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CDI
16,4 A model of psychological contract
creation upon organizational
entry
342
Maria Tomprou
Heinz College and Tepper School of Business, Carnegie Mellon University,
Received 14 October 2010
Revised 3 December 2010, Pittsburgh, Pennsylvania, USA, and
28 March 2011 Ioannis Nikolaou
Accepted 29 March 2011
Department of Management Science and Technology,
Athens University of Economics and Business, Athens, Greece
Abstract
Purpose – The purpose of this paper is to highlight the importance of a number of factors in
newcomers’ psychological contract development.
Design/methodology/approach – The approach taken is a literature review with the development
of a conceptual model.
Findings – The paper contributes to the psychological contract literature by adopting a sensemaking
perspective and focusing on the role of newcomers’ pre-entry expectations and emotions on the
psychological contract creation process. The authors also discuss the differential role of contract
makers and facilitators and the modes they employ to influence newcomers’ psychological contract
creation.
Originality/value – Psychological contract research has emphasized the consequences of
psychological contract breach and violation. The paper’s aim is to direct attention at understanding
the psychological contract in its very initial stages. The authors discuss implications for research and
practice on managing psychological contract creation.
Keywords Psychological contract, Socialization, Sense making, Employee behaviour, Employment
Paper type Conceptual paper
A concept that “neatly captures the spirit of our times” (Guest, 1998, p. 649) regarding the
contemporary employment relationships is the psychological contract. The plethora of
literature on this topic has to date predominantly focused on the processes of contract
violation and its attitudinal and behavioral aftermath (Coyle-Shapiro and Kessler, 2000;
Edwards et al., 2003; Lo and Aryee, 2003; Robinson, 1996; Robinson and Morrison, 2000;
Turnley and Feldman, 1998, 1999a, b). This wealthy theoretical and empirical work has
contributed substantially to our understanding of the properties of the psychological
contract and its relevant outcomes.
However, we believe that this approach is rather pessimistic. The conventional
approach conceptualises the process through which psychological contracts are formed,
managed and breached (Rousseau, 1995, 2001). It is generally accepted among
researchers that contract violation refers to “the rule and not to the exception”
Career Development International
Vol. 16 No. 4, 2011
pp. 342-363 Part of this research was funded by the State Scholarships Foundation (IKY) to the first author.
q Emerald Group Publishing Limited
1362-0436
The authors are also grateful to Denise Rousseau for her support and helpful comments during
DOI 10.1108/13620431111158779 the development of this article.
as predicted by Robinson and Rousseau (Coyle-Shapiro and Kessler, 2000; Robinson and Psychological
Morrison, 2000; Turnley and Feldman, 2000). Here, we examine psychological contract contract creation
by looking in particular at the dynamics of psychological contract creation.
Psychological contract creation refers to the sensemaking process including an
amalgam of promises exchanged by the newcomer and the organizational insiders, as
experienced by the focal individual during her first days at work.
Psychological contract creation is very important from a careers perspective, as well. 343
Changes occurring in the employment relationships, as a result of the current economic
climate might have led employees to embed the new psychological contract in their
mentality (Baruch and Bozionelos, 2010). The traditional protean career shifts its focus of
career management to the individual, while the organisation’s role is to provide employees
with opportunities for growth and development (Briscoe and Finkelstein, 2009; Hess and
Jepsen, 2009). As a result, the newly recruited employees have also probably adopted a
different way of creating their psychological contract compared to previous generations.
Here, we consider a number of characteristics, such as pre-entry expectations, stemming
from previous work experiences and pre-entry information about the organization, certain
individual differences, and post-entry social influence that may affect psychological
contract creation. We also incorporate in our model the role of emotions, since upon entry
emotions can be considered a good indicator of comprehending how psychological contract
creation is perceived and experienced by the newcomer. We distinguish psychological
contract creation from psychological contract development since we mainly focus on
psychological contract processes occurring during the encounter stage of socialization.
Psychological contract creation is a process taking place during newcomers’ first days at
work and lasts for a few weeks. During this stage, the outsider becomes a newcomer and
faces the new working reality; promises and information are intensively exchanged and
expectations are being revised (Louis, 1980). On the other hand, psychological contract
development accounts for a longer time period (almost up to a year) and may include
perceptions of fulfilled and/or violated promise-based obligations (De Vos et al., 2003).
