 .121 6.403 ***

BPREffect2 <--- BPRPC2 .613 .116 5.294 ***

Q13S1 <--- BPREffect1 .969 .068 14.330 ***

Q13S3 <--- BPREffect1 .794 .085 9.351 ***

Q13S6 <--- BPREffect1 .623 .116 5.378 ***

Q13S4 <--- BPREffect2 1.047 .206 5.072 ***

Q13S5 BPREffect2 1.000

Q13S7 BPREffect2 1.184 .197 6.020 ***

Q13S8 BPREffect2 1.131 .208 5.445 ***

Q10S2 BPRPC2 .959 .036 26.962 ***

Q10S5 BPRPC2 .953 .045 21.382 ***

Q10S6 BPRPC1 .937 .043 21.700 ***

Q10S1 BPRPC1 .918 .047 19.446 ***

Q8S2 WorkPC 1.021 .073 13.977 ***

Q8S6 WorkPC 1.000

Q8S7 WorkPC 1.074 .077 14.002 ***

Q8S8 WorkPC 1.025 .076 13.403 ***

Q13S2 BPREffect1 1.000

Q8S4 WorkPC .825 .075 11.047 ***

Q8S5 WorkPC .919 .077 11.869 ***

Q13S9 BPREffect1 .547 .115 4.753 ***

Q10S3 BPRPC1 1.000

Q10S4 BPRPC2 1.000

<---

Estimate

BPRPC2 <--- WorkPC .940

BPRPC1 <--- WorkPC .953

BPREffect1 <--- BPRPC1 .724

BPREffect2 <--- BPRPC2 .803

Q13S1 <--- BPREffect1 .961

Q13S3 <--- BPREffect1 .837

Q13S6 <--- BPREffect1 .625

Q13S4 <--- BPREffect2 .748

Q13S5 BPREffect2 .713

Q13S7 BPREffect2 .904

Q13S8 BPREffect2 .811

Q10S2 BPRPC2 .914

Q10S5 BPRPC2 .842

Q10S6 BPRPC1 .871

Q10S1 BPRPC1 .829

Q8S2 WorkPC .795

Q8S6 WorkPC .761

Q8S7 WorkPC .798

Q8S8 WorkPC .768

<---

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- I cognize that my employer assigns me to an

appropriate job. [Q8S3]

- I cognize that my employer supports me in my

job when necessary. [Q8S4]

- I cognize that I can engage in the work that I feel

is interesting. [Q8S5]

- I cognize that there are appropriate career options

for me in my company. [Q8S6]

- I cognize that I can improve my skills and

knowledge through my job. [Q8S7]

- I cognize that I can construct human networks

through my job. [Q8S8]

 Psychological Contract of BPT [BPT _Con1]

…Achieving Effect

- I cognize that I can achieve a BPT effect.

[Q10S1]

- I cognize that my division can gain feedback

about the total BPT effect of the company.

[Q10S3]

- I cognize that the support system for BPT is well

arranged. [Q10S6]

 Psychological Contract of BPT [BPT_Con2]

…Reward

- I cognize that I can gain feedback about the total

BPT effect of the whole company. [Q10S2]

- I cognize that I can gain feedback corresponding

to my contribution. [Q10S4]

- I cognize that I can gain a raise and promotion

corresponding to my contribution. [Q10S5]

 BPT Effect [BPT_Effect1] …Project

Successes

- The BPT project succeeded. [Q13S1]

- The BPT project gained effectiveness. [Q13S2]

- Employees have improved their skills through

BPT. [Q13S3]

- The trust within each division has increased.

[Q13S6]

- I want to keep contributing to make this

organization better. [Q13S9]

 BPT Effect [BPT_Effect2] …Project

Communication and Awareness of Belonging

- The level of coordination and communication

between the divisions has increased. [Q13S4]

- The trust between divisions has increased.

[Q13S5]

- I think working conditions have become better.

[Q13S7]

- I want to keep working in this organization.

[Q13S8]

5.2 Difference Depending on Labor

Union

As a result of this analysis described in the previous

section, the importance of the psychological contract

was revealed. Then the authors analyzed whether it

was different or not considering the labor union

(Appendix1 and 2). As a rough trend, the score for the

psychological contract of the employees in

companies without labor union seems to be rather low

both for the psychological contract in the usual

working environment and BPT. That means that

forming the psychological contract is even more

important for the companies without labor unions.

6 CONCLUSIONS

The purpose of this paper was to examine in detail

relationship between the psychological contract and

the BPT effect as one of the success factors of BPT.

There was a positive relationship between the work

psychological contract and the BPT psychological

contract, and the BPT psychological contract has a

positive impact on BPT effectiveness. Further, there

were two groups in both the BPT psychological

contract and the BPT Effects, and therefore the

authors formed two latent variables for each; [BPT

_Con1](achieving effect) and [BPT_Con2] (reward)

for the latent variables of the BPT psychological

contract, [BPT_Effect1](Project) and [BPT_Effect2]

(project communication and awareness of belonging)

for the latent variables of the BPT effectiveness. From

these results, it can be said that it is important to form

psychological contracts both in the BPT project and

the usual working environment, and the BPT PC in

order to achieve BPT effectiveness, and those

psychological contracts should be formed by the

personal benefit such as raises or promotions as a

result of total effectiveness of the organization. For

future research, the authors will analyze the

differences in psychological contracts by profiling the

employees (based on occupation, position, years of

continuous employment, etc.).

ACKNOWLEDGMENTS

This work was supported in part by a Grant-in-Aid for

Scientific Research (16K03819). The authors

appreciate researchers, who gave advices from the

perspectives of many research fields, such as

psychology, management organization, and

Psychological Contracts in Business Process Transformation Effect: Structure of Psychological Contracts

433

information system. Also, the authors greatly

appreciate the firms that cooperated in the

questionnaire.

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APPENDIX

1 Work Psychological Contract

(5point Scale)

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2 Work Psychological Contract

(5point Scale)

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