Psychological capital, Big Five traits, and employee outcomes Yongduk Choi and Dongseop Lee Korea University Business School, Seoul, South Korea

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1 The current issue and full text archive of this journal is available at JMP 122 Psychological capital, Big Five traits, and employee outcomes Yongduk Choi and Dongseop Lee Korea University Business School, Seoul, South Korea Received 29 June 2012 Revised 31 January 2013 Accepted 7 March 2013 Abstract Purpose The aim of this paper was to examine the incremental validity of positive psychological capital (PsyCap) in predicting several important employee outcomes while controlling for a full range of personality traits. Design/methodology/approach Using a cross-sectional field study design, the authors collected data from 373 employees in South Korea. Findings Hierarchical multiple regression analyses revealed that employees PsyCap is related to their perceived performance, turnover intention, work happiness, and subjective well-being, even after controlling for the Big Five personality traits. Research limitations/implications By controlling for the Big Five traits, this study was able to evaluate the role of PsyCap more precisely. However, as the data were collected from the same source at one point in time, common method variance is a potential issue. Practical implications The findings suggest that managers need to focus on developing employees PsyCap, given its unique effect on the outcome variables. Social implications By developing employees PsyCap, organizations could turn work into a significant source of happiness and life satisfaction for their employees. Originality/value This study identified the broad and unique effect of PsyCap on work and life outcomes beyond personality traits. Keywords Performance, Turnover intention, Big Five traits, Psychological capital, Subjective well-being, Work happiness Paper type Research paper Journal of Managerial Psychology Vol. 29 No. 2, 2014 pp q Emerald Group Publishing Limited DOI /JMP In the past ten years, efforts to understand human functioning via a positive lens have been applied to the workplace. Consequently, positive organizational behavior (POB) has been developed (Bakker and Schaufeli, 2008). POB refers to the study and application of positively oriented human resource strengths and psychological capacities that contribute to organizational outcomes, such as employee attitudes, behaviors, and performance (Luthans and Youssef, 2007c). A growing body of research to date indicates that psychological capital (PsyCap), a core construct of POB, may have a positive effect on important work attitudes and behaviors, including job satisfaction, organizational commitment, absenteeism, turnover intention, organizational citizenship behavior (OCB), and work performance (Avey et al., 2009; Avey, Luthans, Smith, and Palmer, 2010; Luthans, Avolio, Avey and Norman, 2007a; Walumbwa et al., 2010). PsyCap is defined as an individual s positive psychological state of development that is characterized by: having confidence (self-efficacy) to take on and put in the necessary effort to succeed at challenging tasks; making a positive attribution (optimism) about succeeding now and in the future; persevering toward goals and, when necessary, redirecting paths to goals (hope) in order to succeed; and when beset by problems and adversity, sustaining and bouncing back and even

2 beyond (resilience) to attain success (Luthans, Youssef and Avolio, 2007b, p. 3). As a higher-order construct consisting of hope, efficacy, optimism, and resilience that can change and develop, PsyCap is proposed to be concerned with who you are becoming and your best self, going beyond human capital (i.e. what you know ) and social capital (i.e. who you know ) (Luthans and Youssef, 2004). Given the early stage of the development of PsyCap research, however, we suggest that more research is needed to better understand whether PsyCap is indeed an important and meaningful variable at work and in life. The purpose of this study is to enrich our understanding of the unique effect of PsyCap on work and life outcomes, contributing to the literature in three ways. First, although PsyCap has been proposed to have a unique effect on various outcome variables beyond individual differences, such as personality traits, most empirical studies have not directly tested this proposition in the presence of a full range of personality factors. Represented by the Big Five, relatively stable and dispositional personality traits have been widely recognized to have significant effects on various individual outcomes that are also suggested to be influenced by PsyCap (Barrick and Mount, 1991; Zimmerman, 2008). Moreover, PsyCap and the Big Five traits share some conceptual similarity in the sense that they both are positive in nature (Luthans, Avolio, Avey and Norman, 2007a). For example, resilience of the PsyCap dimensions refers to one s capacity to rebound or bounce back from adversity (Masten and Reed, 2002) while emotional stability works to maintain relatively stable emotional functioning concerning personal anxiety, insecurity, and depression (Barrick and Mount, 1991). Although both are conceptually associated with positive coping or adaptation to change or adversity, psychological resilience is different from emotional stability as well as other traits because it includes proactive property that allows individuals to grow and even thrive in the face of adversity, going beyond simple reactive adaptations or perseverance that conscientious or emotionally stable individuals take towards the adversity (Luthans and Youssef, 2007c). Given the potential functional and conceptual overlap between PsyCap and personality traits, ignoring the role of personality may lead to overstating the importance of PsyCap. Controlling for a full range of personality traits would help ensure more accurate and systematic evaluation of the unique contribution of PsyCap by enhancing the internal validity of the findings. Second, we note that the extant research on PsyCap is limited in scope, as it has focused almost exclusively on the effect of PsyCap on work-related outcomes. The findings thus far revealed that employees PsyCap might induce positive work-related attitudes and behaviors, which in turn contribute to organizational outcomes. To appreciate the full potential of PsyCap, however, it is necessary to view PsyCap not only as a functional variable for performance enhancement, but also as a fundamental psychological capacity for human life (Wright, 2003). Research suggests that happiness at work and in life is an essential ingredient for employees psychological and physical health and work-life balance (Diener, 2000) and are related to problem-solving capability, task competence, and interpersonal relationship (Lyubomirsky et al., 2005). Much can be improved in our understanding of the nature and functions of PsyCap by widening the scope of our examination to include a more diverse range of outcomes. Third, in terms of research setting, most PsyCap research has been conducted in the US. Only a limited number of studies examined PsyCap in different cultures, such as China (Luthans, Avey, Smith and Li, 2008a), Portugal (Rego et al., 2010), and Turkey Psychological capital 123