We have decided to concentrate on psychological contract creation during the first
days of employment for a number of reasons:
(1) A few studies have explored the early processes of psychological contract
development (De Vos et al., 2003, 2005; Rousseau, 1990; Thomas and Anderson,
1998). In these studies, participants have provided retrospective reports of their
perceptions of contracts at entry, with some reports involving lengthy periods
(e.g. four waves: first month, third month, sixth month and 12th month
(De Vos et al., 2003), two waves: first year, second year (Robinson et al., 1994); two
waves: first day and after eight weeks (Thomas and Anderson, 1998)). Although
retrospection over such lengthy periods does not necessarily lead to biased
reports, there is ample evidence suggesting that retrospective reports are prone to
various problems (Reis and Gable, 2000).
(2) The findings of these studies have shown that newcomer’s expectations and
perceived promises tend to change over time contingent on the employer’s
actual inducements and insiders’ perceptions of the psychological contract. Yet
these studies do not fully tap the dynamics occurring during psychological
contract creation. For instance, none of these studies explains the sources
and modes of psychological contract-related information, although they appear
to recognize their influential role.
CDI (3) Theory and research on organizational entry have primarily emphasized
16,4 newcomer’s cognitions and behaviors (i.e. how they think and act related to
their new job and organization) rather than newcomer’s emotions (i.e. how they
feel related to the new job and organization). Although emotions are considered
inherent in the sensemaking processes (Weick, 1995), they are systematically
neglected under the scope of contract creation with a few exceptions mainly
344 within the framework of psychological contract violation (Conway and Briner,
2002; Robinson and Morrison, 2000).
(4) Our conceptual model attempts to respond to recent calls (Bauer and Erdogan,
2011) for integration of the psychological contract and socialization literatures,
since there is limited interplay between the two approaches, although they are both
very significant for understanding newcomers’ adjustment in the organization.
Our aim is to provide a testable model of psychological contract creation upon entry,
from a socio-cognitive perspective. Our proposed model is graphically shown in
Figure 1.
345
Contract makers Post entry experiences Facilitators
Power and authority Individual differences No power and Authority
Promising work ideologies Informing
Formal modes of Sensegivers Informal modes of
sensegiving - contracting sensegiving - facilitating
Monitoring
Emotional reactions
Intensity/type
Pre-entry expectations
Pre-entry expectations are created during the anticipatory stage of socialization
(Louis, 1980). During this stage, recruits – while outsiders – anticipate their experiences
in the organization they are about to enter. According to Weick (1995), the most
distinguishable property of sensemaking is the focus on retrospect. The newcomer
entering the organization, and especially the young graduate (Hurst and Good, 2009;
Hess and Jepsen, 2009), relies on a number of inputs to interpret and understand the new Psychological
employment relationship (Louis, 1980; Weick, 1995), and to formulate expectations contract creation
about the prospective psychological contract. Individual predispositions influence how
newcomers interpret these expectations. Rousseau (1995) claims that an important
factor influencing the development of these expectations is cognitive biases, which
appear to be a generalizable information processing style. We believe that this style will
be heavily influenced by newcomers’ previous work experiences. Newcomers’ previous 347
experiences, either positive or negative, will affect how they encode and develop their
expectations from their new employer. Moreover, this is not the only influence on
recruits’ pre-entry expectations. These will also be affected by the pre-entry information,
the employee has gathered about the future employer through organizational and
recruitment image during the job seeking and recruitment process.
Cognitive biases. These pertain to the schemata that gradually develop from
previous experiences and subsequently guide the way new information is organized
(Louis, 1980; Weick, 1995). They provide a lens through which prospective employees
create their expectations about the content of their psychological contract acquired
prior to socialization (Rousseau, 2001). Within the anticipatory stage, previous work
experiences act as pre-entry schemata accounting for the formation of newcomer
expectations (Rousseau and Tijoriwala, 1998) and depict how the newcomer will act
within the new employing organization (Louis, 1980; Weick, 1995). Upon entry,
newcomers with previous work experience are considered as veterans vis-à-vis the
inexperienced neophytes (Carr et al., 2006). Veterans have created extant schemata that
serve as a guide for attributing meaning to the new employment relationship (Louis,
1980). Neophytes on the other hand are more reliant on schemata evolved in relation to
similar but different contexts (e.g. university or school context). During this stage,
recruits develop prospective expectations about their life in the organization and on the
job. According to Wanous (1977), it is during this phase that unrealistic expectations or
expectations inconsistent with organizational reality can develop. As a
pre-employment schema, previous work experience accounts for the extent to which
some employees develop stable psychological contracts (Rousseau, 2001). Veterans can
have well-developed psychological contracts that are more difficult to change and are
often less responsive to contradictory information than their neophyte counterparts.
