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Psychological Capital


In a world where technology has developed to such an extent that people have become hyper-connected, and where creativity is the only way to survive, the concept of Positive Organisational Behaviour (POB) and Positive Organisational Scholarship is flourishing. When psychology researchers in the late nineties began questioning the single-minded focus within their field on what is ‘wrong with people’ and began asking ‘what is right,’ a shift also took place in the field of Organisational Behaviour (OB).

Specifically, a group of OB researchers led by Dr Fred Luthans developed the concept of psychological capital (PsyCap), a combination of the states of hope, self-efficacy, resilience and optimism as a positive resource for developing a sustained competitive edge through performance. Luthans (2004) explain that financial capital is ‘what you have;’ human capital is ‘what you know;’ social capital is ‘who you know;’ psychological capital is ‘who you are’ and ‘what you can become.’ It is a twenty first century form of investment for organisations to compete with, and perhaps win, in the ‘flat’ world.

Positive Psychology

The notion of OB being positive is not a new concept; OB, “as a field of inquiry…tends to be more positive than negative”. Positive psychology, developed by Martin Seligman in the late nineties, conveyed a shift among certain psychologists towards research focussing on human strengths that enable people to blossom and succeed, rather than concentrating on how to fix people’s weaknesses and illnesses. POB is a fairly new concept emerging in the early 2000s. It began to emerge in the field of OB because of its relevance to the workplace. Dr Fred Luthans, describes his encounter with positive psychology as a ‘eureka’ moment which introduced the potential of new concepts and perspectives to the field of OB.

Positive Organisational Behaviour (POB)

POB places specific emphasis on the “study and application of positively-oriented human resource strengths and psychological capacities”. Of significance within the POB literature is its recognition of the developmental nature of psychological resources as opposed to the fixed unchanging traits in personality research, like the Big Five and core evaluations.


PsyCap is “who you are” and “what you can become in terms of positive development” (Luthans, Norman, Avolio, & Avey, 2008,, p. 233). Four constructs have been found to effectively meet the PsyCap inclusion criteria: hope, self-efficacy, resilience and optimism. These constructs are theoretically-established and researched, open to development, unique to the OB field and have performance impact. Each has empirical evidence to support its effect on improved performance, organisational commitment and satisfaction outcomes and collectively create a higher-order construct known as Psychological Capital.

Each of the four dimensions contributes something unique to the configuration of PsyCap. Hope is having the “goal-oriented energy” to establish, plan and generate the “waypower” to meet goals. Self-efficacy is an individual’s belief or conviction that they have the power to reach a desired outcome. Resilience means not only pulling through difficulty, but excelling beyond the setback. Lastly, optimism conveys the “permanence and pervasiveness” an individual attributes to their circumstances. The interconnectedness of these four dimensions, similar yet empirically distinct, means they form a stronger predictor of performance and attitudes when combined rather than when measured individually. PsyCap has been empirically proven to improve performance.

As a state like construct, research has also focussed on PsyCap’s developmental nature. PsyCap can be developed by mastery experiences or performance attainments, as well as vicarious experiences or modelling. Furthermore, leadership has been shown to influence follower PsyCap. Authentic leadership behaviours – honesty, integrity, transparency and self-awareness, encourage follower PsyCap and trust, leading to group-level OCBs and high performance. Authentic leadership and follower PsyCap is facilitated by Social Exchange Theory (SET), where the exchange (investment) between at least two people should be equal to the benefit from the exchange and that rewards from the exchange are apportioned equally, encouraging a sense of reciprocity.

How do leaders promote healthy PsyCap in your business?

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