Exploring Psychological Contracts in Consultant-Client Relationships : Individual Perceptions in Long-Term Collaboration

Traditionally the consultancy industry has been characterized by short-term transactional exchanges. In contrast, this study explores how highly specialized project consultants engage in long-term relationships with clients, and how psychological contracts form these relationships. Using an abductive approach and thematic analysis of interviews with two consultants and one consultant manager at a Swedish IS consultancy firm, as well as two of their clients, the study investigates how psychological contracts are formed, maintained and evolve in inter-organizational client-consultant relationships. The findings reveal a clear pattern of psychological contracts developing from transactional and formal to relational contracts based on trust. As consultants’ embeddedness in the client organization increases, so does their identification with the client, resulting in multiple psychological contracts and complexities in balancing obligations both to clients and the own firm. Further, the study highlights shifting power dynamics where long-term collaborations may transfer power from clients to consultants over time, challenging traditional assumptions about power asymmetry in contingent work settings. Findings also reveal that while psychological contracts strengthen trust and operational efficiency, they also introduce fragility in the relationship. When reciprocity is disrupted or expectations are unmet, relationships may revert to previous transactional approaches, highlighting the delicate balance of psychological contracts. This contributes to the psychological contract literature by expanding its application to interorganizational consultancy relationships, highlighting power shifts, identification processes, and the risks associated with implicit expectations. Practical implications include the importance of proactive relationship management, awareness of shifting power dynamics, and maintaining clarity of expectations to avoid psychological contract breach. Finally, the study suggests directions for future research, including comparative studies and longitudinal approaches to better capture the temporal development of psychological contracts.