Psychological capital: the evidence that a developable mindset pays

Why this question matters

The thesis argues that people in boundaryless careers, who often operate independently, rely on psychological resources to cope and persist, and it takes psychological capital as the framework for understanding how they persist in challenging environments (Haydon, 2025, p. 23). The choice came out of its own interviews. Participants described sustaining self-belief amid uncertainty, keeping an optimistic view of future work, recovering from setbacks and staying goal-oriented when demand fluctuated, and the thesis maps these themes onto efficacy, optimism, resilience and hope (pp. 195–196). Unlike stable traits, these resources are state-like and developable, which the thesis describes as a unique contribution to boundaryless career research (p. 197).

What is psychological capital?

Psychological capital is “an individual’s positive psychological state of development characterised by: (1) having confidence (efficacy) to take on and put in the necessary effort to succeed at challenging tasks; (2) making a positive attribution (optimism) about succeeding now and in the future; (3) persevering toward goals and, when necessary, redirecting paths to goals (hope) in order to succeed; and (4) when beset by problems and adversity, sustaining and bouncing back and even beyond (resilience) to attain success” (Luthans, Youssef, & Avolio, 2007, p. 3).

Snyder et al. (1991) describe hope in terms of a sense of successful agency (goal-oriented energy) and pathways (planning to meet goals). Avey, Luthans and Youssef (2010) show that the combination of the four gives psychological capital higher-level motivational properties than each construct alone.

Unlike static traits, psychological capital and its components are malleable and open to development, closer to the state end of the continuum than to hardwired traits such as intelligence or stable traits such as conscientiousness and extraversion (Avey, Luthans & Youssef, 2010) (Haydon, 2025, p. 200).

The thesis places psychological capital alongside other forms of capital. Beyond economic capital (what you have), human capital (what you know) and social capital (who knows you), it concerns who you are becoming (Luthans et al., 2004) (Haydon, 2025, pp. 199–200). It sets out the other three parts (pp. 201–202):

• Efficacy is “one’s conviction (or confidence) about his or her abilities to mobilise the motivation, cognitive resources, and courses of action needed to successfully execute a specific task within a given context” (Stajkovic & Luthans, 1998, p. 66), drawing on Bandura (1997).
• Optimism, from Seligman (1998), is an explanatory style that treats negative events as external, temporary and situation-specific, and positive events as personal, permanent and pervasive.
• Resilience is “the capacity to rebound or bounce back from adversity, conflict, failure, or even positive events, progress, and increased responsibility” (Luthans, 2002, p. 702).

The thesis also explains what state-like means. A state reflects how someone feels from point to point (Xanthopoulou et al., 2009); a state-like construct is still momentary but stable over a longer period, and therefore malleable and open to development (Sihag & Sarikwal, 2014) (p. 200). It gives an example: someone may come across as generally confident, which is trait-like, while self-efficacy for a specific set of tasks, such as a job, can be developed through mastery experiences, modelling, social persuasion, and physiological and psychological arousal (Bandura, 1997) (pp. 202–203).

The evidence that it predicts performance

A meta-analysis of 51 independent samples (representing a total of N = 12,567 employees) showed a significant positive relationship between PsyCap and desirable employee outcomes (job satisfaction, organisational commitment, psychological well-being), desirable employee behaviours (citizenship), and multiple measures of performance (self, supervisor evaluations, and objective) (Avey et al., 2011) (Haydon, 2025, p. 208). Across 24 samples, the performance relationship covered creative tasks, sales, referrals, the quality and quantity of manufacturing, and supervisor-rated performance (Avey et al., 2011).

At the organisational level, psychological capital has been found to positively influence innovativeness and firm performance (McKenny et al., 2013; Memili et al., 2014).

It has also predicted employee attitudes and behaviours beyond demographics, core self-evaluation, personality traits, and person–organisation and person–job fit, which led researchers to suggest it may be a stronger predictor of future performance than other forms of human resource profiling (Avey, Luthans & Youssef, 2010) (Haydon, 2025, p. 200). The evidence runs the other way too: psychological capital has a significant negative relationship with cynicism, turnover intentions, job stress and anxiety (Avey et al., 2011) (p. 210).

