Unravelling Employee Retention: Exploring Psychological Contract’s Role in Bangladesh’s Garment Sector

Abstract

Employee turnover remains a major concern for businesses globally. In Western contexts, the concept of psychological contract breach (PCB) is often employed to understand this phenomenon. This paper takes Bangladesh’s readymade garment (RMG) sector as a case study to explore the factors that support employee retention in their jobs, despite reported poor working conditions and associated issues in garment factories. Data were gathered among 400 RMG workers and linear regression analysis was used to answer this question. We demonstrated that while PCB was positively related to turnover intention, its impact on the retention of Bangladeshi garment workers was relatively minimal. Qualitative data showed how cultural and social factors distinct from known Western retention causes shaped our findings. The evidence presented in this paper sheds new light on employee retention in a Bangladeshi context, where socio-cultural issues challenge the PCB theory, which was developed largely based on Western economies.

1. Introduction

Employee retention refers to an organisation’s ability to retain employees by reducing their intention to leave the organisation [1]. In a competitive globalised labour market, retaining employees can be one of the toughest challenges for organisations [2]. Employee retention is a key concern for scholars and practitioners, as capable and productive staff are among an organisation’s most valuable assets [3]. What influences and facilitates employee retention can be a subjective matter and vary in different social, political, cultural, and legal contexts of the organisation(s). Broadly speaking, some argue that employee retention could depend on the work environment, including transformative leadership, intergenerational aspirations, employee training and development, and other factors [4,5,6]. Sociologists such as [7] suggest that high turnover levels signal that an organisation is out of control, and [8] insist that upholding the psychological contracts (a fundamental concept in understanding the dynamics of employee expectations and interactions within the workplace) is key to employee retention. It represents the unwritten, implicit expectations and obligations perceived by both employees and employers, shaping their mutual relationship [9,10]. However, in the context of this paper, it is important to acknowledge that the underlying reasons for employee retention could be psychological, non-psychological (e.g., other economic and social reasons), or both [2,5,11]. This paper uses psychological contract theory to explore employee retention in the Bangladeshi context. In the psychological contract literature [12,13], employee retention is seen from a psychological point of view, whereby it mostly refers to employees’ turnover intention (i.e., the extent to which an employee wants to leave the organisation). However, employees’ retention intention bears just the opposite meaning to employees’ turnover intention, whereby it refers to the extent to which an employee wants to stay within the organisation. While some researchers [8,14,15] investigate the reasons for employees’ intention to stay through psychological contract, others, such as [16], examined the factors causing employees to leave the organisation after the psychological contract has been breached (see next section for more discussion).

The main pillars of psychological contract arguments are built on the experiences of Western countries. It is, thus, imperative to investigate to what extent Western values or practice-led arguments of psychological contract could be relevant in developing country contexts. This is particularly pertinent as social norms, culture, and business practices are often significantly different in developing countries compared to Western industrialised societies. This is particularly true in the South Asian context and even more so for the RMG sector, which employs millions of workers in developing countries. It is intellectually apposite to investigate whether the experiences of psychological contract breach in Western contexts could have similar results in the developing countries. Given this context, this paper aims to explore the effect of psychological contract breach and employees’ retention intention, taking Bangladesh’s readymade garment (RMG) sector as a case study. Bangladesh, once dismissed as a ‘basket case’, has made remarkable progress in many aspects of human and economic development in the last couple of decades and is cautiously described as a ‘success story’ in the recent literature [17,18,19]. Ref. [20] describes Bangladesh as one of the fastest-growing economies in the world, supported by a demographic dividend and strong RMG exports. RMG exports account for approximately 78% of Bangladesh’s total exports, making it the country’s largest source of foreign income after China [21,22]. This makes the Bangladesh RMG sector an ideal case study for examining whether psychological contract breaches affect employee retention, considering various cultural and societal factors. The Bangladeshi RMG sector offers an ideal field for psychological contract breach due to its poor and unsafe working conditions, as well as ineffective trade unions [23,24]. However, evidence presented in this paper sheds light on some little-known aspects of employee retention and psychological contract breach. The allegiance of Bangladeshi RMG employees to their superiors, who are deeply rooted in Bangladeshi culture, appears to play a significant role in this regard. However, it is important to recognise that some ‘universal’ elements of the psychological contract, such as social exchange principles underpinning the functioning of relationships (i.e., through mutual exchange, trust, etc.), largely apply to both Western and developing countries’ contexts. There are also other issues, such as the neo-colonial underpinning of the RMG industry that frequently exploits poor workers to meet the demands of Western consumers (which can also be said for Bangladesh’s RMG sector) [24,25], which is irrelevant for most Western countries, where exploitation might occur in various other ways. The current body of knowledge within psychological contract research has failed to address these vital issues adequately. This paper aims to bridge this conceptual gap by providing new evidence and cognate arguments based on that evidence.