3 JMP 124 (Çetin, 2011). Moreover, the findings from these international settings are not consistent. The present study conducted with employees from South Korea answers Luthans and Youssef s (2007c) call for testing the external validity of PsyCap in a wide range of settings with an aim to understand its contextual applicability and limitations. Theoretical background and hypotheses PsyCap and performance PsyCap is considered an important psychological resource, which can improve employee s performance through its positive cognition and motivational processes (Luthans, Youssef and Avolio, 2007b). Empirical results have revealed that PsyCap is associated with performance (Avey, Nimnicht and Pigeon, 2010; Luthans, Avey Smith and Li, 2008a; Luthans, Avolio, Avey and Norman, 2007a; Walumbwa et al., 2010). Despite those empirical associations, however, the unique effect of PsyCap on performance remains largely undetermined because most previous studies did not control for other individual differences, such as personality traits, which are valid predictors of work-related performance (Barrick and Mount, 1991). While Avey, Nimnicht and Pigeon (2010) reported that PsyCap was related to salespersons performance when extraversion was controlled for, we note that extraversion is not the only trait that affects performance (Barrick et al., 2001). To date, there seems to be no clear evidence that PsyCap indeed has a unique effect on employee performance in the presence of a full range of personality traits, such as the Big Five. The importance of controlling for the Big Five traits when investigating the effect of PsyCap concerns the fact that PsyCap and the Big Five conceptually share positivity, as they both take positive approaches to understanding human functioning (Luthans, Avolio, Avey, and Norman, 2007a). Moreover, meta-analytic findings have shown that the Big Five traits are associated with work performance (Barrick and Mount, 1991; Barrick et al., 2001). Specifically, conscientiousness among the Big Five has the largest average correlation with performance across various contexts, as conscientious individuals tend to be responsible, persistent, and hardworking. Emotional stability also contributes to performance in general by effectively controlling negative emotions, such as worry, nervousness, and stress. On the other hand, extraversion and agreeableness are predictive of performance particularly when substantial interpersonal interaction is required, while openness to experience tends to predict the criteria that are relevant to learning. Given the empirical associations between personality traits and performance as well as the conceptual similarity between PsyCap and the Big Five, we posit that it is essential to control for all Big Five personality traits to understand the PsyCap s unique value to performance. Despite a possible overlap between the Big Five traits and PsyCap, we still expect to find a positive effect of PsyCap on performance. A primary rationale is that state-like PsyCap is a more proximal predictor of performance than are more distal personality traits (Locke and Latham, 2004). Research suggests that each of the four positive constructs forming PsyCap is related to desirable employee performance. For example, self-efficacy enables the employee to contribute to performance by accepting challenging tasks and goals proactively and exerting necessary efforts to achieve them persistently (Bandura, 1997; Stajkovic and Luthans, 1998). Hope contributes to performance because hopeful employees have the will to accomplish their goals and the ability to find alternative ways to reach the goals (Peterson and Luthans, 2003; Snyder,