On motivation, Bandura (2008) argues that unless people believe they can produce the effects they want through their actions, they have little incentive to act or to keep going in the face of difficulties (p. 211). Psychological capital has been found to boost employee engagement (Sihag & Sarikwal, 2014), and the combined measure predicts job satisfaction and affective organisational commitment more strongly than its separate parts (Luthans & Youssef-Morgan, 2017) (p. 211).

For anyone who leads a team, the thesis cites evidence of a contagion effect: a leader’s psychological capital can significantly influence that of their followers, and the effect was mediated by factors such as how often they interact and the quality of their relationship (Story et al., 2013) (pp. 207–208).

In my own survey of 85, psychological capital correlated with revenue band (r = .417), client retention (r = .351), life satisfaction (r = .380) and, negatively, with job insecurity (r = −.424). The full numbers are in the first release.

The evidence that it can be developed

The Psychological Capital Intervention (PCI; Luthans et al., 2006) develops each part:

• Hope: visualising goals, creating possible routes to achieve them, even in the face of adversity, and obstacle planning.
• Realistic optimism: enhancing efficacy and confidence, and developing positive expectancy.
• Efficacy and confidence: experiencing success, modelling others, persuasion, and arousal, such as mentorship.
• Resilience: building assets, avoiding risks, and understanding how to influence the process effectively.

In Luthans et al. (2006), the PCI increased the psychological capital of managers from a range of organisations by 3 per cent, against a control group given a non-related training intervention that showed no increase. In the same study, the intervention carried out in a high-tech firm resulted in a 270 per cent return on investment ($20,000 investment, $73,919 return). Further evidence of financial return through positive interventions has been seen in small, medium and some of the largest organisations, from manufacturing and franchises to healthcare, education and non-profits (Avey, Avolio, Luthans, 2011). Stress has been said to cost companies $200 billion a year in increased absenteeism, ‘tardiness’, and loss of talented workers (Peterson et al., 2008) (Haydon, 2025, p. 209).

What builds it?

The thesis summarises two groups of predictors. Individual-level factors include personal traits, life experiences and demographic characteristics; organisational-level factors include leadership, job characteristics, strategy, structure and culture (Youssef & Luthans, 2012) (Haydon, 2025, p. 207). Leadership has been identified as an active predictor, with the interaction between leader and subordinate significantly influencing psychological capital (Avey, 2014; Wu & Nguyen, 2019) (p. 207).

Coaching is one route. Recent reviews and meta-analyses show that coaching is generally effective in building behavioural capabilities and psychological resources such as self-efficacy, resilience and psychological capital (Athanasopoulou & Dopson, 2018; Wang et al., 2022; Nicolau et al., 2023; Cannon-Bowers et al., 2023) (p. 96). The same body of evidence shows that the number of coaching hours or sessions does not systematically predict outcomes (Cannon-Bowers et al., 2023; Nicolau et al., 2023), and that face-to-face and virtual formats appear similarly effective (Cannon-Bowers et al., 2023), which the thesis reads as a sign that what happens within coaching may matter more than dosage or format (p. 66).

Why it works: the theory

Psychological Resource Theory (Hobfoll, 2002) holds that “resource caravans”, clusters of accumulated resources, provide a stable foundation to cope with challenges and persist over time, acting as a buffer against potential losses and supporting recovery from setbacks. The broaden-and-build theory (Fredrickson, 2004) explains how positive emotions expand cognitive and behavioural responses, leading to the accumulation of personal resources over time (Haydon, 2025, p. 205).

Social cognitive theory (Bandura, 1997) emphasises the role of self-efficacy in motivation, perseverance and resilience; the thesis uses it to explain the motivational route, but notes that it does not fully account for how all four parts of psychological capital interact (Haydon, 2025, pp. 204–205). The thesis chose psychological resource theory as its main framework for three reasons: it captures how people must replenish their resources to sustain performance in careers that lack structural stability, it explains how resilience accumulates over time, and it brings the insights of the other two theories into a single resource-based framework (p. 206). It also accounts for people both with and without a strong sense of agency, which the interviews showed varied (p. 204).

