The extant literature on the psychological contract is overly focused on human resources (HR) outcomes, such as work engagement, job satisfaction and organisational citizenship behaviour, thereby undermining its boundary-spanning benefits for marketers. Drawing on psychological ownership (PO) theory, the purpose of this paper to examine the role of psychological contract fulfilment (PCF) in converting employees into customers (i.e. employer-brand patronage) and compares its efficacy with employee discounts.
Three separate studies, including two experiments, were conducted on a total sample of 738 respondents, and data were analysed using SmartPLS 4 and analysis of covariance.
Results show that PCF significantly influences employer-brand patronage, and employee brand identification mediates this relationship. The two experiments show that (i) employer discounts can be counter-productive in PCF situations as they weaken the PCF’s effect, (ii) PCF can lead employees to ignore competitors’ discounts and (iii) employer discounts partially offset the loss caused by psychological contract breach, but employees prefer competitors’ services if the psychological contract is breached.
The results are relevant to service-sector organisations but may not be generalisable to manufacturing organisations. The study does not provide insights into the elasticity of employer-brand patronage with varying discount levels. The study did not examine potential moderators, such as individual factors (e.g. personality, self-concept), target factors (e.g. attractiveness and accessibility) and PCB attribution (i.e. intentional vs unintentional).
HR and marketing managers need to recognise the boundary-spanning benefits of PCF in converting employees into customers. Results show that employee discounts are counter-productive in influencing employer-brand patronage; managers can reallocate employee discount investments to the PCF budget to address employees’ needs in areas such as compensation, training and development and work-life balance facilities. Lastly, managers should foster psychological ownership among employees to enhance employee brand identification, which supports employer brand patronage.
The study advances understanding of the mechanism underlying employees’ purchase of employers’ services and initiates a research stream at the intersection of the psychological contract, employee brand identification and PO theory to explain employer-brand patronage. This is the first study to compare the efficacy of employee discounts with psychological contract fulfilment.