4 2002). Resilience can lead to positive results in times of adversity because resilient people adapt flexibly to unexpected problems or setbacks and bounce back more readily (Masten and Reed, 2002). In uncertain situations, realistically optimistic expectations and interpretations help employees increase or maintain their level of motivation, efforts, and performance ( Jensen et al., 2007; Seligman, 1998). Furthermore, while each factor has its own cognitive and motivational processes that lead to performance, it is anticipated that combining the factors would enhance the effect of these processes (Luthans, Avolio, Avey and Norman 2007a). That is, employees with such a composite positive resource have the belief that they can make positive outcomes, the hope to reach their goals, optimistic yet realistic expectations about goal achievement, and the ability to bounce back from and beyond various difficulties. Therefore, PsyCap has a broader and greater effect on work performance than any one of the four positive constructs. H1. PsyCap is positively related to performance, controlling for the Big Five traits. Psychological capital 125 PsyCap and turnover intention Employee turnover incurs substantial costs to organizations, both in terms of direct expenditures (e.g. replacement, recruiting, training, and development) and in terms of hidden costs (e.g. low morale and loss of organizational memory) (Glebbeek and Bax, 2004). Based on the theory of planned behavior (Ajzen, 1991), which posits that behavioral intention is a strong and immediate determinant of actual behavior, the intention of an employee to quit his or her organization has been considered a significant predictor of future turnover (Tett and Meyer, 1993). To date, only two studies (Avey et al., 2009; Avey, Luthans, Smith and Palmer, 2010) tested the relationship between PsyCap and turnover intention but without controlling for a full range of personality traits. Given that employee turnover intention is affected not only by situational factors relevant to job or organizational environment, but also by individuals dispositional traits (Zimmerman, 2008), the unique effect of PsyCap on turnover intention has yet to be examined in the context of the Big Five traits. The Big Five variables have received substantial research attention in relation to turnover intention. For example, emotional stability contributes to reducing turnover intention by helping employees cope with various stress and negative emotions (Maertz and Griffeth, 2004). Conscientious employees are less likely to leave their organizations because they are likely to feel responsible and obliged to stay in their organizations (Maertz and Griffeth, 2004). Agreeable employees tend to remain at their organizations by fostering positive relationships with coworkers (McCrae and Costa, 1991) and adapting well to any given environment (Maertz and Griffeth, 2004). Extraverts are more likely to establish successful social relationships, which in turn, contributes to an increase in job embeddedness within their organizations (Mitchell et al., 2001). Contrary to the other Big Five traits, openness to experience is positively linked to turnover intention because those high in openness to experience value new experiences and tend to seek other opportunities (Maertz and Griffeth, 2004). Moreover, according to Zimmerman s (2008) meta-analysis, emotional stability among the Big Five best predicts turnover intention. Therefore, although Avey, Luthans, Smith and Palmer (2010) reported that PsyCap predicted turnover intention with conscientiousness and extraversion controlled for, their finding is still limited in that emotional stability was omitted.

5 JMP 126 Acknowledging the potential bearings of personality traits, we posit that PsyCap can play a major role in preventing negative thoughts that induce employees turnover intention, by increasing positive experiences in job and social relationships and helping resolve conflicts and reduce stress at work (Avey, Luthans, Smith and Palmer, 2010). Moreover, employees with higher PsyCap are more likely to succeed in their current jobs because they are competent about their capabilities to create desirable work outcomes and devise various alternative pathways to realize them. The more positive outcomes employees achieve, the more they want to remain in their organizations. Even when frustrated from failures at work, those with higher PsyCap are likely to develop optimistic expectations and recover from and go beyond such setbacks by investing much effort, time, and energy. That is, PsyCap leads to positive adaptability in the face of adversity rather than to inclination to leave organizations. H2. PsyCap is negatively related to turnover intention, controlling for the Big Five traits. PsyCap and happiness Along with the developing interest to understand what can make life most valuable and flourishing, two related happiness constructs work happiness and subjective well-being (SWB) have received increasing attention from both practitioners and researchers (Ménard and Brunet, 2011). Work happiness refers to the degree to which people experience positive affect and satisfaction at work (Youssef and Luthans, 2007). SWB is defined as people s cognitive and affective evaluations of their lives in general (Diener, 2000, p. 1). Both concepts reflect subjective senses of satisfaction and well-being, but they differ from each other in the scope of the domain in which individuals experience happiness. As many people spend a significant portion of their daily lives contributing to their organizations, workplaces have become an important source of people s happiness. In addition to the normative values that are attached to work happiness and SWB, we also posit that these two variables can be important factors in the development of organizations as well. Furthermore, we argue that the effect of PsyCap on work happiness and SWB also needs to be evaluated in the presence of personality traits because these traits predispose individuals to appraise their life and respond to their environments in a manner congruent with their stable dispositions (McCrae and Costa, 1991). Personality traits are among the most consistent predictors of such subjective experiences as work happiness and SWB. For example, extraverts tend to maintain high levels of positive affect because they are not only sociable and affiliative, but also susceptible to positive experiences (Barrick and Mount, 1991). Similarly, agreeable people tend to get along well with their peers. In turn, such social activities and interaction with others increase work happiness and SWB (Lyubomirsky et al., 2005). Emotional stability helps experience work happiness and SWB by enabling people to perceive the world optimistically (McCrae and Costa, 1991). Conscientious people tend to pursue happiness with detailed plans and responsibility at work and in life (McCrae and Costa, 1991). Finally, openness to experience can also foster subjective senses of happiness, as it helps employees engage in interesting activities (McCrae and Costa, 1991). Despite such theoretical and empirical evidence for the association between personality traits and happiness, the potential bearings of personality traits have not been appropriately accounted for in prior research on the effect of PsyCap on the two