What did the doctorate add?

In the thesis’s survey of 85 people in UK franchised advisory practices, psychological capital had significant direct effects on revenue band, client retention, job insecurity and satisfaction with life, and engagement was the only route that carried it through to a positive result: the number of clients (Haydon, 2025, pp. 269–270). Instilling hope in clients had unexpected negative indirect effects on revenue band and life satisfaction (p. 270). The thesis concludes that psychological capital’s influence is multifaceted but uneven, operating primarily through motivation (pp. 276–277). The detail is in the second release.

The thesis uses the term Return on Development (ROD) for the value of investing in developing psychological capital (pp. 28, 298). Its own survey measured psychological capital at one point in time; it did not test a development programme (p. 246).

What this doesn’t show

The meta-analysis and intervention figures come from studies of employees and managers, not owners. The intervention figures are from a single study, quoted as the thesis reports them. My own survey extends the finding to owner-operators of franchised advisory practices and some employed advisers, but with 85 people in one network, at one point in time.

My read

My view, kept apart from the sources.

I did seven years on this because I’d watched it in my own businesses and couldn’t name it. The owners who come through a bad year with the business intact aren’t braver. They have more of this resource, and they usually built it without knowing: a mentor who kept them honest, a habit of planning for the obstacle, a record of what they’d already survived. The research says it can be developed. In my experience it’s developed fastest by someone who owns businesses sitting at your table, asking the questions you’d rather not answer, and making you plan the second route before the first one fails.

What an owner can do with it

• Work on the four parts deliberately, the way the PCI does: goals with possible routes and an obstacle plan; building on the successes you’ve already had and learning from others who’ve done it; building confidence and positive expectancy; and building your assets and reducing your risks so setbacks don’t sink you.
• Pair mindset with method. The thesis suggests developing psychological capital through training such as group sessions or one-to-one interventions, and integrating it with practical skills training and realistic goal-setting (Haydon, 2025, p. 281).

Sources

References as listed in the thesis (Haydon, 2025, pp. 312 onwards). The thesis cites the 51-sample meta-analysis as Avey et al. (2011); the 2011 Avey entry in its reference list is Avey, Avolio and Luthans (2011), below.

