INTERCONTINENTAL JOURNAL OF HUMAN RESOURCE … JOURNAL OF HUMAN RESOURCE RESEARCH REVIEW r o r-C m ... sucess’ (Luthans, Youssef ... aiming to fill this gap

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Volume 1, Issue 8 (October, 2013)

INTERCONTINENTAL JOURNAL OF HUMAN RESOURCE RESEARCH REVIEW

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PSYCHOLOGICAL CAPITAL PAST AND PERESENT: A REVIEW

Dr. S. RIASUDEEN K.MUTHUKUMAR

Assistant Professor, Dept of Management Studies, Pondicherry University

JRF-Research Scholar, Dept of Management Studies, Pondicherry University

ABSTRACT

Several identifiable domain and approaches to positivity in the workplace have recently emerged

and researchers have found psychological capital as an important construct to enhance employee

performance. Evolving research in the field of psychological capital leads to concentrate on employee’s

wellbeing, satisfaction and commitment.

In this article we review existing research related to psychological capital in order to provide

insight critique of the current state of knowledge on psychological capital. In the past researchers have

concentrated in the conceptualization and application of psychological capital in the organisational

settings. The aim of this article is to bring forth such research and form a body of knowledge in the field

of management.

Keywords: Psychological capital, work settings and wellbeing.

Introduction

Emergence of globalization created challenges to organizational settings, composition of work groups and

sustainment. Organisations thrive to meet those challenges through procuring, possessing, developing and

retaining potential human resources, hence, core importance are being given to employees in an

organization and they are being not merely considered as workers but as human capital (Wright & Snell,

1999). Although employees are capable to retain their jobs, still they observe that their jobs as unsound

and panic for the future (Mack, Nelson, & Quick, 1998). Organization suffers from high attrition rate,

poor organizational commitment, and job dissatisfaction among employees; despite of handsome

remuneration and all other facilities, this scenario draws the attention of researchers and practitioners.

Many studies have found that employees are not psychologically balanced (EW Morrison, SLRobinson

1997) hence, in the recent years; importance for ‘positivity’ (positive psychological capital) is emerging in

human resource management with particular focus on increasing the psychological resources among

employees to enhance their performance.

A high psychological capital (PsyCap) were found commonly amongst the employees who are positive

and optimistic in the place of work and in the management of human resources in particular (Luthans and

Youssef 2004; Luthans, Youssef and Avolio 2007b). Psychological capital is distinctive from human

capital (‘‘what individual knows’’), social capital (‘‘whom does individual knows’’), and financial capital

(‘‘what individual has’’) (Luthans et al., 2004). PsyCap is stated as ‘Persons optimistic psychological

status of progress that is categorized by: (1) having confidence (self-efficacy) to take a challenging task

and take a attempt to accomplish a goal; (2) Having a positive (optimism) confession about success at

present and in future; (3) Resolute towards the goal (hope) and changing the path of the goal whenever it

is necessary; and (4) Sustaining at the time of problem and resuming back to work (resiliency) to achieve

ISSN: 2320-9704- Online ISSN:2347-1662-Print

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sucess’ (Luthans, Youssef and Avolio 2007b, p. 3). Current breakthroughs in the positive psychology

movement can benefit the companies, managers, and workers. Today’s workplace can be effectively

considered, managed and developed by implementing the positively oriented HR practices and

psychological capacities. (Luthans, 2002b). In the same line of thought Milan Larson and Fred Luthans

(2006) expressed, economics and HR management now recognized that physical capital can be extended

to human capital.

Emergence of Psychological Capital

Psychological capital has its root from positive psychology, in early day’s research the positive

psychological capital was less discussed among the researchers and practitioners. However in few

researches, the discussion was limited to unenthusiastic aspects of human behaviour viz. stress, burnout,

anxiety, dissatisfaction, depression, emotional exhaustion and turnover intention (Parker & Kulik 1995,

Edwards et al. 2000, McVicar 2003, Kanai-Pak et al. 2008, Brady & Cummings 2010, Kowalski et al.

