Financial managers' psychological ownership

Abstract

In recent decades, the organizational and work environment has undergone significant changes due to various factors, including globalization, increased competition, digitalization, the development of artificial intelligence, as well as the financial crisis and the Covid-19 pandemic. These developments have created an environment that could be described as volatile, uncertain, complex, and ambiguous, which may pose challenges for both organizations and employees (Schermuly, 2021). In this evolving landscape, employees’ work environment and organizations’ success will depend on the adaptive responses of employees and organizations to these challenges (Kraus et al., 2023). This in mind, two diverging tendencies are emergent: on the one hand, companies that are increasingly reliant on their key personnel in order to remain competitive; on the other hand, as a result of changing work conditions, employees that are more and more distancing themselves from their employing company. For example, due to the aforementioned developments, technical and economic complexity has risen, business processes have become more dynamic and integrated, and markets have become international (Bernhard, 2011). Thus, economic pressures have considerably risen, creating a more and more competitive environment. Although some companies are downsizing, pushing employees into short-term contracts or outsourcing them to private agencies to cut costs and to increase profitability in response to growing global competition (Bernhard, 2011; Cavanaugh and Noe, 1999; Rousseau, 1998), it is well acknowledged that the success of an organization increasingly depends on its key employees (Coyle-Shapiro and Shore, 2007; Herrera and Heras-Rosas, 2021; Riketta and van Dick, 2004; Rousseau, 1998; Santana and Cobo, 2020; Schermuly, 2021). Thus, modern organizations, “where focus shifts from production to intangible-, knowledge- and creativity-intensive, service-sector oriented businesses, face heightened dependency on motivated organizational members as key factor for success” (Bernhard, 2011, p. 3; cf. Kraus et al., 2023; Schermuly, 2021). Moreover, dealing with the challenges of a volatile, uncertain, complex and ambiguous environment, amongst others, may require flat hierarchies, decentralized organizational structures and high connectivity (Bernhard, 2011; Malhotra, 2021; Schermuly, 2021), which in turn require personnel responsibility of and a strong bond between employees and their employer (Meyer et al., 2008). These organizational changing to the evolving business environment may also affect the work environment of employees, which is captured by e.g., the concepts of ‘future of work’ and the ‘new psychological contract’. While the ‘future of work’ (Kraus et al., 2023; Malhotra, 2021) deals with work designs regarding the aforementioned developments (e.g., digitalization or hybrid/remote work as consequence of the Covid-19 pandemic), the ‘new psychological contract’ describes employees’ perceptions regarding their employee-organization-relationship (Braganza et al., 2021; Cavanaugh and Noe, 1999). For example, artificial intelligence and machines may take over routine tasks, resulting in job losses for employees or changing job roles, which in turn requires employees to attain new skills to handle new technologies or nonroutine, creative tasks (Bernhard, 2011; Braganza et al., 2021; Malhotra, 2021; Schermuly, 2021). Additionally, mainly driven by the Covid-19 pandemic, knowledge-based work increasingly will be and is performed remote or hybrid, turning employees into “independent agents” often working outside the organization in virtual and multiple teams across the globe (Malhorta, 2021, p. 1092; cf. Kraus et al., 2023). These exemplarily ‘future of work’ characteristics and practices are accompanied by an increased delegation of autonomy and responsibility to employees, which are covered by the ‘new psychological contract’ (Bernhard, 2011; Braganza et al., 2021; Cavanaugh and Noe 1999; Malhotra, 2021; Schermuly, 2021). The ‘new psychological contract’ defines employee-organization relationships in which long-term employment is of minor importance and in which employees are responsible for their own career development (Cavanaugh and Noe, 1999). One the one hand, the described work environments above could provide opportunities for employees to acquire new competencies and to develop their career. On the other hand, they could also create the pressure for employees to stay flexible and adaptable, while facing the uncertainty of potential job losses when not met (Bernhard, 2011). As a result, these developments may erode and complicate employees’ attachment to their employing company, while also potentially transforming them into independent agents pursuing their own interests in the context of the new psychological contract (Bernhard, 2011; Bagranza et al., 2021; Cavanaugh and Noe, 1999; Malhotra, 2021). As organizations increasingly rely on key employees and their attachment, a critical