Dual roles in psychological contracts: When managers take both agent and principal roles

•We challenge the assumption of managers as agents in psychological contracts.•Besides the agent role, managers may create psychological contracts as principals.•The combination of dual roles often yields significantly negative consequences.•We advance our understanding of managers' roles in the psychological contract.•We discuss the nature, antecedents, and consequences of managers' dual roles.

Departing from the long-espoused assumption that managers act only as agents in employees' psychological contract with the organization, this paper asserts that in addition to the agent role, some managers, in an attempt to further their own self-interests, form and enact their own psychological contracts as principals with select employees. The combination of these dual roles often yields unacknowledged but significantly negative consequences for the employing organizations, the managers who choose a principal role, and the select employees with whom they form a psychological contract. Drawing upon agency, psychological contract, and social exchange theories, we develop the distinctive characteristics of the agent vs. principal roles, identify the antecedents that motivate managers to assume a principal role, develop four archetypes for combining the dual roles, and suggest the potentially harmful consequences for the above three parties mentioned. The paper concludes with theoretical and practical implications and suggestions for future research.