Most people work for several organizations throughout their careers and it is not
uncommon for employees and organizations to change occupations, industries or
organizations. Newcomers’ previous experience of terminating psychological contracts
can influence the content of pre-entry expectations. Experiencing involuntary job
change or any other unpleasant job event also contributes to employees’ expectations for
future employment relationships (Morrison and Robinson, 1997). Research has shown
that employees with a history of perceived breach of a relational (i.e. high trust) contract
are more likely to defensively pursue a transactional contract (i.e. quid pro quo) as a
pre-emptive strategy against other incidents of violation (Robinson et al., 1994). On the
other hand, individuals who have experienced job loss and organizational change are
more likely to expect job insecurity (Cavanaugh and Noe, 1999). Conversely, newcomers
with positive previous experiences, such as keeping promises and expectations on
behalf of the employer, would influence, respectively, the process of psychological
contract creation. It is also more likely that they would expect that their new employer
would keep their promises.
CDI Pre-entry information. Pre-entry information about the employing organization can
16,4 influence a newcomer’s expectations about the new employment relationship. Dineen
and Soltis (2011) in the most recent review of recruitment research emphasized the
importance of firm characteristics in the context of recruitment. Here, we focus on the
signalling messages sent by the employing organization through its brand and
organizational image. Signalling is a very significant part of the recruitment process.
348 Candidates often generalize from job and organizational attribute information they have
to job and organizational attributes about which they lack information (Breaugh et al.,
2008). The credibility of the source might also be an important factor in this process. Tsai
and Yang (2010) suggested that one of the main antecedents of organizational
attractiveness is corporate credibility image. Credibility is generally considered a valid
way of taking others “on board” and earn their trust. When an organization is positively
perceived by outsiders, people may normally associate such a positive impression with a
number of positive characteristics in the firm. Because of the functioning of social
identification, a positive image will attract larger number of applicants to the
corresponding organization.
Psychological contract researchers argue that the employer can send messages
(whether unwitting or contrived) about future contractual obligations during the
recruitment and selection process (Millward-Purvis and Cropley, 2003; Rousseau, 1995,
2001; Rousseau and Greller, 1994; Shore and Tetrick, 1994). Firm characteristics, such as
the corporate image, create general organizational impressions through advertisements,
campaigns and activities of corporate social responsibility (Rynes, 1991). In the absence
of inside information, applicants may rely on corporate image to decide whether to
pursue an employment relationship with the focal organization. Images actively used in
recruitment processes may likewise be used by prospective employees (Gatewood et al.,
1993). Rousseau and Greller (1994) argue that promises abound in descriptions of the
work, pay system, career progression and working conditions. Although these promises
may be considered by those who send the messages as personal opinions, the result is
more often than not to create lasting expectations. Selection procedures, such as the
employment interviews, realistic job previews and assessment centers can all furnish
expectations (Rousseau and Greller, 1994; Wanous, 1977).
The above provide the rationale for the following propositions:
P1. Pre-entry expectations will influence newcomer’s perceptions of
organizational promises.
P1a. Veteran newcomers will have more realistic expectations, and will perceive
fewer promises than neophyte newcomers.
P1b. Corporate and recruitment image will influence pre-entry expectations, which
will in turn affect newcomers’ perceptions of organizational promises.
