Building and maintaining trust “even when things aren't going well”: meta‐regulation through an explicit psychological contract

Hierarchical relationships between government regulators and public services providers often lead to dysfunctional behaviors that negatively impact service delivery. Meta-regulation encompassing continuous learning towards sustainable service improvement involving both parties could offer a more effective regulatory approach. Mutual trust is crucial for this approach but is often absent. Drawing on psychological contract theory and an empirical study in the English NHS, this research illustrates how an explicit psychological contract (EPC) can facilitate building and maintaining trust, even through challenging times. Our ethnographic observations reveal how a regular face-to-face meeting between regulators and hospital leaders provided a stable context through which the EPC could be operationalized to make fulfillment and breach visible, prompting responses that served to build and maintain trust. However, some breaches were deliberately kept hidden to protect trust and shared goals. We conclude the EPC is a pivotal mechanism to support a meta-regulatory approach in complex regulatory contexts.