Psychological capital and strategic decision outcomes

Abstract

PurposeA large body of research has analyzed individual psychological characteristics as antecedents of strategic decision-making. However, this research has mainly focused on trait-based characteristics that explain impaired strategic decision outcomes. Recently, PsyCap has been proposed as an alternative driver of strategic decision outcomes that, in contrast to other drivers, can be influenced by management.Design/methodology/approachDrawing on research on psychological capital (PsyCap), a psychological construct conceptualized as a state-like individual strength that is malleable, the authors argue that PsyCap exerts an inverted curvilinear effect on strategic decision outcomes. The authors use a computerized strategic decision simulation involving 102 managers to empirically test our hypotheses.FindingsThe authors show that PsyCap improves strategic decision outcomes up to an inflection point, after which it negatively affects those outcomes. The authors also show that this effect is mediated by heuristic information processing.Research limitations/implicationsFor the empirical study the authors relied on a sample of 102 practicing managers from the financial services industry in Germany.Practical implicationsPsyCap has been shown to be malleable through, for instance, micro-interventions and dedicated web-based trainings. Therefore, depending on managers' PsyCap levels, either further increases in PsyCap or a regulation of this characteristic might be appropriate in order to optimize strategic decision outcomes.Social implicationsAs a state-like individual strength that is malleable, PsyCap might serve as a management characteristic that is particularly important in challenging situations such as the COVID-19 pandemic.Originality/valueThis paper contributes to research on strategic decision making by introducing PsyCap as an important antecedent of strategic decision outcomes that – in contrast to other individual characteristics – is state-like and, hence, malleable.