2010). Emerging studies in the field of positive psychology focuses on what makes people cheerful,

satisfied and committed to an organization by developing psychological state of progress in an individual

(e.g. Suzanne J. Peterson., Pierre A. Balthazard., David A. Waldman., Robert W. Thatcher 2008). The

emergence of new competitive world brings the importance to look into the overall aspect of human

psychology, specifically the positive & productive dimensions. Such an innovative business ambience is

necessary for the firms to take a new move towards to HR management in regard to withstand and to

construct the tolerable progress and advancement (Luthans, Fred, Steven, Norman, Bruce, and James

(2008). As the diversification & environment at work place were changing rapidly, many employees

stated to suffer from work pressure, stress, burnout etc. so it is became necessary to concentrate on

employees’ wellbeing by motivating them psychologically.

Human, Social and Psychological Capital

Human capital is essential to understanding and managing the human resources (Barros & Alves 2003;

Cascio., Young., & Morris 1997; Fernandez., Castilla., & Moore, 2000; Leana & Van Buren, 1999), and

current recognition by human and social capital is not adequate in measuring the desires of complex

human resources, hence, there is great need for understanding psychological capital of work forces for

mapping workers desirable attitudes, employee’s performance, satisfaction and commitment (Milan and

Luthans, 2006). Bandura (1991) stated ‘individuals cannot manipulate their personal motivation and

performance well if they fail to pay sufficient attention towards their own attainment in this regard

psychological capital can provide supportive climate–performance relationship (Luthans et.al. 2008).

Organization Citizenship Behaviour and PsyCap

Research has shown that when an individual has a positive consideration towards the work climate, he or

she will be more likely to help the co-workers and the organization by expending the effort and adjusting

the input. (Organ & Near, 1985). Similar to this previous research have found that employees who have

reported with numerous levels of optimistic emotions conductive to be more humanly incorporated in the

organization, thus leading to higher commitment and citizenship than those who noted less optimistic

emotions. (Staw & Barsade, 1993; Staw., Sutton., Pelled 1994; Wright & Staw, 1999). These findings

were supported by Fredrickson’s (1998, 2001, 2003b), stating that optimistic emotions will effect in

higher levels of organizational commitment and citizenship behaviours that would promote positive


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change. In the same line of thought, James, Luthans, and Susan (2009) opined, individuals who are high

in PsyCap are more occupied and likely to have more optimistic emotions and organizational citizenship

and exhibit less cynical and deviant behaviours. Individuals in higher PsyCap reported more in OCB

concerned with organization (Steven M. Norman, James B. Avey, James L. Nimnicht and Nancy Graber

Pigeon 2010)

Psychological Capital and Workplace Stress

Workplace stress is a core HR management problem because of the apparent association among

anticipated stress and employee attainment (Motowildo, S. J., Packard, J. S., & Manning, M. R 1986).

Stress is considered to be one of the most important problems that each and every organization faces

(James B. Avey, Fred Luthans, and Susan M. Jensen 2009). Recent analysis stated that typical companies

spend nearly 20% of its payroll towards stress-relevant problems (Riga, 2006). Numerous numbers of

factors contributes towards workplace stress, starting from technological change and global competitive

pressures to poor organizational climate and managerial bullying (Colligan & Higgins, 2006). There is

negative association between employees PsyCap and their perceived symptoms (job srarech and job quit

behaviours) of job stress (James B. Avey, Fred Luthans, And Susan M. Jensen 2009). In the same line of

thought Luthans & Susan (2005) stated that Individuals with higher levels of psychological capital who

are committed in stressful occupations will likely to stick in the same rather than give up. Hence recent

researches have focused upon PsyCap as a critical resource for coping up with stressful task or

circumstances at work. Another way looking at the minimisation of employees stress is through

transformational leadership, who acts as a motivator (Lowe., Kroeck & Sivasubramaniam 1996).

Leadership and Psychological Capital

The leadership practice has absolute command over self-regulated and a self-awareness positive

behaviour on the part of both leaders and followers, and it encourages positive personal growth and self-

progress (Ilies Remus., Morgeson Frederick., Nahrgang Jennifer 2005). Walumbwa Fred., Avolio Bruce.,

Gardner., Wersning Tara., Peterson (2008) defines “authentic leadership as a pattern of leader behavior

that draws upon and promotes both positive psychological capacities and a positive ethical climate, to

foster greater self-awareness, an internalized moral perspective, balanced processing of information, and

relational transparency on the part of leaders working with followers, fostering positive self-

development”. Similar to this, Gardner., Avolio., Luthans., May & Walumbwa (2005) recommended that

authentic leaders can give rise to followers’ positive psychological conditions and resources via their own

role modelling. It means that the overall impact of positive psychological capital is grater then its factor

which is emphasized by Luthans et al (2007). Moreover, transformational leaders generate a obligation to

group goals via a higher sense of purpose (Avolio, 1999). The gap between transformational leadership

and psychological capital was filled by Janaki Gooty., Mark Gavin., Paul., Johnson., Lance Frazier and