2. Literature Review

2.1. Theoretical Underpinning

When an employee joins an organisation, a formal written contract is typically established, outlining what each party—the employee and the employer—will receive in exchange for fulfilling their respective obligations. When the terms are written down and signed by all parties, the contract then assumes a legal form. When such terms are unwritten but mutually understood, they constitute the psychological contract. Most definitions of the psychological contract postulate that it is subjective and exists in the eye of the beholder [26,27,28,29,30]. This involves each party attempting to interpret the other’s expectations and intentions. Many scholarly works highlight the relationship between the psychological contract and employees’ turnover intention [31]. This interconnection underlines the primary theoretical ground of this research. To illustrate, social exchange theory has been widely used to explain employees’ perceptions of contract fulfilment and breach [32]. It is argued that psychological contract breach results in many negative organisational outcomes, including employees’ intention to quit the organisation (ibid). Furthermore, in the employee turnover literature, psychological contract breach has been presented as an antecedent of voluntary turnover [33,34] where exchange fairness and trust were claimed to explain the relationship between psychological contract breach and employee retention. We explain the cognate theories below.

Psychological Contract Theory and Its Application in Business Organisations

Definitions of psychological contracts vary, but a cognitive approach—where promises imply obligations—is widely accepted. Ref. [35] argue that obligations are inherently promissory (i.e., a promise becomes an obligation if it is endorsed in a mutual agreement). Keeping this in mind, this paper defines the psychological contract as a set of ‘obligations’ that one party (e.g., employees) is perceived to have to the other parties (e.g., employing organisations). It is worth mentioning that the proponents of psychological contract theory believe that promises are mostly made by employers (it is generally taken for granted that employees must have to offer their labour or services).

The significance of the psychological contract is manifested when it is breached [28,36,37]. To illustrate, Ref. [38] argue that fulfilment and breach of the psychological contract led to dissimilar organisational outcomes. Likewise, the type of psychological contract (e.g., relational or transactional) breaches may also lead to dissimilar outcomes. For example, a relational contract affects long-term work outcomes (e.g., prosocial work behaviour, psychological ownership, and engagement, etc.) while a transactional contract affects employees’ turnover intention and their attitudes toward work (ibid.). Breaches may lead to individual consequences (e.g., loss of trust, reduced performance), organisational issues (e.g., strained relationships, internal conflict), and broader societal effects (e.g., shifts in workplace norms). Evidently, there is a strong correlation between an employee’s psychological contract and their retention in an organisation [13]. Promises, a key element of the psychological contract, may indirectly impact turnover intentions [14]. Social exchange theory further explains these perceptions of contract fulfilment and breach [32].

While the psychological contract is often used to explain employee turnover intention, some studies suggest that breaches may not significantly influence the decision to leave [6,14]. Organisational commitment may also play a critical role in shaping turnover intention. For [39], the organisational and professional commitments of employees could lead to the avoidance of employee turnover intention. This then elucidates the point that psychological contract breach and employees’ retention relationship are context-specific. For example, Ref. [40] reveal that in a Chinese context where employers do not fulfil their psychological contract obligations, some employees (i.e., those less committed to the customs and norms of a traditional society) are less likely to leave their organisations than others known as ‘traditional employees’. Likewise, according to [14], psychological contract violations have no direct effect on turnover intentions of older workers. Gender differences also influence turnover intentions, with promotion opportunities and work–life balance being more critical for women, while men prioritise job clarity [41]. Notably, the psychological contract is nevertheless influenced by the divergent employment realities in which it is embedded [35,42,43]. Studying it purely from a psychological perspective undermines the value of acknowledging variations in contextual differences. Additionally, employee turnover intentions vary across countries and industries due to institutional and cultural factors. Hence, fulfilling the psychological contract does not guarantee loyalty, but breaching it may lead to disappointment and an intention to leave [44].

It can be argued that the factors influencing employee retention differ from those driving turnover, particularly when specific expectations are unmet. This suggests that employees’ perceptions, shaped by cultural and contextual nuances, play a pivotal role in their decisions to remain with or leave an organisation, even in the face of psychological contract breaches. To explore the relationship between psychological contracts and employee retention in Bangladesh’s Ready-Made Garment (RMG) sector, it is essential to provide a concise overview of the sector’s context. The RMG industry is a cornerstone of Bangladesh’s economy, contributing significantly to export earnings and employment. Understanding its unique dynamics is crucial for contextualising how psychological contracts operate within this setting, particularly in a developing economy with distinct cultural and socio-economic characteristics.