6 happiness variables. In fact, no studies have examined the relationship between PsyCap and work happiness. One study reported that some individual components of PsyCap are related to work happiness but without controlling for personality traits (Youssef and Luthans, 2007). Two previous studies reported that PsyCap is related to employee well-being (Avey, Luthans, Smith, and Palmer, 2010; Culbertson et al., 2010); however, neither one controlled for any of personality traits. Thus, it seems timely and necessary to examine the unique effect of PsyCap on happiness at work and in life while controlling for the Big Five traits. We propose that even after controlling for the Big Five traits, PsyCap can increase employees work happiness and SWB because PsyCap helps them perceive and interpret their work and life experiences positively, obtain positive achievements, and overcome difficulties and setbacks in their jobs and lives. For example, self-confident people tend to be more satisfied with their lives, as they obtain higher achievements (Lyubomirsky et al., 2005). Hopeful people tend to be healthier both mentally and psychologically, have a positive outlook on their achievement, and be satisfied with their environment (Snyder, 2002). Optimistic people are more likely to experience positive emotions and have higher satisfaction in life (Diener, 2000), as they tend to consider positive outcomes as internal and stable and negative outcomes as external and temporary (Carver and Scheier, 2001). Resilient employees are more likely to go through hardships and adapt well even to unexpected situations than to be stuck in frustration (Masten and Reed, 2002). Thus, PsyCap, as the core construct of those positive resources, contributes to employee work happiness and SWB. H3. PsyCap is positively related to work happiness (a) and SWB (b), controlling for the Big Five traits. Psychological capital 127 Methods Sample and procedures The sample in this study consisted of 373 employees from ten organizations in South Korea. We contacted human resource directors of 15 organizations in diverse industries, including manufacturing, services, and finance/banking, to ask for participation in our data collection. We explained to them that the purpose of the study is to examine the role of employees traits and psychological states experienced at work. We explicitly noted that the study is purely academic and that there is no material compensation for participation. Instead, we offered to share the knowledge gained from the study through conference presentations. In total, ten organizations agreed to participate. Hence, we distributed our survey to 650 employees through their HR directors, along with an accompanying cover letter explaining the purpose of the study, an assurance of confidentiality, and a prepaid addressed envelope. Overall, 373 employees provided usable responses, resulting in a response rate of 57.4 percent. Of these respondents, 77 percent were male, and 91 percent reported to have completed college or a higher level of education. Furthermore, 64 percent of the respondents were administrative personnel, 16 percent were sales personnel, 12 percent were engineers, and 6 percent were R&D professionals. Their ages ranged from 20 to 53 years, with an average of years (SD ¼ 6.05). All scales in the survey were translated into Korean using the back-translation method (Brislin, 1980). First, the second author translated the questionnaires from original English to Korean. Second, a bilingual linguist translated this Korean version

