The ripple effect of abusive supervision: A longitudinal examination of psychological contract breach, turnover intentions, and resilience among third parties

• Observing abusive supervision at T1 relates positively to observers’ PC breach at T2. • PC breach at T2 relates positively to observers’ turnover (intentions) at T3. • PC breach mediates the observing abusive supervision − turnover (intentions) relationship. • Resilience at T1 mitigates the observing abusive supervision − PC breach relationship. Being a direct target of abusive supervision is known to have detrimental effects on the targeted employee’s psychological contract (PC). This paper however introduces a novel finding: abusive supervision not only affects direct targets, but also negatively affects the internalized mental schema of third-party observers. That is, contrary to traditional expectations of psychological contract (PC) theory, which posit that only events affecting the direct employee-supervisor relationship shape one’s PC, our longitudinal study, among 274 Dutch employees who observed abusive supervision in their workplace, demonstrates that merely observing abusive supervision can lead to a PC breach in third parties. This internalization of observing abusive supervision alters the observers’ perceptions of their own relationship with the supervisor, triggering higher turnover intentions and actual turnover. In addition, we argue that resilience acts as a vital personal resource. In this study, resilience helps third-party observers buffer the psychological damage caused by observing abusive supervision. Specifically, individuals with higher levels of resilience are better able to withstand the negative impacts of observed abusive behaviors, reducing the likelihood of PC breach but not one’s turnover intentions and actual turnover. This finding highlights the underexplored value of resilience as a personal resource in mitigating the ripple effects of abusive supervision on one’s PC. Implications for PC theory and practice are discussed.