2.2. Bangladeshi RMG Sector Context

While the overall unemployment rate in Bangladesh is low, at 4.2% [45], approximately six in every ten working-age population (aged 15 and older) live in poverty. The rise of the RMG sector has been central to Bangladesh’s industrialisation process and its export strategy [17,46], which is acting as a major source of the country’s recent economic progress [47,48]. In 1990, Bangladesh was exporting USD 0.64 billion worth of garments, which by 2009, had increased to USD 11 billion a year. The industry employs nearly two and a half million people in its factories, 90% of whom are women, and creates further employment in related services such as transport, insurance, and banking [49]. Although the RMG sector is one of the major sources of industrial employment in Bangladesh [50], labour practices in this sector are rather traditional. As [51] suggest that many RMG factories do not offer appointment letters to the workers even though they operate under a formal business operating system. This approach to employing workers makes the job tenure uncertain and temporary and thus offers a suitable case study for the psychological contract in the context of a business sector.

2.3. Conceptual Framework

Some studies [51,52] insist that Bangladeshi RMG factories fall short of social compliance (conceptualised as building standards of the factories, health and safety and environmental safety measures, working conditions, workers’ rights measures), and do not comply with labour practice that ensures the social welfare of the employees. The workplace conditions and respect for workers’ rights, including their right to form trade unions, are thought to be some of the key areas for the RMG sector in Bangladesh, where many improvements can be made [53]. Working conditions and job satisfaction have been identified as two primary determinants of productivity in the RMG sector, which is crucial for its continued success in a globally competitive context. According to [54], the RMG sector also has significant shortcomings in ethical practice and moral agency, as these can be found only in some instances as a response to mounting political and legal pressure from external stakeholders. The RMG sector in Bangladesh plays a significant role in economically uplifting a large cohort of poor and socially less advanced female workers [52,53,54,55]. According to the [56], female RMG workers are among the least advanced social groups, entailing young, poor, unskilled, sometimes illiterate, and often single women in a patriarchal society. While the majority (80%) of RMG workers are women [56,57], female workers are predominantly employed in lower-ranked jobs that offer lower wages. These jobs are also reported by female workers as monotonous in nature [58]. Nevertheless, the RMG sector has been described as a key driver of women’s empowerment in Bangladesh since the 1980s [59]. The new factories primarily drew on the labour of village women who had learned traditional sewing skills as young girls within rural households. This resulted in a generation of young women who were able to challenge the constraints of kin and patriarchal social norms, shaping new identities in settings beyond the village [18]. However, the working conditions have been questionable, as it is quite common to see that female RMG workers are harassed in Bangladesh [52,58]. Consequently, it is causing female RMG workers to lose interest and become depressed. Low and irregular wages are also reported as other root causes of their dissatisfaction, leading to high employee turnover in this sector.

We propose a contextualised framework in which perceived psychological contract breach (PCB) has a direct, positive association with turnover intention, but its effect is attenuated by culturally specific moderators—such as dignity at work, local/family ties, and perceived job security—and may be mediated by perceived employability. This framework guides the interpretation of our results in a collectivist, low-income setting (see Figure 1).

Bangladeshi RMG sector is currently facing many challenges. Many of these challenges are economic, such as upholding the industry’s reputation in the face of recent industrial accidents and the COVID-19 pandemic. However, a few challenges are HR-related, such as high employee turnover and low employee productivity. These challenges with low labour productivity are intricately linked with high employee turnover. High employee turnover, amongst other factors, is identified as one of the main reasons contributing to the low employee productivity in the Bangladeshi RMG sector [60,61]. Managing employee turnover, therefore, could be pivotal for the success of this incredibly important sector and for the potential economic success of Bangladesh [62].

In this context, the existing literature is broadly divided into two opposing continuums when explaining the effect of psychological contract breach on employees’ leaving intentions. While one cohort of researchers [63,64] found a detrimental effect of employees’ psychological contract breach, the other cohort of researchers found no significant association between these two contracts [40]. Thus, the issue remains unresolved. The role of gender was also examined in the existing literature on the relationship between employees’ psychological contract breach and their turnover intention, which eventually differentiated women’s reasons for turnover intentions from those of men.

