Psychological Capital (A complete guide)

This blog defines psychological capital and explains its importance with reference to positive psychology.

In this blog, you will be told about the basic components of psychological capital and the factors that predict psychological capital.

So let’s take a start from the basic definition of psychological capital. 

What is the Psychological Capital?

Psychological capital is defined as the group of resources used by an individual for enhancing his job performance and success rate.

Psychological capital can be improved, taught and learned.

Psychological capital, also known as positive psychological capital, refers to the positive perspectives, perceptions, and consequences of an individual’s behavior.

It is described as “a common underlying capacity considered critical to human motivation, cognitive processing, striving for success, and resulting performance in the workplace”.

Importance of Psychological Capital 

Psychological capital holds great significance in an individual’s life. Psychological well-being is a strong predictor of the overall well-being of an individual including social, emotional and psychological well-being.

Developing even one of the four components of psychological capital can help an individual accomplish his goals efficiently, improve his performance in all fields of life and become successful in his life.

Since this construct has been introduced lately, there is very little research on it but the empirical researches done so far unveil the importance of psychological capital and its positive influence on the life and well-being of an individual. 

Just as human resources are essential for running a business, psychological capital is important to promote the business and ensure its success.

Positive psychological capital was introduced in postmodern positive psychology. Positive psychological capital is enriched with capabilities, strengths and positive aspects of an individual’s behavior.

Martin Seligman was the first one to give the concept of positive psychological capital in the year 1999. His concepts were appreciated an adopted by Luthans and hid colleagues in the  USA in the year 2004.

Just a few years back of giving the concept of positive psychological capital, Martin Seligman had introduced the field of positive psychology by saying that we need to focus on our good qualities and strengths rather than focusing on the negative points and weaknesses. 

Psychological capital focuses on an individual’s personal, psychological abilities that are helpful for him to succeed in life.

These resources include self-efficacy, hope, optimism, and resilience. 

Basic Components of Psychological Capital 

As mentioned earlier, there are four basic components of psychological capital.

These are self-efficacy, hope, optimism, and resilience. These four components help encourage an individual to accomplish his goals and become successful in his life. 

Self- Efficacy

One of the basic components of psychological capital is self-efficacy. Self-efficacy is defined as an individual’s confidence in his skills and potential to control, confront and resolve conflicts.

The individuals who have higher levels of self-efficacy believe that they have control over whatever happens and they can confront the challenges skillfully.

Such individuals do not avoid challenges nor they delay them, rather they face them with full courage and accomplish their goals efficiently.

They do not lose their courage from failures, they learn from their mistakes as well and succeed in their lives.  


Optimism is defined as an individual’s ability to see positive in every situation.

Optimistic people never lose their hope, they expect positive outcomes from every situation. Such people are of the opinion that whatever happens will end in good.

They are highly motivated and goal-oriented. They face challenges with full courage and always seek the positive side of every picture. 


You are already familiar with the word hope. The word hope has a little bit different meaning in the field of research.

It is derived from two words; agency and pathways. Agency is the inspiration or motivation to accomplish goals efficiently whereas pathways are the ways that are used to achieve these goals.

The people who possess high levels of hope contribute more of their time and effort to working to accomplishing their goals as compared to the people who are less hopeful.

Hopeful people find out more than one way to accomplish their goals while the less hopeful people come up and follow only one path for achieving their goals.

To make it more simple, unlike less hopeful people, hopeful people work harder to achieve their goals and always find another way if they stuck on one path.

They always keep a backup plan with them. 


Another component of psychological capital is resilience. Resilience is an individual’s ability to cope with the challenges, threats, and failures.

Resilient people do not fear to confront challenges and do not lose courage form failures, rather they bounce back the negative feelings and manage the crisis efficiently.

Sich people can possess the ability to adapt to the changes in their environment and face stressful, discomforting situations bravely.

Confronting challenges make them fearless and more strong than before. 

Predictors of Psychological Capital 

There are only a few studies that aimed to explore the predictors of psychological capital.

Most of the studies concentrated on finding out the effects of psychological capital in the work situation.

Nonetheless, the few pieces of research on recognizing predictors of psychological capital unveiled that creativity, wisdom, well-being, flow, and humor has a connection to psychological capital.

Furthermore, employees’ performance, satisfaction, and commitment are also found to be some predictors of psychological capital. 

Well-being and Psychological Capital 

Empirical evidence has unveiled that well-being has a close association with psychological capital and its elements.