7 JMP 128 back to English. Finally, the two translators and the first author compared the two English versions (i.e. the back-translated and the original), resolving discrepancies by collective agreement among them. The survey items are provided in the Appendix. Measures We measured PsyCap using the 12-item scale adopted from Luthans, Avolio, Avey and Norman (2007a). The scale included three items for self-efficacy, two items for optimism, four items for hope, and three items for resilience. All items were measured on a six-point scale ranging from strongly disagree to strongly agree. The 12 items were averaged to form a single measure of PsyCap to reflect its nature as the higher-order construct of the four variables. Cronbach s alpha for this scale was We measured individual performance using Luthans, Norman Avolio and Avey (2008b) scale for self-rated performance. Turnover intention was assessed with a three-item scale extracted from the Michigan Organizational Assessment Questionnaire (Cammann et al., 1983). Responses were made on a five-point scale (1 ¼ strongly disagree, 5 ¼ strongly agree). Cronbach s alpha for the scale was Work happiness was assessed with the instrument developed by Fordyce (1988). We slightly modified the items to capture happiness at work rather than general happiness by adding the term at work. Respondents rated the magnitude of work happiness on an 11-point scale ranging from extremely unhappy to extremely happy, and they reported the amount of time they felt happy at work in the form of a percentage. Work happiness was formed by averaging the two figures. The Cronbach s alpha for the scale was SWB was measured using the five-item satisfaction with life scale (Diener et al., 1985). The scale measures a person s judgment of global life satisfaction on a seven-point scale ranging from strongly disagree to strongly agree. Cronbach s alpha for the scale was Our key control variables, the Big Five personality traits, were measured using 50 items, ten items for each of the five traits, adopted from Goldberg et al. (2006). Responses were provided on a five-point scale ranging from 1 (strongly disagree) to 5 (strongly agree). Cronbach s alphas were 0.82 for agreeableness, 0.80 for extraversion, 0.85 for conscientiousness, 0.82 for emotional stability, and 0.81 for openness to experience. In addition, respondents socio-demographic data (e.g. age, gender, education level, job type, and organizational tenure) were included as control variables in the regression models. Job type was measured with five categories, including administrative personnel, sales personnel, R&D professionals, engineers, and the others, resulting in four dummy variables. Results Table I presents the means, standard deviations, and correlations among study variables. As the sample consisted of employees from multiple organizations, we conducted an analysis of variance to see whether the responses on the study variables differ depending on differences among firms. We found no differences among firms in the responses on the study variables. Confirmatory factor analyses We conducted a confirmatory factor analysis to examine the factor structure among the four constructs that form PsyCap, turnover intention, work happiness, SWB, and

8 Variable M SD PsyCap (0.64) 2. Self-rated performance Turnover intention (0.56) 4. Work happiness (0.83) 5. SWB (0.62) 6. Agreeableness (0.70) 7. Conscientiousness (0.65) 8. Emotional stability (0.55) 9. Extraversion (0.56) 10. Openness (0.65) 11. Age Gender Education Tenure Job type Job type Job type Job type Notes: n=373. Correlations above 0.10 are significant at the 0.05 level, and those above 0.13 are significant at the 0.01 level. Average extracted variances are on the diagonal in parentheses. Dummy codes for gender (1 ¼ male, 0 ¼ female); job type 1 (1 ¼ administrative personnel, 0 ¼ other), job type 2 (1 ¼ sales personnel, 0 ¼ other), job type 3 (1 ¼ R&D professionals, 0 ¼ other), job type 4 (1 ¼ engineers, 0 ¼ other) Psychological capital 129 Table I. Means, standard deviations, and correlations

9 JMP 130 the Big Five variables. We used item parcels to represent the indicators of the Big Five traits because fitting measurement models with large numbers of items is an overly stringent approach that may yield poor fit (Judge et al., 2002, p. 697). We randomly broke the ten items of each factor of the Big Five into three parcels, resulting in two three-item parcels and one four-item parcel. We modeled 12 correlated first-order factors that correspond to a three-item self-efficacy factor, a four-item hope factor, a three-item resilience factor, a two-item optimism factor, a three-item turnover intention factor, a two-item work happiness factor, a five-item SWB factor, and five three-item personality factors. The results of confirmatory factor analysis showed that the 12-factor model fit the data adequately ðx 2 ¼ 1350:67; df ¼ 563; CFI ¼ 0:90; IFI ¼ 0:90; RMSEA ¼ 0:06Þ; and the factor correlations between the four PsyCap components were, as expected, very high, ranging from 0.82 to The strong interrelationships among the four PsyCap components support their posited common threads of positive cognition and motivational processes, justifying them to be combined into a higher core factor. On the other hand, the factor correlations between the four PsyCap components and the other variables were relatively lower, ranging from 0.03 to 0.55 in absolute values. All items loaded significantly on their underlying factors with loadings ranging from 0.63 to 0.88 for PsyCap, 0.69 to 0.83 for turnover intention, 0.71 to 0.89 for SWB, 0.90 to 0.91 for work happiness, and 0.74 to 0.93 for the Big Five, supporting the measures convergent validity (Hair et al., 1998). In addition, we assessed the discriminant validity among the measures of PsyCap (as a combined measure of the four components), turnover intention, work happiness, SWB, and the five personality traits by conducting a series of Chi-square difference tests. For each pair of the nine factors, we compared the Chi-square values between the theoretical nine-factor model and the constrained model in which the correlation between two given factors was fixed to 1.00, entailing 36 comparisons (Anderson and Gerbing, 1988). The tests resulted in a significant Chi-square difference (i.e. significantly worsened fit in the constrained model) in all 36 cases. For example, while the theoretical model ðx 2 ¼ 1318:43; df ¼ 593; CFI ¼ 0:90; IFI ¼ 0:90; RMSEA ¼ 0:06Þ provided a reasonable approximation to the data, the best competing model in which PsyCap and work happiness were merged into one construct ðx 2 ¼ 1353:90; df ¼ 594; CFI ¼ 0:89; IFI ¼ 0:87; RMSEA ¼ 0:06Þ yielded a significantly poorer fit ðdx 2 ¼ 35:47; Ddf ¼ 1; p, 0:01Þ; implying that distinguishing any two constructs indeed makes a meaningful contribution to explaining our data and that the measures used are distinct from one another. We further complemented this result with two additional assessments. First, we found that the confidence interval around the correlation estimate between any two variables excluded 1.00 (Anderson and Gerbing, 1988). We also found that the average extracted variance of each construct was greater than the construct s shared variance with any other construct (Fornell and Larcker, 1981). These results indicate that each construct had more in common with its items than with other constructs, providing further support for discriminant validity. Assessing common method bias Given that the data were obtained from the study participants, we assessed the effect of the same-source variance using a rigorous statistical test. We re-estimated our measurement model by adding a latent common method factor (Podsakoff et al., 2003).