In this paper, we aim to identify the effect of psychological contract breach on employees’ intentions to leave in Bangladesh’s RMG sector. One of the key rationales for exploring and assessing this relationship is that in the RMG sector, employees had a set task to do at a pace set by the operational design/system. Employees in the RMG sector typically have little autonomy over their work preferences (i.e., how they want to work, at what pace they prefer to work, and where they want to work, among other factors). Unlike Western countries, where the notion of a psychological contract originated, employees in the RMG sector have hardly any provisions for well-being and work–life balance. Additionally, Bangladeshi RMG sector employees are traditionally loyal, where allegiance is a key factor in their relationships with their employers. The prolonged history of colonialism and the cultural dimensions [65] of Bangladeshi people, as determined by [66], could corroborate this claim. Likewise, local and social ties could also play a role in Bangladeshi RMG employees’ responses to their psychological contract breach.

3. Methodology

3.1. Participants and Procedure

Data were collected using convenience sampling, yielding a total of 400 responses. While the main data collection was conducted using the survey questionnaire, data was also collected through an online survey platform named Qualtrics. However, Qualtrics was only used to collect the data from the managers (as employees) who were highly educated (e.g., university graduates) and who had internet access. In total, 222 managers were approached to take part in this study. However, only 30 managers have responded. The response rate was 10 per cent only among the participants approached through Qualtrics. These managers completed the survey in their employee capacity, not in their managerial role. This is because this study only concentrated on grassroots-level blue-collar employees or managers in the RMG sector in Bangladesh.

Table 1. Demographic profiles of respondents.

Particulars	Categories	Percentage
Gender	Male	37.3
	Female	62.7
Age Range	Below 18 years	6.3
	18 to 25 years	49.0
	26 to 39 years	40.8
	40 to 59 years	4.0
Level of education	No education	11.3
	Primary school	48.8
	High school	24.0
	College	10.5
	University	4.5
Employment status	Full-time	94.5
	Part-time	5.0
Employment tenure	Less than 6 months	9.0
	6 months to under 2 years	33.3
	Between 2 and 10 years	50.7
	Over 10 years	7.0

suggests that data were collected from a diverse cross-sectional population.

In the absence of reliable databases about the research context (RMG employees in Bangladesh), a convenience sample was taken. This was also why probability sampling was not possible. The sampling frame was unknown, and it was unclear whether managers would provide access to worker lists. On the other hand, systematic errors (e.g., sampling bias) that arise because of the study design and the level of rigour in executing that design were minimised by taking precautions. For example, the inclusion of men and women, people of different age groups, and individuals with various employment tenures and job statuses was carried out to minimise the sampling bias. Likewise, employees were selected from several factories across multiple industrial (e.g., factories located in export processing zones facilitated by the government) and non-industrial areas (e.g., factories located in residential areas) to achieve a more rigorous research protocol, as is advised in [67].

This research used cross-sectional and self-report measures that may have caused common method bias. To assess potential common method bias, Harman’s single-factor test was conducted (see Appendix A). In the case of common method bias, the concern is that when the same method is used for measuring multiple constructs, this may result in spurious method-specific variance that may jeopardise the observed relationships amongst the measured constructs [68]. This issue was addressed through varied response formats (e.g., reverse coding, diverse Likert scale wording) and a temporal break during data collection, as recommended by [69]. The potential bias was also kept to a minimum by allowing respondents to remain anonymous using novel data collection techniques that followed the ethical code of conduct of the researcher’s university.

3.2. Research Instruments

3.2.1. Psychological Contract Breach

The five-item scale, adapted from the instrument developed by [70], was employed to assess employees’ perceptions of psychological contract breach. Four of the five items were phrased as positively worded statements (e.g., “To what extent has the company fulfilled its obligations?”), which were subsequently reverse-scored during data analysis to align with the construct’s direction. Sample items include: “My company has repeatedly failed to meet its obligations to me” and “My company has done a good job of fulfilling its obligations to me” (reverse-scored). The scale demonstrated acceptable internal consistency, with a Cronbach’s alpha coefficient of α = 0.68.

The average variance extracted (AVE) for the four items measuring employees’ relational contract was 0.43, marginally below the conventional threshold of 0.50 recommended for convergent validity and internal consistency [71]. However, given the exploratory nature of this research within an understudied context, this value remains pragmatically acceptable, as lower AVE thresholds are often tolerated in preliminary investigations [71]. Factor loadings for the items were retained to preserve theoretical coherence, despite the modest AVE, reflecting the prioritisation of conceptual relevance over stringent metric criteria in early-stage inquiry.