Post-entry experiences
When new hires enter the organization, they have already formulated a gamut of
expectations about their future employment relationship (Robinson, 1996; Rousseau
and Greller, 1994). However, it is also clear that these expectations are subject to
revision through the course of interactive exchanges with insiders
(Thomas and Anderson, 1998). As earlier stated, one common newcomer experience
that can challenge pre-existing schemata is “reality shock”. Newcomers, in their early
days at their new position, are busy with many unfamiliar cues that need to be Psychological
handled. Louis (1980) argues that individuals experience events that may be starkly contract creation
divergent from their expectations and predictions. A perceived inconsistency of
promises (i.e. perceived obligations) and anticipatory expectations may be experienced
(Robinson, 1996), because pre-entry expectations are ill-founded in the reality of the
organization (Wanous, 1977; Wanous et al., 1992). It is also possible that new recruits
will perceive congruence and consistency between pre-entry expectations and 349
perceived obligations (Robinson, 1996). Met expectations are likely to become part of
newcomers’ psychological contracts. However, it should be noted that expectations can
exist in the absence of perceived promises (Robinson, 1996) contributing to some
uncertainty about where expectations end and promises begin in the employees’ minds
(Coyle-Shapiro and Kessler, 2000; Guest, 1998).
Whether the newcomer recognizes what was promised and whether these
expectations are actually met or unmet will also depend on the salience of perceived
obligations and expectations. Salience is likely to affect how vigilant an employee will be
in detecting whether perceived promises are upheld (Morrison and Robinson, 1997), and
also the perceived relevance of particular employer contributions to judgments about
whether obligations have been met. In addition, the influence of social environment
guides the individual’s attention to focus on certain information close to her salient
schemata and provide expectations concerning individual behavior (Harris, 1994). In the
following section, we explain the influence of certain individual differences and the role
of the social environment within the context of psychological contract creation.
Individual differences. Psychological contract and breach are individual-specific
constructs that are influenced by individual characteristics and differences, generally
represented by personality traits, work values and beliefs. A few studies have
investigated the role of individual differences on psychological contract violation
(Raja et al., 2004; De Vos et al., 2005; Rousseau, 2004; Nikolaou et al., 2007). Further,
previous research has investigated the effect of work values on psychological contract
development and type of information seeking (De Vos et al., 2005). We expand this
work by suggesting the potential role of work ideologies that could affect
psychological contract creation, since we believe that reciprocation ideology and
self-reliance play have important roles in psychological contract creation.
Proactive personality. Personality is less subject to changes during career and
organizational experiences relative to work values and ideologies (De Vos et al., 2005;
Gundry and Rousseau, 1994). As stated earlier, socialization researchers tend to conceive
newcomers as proactive in information seeking in relation to their new environment
(Bauer and Erdogan, 2011; Major et al., 1995; Morrison, 1993a, b, Nikolaou et al., 2007).
Proactive newcomers appear to adjust more readily to new organizational settings
(Morrison, 1993a, b). Proactive employees take action to influence their environment
(Bateman and Crant, 1993) and experience career success (Seibert et al., 1999) along with
increased levels of work engagement over time (Dikkers et al., 2010). Crant (2000) argues
that, in general, proactive people recognize opportunities and act on them, demonstrate
initiative, take action and persist until significant change occurs. In short, proactivity
may influence the sensemaking process during psychological contract creation, and may
in particular contribute to the development of realistic expectations as well as to their
ability to understand and interpret promissory messages sent by the organization.
Proactive newcomers would be more vigilant about organizational messages in order to
CDI understand the new working environment than less proactive individuals. Proactivity is
also associated with the willingness to take the initiative and to make promises as a way
16,4 to seek and initiate feedback (Crant, 2000). Proactive individuals also have an increased
tendency to control their work environment, thus demonstrating proactive behavior that
enhances socialization (Bauer and Erdogan, 2011). Therefore, we expect that more
proactive newcomers would report more employer promises than less proactive
350 newcomers.