10 All items were allowed to load onto both their theoretical latent constructs and the unmeasured latent method factor. The results showed that all factor loadings of the items on their respective theoretical construct remained significant even after the effect of the common method factor was taken into account. In contrast, the results indicated frequent non-significant loadings onto the method factor. The theoretical model without the common method factor produced the following fit indices: x 2 ¼ 783:81; df ¼ 341; p, 0:01; CFI ¼ 0:89; IFI ¼ 0:90; RMSEA ¼ 0:06: The re-estimated model with the additional method factor yielded the following fit indices: x 2 ¼ 607:10; df ¼ 312; p, 0:01; CFI ¼ 0:93; IFI ¼ 0:93; RMSEA ¼ 0:05: While the inclusion of the common method factor improved overall model fit, the amount of the total variance explained by this method factor was 13 percent, which is well below the suggested 25 percent that is considered an indication of substantial method variance (Williams et al., 1989). Taken together, these results indicate that the same-source bias was not a serious threat to this study s findings. Psychological capital 131 Hypothesis tests To test the hypotheses, we performed a series of hierarchical regression analyses. We entered the variables into regression models in three hierarchical steps: (1) socio-demographic variables; (2) the Big Five traits; and (3) PsyCap. Table II presents the results of the analyses. First, in support of H1, PsyCap significantly predicted self-rated performance ðb ¼ 0:20; p, 0:01Þ even after the socio-demographic variables and the Big Five traits were controlled for, explaining an additional 3 percent of variance in the self-rated performance ð p, 0:01Þ: Among the Big Five, conscientiousness remained a significant predictor of performance, which is consistent with Barrick and Mount s (1991) meta-analytic findings. Second, in support of H2, PsyCap was negatively related to turnover intention ðb ¼ 20:29; p, 0:01Þ beyond the control variables, explaining an additional 5 percent variance in turnover intention ð p, 0:01Þ: As found in past research (Zimmerman, 2008), openness to experience was also related to turnover intention. Third, PsyCap predicted both work happiness ðb ¼ 0:19; p, 0:01Þ and SWB ðb ¼ 0:36; p, 0:01Þ; supporting H3a and H3b, respectively. The addition of PsyCap accounted for an additional 2 percent of variance in work happiness ð p, 0:01Þ and an additional 7 percent of variance in SWB ð p, 0:01Þ: At the same time, emotional stability, extraversion, and openness to experience were also related to work happiness while emotional stability was related to SWB, findings which largely corroborate prior work on the personality-happiness relationship (DeNeve and Cooper, 1998; Diener and Lucas, 1999). In summary, PsyCap turned out to be predictive of all four outcome variables considered, accounting for significant incremental variance beyond the personality traits. Discussion The main purpose of this study was to identify whether PsyCap has a unique effect on the criteria that are important to both work and life while controlling for personality traits. Conceptual correspondence between the Big Five traits and PsyCap, and the empirical associations between the personality traits and those outcome variables,