3.2.2. Intention to Leave the Organisation

The two-item scale was adapted from a scale developed by the [72] to measure employees’ intention to leave their organisations. Sample question items are ‘I often think about quitting’ and ‘I will probably look for a new job in the next year’. The overall scale reliability (Cronbach’s alpha) was α = 0.69. The loading of two items used to measure ‘employees’ relational contract’ was with an Average Variance Extracted (AVE) value of 0.76, showing a higher level of both convergent validity and internal consistency.

Simple linear regression was conducted. As the majority (about sixty per cent) of the respondents were completely illiterate or little literate (e.g., went to primary schools only), research aid was sought from one male and two female research assistants who read out the questionnaire to the respondents. While data were collected individually, for cultural and religious reasons, the female research assistants were present during data collection from the female respondents. The utmost care was also taken not to administer questionnaires both in and directly outside (e.g., at the factory gate) of the factory. This was to ensure that the garment owner or their agents (e.g., managers or supervisors) do not directly see them while taking part in the survey.

Table 2. Mean, standard deviations, zero-order correlation and reliability coefficient (α) for the study variables.

Variables	Mean	SD	1	2	3	4	5	6	7
1 Gender	1.63	0.48
2 Age	2.43	0.67	−0.253 **
3 Education	2.48	0.98	−0.434 **	0.324 **
4 Employment Status (full or part-time)	1.05	0.22	0.041	−0.098	−0.053
5 Job Tenure	2.56	0.75	−0.129 *	0.459 **	0.142 **	−0.161 **
6 Psychological Contract Breach (PCB)	2.2	0.61	0.132 **	−0.179 **	−0.243 **	−0.026	−0.144 **	(α = 0.68)
7 Intention to Leave	3.23	1.01	−0.003	−0.126 *	−0.003	0.011	−0.184 **	0.143 **	(α = 0.69)

** Correlation is significant at the 0.01 level (2-tailed). * Correlation is significant at the 0.05 level (2-tailed).

shows the descriptive statistics with mean and standard deviations of the Likert scale variables.

Zero-order correlations were all in the expected directions. Psychological contract breach (PCB) was positively correlated (r = 0.143, p < 0.01) with employees’ intention to leave the organisation. However, the strength of this relationship was very weak [73], suggesting PCB has a trivial relationship with employees’ intention to leave their organisations. All demographic and employment characteristics significantly correlated with psychological contract breach except for employment status. Likewise, among these significant correlations, apart from gender (r = 0.132, p < 0.01), all relations were negatively correlated. The Average Variance Extracted (AVE) value for ‘Intention to Leave’ was 0.76, showing a higher level of both convergent validity and internal consistency.

3.3. Measurement Quality and Validity

Reliability and validity metrics were assessed for both constructs. The following table (

Table 3. Reliability and validity metrics for the study constructs.

Construct	No. of Items	Cronbach’s Alpha (α)	Average Variance Extracted (AVE)	Composite Reliability (CR)
Psychological Contract Breach	5	0.68	0.43	0.79
Intention to Leave	2	0.69	0.76	0.86

) shows the reliability and validity metrics for the study constructs. Although the AVE for PCB was slightly below the conventional 0.50 threshold, this exploratory study prioritised conceptual coverage within an understudied context, retaining theoretically important items, as mentioned previously. To strengthen the measurement model, a confirmatory factor analysis (CFA) was conducted to assess convergent and discriminant validity, as well as composite reliability.

4. Results

A simple linear regression analysis was conducted to examine whether psychological contract breach (PCB) significantly predicted employees’ intention to leave their organisation. The results, as presented in Table 3, revealed that PCB accounted for 6.4% of the variance in employees’ turnover intentions (ΔR² = 0.064, F (4.393, 6) = 4.393, p < 0.001). The regression coefficient indicated a positive and statistically significant relationship between PCB and employees’ intention to leave (β = 0.16, p < 0.001). Specifically, the analysis suggests that for every one-unit increase in PCB, employees’ intention to leave their organisation is predicted to increase by 0.16 units. Although PCB emerged as a significant predictor of turnover intentions, other factors—such as organisational culture, job security, and working conditions—may also influence employees’ decisions to leave. Further research is needed to explore these additional dimensions and their interplay with psychological contract breaches.

The following regression analysis table (

Table 4. Summary of analyses.