Work ideologies. Ideologies have been defined as “a relatively coherent set of beliefs
that bind some people together and that explain their worlds in terms of cause-and-effect
relations” (Beyer, 1981). Work ideologies often exist prior to an encounter with a
particular employer (Rousseau, 2001). Ideologies within the organizational setting serve
to reduce uncertainty and ambiguity acting as an interpretation of employment reality,
minimizing the need to constantly explain an overload of complicated information (Beyer,
1981; Edwards et al., 2003). When the individual is about to enter the organization, her
pre-entry expectations direct sensemaking processes regarding psychological contract
creation. Based on the idea of the psychological contract as an exchange relationship
(Coyle-Shapiro and Conway, 2005; Coyle-Shapiro and Neuman, 2004; Teklab and Taylor,
2003), the role of reciprocation ideology has been found to influence the formation process
by means of biasing the way newcomers perceive information sent by the organization
(Coyle-Shapiro and Neuman, 2004; Eisenberger et al., 1987). Eisenberger et al. (1987)
have identified two independent dimensions of reciprocation ideology: one involving
beliefs that returning help greater than previously received will result in generous
repayments (i.e. creditor ideology), and one involving caution in returning help required
to avoid being taken advantage of (i.e. reciprocation wariness). Creditor ideologists are
more likely to pursue an over-reciprocation contract with the employer when they enter
an organization, due to a preference to have the other party in their debt rather than
experiencing the felt discomfort of indebtedness (Coyle-Shapiro and Neuman, 2004). As
such, a creditor newcomer will tend to be vigilant about their own promises but not to the
employer promises. Accordingly, newcomers with high reciprocation wariness may
appear to ignore promissory messages sent by the organization and being rather stingy
on their own promises maintaining a balance between their own and the organization’s
obligations. Another potentially important work ideology is that of self-reliance.
Employee’s self-reliance is a belief that employees should depend on their employers as
little as possible and should be responsible for their own employability (McKinley et al.,
1998). Edwards et al. (2003) argue that employees who are not self-reliant can have high
expectations of employers regarding training, benefits and job security (i.e. pursuing a
more relation-oriented psychological contract), whereas their counterparts subscribing
to a self-reliance ideology are likely to have lower expectations of employers regarding
these attributes, predisposed to more transaction-oriented contracts. Therefore,
self-reliant newcomers will tend to perceive fewer promises about employer promises.
This leads to the following propositions:
P2. Certain personality traits and work ideologies are likely to affect newcomer’s
psychological contract creation.
Specifically:
Otherwise, the promises conveyed to the newcomer may lead to a disoriented and
unrealistic psychological contract vulnerable to violations. Contract makers, on the
other hand, are not always an accessible source of information; they mainly convey
messages as organizational representatives through formal procedures, such as
recruitment and selection or socialization and induction processes (Miller and Jablin,
1991; Rousseau, 1995). Within these organizational practices, formal conversations are
the framework of sensegiving and sensemaking processes that create the content of the
psychological contract (Rousseau, 2001). This might occur, for example, through
realistic job previews (Premack and Wanous, 1985) or active communication.
Facilitators. By contrast, facilitators convey messages about the employment
relationship as information providers to help (facilitate) the newcomer to make sense of
his/her psychological contract. Ho and Levesque (2005) and Ho et al. (2004) conceived
the third party as friendships and networks, whereas Thomas and Anderson (1998)
defined the third party as insiders but not clearly distinguished from contract makers.
During organizational socialization, especially in the early beginning of the
employment relationship, the third party has a facilitative role to the extent that
they clarify promissory messages sent by organizational representatives. Therefore,
they are labeled as facilitators and act as a secondary informal information source.
When promissory messages are conveyed by organizational representatives, the
newcomer is likely to seek validation or clarification from facilitators. Facilitators can
provide helpful information for the newcomer to make sense of the promissory
messages sent by the organization. For instance, if an organizational representative
promises fringe benefits, the newcomer can make use of facilitator source to obtain
information of the process of obtaining these benefits. Facilitators can be co-workers,
administrative staff, and colleagues from other departments (Miller and Jablin, 1991)
but do not necessary have some type of relationship, such as friendship or network, as
in Ho and colleagues’ definition. During psychological contract creation, relationships
are not yet established and newcomers focus on the facilitative role of the third party to
obtain information. They may turn to experienced peers, or informal mentors (Eby,
2011), who act as helpful sources and guides to salient background information for
assigning meaning to events and surprises (Louis, 1980). In their study into army
recruits’ changes in psychological contracts, Thomas and Anderson (1998) argue that
newcomers’ changes in their pre-entry expectations are generally toward the existing
norms of experienced soldiers. All these arguments indicate the influential role of Psychological
facilitators in the psychological contract creation process. contract creation
Unlike contract makers, facilitators cannot make any official promises about
employer’s obligations as they are not assigned with the authority or the power to do
so. Therefore, they may not be considered as reliable source of information as contract
makers. Nonetheless, they do provide information about employer’s obligations. This
will definitely be the case if we are talking about an informal mentoring relationship 353
(Eby, 2011). This information may attribute both positive and negative meaning
compared to promises that have a primarily positive nature, as they refer to intention
to fulfill a perceived obligation. Researchers have consistently found that supervisors
evaluate contract fulfillment towards their subordinates higher compared to
employees’ evaluation of organizational contract fulfillment (Coyle-Shapiro and
Kessler, 2000; Porter et al., 1998; Tekleab and Taylor, 2003). Porter et al. (1998) have
also found that employees report greater amounts of employer’s inducements than do
their organizational representatives. These discrepancies can be explained by the
information provided by the facilitators who help the newcomer to learn the ropes by
providing both positive and negative information.