Bradley Snow (2009). The study reveals that PsyCap is positively associated with followers’ perceptions

of transformational leadership; however, this study has not included assessment of the field of

authentic leaders with PsyCap. The study of Majid Zamahani., Vahid Ghorbani., Faezeh Rezaei (2011) is

an important study to sight, aiming to fill this gap. Majid Zamahani et.al (2011) made an attempt to test

the components of psychological capital with the components of authentic leadership and stated that role

of optimistic psychological capability and authenticity of leaders to obtain their followers’ trust and

motivate them to superior performance which makes possible to secure organization goal.


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Job Satisfaction, Organizational Commitment and PsyCap

Researchers have focused on analysing impact of PsyCap with job satisfaction and organisational

commitment. Fatih Çetin (2011) attempted to speak about the core construct of psychological capital with

organization obligation and job contentment. Outcome of the study indicates that psychological capital is

positively linked to job contentment and organizational obligation. The promotion of organizational

commitment and job satisfaction of employees achieved through the factors of PsyCap such as hope,

optimism and resilience. Paralleled with these findings Youssef and Luthans (2007) stated that more

satisfied and committed individuals display grater level of hope, optimism and resilience. Luthans et al

(2008) explained that performance, satisfaction, and commitment are positively connected with

employees’ general psychological capital and its construct.

Employees Attitude, Behaviour, Performance and PsyCap

Previous study focused only on commitment and job satisfaction but they failed to measure over all

employees attitude, behaviour and performance this gap has been filled by Avey et.al, (2011), the study

depicts that there is a expected considerable positive relationships between desirable employee attitudes

(job satisfaction, organizational commitment, and psychological well-being), employee behaviours

(citizenship), various channels performance (self, supervisor evaluations, and objective) and PsyCap.

There was also a significant unconstructive connection between PsyCap and undesirable employee

attitudes (cynicism, turnover intentions, job stress, and anxiety) and undesirable employee behaviours.

Parallel to this researchers have found negative relationships between PsyCap and stress and anxiety

(Avey, Luthans, & Jensen, 2009) and with absenteeism (Avey, Patera, &West, 2006) as well as

constructive association with psychological well-being (Avey,Luthans, Smith, & Palmer, 2010). Job

performance and quality of work life were also assessed by the measure of PsyCap. Research showed that

there is a significant connection among PsyCap and job performance (Luthans et.al 2008) and PsyCap

also emerged as an important predictor of quality of work life (Avey et.al 2011).

To have an easy understanding, few important studies about the PsyCap and its’ influence on other

variables is tabulated in Table 1.


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TABLE: 1

TAXANOMY OF PSYCHOLOGICAL CAPITAL

SN:

NO

Article

Author & Journal

Objective

Variable

Methodology

Key Results

1. Potential Added Value of

Psychological Capital in

Predicting Work Attitudes

Milan Larson and Fred

Luthans.

Journal of Leadership &

Organizational Studies

(2006).

Empirically analysis the

correlation between

psychological capital

and employee attitudes

of satisfaction and

commitment.

Work Attitudes

(Organizational

commitment and job

satisfaction).

State optimism: Life

Orientation Test (LOT),

Scheier and Carver’s (1985).

Resiliency: Block and Kremen

(1996) and Klonhlen (1996).

Social Capital: workplace

social inclusion (WSI), Pearce

and Randel (2004)

Efficacy: Parker’s (1998)

efficacy scale

Commitment: commitment

measure by Allen and Meyer

(1990).

Job Satisfaction: Hackman

and Oldham’s (1980).

Result of the study

exposes that the


describes higher

workers’ desirable

attitudes than is

presently being

documented by

human and social

capital.

2. The mediating role of

psychological capital in the

supportive organizational climate

employee performance

relationship.

Fred Luthans1*, Steven

M. Norman2, Bruce J.

Avolio3 And James B.

Avey.

Journal Of Organizational

Behavior (2008).

To analyse the role of

psychological capital in

supportive climate and

employee performance

relationship.

