The Moderating Effect of Organizational Trust on the Relationship Between Locus of Control and Psychological Contract

Many studies have pointed out that psychological contracts are significantly associated with improving job satisfaction, performance, and willingness to stay. Meanwhile, scholars have found that psychological contracts are affected by different personality traits, such as locus of control. In addition, trust in organization is positively related to psychological contract. Consequently, this study explores the effect of organizational trust on the relationship between locus of control and psychological contract. A questionnaire survey was used in this study. A total of 231 questionnaires were collected from employees involved in manufacturing industry in Tainan City, Taiwan. The results of hierarchical regression analysis revealed that internal locus of control has a positive effect on psychological contract, while external locus of control has a negative effect on psychological contract. Organizational trust including vertical and lateral trusts has a positive effect on psychological contract. Parts of organizational trust have the moderating effects on the relationship between locus of control and psychological contract. Furthermore, practical suggestions based on the research results and analysis were also proposed.


INTRODUCTION
At present, Taiwan's traditional industries are facing many challenges such as insufficient management capabilities to cope with the organizational development, long-term imbalances in human resource requirement, insufficient R&D and innovation investments etc. [1]. Consequently, the dilemma of inadequacy and serious manpower gaps becomes one of the most serious management issues to traditional industry in Taiwan [2]. To maintain the sustainable development of the traditional manufacturing industry, it is an urgent task to solve this problem. Studies have pointed out that psychological contract is an implicit contract between employees and enterprises [3]. The purpose of psychological contract management is to achieve employee job satisfaction through human resource management, and to further strengthen the employees' strong sense of belonging to the organization and work [4]. In addition, scholars indicated that if companies can adapt the employees' personal characteristics to their jobs, assist employees in career planning, or transfer to more appropriate positions, and provide opportunities for training and development, employees will be particularly satisfied with happiness and the companies will benefit from it [5]. There are also studies mentioning that organizational trust can improve employee performance [6]. Therefore, this research took the employees of traditional industry in Taiwan as samples to explore: 1. The current status of locus of control, organizational trust and psychological contract in traditional industries. 2. The influence of locus of control and organizational trust on psychological contract. 3. The effect of organizational trust on the relationship between locus of control and psychological contract.