tension field arises due to the potential decline of two typical forms of employee organizational attachment in such environments: organizational commitment and identification (Baruch, 1998; Cohen, 1993; Feeney et al., 2018; Riketta and van Dick, 2005; Yip et al., 2018). In this context alternative forms of employee attachment might be important to bond independent agents to their employing company. However, research focusing on how employees (psychologically) bond to their employing organization is far from new. While prior research on organizational attachment examines for example employees’ organizational commitment towards or their identification with their employing organization or both (e.g., Feeney et al., 2018; Riketta and van Dick, 2005; Reichers, 1985; Yip et al., 2018), recent studies suggest an additional form of employee attachment to organizations, that is psychological ownership (Zhang et al., 2020). While employee’s commitment toward the organization “refers to a positive evaluation of the organization along with a desire to remain a member of the organization”, organizational identification refers to “a general perception of belongingness or a link between one’s self image and their employer” (Feeney et al., 2020, p. 113). In contrast, psychological ownership is defined as that “state in which individuals feel as though the target of ownership or a piece of that target is “theirs” (i.e., “It is mine!”)”, and thus describes what becomes part of ones extended self (Pierce et al., 2003, p. 86). Thereby, psychological ownership might allow independent agents to turn into psychological principals (Sieger et al., 2013). Although commitment, identification, and psychological ownership are similar in that they describe how employees psychologically bond to their employing organization, they are distinct regarding their conceptual core and their motivational basis (Pierce et al., 2001). While employee’s commitment and identification have been extensively studied (for overviews see Ashforth et al., 2008; Riketta and van Dick, 2005; Sidorenkov et al., 2023; Yip et al., 2008), scholarly interest in the emerging construct of psychological ownership has increased over the last thirty years (Dawkins et al., 2017; Kim et al., 2023; Renz and Posthuma, 2022; Zhang et al., 2021). Organizations are likely to be interested in developing their employees’ psychological sense of ownership in order to strengthen their bonds with their employer, but also because feelings of ownership can lead to pro-organizational and work-related perceptions, attitudes and behaviors (Dawkins et al., 2017; Zhang et al., 2021). For example, with regard to the outcomes of psychological ownership, prior research has identified its positive effects on attitudes such as job satisfaction, work engagement, and organization-based self-esteem (Liu et al., 2012; Peng and Pierce, 2015; Ramos et al., 2014; Sieger et al., 2011; Van Dyne and Pierce, 2004), pro-organizational behaviors such as knowledge sharing, stewardship, and voice behavior (Han et al., 2010; Henssen and Koiranen, 2021; Henssen et al., 2014; Mayhew et al., 2007; O’Driscoll et al., 2006; Peng and Pierce, 2015), as well as other outcomes such as its negative relation to employee burnout (Kaur et al., 2013). Nonetheless, little is known about the boundary conditions that may moderate the relationship between psychological ownership and its outcomes (Dawkins et al., 2017). This raises the question regarding the circumstances under which psychological ownership might have stronger or weaker effects on its outcomes. Due to these various pro-organizational outcomes, companies might engage in factors and mechanisms that allow their employees to develop, enhance and/or foster their psychological ownership. In this vein, numerous studies have examined the antecedents of psychological ownership. Amongst others, prior research has identified employee’s participation in decision-making (Chi and Han, 2008; Liu et al., 2012), the provision of stock ownership and profit-sharing (Chi and Han, 2008; Chiu et al., 2007), the degree of autonomy (Henssen et al., 2014; Mayhew et al., 2007), or the role of organizational leaders (Avey et al., 2012; Bernhard and O’Driscoll, 2011) as predictors of psychological ownership. However, like on the outcome side, little is known about the boundary conditions under which such predictors might create stronger or weaker ownership feelings. Additionally, as several of these predictors could coexist within an organization, they might interact with each other (Pierce et al., 2003, 2001). Yet, little is known about the potential interplay between these different factors. This dissertation aims to address these shortcomings, by (1) examining selected boundary conditions that affect the emergence of behavioral consequences resulting of feelings of ownership, by (2) shedding light on the interplay between different predictors of psychological ownership, and (3) by explaining how the relationship between certain predictors and outcomes of psychological ownership works.