According to research done by Luthans et al. (2007b), well-being is a significant mental strength and ability of the job setting.

Well-being is defined as the individual’s perceptions and feelings of his emotional wellness (positive and negative affect, satisfaction with life, and contentment), mental wellness (acceptance of self, personal development, goals in life, environmental mastery, autonomy and positive relations with others) and social wellness (social acceptance, self-actualization, contribution in society, coherence and integration).

The researchers also proposed that there could be a correlation of low with psychological capital when he said that subjective well-being has a close association with happiness and optimal experience.

A number of researches have provided evidence on the direct relationship between well-being and flow experience.

It was also found that psychological capital has a positive correlation with job satisfaction.

Numerous studies unveiled that well-being as an association with the basic components of psychological capital (self-efficacy, optimism, hope, and resilience) 

Psychological capital is based on Bandura’s theory according to which an individual uses his abilities and strengths to accomplish his goals.

The individuals who have a high level of self-efficacy are less affected by self-doubt, negative responses, failures and criticisms.

Hence, psychological capital does have a close relationship with the well-being of an individual.

Similarly, optimism, that is an individual’s ability to see good in every situation and expect good things to happen, is also shown to have a direct relationship with mental wellness as well as satisfaction with life.

The third component of psychological capital, hope, is found to have a positive correlation with an individual’s subjective well-being.

Last but not the least, resilience, is found to portray positive impacts on an individual’s well-being in job settings.

Research proved that there is a direct relationship between resilience and happiness among workers who were facing downsizing.

Another research showed that psychological capital resilience and job satisfaction are directly related to each other.

Thus, it is expected that well-being could act as a predictor of psychological capital. 


The following books are recommended for you to help you increase your knowledge about psychological capital, its components and ways to increase psychological capital to enhance job performance and success rate. 

Frequently Asked Questions

Question. What does psychological capital mean?

Answer. Psychological capital is defined as a group of resources that can be used by an individual to enhance their performance and improve their success rate.

Psychological capital includes four basic components.

These are self-efficacy, optimism, hope, and resilience.

Question. Why is psychological capital important?

Answer. Psychological capital plays a very significant role in the life of an individual.

Psychological capital is likely to improve the well-being of an individual, work performance and satisfaction with life.

Promoting even one of the psychological components, self-efficacy, hope, optimism, and resilience can help an individual succeed in his life. 

Question. What is the nature of psychological capital?

Answer. The construct, psychological capital has been introduced lately by academics and practitioners.

It is defined as the ability of an individual to operate in a positive psychological state, the state which is characterized by high self-efficacy, optimism, hope, and resiliency

Question. How can I improve my PsyCap?

Answer. There are various ways of improving psychological capital.

Some of the tips for increasing psychological capital include: challenging people and setting clear, achievable and realistic goals (self-efficacy), expecting good to happen in the future for yourself and for others (optimism) and helping people identify their agency and explore pathways to achieve their goals (hope). 

Question. What is psychological capacity?

Answer. Psychological capacity is a second-order construct that is enriched with an individual’s hope, optimism, self-efficacy, and resilience. 

Question. What is the field of psychology that applies the science of human behavior to work and the workplace?

Answer. Industrial-organizational psychology, I/O psychology, is the field of psychology that deals with studying human behavior relating to work and applies psychological theories and principles to organizations and individuals in their places of work as well as the individual’s work-life more generally.

This branch of psychology aims to help improve employees’ job performance in work settings. 

This blog described in detail the concept of psychological capital, its origin, its components and importance in an individual’s life.

It also described how psychological capital is related to the overall well-being of an individual in light of empirical research.

We hope this blog helped you clear your concepts about psychological capital.

There was also a list of recommended books mentioned above to help you increase your knowledge about psychological capital and ways to improve it.

If you have any queries or questions, please let us know through your comments in the comment section.

We will be glad to assist you in this regard.

Your suggestions and feedbacks are also welcomed. 


Psychological Capital: Definition, Components and Effects, by Mustafa Fedai ÇAVUŞ, Ayşe Gökçen Kapusuz (2015)

What is Psychological Capital? By Patriciagrabarek, 2018

What Are the Potential Predictors of Psychological Capital for Chinese Primary School Teachers? By Xinjie Chen1, Guang Zeng2*, Edward C. Chang3 and Hoi Yan Cheung (2019)

Google books 

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