R Square
Construct	R		R Square		Adjusted R Square
PCB	0.252		0.064		0.049
ANOVA
Model	Sum of Squares	df	Mean Square	F	Sig.
Regression	25.637	6	4.273	4.393	<0.001
Residual	377.417	388	0.973
Total	403.054	394
Model Summary
Model	B	Std. Error	Beta	t	Sig.
1	Constant	3.618	0.486	7.444	0.000
	PCB	0.261	0.083	3.127	0.000

Dependent Variable: Intention to leave. Predictors: PCB. Control variables: EmpStatus, Gender, AgeRange, JobTenure.

) show the summary of the regression model, the ANOVA table and the coefficient of determination.

The extent to which respondents intended to leave their organisations was assessed through two specific questions. The first question inquired whether respondents frequently considered leaving their organisation, while the second question explored whether they were actively seeking new employment opportunities for the upcoming year. The following graph (Figure 1) provides the details of the respondents’ answers.

The five topmost reasons reported were: low pay package, excessive workload, family problems, abusive language (i.e., being verbally abused), and lack of promotion opportunities. It is also interesting to note that nearly one fourth of the total respondents (n = 112) mentioned ‘other reasons’ as their reason to leave. Figure 1 shows a myriad of reasons for employees’ intention to leave their organisations.

Figure 1 above shows that ‘other reasons’ are mostly unspecified (87 per cent) while some specified reasons can be categorised as ‘health and economic reasons (4 per cent) and ‘cultural and religious reasons’ (3 per cent). Some of the mentioned reasons in this category were: enough is enough, I like to go back home to spend more time with family, I like to focus on God, I have health issues, and I need care from my family, etc. One other category mentioned here is miscellaneous reasons (6 per cent). These reasons are standalone reasons and too small or a percentage to be included in the ‘other reasons’ category mentioned above.

Impact of Psychological Contract Breach on Employee Retention in Bangladesh

This paper argues that psychological contract breach (PCB) has a weak impact on employees’ intention to leave within the Bangladeshi Ready-Made Garment (RMG) sector. While being significantly related to turnover intention, it only explained 6% of the variance, leaving 94% of the variance in turnover intentions unexplained. Turnover intentions among RMG workers are predominantly influenced by unique cultural and societal factors specific to Bangladesh. The study aimed to extend understanding of PCB’s impact on employee retention in this context, hypothesising a positive relationship between PCB and turnover intentions. However, the analysis revealed that PCB has a minimal effect on employees’ intention to leave. This finding aligns with [28] assertion that the subjective nature of psychological contracts means perceived breaches do not necessarily translate into significant attitudinal or behavioural changes.

To further validate the findings, a regression model was estimated, including demographic controls (gender, age, employment status, and job tenure). PCB remained a significant predictor of turnover intention (b = 0.285, SE = 0.081, t = 3.53, p < 0.001), with a standardised beta of 0.184. The model explained 7.5% of the variance (R² = 0.075, Adj. R² = 0.045), confirming the modest but significant effect of PCB on retention.

Research [62] on the impact of psychological contract on RMG sector employees’ retention found that wage rates, wage payment methods, training and development, career opportunities and occupational health and safety (OHS) as the main factors leading to high employee turnover in garment factories in Bangladesh. This finding is partly aligned with the findings of the current research study. On the other hand, although the research was carried out amongst the white-collar Bangladeshi employees (e.g., Bankers), Ref. [74] found no association between employees’ psychological contract breach and their leaving intentions, while this study found weaker relations between these two research constructs. In the Chinese context [75,76], it is argued that psychological contract breach has a significant relationship with organisational outcomes such as their leaving intentions. While the Chinese context complements this study’s findings, this study, however, takes an opposite view to some other developing and developed country contexts. For example, in the Indonesian context, Ref. [6] found no significant impact of employees’ perceived psychological breach on employees’ leaving intentions. Interestingly, in the developed country context (e.g., Finnish context), Ref. [63] found a positive relationship between employees’ exposure to bullying and their leaving intentions. This study’s findings, partially backed by a Finnish example, reveal that verbal abuse is a potential reason for Bangladeshi RMG sector employees to quit. Bangladeshi RMG employees value a dignified work environment more than formal work contracts and their terms. Additionally, employment in the RMG sector (which is also heavily women-centred in terms of the numbers) has enabled many women to better negotiate their position in society [77]. This has enabled those employees to challenge pressure to marry early, sometimes to a much older man, and contest or recast norms in ways that enable them to assert their rights (see the arguments of the RMG sector contributed to women’s empowerment above). Hence, breach of psychological contract had a minimal impact on RMG employees’ retention.