Introduction of Locus of Control, Organizational Trust and Psychological Contract
Even though the theories and definitions of personality traits are still diverse, what can be confirmed is that the research and application of personality traits have become an important area in the business community. Therefore, James and Mazerolle [7] stated that companies will seek help from experts in personality traits and use their expertise to recruit high-achieving, stable and sincere employees.
There is a classification of personality traits that has been mentioned in many studies: locus of control. Rotter [8] put forward this concept based on social learning theory.
individual's perception of the outcome of an event. Internal control means that oneself has considerable influence on the surrounding environment and the pace of life, can control and understand events, attributes success to one's own performance, has strong autonomy in fate, adopts constructive adaptation methods, and has high internal control. Employees with these characteristics are more welcome and encouraged. External control is just the opposite. It refers to having little influence on the surroundings, unable to control and understand events, believing that fate is determined by external forces, attributing success to external forces, and not believing that success or failure is related to personal ability or effort, and taking a destructive performance after suffering a setback. Judge and Bono [9] found that according to the data of Psyc INFO: from 1997 to 1999, locus of control was mostly used to analyse personality traits in applied psychology. Hammer and Vardi [10] pointed out that those with internal control personality traits are more proactive in achieving work goals and obtaining the desired job. On the contrary, those with external control personality traits tend to be passive, inactive, and rely on external forces. Spector [11] found that internal controllers are better and more confident in their work performance, tend to participate in management and give more feedback; while those with strong external control personality traits are more passive, submissive and more acceptable on organizational arrangements. The term trust is often mentioned in many studies on social exchange theory. Blau [12] indicated two very important concepts: trust and commitment. In the process of social exchange, because of the results of reciprocity, mutual gratitude, sense of responsibility, trust will be generated between each other eventually. Moorman et al. [13] defined trust as a willingness to rely on a trustworthy exchange partner to make each other feel the credibility and benevolence of each other. Even at organizational level, Williams and Lawson [14] pointed out that trust is a social phenomenon that promotes mutual cooperation between organizations. There are also many classifications of organizational trust, mainly discussing trust in organizations, supervisors, and colleagues. Among them, McCauley & Kuhnert [15] divided organizational trust into two types: lateral trust and vertical trust. Lateral trust refers to the trust relationship between peers or peers who enjoy a similar working environment, that is, the trust relationship among employees or departments. Vertical trust emphasizes the trust relationship between individuals and supervisors, senior managers and even the entire organization. A psychological contract, systematically developed by [3] [16] [17], represents the mutual beliefs, perceptions and informal obligations between an employer and an employee. It is a dynamic process for the relationship and defines the detailed practicality of the work to be done. It is distinguishable from the formal written contract of employment. Morrison [18] argued that the characteristics of psychological contract include ： (a) Predictability: It means that if employees can have a better anticipation of their current or future work conditions, it will help develop their trust and generate higher loyalty. (b) Dependence: It means that people in the organization can only play a role if they depend on each other. (c). Psychological distance refers to the distance that the organization's personnel rely on each other on the psychological level. (d) The psychological contract is passive and will change with the needs of both parties. Moreover, an employee's attitude toward change in the job is clearly linked to the employee's psychological contract with the manager or employer. Van den Huevel et al. [4] pointed out that an employee's attitude and mindset about what changes could benefit them in what ways could affect the psychological contract they have with the manager. With regard to the content of psychological contract, Macneil [19] divided the psychological contract into two types: transactional contract and relational contract. This is the most widely used aspect and the most basic aspect of early research on psychological contract. Transactional contracts are economic or currency exchange relationships between short-term organizations and employees, such as salary, bonuses, and financial welfare measures [20][21]. Relational contract refers to the relationship between the organization and employees in addition to currency transactions and non-monetary transactions. Relational psychological contracts include not only transactional components, but also longer-term, undefined, and socially emotional obligations. Meanwhile, there are emotional factors including trust or belief. Relational psychological contracts are also characterized by commitment and trust, such as job challenge, organizational support, training and development opportunities, promotion opportunities, and job security [21]. The targeting sample of this study are not short-term or part-time labours. In addition, according to the above-mentioned literature, it can be found that the relational contract contains part of the transactional contract. Therefore, this research only discussed the relationship between psychological contract and locus of control and organizational trust from a relational perspective.

The Relationship among Locus of Control, Organizational Trust and Psychological Contract
With regard to the relationship between locus of control and psychological contract, people with strong external control will be less concerned with long-term relationships since they show low alertness and are not sensitive to information related to future situations and outcomes [11]. They will form contracts that offer them accessible short-term gains, and believe outcomes to be under the control of factors such as influential others or luck. Therefore, this study suggested that: H1: External control will be negatively related to relational psychological contract, and internal control will be positively related to relational psychological contract.
Regarding the relationship between organizational trust and psychological contract, trust is an important variable that strengthen the employee-employer relationship at long run [22]. Studies have revealed that the employees' perception

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of employment contract breach can be reduced or overcome by trust [22][23][24], because it is built on the employeremployee mutual obligation of exchange relationship over time [25]. Meanwhile, some studies indicated that supervisor support enhances employees' perceptions of organizational support, which in turn builds the belief that the organization has fulfilled its responsibilities in regarding the employees' psychological contracts [26][27].
Consequently, this study proposed that: H2: Organizational trust (lateral and vertical trust) will be positively related to relational psychological contract.
As previous studies mentioned that relational psychological contract will be influenced by external control negatively and by organizational trust positively, it is reasonable to suggest the different interactions of locus of control (internals vs. externals) and organizational trust (lateral vs. vertical) will have different effects on relational psychological contract. Thus, the following hypothesis was proposed: H3: Organizational trust will have significant moderating effect on the relationship between locus of control and relational psychological contract.

