People, performance and transition: A case study of psychological contract and stakeholder orientation in the Toyota Australia plant closure

Operations managers often manage in times of change that exert pressure on values and methods usually developed during more stable eras. With increasing global volatility, companies open close plants because demand shifts, cost reshoring considerations, government-induced market forces. Impacts plant closures local communities, employees, suppliers, other stakeholders have been documented, but closure processes not extensively studied. This paper describes an engaged research study Toyota Australia's manufacturing processes. We apply psychological contract theory, particularly breach, to examine the “respectful” approach used its assembly operation Melbourne. examined role stakeholder theory plays describing managerial motivations. allocated resources beyond typical expectations prepare workforce for their post-Toyota careers lives. During 4-year transition process, employee performance, engagement improved, supporting propositions reserves goodwill can come into play when a breach occurs. Further, leadership actions moderate negative impacts predicted by outcomes transactional views would predict. Our offers elaborated model future researchers related operational contexts.