5. Discussion

At this point, one can raise the question: why do RMG employees, despite experiencing breaches, not exhibit the expected negative behaviours—such as leaving the organisation—as seen in Western contexts? In finding answers to this question, this study focused on the individual-level performance outcomes (i.e., one’s intention to leave) instead of group-level outcomes (i.e., mass resignation). Bangladeshi RMG employees responded to breaches in ways shaped by personal, social, and cultural factors. Rather than blaming their organisations for their negative intentions (e.g., leaving intentions), they had mentioned reasons like local or family ties, homesickness, or involvement in religious activities, etc. This suggests that RMG employees in Bangladesh respond differently to workplace breaches compared to Western counterparts, often deprioritising abuse-related factors in their decision to leave. For instance, physical and mental harassment and poor working conditions ranked 11th and 12th out of 16 reasons cited for leaving. Abusive language at work, however, remained in the top five reasons for leaving. The cultural context of employees who are loyal and committed to their employer has compelled them to exhibit minimal reaction to this type of negative work experience. Other reasons may include poverty and a lack of alternatives. For many RMG workers, their families depend on their incomes. Likewise, since most RMG workers are poor and illiterate (or have exceptionally low levels of literacy), there are few alternatives available for them. An alternative for them could be to leave and find a job in another RMG, where they cannot guarantee that they will not experience the same issues. Although the global economy should be fair and just to its workers in their coping strategies to rise above many challenges (including rising costs), the RMG sector in Bangladesh depicts a bleak picture. A picture that can lead to opportunistic behaviour and exploitation by industry, as the findings of this study suggest that employees do not tend to leave even though their psychological contract is being violated and/or they experience other abuse. This aligns with [78], who found that RMG workers often feel imprisoned and compelled to work despite exhaustion from eighteen-hour shifts.

Our findings suggest that classic psychological contract formulations, derived from individualist, higher-income settings, require contextual extension. In collectivist, resource-constrained contexts, relationship-centred obligations (respectful treatment, social recognition) appear to buffer the impact of transactional shortfalls on turnover intentions. We advance a refined lens that integrates cultural moderators into PCB–outcome models.

This study highlights the limitations of applying Western-centric psychological contract theory to contexts like Bangladesh’s RMG sector. Employees outside Export Processing Zones often face verbal abuse and exploitation, exacerbated by significant power imbalances [66]. In the RMG sector, supervisors wield substantial authority over subordinates, and employees’ acceptance of such hierarchical structures influences their responses to breaches of the psychological contract [79]. Compounding these issues are systemic challenges, including high youth unemployment, ineffective trade unions, and limited education, which hinder employees’ awareness of their rights and access to formal employment contracts. Despite ongoing challenges, this study shows that RMG employees prioritise dignity and respectful treatment over physical safety. This aligns with [57], who identified work–life balance and reduced stress as key to employee satisfaction, and with [80], who emphasised the cultural importance of social recognition and workplace respect in Bangladesh.

Theoretical Contributions

The findings of this study challenge the preconceived understanding of psychological contract developed in a Western and mostly white-collar job context. Albeit developed predominantly in Western contexts, the assumption that the appeal and applicability of the psychological contract is universal and that various aspects of employment relationships affect (either positively through its fulfilment or negatively through its breaches) various indices of organisational outcomes and therefore can be applied anywhere. We contend that such a view is contentious. Findings of this research counter the preconceived thoughts, arguing that the existing construct of psychological contract breach, in fact, has a trivial effect on organisational outcomes. The Western-centric approach to psychological contract breach can explain little in the variations (of responses) in employees’ individual performance and their retention under the current research context. This study, therefore, offers a new perspective on this construct, and it poses a new question as to why Bangladeshi RMG sector employees might stay in their organisations after their psychological contracts may have been breached.

This study contributes to the psychological contract literature by examining the impact of culture on breach-outcome relationships. Individual differences, such as employee cynicism [81] and equity sensitivity [82], may serve as boundary conditions for these relationships. In this way, the study integrates a contextual perspective into psychological contracts by investigating how psychological contracts affect behaviours in the context of a broader relationship between the employee and their employing organisations.

This research sought to fill some of exiting conceptual knowledge gaps (i.e., the way psychological contract issues unfold itself in typical Bangladeshi RMG context) by arguing that the nature of the collectivist society and loyalty (towards someone senior in social and organisational hierarchy, such as the supervisor/line manager in the workplace context) that are deeply rooted in Bangladesh’s cultural values. This is perhaps one of the key factors that influences the relationship between contract breach and employee retention. Thus, this affirms the arguments that cultural context may influence employment relationships through the psychological contract. Also, the perception of breach is deeply rooted in the employee’s awareness of their employment relationships [64]. Hence, the situational awareness of employment relationships is the locus of triggers [37] for employees’ psychological contract breaches, and the Bangladeshi RMG sector is not an exception to this. The current research has highlighted some of these issues (e.g., dignified and less abusive work, reasonable workloads, etc.) to determine the reasons for RMG employees’ negative organisational behaviour, such as employees’ intentions to leave, and thereby adds to the theoretical debate and discussions of the psychological contract.

