Psychological Capital for Competitive Advantage: A Review

Abstract

Increased competition among businesses demands adequate attention towards steps which would ensure business survival in long run. Businesses must build on their strengths which in turn depend upon their employee’s strengths. One of such strengths is employee’s positive Psychological Capital which comprises of self-efficacy, optimism, hope and resilience. Employee’s Psychological Capital has been linked to key driver of sustainable competitive advantage in today’s business scenario that is innovation. This review focuses upon studies determining the relationship between Psychological Capital and innovation. The review suggests that Psychological capital is a significant predictor of innovation among employees working in various sectors. Positive leadership styles such as Authentic, transformational leadership etc. and favourable organizational climate are found to foster Psychological Capital among employees. Although at individual level there are studies linking Psychological Capital with innovative behaviour, but less number of studies have examined the role of team or collective Psychological Capital in predicting overall innovation within the organizations.