This study investigated the process by which employee perceptions of the organizational environment are related to job involvement, effort, and performance. The researchers developed an operational definition of psychological climate that was based on how employees perceive aspects of the organizational environment and interpret them in relation to their own well-being. Perceived psychological climate was then related to job involvement, effort, and performance in a path-analytic framework. Results showed that perceptions of a motivating and involving psychological climate were related to job involvement, which in turn was related to effort. Effort was also related to work performance. Results revealed that a modest but statistically significant effect of job involvement on performance became nonsignificant when effort was inserted into the model, indicating the mediating effect of effort on the relationship. The results cross-validated well across 2 samples of outside salespeople, indicating that relationships are generalizable across these different sales contexts.Unleashing the power of human potential in the workplace through creation of an involving and motivating organizational environment has been acclaimed as a key source of competitive advantage for business organizations (e.g., Lawler, 1992;Pfeffer, 1994). A prominent stream of literature has argued that when employees perceive the potential for satisfying their psychological needs in the workplace, they engage themselves more completely and invest greater time and effort in the organization's work (Kahn, 1990;Pfeffer, 1994). It has been argued that such processes lead to greater organizational productivity and competitiveness. Although anecdotal evidence suggests that favorable employee perceptions of organizational environments lead to superior performance, empirical research has not shown how (or whether) psychological climate and job involvement translate into higher performance. We investigated whether employee effort constitutes the mediating link relating psychological climate and job involvement to work performance.Our purpose was to investigate the process by which psychological climate is related to employee involvement, effort, and performance. We evaluated the premise that favorable employee perceptions of the organizational environment are positively related to job involvement, effort, and performance. When employees perceive the organizational environment positively (i.e., as consistent with their own values and self-interests), they are likely to identify their personal goals with those of the organization and to invest greater effort pursuing them. We investigated specific perceptions of the organizational environment that constitute important aspects of psychological climate, as well as the process by which these are related to performance. Studying dimensions of psychological climate may reveal important aspects of the relationship between the employee and the organization that are related to greater involvement, effort, and performan...