ABSTRACT
This chapter explores the conceptual framework of the psychological contract and the employee engagement in Indian context. The conceptualisation of the psychological contract has evolved from its historical roots in C. Barnard's theory of equilibrium and H. P. Gouldner's theory of reciprocity. The impact of the psychological contract has been associated with in-role organisational citizenship behaviour directed at the organisation rather than at the citizenship behaviour directed at colleagues. The relational psychological contract based on the relationship between the employee and the employer improves as the employee moves to higher levels of employee engagement in the sector. In India, there has been no reported empirical research on the linkage between employee engagement and psychological contract, especially in the changing context of the post-liberalised Indian economy. Employee engagement was found to be stronger for the relational contract than for the transactional contract. Measuring organisational engagement and employer obligation of the psychological contract with dyads of employee-employers would have given interesting results.