Supportive climate,

employee

performance,

satisfaction, and

commitment.

Supportive climate: Rogg et

al. (2001)

PsyCap measure: Luthans,

Youssef et al.(2007).

Satisfaction and commitment:

Hackman and Oldham (1980),

Allen and Meyer (1990)


is optimistically

associated with

performance,

satisfaction, and

commitment and

supportive climate is

associated with

employees’

satisfaction

and obligation


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3. Can Positive Employees Help

Positive Organizational Change?

Impact of Psychological Capital

and Emotions on Relevant

Attitudes and Behaviours

James B. Avey, Tara S.

Wernsing and Fred

Luthans.

Journal of Applied

Behavioural Science

(2008).

To find weather the

procedure of

employees’ positivity

will have an impact on

appropriate attitudes

and behaviours.

Employees attitudes

and behaviour



Mindfulness: Brown and Ryan

(2003).

positive emotions: Positive

and Negative Affect Schedule

(PANAS) scale Watson, Clark

and Tellegen’s (1988)

Emotional engagement: May,

Gilson, & Harter, (2004).

Cynicism: Wanous, Reichers,

and Austin (2000).

OCBI: Lee and Allen’s (2002)

eight-item OCBI scale

Employees who are

resulted high in

PsyCap are expected

to be more positive

emotions,

organizational

citizenship and

consequently be more

occupied and less in

cynical and deviant

behaviours

4. Psychological Capital: A Positive

Resource For Combating

Employee Stress And Turnover.

James B. Avey, Fred

Luthans, And Susan M.

Jensen.

Journal Of Human

Resource Management

(2009).

To find out the

association between


and stress.

Stress and

turn over



Intentions to quit and job

search behaviours: Crossley

and colleagues (2007).

Stress symptoms: DASS;

Lovibond & Lovibond, 1995)

Results shows that

The PsyCap has

negatively related to

job stress and job

quite

5. In the Eyes of the Beholder :

Transformational Leadership,

Positive Psychological Capital,

and Performance

Janaki Gooty, Mark

Gavin, Paul D. Johnson,

M. Lance Frazier and D.

Bradley Snow.



(2009).

To find out the

association between

PsyCap,

transformational

leadership and

performance.

Transformational

leadership

Transformational leadership:

Podsakoff and colleagues

(1996).



Performance outcomes:

Williams and Anderson

(1991).

Result of the study

indicates that

follower’s perception

of the

transformational

leader behaviours are

positively related to

the PsyCap.


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6. The Interactive Effects of

Psychological capital and

organizational identity on

employee organizational

citizenship and deviance

behaviours.

Steven M. Norman, James

B. Avey, James L.

Nimnicht and Nancy

Graber Pigeon.



(2010).

To inspect the

association between

positive psychological

capital and

organizational identity

on employee deviance

and organizational

citizenship behaviours

Employee deviance

and organizational

citizenship

behaviours.



Identity with the organization:

Avey, Avolio.

OCBO: Lee and Allen’s

(2002).

CWB: Fox and Spector’s

(1999).

Result stated that

individuals who are

higher in PsyCap

accounted appealing

more in

OCBOs and low in

deviance.

7. Psychological Capital, Quality of

Work Life, and Quality of Life of

Marketers: Evidence from

Vietnam

James B. Avey, Rebecca J.

Reichard, Fred Luthans,

Ketan H. Mhatre.

Human Resource

Development Quarterly,

Vol. 22, No. 2, Summer

2011

To identify the impact

of PsyCap on job

performance and QWF

Job performance and

quality of work life

Hope: Snyder, Rand, and

Sigmon (2002).

Optimism: Carver and Scheier

(2002).

Resiliency: ck and Kremen

(1996).

Seli efficacy: Parker (1998).

QOL: Ekici, and Hunt (2010).

The results of the

study indicate that

PsyCap has a positive

impact on both QWL

and Job performance.

It also stated that

PsyCap was the key

factor predicting job

performance and

QWL.

8. Meta-Analysis of the Impact of

Positive Psychological Capital on

Employee Attitudes, Behaviours

and Performance (2011)

James B. Avey, Rebecca J.

Reichard, Fred Luthans,

Ketan H. Mhatre.