The second function that differentiates the role of contract makers from that of
facilitators is the differential sensegiving modes they adopt. Contract makers, as we
explained earlier, are more likely to employ formal tactics to convey messages about an
employer’s obligations, whereas facilitators use more informal tactics to provide their
information. The potential inefficiency of formal procedures to offer the newcomer a
holistic picture of the new employment relationship may lead to the development of
alternative modes of information seeking (Miller and Jablin, 1991). The use of facilitators
as informal socialization agents may provide a means by which the newcomer can
confirm or clarify contract makers’ promises. Facilitators are available to newcomers
through more informal modes, such as chatting, storytelling and advising. Previous
research has shown that advice and friendship relationships shape the content of
psychological contract (Dabos and Rousseau, 2004b; Ho et al., 2005). Therefore,
we develop the following propositions:
P3. During the encounter stage, different sources of sensegivers will influence
differently the process of psychological contract creation.
P3a. Newcomers will perceive more employer promises by contract makers than
by facilitators.
P3b. Newcomers will perceive more facilitative information about employer
inducements from facilitators than by contract makers.
Concluding remarks
We believe that the aforementioned dynamics provide a means of understanding how
the content of a newcomer’s psychological contract is formulated. Pre-entry
information and cognitive biases function as a cognitive lens through which the
newcomer interprets the new employment relationship. Yet this cognitive lens is likely
to be dysfunctional within the new context, as pre-entry expectations will need to be
revised and updated contingent upon entry experiences and social interchanges with
insiders (Robinson, 1996; Rousseau, 1989, 1995). Facilitators, as helpful sensegivers,
also influence the content of newcomer’s psychological contract as they convey
messages that attribute both positive and negative meaning to the new psychological
contract (Ho and Levesque, 2005). The type of a new hire’s psychological contract
is also being formed; promises emphasizing relational terms (e.g. long-term security
and concern for individual’s wellbeing) or transactional terms (e.g. encouragement
of external marketability and pay contingent on performance), shape the scope through
which the newcomer interprets the nature of her employment relationship
CDI (Rousseau, 1990; Robinson et al., 1994). The final point regarding the psychological
16,4 contract fundamentals involves the fluctuation of emotions the newcomer will
experience. Acknowledging explicitly the role of emotions in the workplace has been
on the rise recently (Elfenbein, 2007; Barsade and Gibson, 2007). In a similar vein to
Morrison and Robinson (1997) and Robinson and Morrison’s (2000) argument
about the need to distinguish between cognitive and affective components of the
356 concept of violation, the influence of the emotions may need to be considered as
inherent to psychological contracting. The degree of consistency between perceived
employer promises with pre-entry expectations as well as with facilitative information
can have a differential effect on how the psychological contract is being experienced
upon entry.
Despite the important work on psychological contract, little is known about how the
psychological contract is actually created and experienced during employees’ first days
at work. We have attempted to clarify the sensemaking processes occurring during
psychological contract formation taking into consideration emotional and social factors,
as well as conventional cognitive elements. In doing so, we have illustrated certain
pre-entry antecedents, the role of individual differences, as well as the differential
influence of sensegiving from contract makers and facilitators. Likewise, we have
emphasized the pivotal role of emotions as an inherent part of the psychological
contracting process. Next, we address the future research potential of our propositions,
and implications to promote both research and practice on psychological contracts.
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Corresponding author
Ioannis Nikolaou can be contacted at: inikol@aueb.gr
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