Research Framework
Based on the research aims and the literature review, this study proposed the following research framework as shown in Figure 1, to investigate the moderating effect of organizational trust on the relationship between locus of control and relational psychological contract.

Measurements
The measurement of Locus of Control is revised from Rotter's study [28]. "Internal Control" (α = 0.803), a total of eight questions and "External Control " (α = 0.859), a total of eight questions were used. The Organizational Trust measurement is based on the McCauley and Kuhnert's [15] questionnaire, which is divided into two dimensions, namely "Vertical Trust" (α = 0.888) with five questions and "Lateral Trust" (α = 0.821) with five questions. Because the measurement of Psychological Contract mainly focuses on relational contracts, it refers to the part of the scale of Hui, Rousseau and Lee's study [29], with a total of seven questions (α = 0.813). The rating scale used the Likert 5-point score. The scales are divided into 5, 4, 3, 2, and 1 point. They are the representative of strongly agree, agree, no difference, disagree, and strongly disagree, respectively.

Sampling
The targeting group of this study is the employees of traditional manufacturing industry in Tainan City, Taiwan. The questionnaires were distributed by convenient sampling from July to August 2019. A total of 249 questionnaires were distributed and 231 valid questionnaires were returned, with a valid response-rate of 92.8%.

Demographic Data
In Table 1, the information regarding demographic variables, including gender, age, marriage, education level, seniority and position in company, are demonstrated.

Descriptive Statistics and Correlation Analysis
In

t-Test and ANOVA
To test the influence of demographic variables on the research dimensions, t-test and ANOVA were employed. The significant results (referring to Table 3) pointed out gender, marriage and educational level were not significant variables (p > 0.05). However, the respondents, whose age was over 41 (m = 3.843) and whose position was nonsupervisor (m = 3.865), had significantly higher mean score of internal control than those whose age was under 30 (m = 3.459) and those whose position was supervisor (m = 3.434). Regarding external control, the respondents whose seniority was under 5 years (m = 3.250) had higher mean score than those who worked for 6 to 15 years (m = 2.872).
Regarding organizational trust, the respondents whose position was non-supervisor had higher mean score of vertical trust and lateral trust than those whose position was supervisor (m = 3.692 > 3.370, 3.338 > 3.067). With respect to psychological contract, the respondents whose seniority was over 16 years (m = 3.478) and whose position was nonsupervisor (m = 3.446) had higher mean score than those whose seniority was under 5 years (m = 3.063) and those whose position was supervisor (m = 3.195). In short, position is likely to be the most influential demographic variable.

Regression Analysis
In Table 4 and 5, the results of regression analysis are demonstrated. All equations with relational psychological contract (RPC) as dependent variable were significant since F-values were significant (p < 0.05). In E0, the demographic variables including gender, age, position and seniority were independent variables. In E1 and E2, the dimensions of locus of control, including internal control (IC, β = 0.193, p < 0.01) and external control (EC, β = -0.206, p < 0.001) were significantly related to RPC. Consequently, Hypothesis 1 was supported. Regarding the effect of organizational trust, the results of E3 and E4 indicated that vertical trust (VT, β = 0.312, p < 0.001) and lateral trust (LT, β = 0.695, p < 0.001) were significantly related to RPC. Therefore, Hypothesis 2 was supported as well.
Considering the interaction effect, only the interaction of EC and VT (β = 0.302, p < 0.01) was significantly related to RPC. Therefore, Hypothesis 3 was partially supported. In detail, regardless of the level of EC, the respondents with

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high degree of VT have higher RPC levels than those with low degree of VT. If the respondent has a low level of EC, the degree of VT has less impact on RPC level. If the respondent has a high level of EC, the degree of VT has a greater impact on RPC. In other words, if the employee has a high EC, the strong sense of high VT is required, otherwise the RPC level will be relatively low.