11 JMP 132 Table II. Summary of regression analysis results a Variable Self-rated performance Turnover intention Work happiness SWB Step 1 Step 2 Step 3 Step 1 Step 2 Step 3 Step 1 Step 2 Step 3 Step 1 Step 2 Step 3 1. Age 0.21 * 0.17 * * Gender Education ** 0.16 ** 0.14 ** Tenure * 0.15 * Job type Job type Job type Job type * Agreeableness * Conscientiousness 0.28 ** 0.23 ** Emotional stability * ** 0.21 ** 0.34 ** 0.27 ** Extraversion 0.13 * ** ** 0.19 ** 0.15 ** 0.06 Openness ** 0.18 ** * PsyCap 0.20 ** ** 0.19 ** 0.36 ** DR ** 0.03 ** ** 0.05 ** ** 0.02 ** ** 0.07 ** R 2 for total equation ** 0.30 ** ** 0.21 ** ** 0.24 ** ** 0.32 ** Notes: : a Standardized coefficients are reported. * p, ** p, 0.01

12 warrant our test of the incremental predictive validity of PsyCap in the presence of a full range of personality traits. In addition, we focused on individual happiness at work and in life as well as performance and turnover intention as outcome criteria. The former, in particular, is not only essential and desirable to individuals, but also may ultimately contribute to organizational effectiveness. Contributions and theoretical implications This study contributes to the literature in three ways. First, this study demonstrated that PsyCap is indeed related to perceived performance, turnover intention, work happiness, and SWB, through more conservative analyses compared to most previous studies on PsyCap. To the best of our knowledge, this study is the first to examine the relationship between PsyCap and any of the four outcome variables in the presence of a full range of personality traits. At the same time, our results indicated that considering the Big Five together significantly increases explained variances in all four outcome variables. Moreover, some of the personality traits remained significant predictors of the outcome variables after including PsyCap. These findings suggest that omitting personality traits might result in a positively biased estimation of the PsyCap effect. Second, compared to previous studies on PsyCap that focused mainly on the relationship between PsyCap and work outcomes, the present research offers additional significance, as it expands the domain of criterion variables by exploring PsyCap s role in a broader context of work and life. This study provides evidence that the benefits of PsyCap may not be limited to work-related outcomes only but may also be directed to employees individual happiness. Such findings answer Wright s (2003, p. 441) call that more than just considering employees as a means to the desired end of higher organizational productivity, to make a truly valuable contribution to the field, the mission of POB must also include the pursuit of employee happiness, health, and betterment issues as viable goals or ends in themselves. Investigating the role of PsyCap in a wider domain more comprehensively, this study helps enhance our understanding of whether and if so, how human strengths and positive capacities contribute to making lives more meaningful and thriving. Third, we identified the unique value of PsyCap in a Korean context. Given the increasing globalization of today s business environment, not much has been discovered about the nature and functions of PsyCap in culturally different organizational settings. For PsyCap to gain global recognition as a new approach to management studies and practices, more research should be designed to examine PsyCap across various cultural contexts. By verifying the applicability of PsyCap among Korean employees, this study adds to the external validity of the PsyCap construct and its functions. Psychological capital 133 Limitations and future research The contributions of this research should be interpreted in light of its limitations. A first limitation pertains to a potential common method variance problem because the data were obtained from the same source. To reduce this potential method bias, in developing questionnaires, caution was taken to separate measures for predictors and those for criterion variables proximally and psychologically (Podsakoff et al., 2003). Moreover, the confirmatory factor analysis with additional latent method factor indicated that common method bias was not serious to the extent of distorting our

