When the gig isn’t up: The influence of employment arrangement and psychological contract type on effort and performance

Keywords: trust, gig workers, psychological contracts

Abstract: Millions of employees are now classified as gig workers and beneficial for both managers and employees. Yet, little research has addressed whether these work arrangements lead to differences in work outcomes when compared to traditional employment arrangements. Across three studies, we test whether employees' effort and performance differ based on their work arrangement and the relationship with their manager. Using trust and psychological contract theories, we found that gig workers, employed under transactional agreements, exerted less effort and had lower performance than traditional employees working under a relational contract when both groups trusted their manager. Following a trust violation, feelings of betrayal and anger created a stronger, negative reaction from traditional employees, which led to greater self-interested behaviors. Our findings enhance our understanding of how psychological contracts affect effort choices and performance of gig versus traditional workers and highlight the important role of trust for the manager in this relationship.