Research Conclusion
From the results of descriptive analysis, the respondents have a higher level of internal control (IC) than external control (EC), and the perception of vertical trust (VT) is slightly higher than that of lateral trust (LT). As for the relational psychological contract (RPC), the mean score is also a little higher.
According to the results of regression analysis, IC and organizational support (including VT and LT) have a positive effect on RPC respectively, while EC has a negative effect. Among them, the influence of organization support is greater than that of locus of control. Coupled with the results of the interaction, it is also found that respondents with high levels of VL have higher levels of RPC regardless of their EC levels. Therefore, compared with Locus of control, organizational support has a more positive influence on RPC. Therefore, employees with a relatively high degree of IC and organizational support and a relatively low degree of EC, are more likely to have a higher level of RPC. Furthermore,

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according to the results of t-test and ANOVA, respondents who are over 41 years old and have non-supervisory position have higher IC levels, while those with 6-15 years of seniority have higher EC levels. Meanwhile, non-supervisory respondents have significantly higher VT and LT than those with supervisory position. In addition, respondents with high seniority and non-supervisory positions have a higher degree of RCP. In other words, non-supervisory respondents with higher seniority may have a higher RCP level. This research speculated that the reason may be that respondents in supervisory positions may have more opportunities to change their jobs, but respondents with higher seniority and nonsupervisory positions are more likely to experience more VT and LT.

Managerial Suggestion
This study found that older employees or employees with more seniority have higher level of IC and RPC. Therefore, it is recommended that companies need to improve the benefits of senior workers to affirm the value of seniority. For example: adding a part of the allowance to employees who have been working for over five years so that employees may feel that the long-term involvement in the company is worthwhile. However, if employees believe that their seniority has not received the respect they deserve, their trust in the supervisor or the company may be damaged. At this time, they can feel recognized by encouraging them, and not only pay attention to whether the employees' rights are satisfied. Meanwhile, it is important to listen to the needs and suggestions from the employees. In terms of improving VT and LT, it is recommended to organize family days and consensus camps. Family days can allow employees and their families to get to know each other better, so as to build team awareness and increase understanding of company's culture. In addition, this study shows that the VT of organizational trust has a significant and positive moderating effect on the relationship between EC and RPC. Therefore, it is extremely important to establish the trust of employees in supervisors. The company needs to enhance the training of supervisors on the management issues, to ensure that it is not overly committed when communicating with employees, and to appropriately defend the rights and interests of employees. In addition, IC has a positive impact on RPC, so when recruiting and selecting new employees, company can focus on the requirements of EC, such as: enthusiastic, selfmanagement, active responsibility, etc. In addition, personality tests can be conducted during the selection process. When planning for promotion, company can also try to prioritize the employees with higher IC in management positions.

Research Contribution and Limitation
With respect to the research contribution, this study attempted to investigate the interaction effect of individual level (locus of control) and organizational level (organizational trust) factors for research perspective. Meanwhile, the empirical research information is likely be become a brick of Taiwanese study on social exchange theory. For managerial perspective, the research results pointed out a better interaction combination of locus of control and organizational trust to psychological contract. The related and feasible suggestions were also proposed.
Regarding the research limitation, this research framework focused on the interaction of locus of control and organization trust in relational psychological contract. Different organizations could have different trust level for employees and the organization-level effect should be considered. Therefore, hierarchical regression analysis may not be appropriate to deal with the cross-level issue. Secondly, this study used convenient sampling to reach the respondents. It is better to use the probability-oriented sampling in order to increase the validity of argument generalization. Thirdly, the low values of R 2 and not-supported hypotheses pointed out that the explanatory power of independent variables in this study may not totally match the literature arguments. It suggests that some independent variables, such as leadership style, compensation satisfaction, career development, are more likely to be appropriately employed in the regression analysis and research framework.