Human Resource

Development Quarterly,

Vol. 22, No. 2, Summer

2011

To find out the

association between


and employee attitudes.

desirable employee

attitudes (job

satisfaction,

organizational

commitment,

psychological well-

being)

There is a significant

positive association

between PsyCap and

desirable employee

attitudes and

behaviours. There

was also a significant

negative association

between PsyCap and

undesirable employee

attitudes (cynicism,

turnover intentions,

job stress, and

anxiety) and

undesirable employee


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behaviours

9. The Effects of the Organizational

Psychological Capital on the

attitudes of Commitment and

Satisfaction

Fatih Çetin- Defense

Sciences Institute, Turkish

Military

Academy,Bakanlıklar

Ankara, Turkey.

European Journal of Social

Sciences 2011.

The objective of this

study was to discover

the effects of psycap

factors on the attitudes

of organizational

commitment and job

satisfaction.

Organizational

commitment and job

satisfaction.

Psychological Capital:

Luthans et al (2007).

Organizational Commitment:

Jaworski and Kohli (1993).

Job Satisfaction: Hackman ve

Oldham (1975).

The result displayed

that organizational

commitment has

optimistic

relationship between

hope and optimism

dimensions and job

satisfaction has

positive relationship

between resilience,

hope and optimism

dimensions of the

organizational

psychological capital.

10. Impact of Authentic Leadership

and Psychological Capital on

Followers’ Trust and

Performance

1Dr. Majid Zamahani

(Ph.D), 2Dr. Vahid

Ghorbani (Ph.D) and

3Faezeh Rezaei.

Australian Journal of

Basic and Applied

Sciences (2011).

Objective of the study is

to inspect how authentic

leadership and


impacted participants'

level of trust in the

leader and their

performance.

Leaders authenticity,

trust and

performance

Authentic Leadership:

Avolio, Gardner and

Walumbwa (2007).

Psychological Capital:

Luthans et al (2007).

Performance: Welbourne,

Johnson and Erez role (1998)

Trust: Cummings & Bromiley,

1996.

The results showed

that there is a shortest

positive relationship

between leaders’

authenticity and

positive


and subordinates trust

and performance.


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Conclusion

Psychological capital has been emerging as an important concept and research in this area is growing

rapidly in these days. The focus of this study is to compile studies related to psychological capital and its

relation with related variables i.e. employee attitude, performance, satisfaction, commitment, employee

emotion, work environment, OCB, employee behaviours, job stress, transformational leadership, leaders’

authenticity, QWL and subordinates trust.

Results of these studies disclose that psychological capital explains more of workers’ desirable attitudes.

Psychological capital has a positive and significant relationship with performance, satisfaction, and

supportive climate. Employees exhibit more organizational citizenship, positive emotions and

subsequently more engagement who are higher in PsyCap. The studies also exposes the fact that

perception of the transformational leader behaviours are positively related to the PsyCap and look for the

positive relation with leaders’ authenticity and subordinates trust. The positive practices of PsyCap

produce less cynical and less deviant behaviours. A close look on prevailing studies indicated that PsyCap

was the key factor predicting job performance and QWL. Studies have indicated organizational

psychological capital dimensions such as resilience, hope and optimism are having positive impact on

organizational commitment and job satisfaction. On the other hand PsyCap has negatively related to job

stress, cynicism, anxiety, work place deviance and attrition, suggesting psychological capital has been

used to measure both positive and negative outcomes.

Looking forward, future research in the area of PsyCap would benefit the employees as well as

organization. Future research might be aimed at exploring the relationship between the variables which is

positively and negatively related to PsyCap by untangling their similarities and differences. It is important

to explore the set-up of psychological Capital and its relation with mindfulness, emotions, angry

management, cynicism, burnout and other related positive and negative factors in the context of

organizational change. It is also obligatory to fully address the directionality and perhaps, the reciprocity

of leader’s behaviour and antecedent to follower’s reaction.

Furthermore, outlook research should consider the responsibility of additional mediators and moderators

as well as the responsibility of differing organizational change, climate and cultural related factors which

manipulates employee psychological capital and positive emotions and how they evident and impact the

performance of organizational change in macro-level. Future research should also focus on experimental

and exploratory studies to ascertain the fundamental, directional impact of psychological capital and

positive emotions on employee’s well being.

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INTERCONTINENTAL JOURNAL OF HUMAN RESOURCE … JOURNAL OF HUMAN RESOURCE RESEARCH REVIEW r o r-C m ... sucess’ (Luthans, Youssef ... aiming to fill this gap