13 JMP 134 results. Nevertheless, efforts to obtain data from multiple sources (e.g. obtaining performance measures from company records or supervisor ratings and assessing personality and/or PsyCap through peer evaluations) in future research seem warranted as ways to alleviate the potential common method bias. A second limitation concerns the cross-sectional nature of study design. This study embraces the underlying assumption that PsyCap would influence performance, turnover intention, work happiness, and SWB; however, some of the outcome variables might change PsyCap. An experimental design would enable the investigators to evaluate directions of the causality more precisely. In addition, our cross-sectional, between-subjects data do not speak to the intra-individual dynamics of the relationships we considered. Longitudinal, within-subjects data, on the other hand, are better able to capture the dynamic process through which psychological states experienced at work (i.e. at least in part influenced by the given environment) and individual traits lead to employee outcomes (e.g. Ilies et al., 2006) at the intra-individual level. Using such longitudinal within-subjects data, future research may explore the interactive effects of PsyCap and personality traits on intra-individual patterns of the outcomes variables. Third, besides the Big Five traits, other individual differences may affect the outcome variables we examined. For example, core self-evaluations ( Judge and Bono, 2001) and positive affectivity (Watson et al., 1988) are among the positive traits that can be related to those outcomes. By controlling for such additional individual difference variables, future research would further increase the internal validity of the findings regarding the effect of PsyCap. Finally, while this study was carried out in South Korea, and it contributes to our understanding of PsyCap s contextual applicability, the generalizability of its findings and implications to other cultural contexts may be questionable. Thus, future research needs to replicate the findings of this study in diverse cultures. Practical implications The findings of this study also provide practical implications for organizations and their managers in terms of building more effective organizations in more constructive and healthier ways. First, managers should note that the unique effect of PsyCap on the outcome variables goes beyond the Big Five traits. Despite an increasing use of the Big Five traits as a selection tool (Barrick et al., 2001) and their utility, personality traits are difficult to develop with organizational interventions because they remain, by definition, relatively stable over time. On the other hand, the notion that PsyCap is a state-like psychological resource that is sufficiently malleable to change provides a good rationale for interventions to develop employees PsyCap. Prior research suggests that PsyCap can be developed through relatively short (two hours or so) online-based or face-to-face intervention training (Luthans, Avey, and Patera, 2008c; Luthans, Avey, Avolio, and Peterson, 2010). In addition, while positive organizational climates supported by overall HRM systems can create the preconditions necessary for employees PsyCap (Luthans, Norman, Avolio, and Avey, 2008b), it is also important for organizations to realize the important role of leaders in developing employees PsyCap. The PsyCap of the leaders themselves (Walumbwa et al., 2010) and certain types of leader behaviors, such as authentic and transformational leadership (Gooty et al., 2009), are known to be more

14 conducive to employees PsyCap development. Therefore, leadership programs that focus directly on stimulating the PsyCap of leaders and encourage positive leadership behaviors would help organizations reap more positive outcomes through enhancing positive psychological strengths among their employees. Finally, today, employee welfare and well-being are receiving great attention from practitioners (as well as from researchers) more than ever because of their implications not only for employees mental and physical health but also for long-term organizational effectiveness (Danna and Griffin, 1999). Enhancing happiness both at work and in life is considered an important agenda in many organizations as work and life have become increasingly interrelated and reciprocally influential on each other (Leung et al., 2011). The results of this study suggest that one way to achieve this agenda would be via improving employees PsyCap. By developing employees PsyCap, organizations could make work a significant source of happiness and life satisfaction for their employees. Psychological capital 135 References Ajzen, I. (1991), The theory of planned behavior, Organizational Behavior and Human Decision Process, Vol. 50, pp Anderson, J.C. and Gerbing, D.W. (1988), Structural modeling in practice: a review and recommended two-step approach, Psychological Bulletin, Vol. 103, pp Avey, J.B., Luthans, F. and Jensen, S. (2009), Psychological capital: a positive resource for combating employee stress and turnover, Human Resource Management, Vol. 48, pp Avey, J.B., Nimnicht, J.L. and Pigeon, N.G. (2010), Two field studies examining the association between positive psychological capital and employee performance, Leadership & Organization Developmental Journal, Vol. 31, pp Avey, J.B., Luthans, F., Smith, R.M. and Palmer, N.F. (2010), Impact of positive psychological capital on employee well-being over time, Journal of Occupational Health Psychology, Vol. 15, pp Bakker, A. and Schaufeli, W.B. (2008), Positive organizational behavior: engaged employees in flourishing organizations, Journal of Organizational Behavior, Vol. 29, pp Bandura, A. (1997), Self-efficacy: The Exercise of Control, Freeman, New York, NY. Barrick, M.R. and Mount, M.K. (1991), The Big Five personality dimensions and job performance: a meta-analysis, Personnel Psychology, Vol. 44, pp Barrick, M.R., Mount, M.K. and Judge, T.A. (2001), Personality and performance at the beginning of the new millennium: what do we know and where do we go next?, International Journal of Selection and Assessment, Vol. 9, pp Brislin, R.W. (1980), Translation and content analysis of oral and written materials, in Triandis, H.C. and Berry, J.W. (Eds), Handbook of Cross-cultural Psychology, Vol. 2, Allyn and Bacon, Boston, MA, pp Cammann, C., Fichman, M., Jenkins, D. and Klesh, J. (1983), Assessing the attitudes and perceptions of organizational members, in Seashore, S.E., Lawler, E.E. III, Mirvis, P.H. and Cammann, C. (Eds), Assessing Organizational Change: A Guide to Methods, Measures, and Practices, Wiley, New York, NY, pp Carver, C.S. and Scheier, M. (2001), Optimism, pessimism, and self-regulation, in Chang, E.C. (Ed.), Optimism And Pessimism: Implications for Theory, Research, and Practice, American Psychological Association, Washington, DC, pp

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