A study of organizational cynicism and how it is affected by social exchange relationships at work

Drawing on the social exchange theory, organizational cynicism has been suggested as a central consequence of psychological contract (PC) breach. In this study, we examine the extent to which social exchange relationships with the supervisor and coworkers have an impact on cynical reactions to broken employer promises. Based on two‐wave data with a time lag of three months from a sample of 781 employees, we investigated the influence of employees’ perceived PC breach on cynical thoughts, emotions, and behaviours, and the moderating effects of leader–member exchange (LMX) and coworker exchange (CWX). Using structural equation modelling, we found that PC breach was positively associated with cognitive, affective, and behavioural cynicism. Our analysis further revealed that LMX and CWX moderated different dimensions of organizational cynicism: When LMX was high, employees reacted more sensitively to a PC breach with cognitive and behavioural cynicism. In contrast, CWX attenuated employees’ affective cynical response to a PC breach. The differentiated perspective on cognitive, affective, and behavioural cynicism and the identified moderating effects help explain varying strengths of the PC breach–organizational cynicism association found in previous research and highlight contingencies related to social exchange relationships at work. Practitioner points This study shows that cynicism towards the organization varies with the extent of perceived PC breach, indicating that organizations should actively manage employees’ psychological contracts. LMX tends to reduce cynicism towards the organization (direct effect), but high LMX employees seem to react more sensitively to severe PC breaches (interaction effect). Thus, high LMX cannot completely compensate employees’ cynical reaction to a PC breach. Leaders should be made aware of that and should be trained to effectively manage employees’ expectations to prevent PC breaches. Employees’ cynical emotional reaction to severe PC breaches was buffered by high levels of CWX. Hence, organizations should foster interpersonal relationships among coworkers.