• Athanasopoulou, A., & Dopson, S. (2018). A systematic review of executive coaching outcomes: Is it the journey or the destination that matters the most? Leadership Quarterly, 29: 70–88.
• Avey, J. B. (2014). The left side of psychological capital: New evidence on the antecedents of PsyCap. Journal of Leadership & Organizational Studies, 21(2), 141-149.
• Avey, J. B., Avolio, B. J., & Luthans, F. (2011). Experimentally analyzing the impact of leader positivity on follower positivity and performance. The Leadership Quarterly, 22(2), 282–294. https://doi.org/10.1016/J.LEAQUA.2011.02.004
• Avey, J. B., Luthans, F., & Youssef, C. M. (2010). The additive value of positive psychological capital in predicting work attitudes and behaviors. Journal of Management. https://doi.org/10.1177/0149206308329961
• Bandura, A. (1997). Self-efficacy: The exercise of control. New York, NY: Freeman.
• Bandura, A. (2008). An agentic perspective on positive psychology. In S. J. Lopez (Ed.), Positive Psychology: Exploring the best in people. Volume I (pp. 167-196). Westport, CT: Greenwood Publishing Company.
• Cannon-Bowers, J. A., Bowers, C. A., Carlson, C. E., Doherty, S. L., Evans, J., & Hall, J. (2023). Workplace coaching: A meta-analysis and recommendations for advancing the science of coaching. Frontiers in Psychology, 14, 1204166. https://doi.org/10.3389/fpsyg.2023.1204166
• Fredrickson, L. B. (2004). The Broaden-and-Build Theory of Positive Emotions. The Royal Society. https://doi.org/10.1098/rstb.2004.1512
• Hobfoll, S. E. (2002). Social and psychological resources and adaptation. Review of General Psychology, 6(4), 307–324.
• Luthans, F. (2002). The need for and meaning of positive organizational behavior. Journal of Organizational Behavior. https://doi.org/10.1002/job.165
• Luthans, F., & Youssef-Morgan, C. M. (2017). Psychological capital: An evidence-based positive approach. Annual Review of Organizational Psychology and Organizational Behavior, 4, 339–366. https://doi.org/10.1146/annurev-orgpsych
• Luthans, F., Avey, J. B., Avolio, B. J., Norman, S. M., & Combs, G. M. (2006). Psychological capital development: Toward a micro-intervention. Journal of Organizational Behavior. https://doi.org/10.1002/job.373
• Luthans, F., Luthans, K. W., & Luthans, B. C. (2004). Positive psychological capital: Beyond human and social capital. Business Horizons, 47(1), 45-50.
• Luthans, F., Youssef, C. M., & Avolio, B. J. (2007). Psychological capital: Developing the human competitive edge. Oxford University Press.
• McKenny, A. F., Short, J. C., & Payne, G. T. (2013). Using computer-aided text analysis to elevate constructs: An illustration using psychological capital. Organizational Research Methods, 16(1), 152-184.
• Memili, E., Welsh, D. H., & Kaciak, E. (2014). Organizational psychological capital of family franchise firms through the lens of the leader–member exchange theory. Journal of Leadership & Organizational Studies, 21, 200–209.
• Nicolau, A., Candel, O. S., Constantin, T., & Kleingeld, A. (2023). The effects of executive coaching on behaviors, attitudes, and personal characteristics: A meta-analysis of randomized control trial studies. Frontiers in Psychology, 14, 1089797. https://doi.org/10.3389/fpsyg.2023.1089797
• Peterson, S. J., Balthazard, P. A., Waldman, D. A., & Thatcher, R. W. (2008). Neuroscientific implications of psychological capital: Are the brains of optimistic, hopeful, confident, and resilient leaders different? Organizational Dynamics, 37(4), 342–353. https://doi.org/10.1016/J.ORGDYN.2008.07.007
• Seligman, M. E. P. (1998). Learned optimism. New York, NY: Pocket Books.
• Sihag, P., & Sarikwal, L. (2014). Impact of Psychological Capital on Employee Engagement: A Study of IT Professionals in Indian Context. Management Studies and Economic Systems, 1(2), 127–139.
• Snyder, C. R., Irving, L., & Anderson, J. (1991). Hope and health. In C. R. Snyder & D. R. Forsyth (Eds.), Handbook of social and clinical psychology (pp. 285–305). Elmsford, NY: Pergamon.
• Stajkovic, A., & Luthans, F. (1998). Social cognitive theory and self-efficacy. Organizational Dynamics, 26, 62–74.
• Story, J. S. P., Youssef, C. M., Luthans, F., Barbuto, J. E., & Bovaird, J. (2013). Contagion effect of global leaders’ positive psychological capital on followers: Does distance and quality of relationship matter? International Journal of Human Resource Management, 24(13), 2534–2553. https://doi.org/10.1080/09585192.2012.744338
• Wang, Q., Lai, Y.-L., Xu, X., & McDowall, A. (2022). The effectiveness of workplace coaching: A meta-analysis of contemporary psychologically informed coaching approaches. Journal of Work-Applied Management, 14(1), 77-101. https://doi.org/10.1108/JWAM-04-2021-0030
• Wu, W. Y., & Nguyen, K. V. H. (2019). The antecedents and consequences of psychological capital: A meta-analytic approach. Leadership and Organization Development Journal, 40(4), 435–456. https://doi.org/10.1108/LODJ-06-2018-0233
• Xanthopoulou, D., Bakker, A. B., Demerouti, E., & Schaufeli, W. B. (2009). Work engagement and financial returns: A diary study on the role of job and personal resources. https://doi.org/10.1348/096317908X285633
• Youssef, C. M., & Luthans, F. (2012). Psychological capital: Meaning, findings, and future directions. In K. S. Cameron & G. M. Spreitzer (Eds.), The Oxford handbook of positive organizational scholarship (pp. 17-27). Oxford University Press.