6. Conclusions

This study found that Bangladeshi RMG employees prioritise social and psychological factors—such as dignity and respectful treatment—over perceived breaches of psychological contract, as measured by scales developed in Western contexts. This research contends that employees’ leaving intentions were hardly explained by the perceived breach of their psychological contract. Fairness, trust, and deal delivery (i.e., all parties fulfilling their obligations in workplace relationships), as described by [83], are largely absent in the context of Bangladesh’s RMG sector. Despite many negative working conditions, our research found that psychological contracts had a minimal impact on the leaving intentions of RMG employees. Turnover intentions were shaped more by cultural and societal factors, including allegiance, loyalty, and local ties.

This paper thus fills some of the existing conceptual knowledge gap (i.e., the way psychological contract issues unfold itself in Bangladesh’s RMG context) by arguing that the nature of the collectivist society and loyalty (towards someone senior in a social and organisational hierarchy, such as the supervisor/line manager in the workplace context) which is deeply rooted in Bangladesh’s cultural values perhaps one of the key factors that influence the relationship between psychological contract breach and employee retention. This highlights that cultural context(s) can be intertwined in understanding the impact of psychological contract breaches in a competitive sector. This paper also highlighted some of the important triggers (e.g., dignified and less abusive work, reasonable workloads, etc.) while assessing to determine the reasons for RMG employees’ negative organisational behaviour, such as employees’ leaving intentions. Findings of this study also confirm that personal issues, such as family issues and local ties, took precedence over other known (organisational) issues that are more common in the Western experience.

6.1. Practical Implications

In a competitive global economy, this paper offers insights for practitioners addressing labour issues in manufacturing-intensive sectors like Bangladesh’s RMG industry and similar contexts in developing countries. It presents an alternative perspective to Western approaches, particularly in understanding the concept of psychological contract breach. The findings highlight how personal factors—such as family ties and local obligations—often outweigh organisational concerns familiar in Western settings. In a globalised world, cultural and social contexts deserve greater attention. The evidence shows that local employment practices, low literacy, and limited awareness place workers in a vulnerable position. Future business strategies should reflect these realities to promote fairness and reduce exploitation.

To support this, we offer the following practical recommendations for managers operating in similar contexts:

• Treat workers with dignity and respect;
• Consider family and community ties in HR decisions;
• Adapt practices for workers with low literacy;
• Ensure inclusive and culturally sensitive communication;
• Recognise the role of informal employment arrangements.

6.2. Limitations and Future Research

This study acknowledges several limitations. Firstly, its findings are specific to Bangladesh, limiting generalisability. To enhance the relevance of psychological contract theory in non-Western contexts, future research could incorporate multi-country case studies or comparative analyses. Secondly, while the survey method provided valuable insights, it restricted participants’ voices, potentially omitting nuanced perspectives that qualitative approaches, such as experiential narratives, might uncover. Further research is needed to explore the experiences of blue-collar employees within the RMG sector in Bangladesh and other developing countries. We explicitly acknowledge that the convenience sample and modest effective sample size constrain statistical power and generalisability. Self-reported survey data may also be susceptible to response bias; future designs should triangulate survey responses with administrative or observational data.

Future studies could also extend this research to other South Asian and Southeast Asian regions (e.g., Nepal, Bhutan, Sri Lanka, Vietnam, Cambodia, Myanmar) to assess cultural similarities and differences. Additionally, while the RMG sector dominates Bangladesh’s economy, examining psychological contract dynamics in other industries, such as fishing, farming, shipbuilding, and pharmaceuticals, could yield broader insights. Another critical area for investigation is the processes underlying psychological contract breaches, including how employees perceive violations—whether as breaches of trust or fair actions (e.g., economic, social, procedural, or justice fairness). Such perceptions could enrich psychological contract scholarship by incorporating psychological elements. Finally, qualitative or mixed-methods approaches could provide deeper, nuanced insights into workers’ perspectives on psychological contracts and their breaches. Conversational observations and narrative data may either support or challenge this study’s findings, advancing understanding of psychological contracts in developing countries.