A psychological contract perspective of vertical and distributed leadership in project-based organizations

Abstract

The primary purpose of this study is to examine the relationship between two leadership styles (vertical and distributed), conceptualized through types of decisions made (strategic and operational/tactical), and the state of psychological contract (fulfillment/breach) at three different levels of the organizational hierarchy in project-based organizations. The explorative analysis of eight organizations from India and Australia demonstrates the prevalence of distributed leadership: operational and technical decisions are usually entrusted to the project team and project managers, while strategic decisions are made by senior management. The study suggests that three factors facilitate a specific leadership style (vertical or distributed): organizational culture, knowledge sharing and project management practices, which in turn impact the state of psychological contract (fulfillment/breach). A flexible, collaborative organizational culture supports knowledge sharing and the adoption of agile methods, enabling distributed leadership and leading to psychological contract fulfillment.