Assignment: Variables of Job Attitudes Antecedents

Leader psychological capital and employee work engagement

The roles of employee psychological capital and team collectivism

Jia Xu School of Political Science and Public Administration,

Wuhan University, Wuhan, China Yan Liu

Economics and Management School, Wuhan University, Wuhan, China, and Beth Chung

San Diego State University, San Diego, California, USA

Abstract Purpose – The purpose of this paper is to investigate the relationship between leader psychological capital and employee work engagement. Drawing on conservation of resources theory, the authors hypothesize that leader psychological capital is associated with employee work engagement through employee psychological capital. The authors further hypothesize that team collectivism moderates the relationship between leader psychological capital and employee psychological capital. Design/methodology/approach – Multi-source data came from 44 team leaders and 307 employees in Mainland China. Findings – The results suggest a trickle-down relationship between leader psychological capital and employee psychological capital, which in turn is linked to employee engagement. In addition, the relationship between leader psychological capital and employee psychological capital is stronger (weaker) when team collectivism is lower (higher). Practical implications – By paying attention to the psychological capital of both employees and their leaders, organizations can increase employee engagement which is an important work outcome. Originality/value – Work engagement is important in the workplace because it is related to a variety of employee work and life outcomes. Prior research has examined the antecedents of work engagement, but little is known about the role of leader psychological capital, a positive psychological state, in shaping employee work engagement. This research applied a resource conservation process model of leader positivity on employee engagement that is mediated by employee psychological capital. This study contributes to a better understanding of the theoretical foundation of leader psychological capital. Keywords Work engagement, Collectivism, Employee psychological capital, Leader psychological capital Paper type Research paper

Introduction Workplace well-being is a critical indicator of quality of work life in the areas of management, education, and health psychology (Carvalho and Chambel, 2013). As a major focus of positive organizational behavior research, workplace well-being refers to employees’ cognitive feelings and affective evaluations of their workplace events and experience (Grant et al., 2007). Work engagement is a major component of work-related well-being, reflecting a persistent affective-cognitive evaluation of one’s work-related state, characterized by vigor, dedication, and absorption (Schaufeli, Bakker and Salanova, 2006). Research has shown that work engagement is associated with a variety of positive work and life outcomes, such as job satisfaction (Karanika-Murray et al., 2015), proactive behavior (Salanova and Schaufeli, 2008), performance (Christian et al., 2011), psychological and physical health (Bakker and Demerouti, 2007), creativity (Bakker and Xanthopoulou, 2013), and organizational commitment (Yalabik et al., 2015).

Leadership & Organization Development Journal Vol. 38 No. 7, 2017

pp. 969-985 © Emerald Publishing Limited

0143-7739 DOI 10.1108/LODJ-05-2016-0126

Received 25 May 2016 Revised 31 January 2017 Accepted 19 June 2017

The current issue and full text archive of this journal is available on Emerald Insight at: www.emeraldinsight.com/0143-7739.htm

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Many factors can affect individuals’ perceptions of work engagement. For example, prior research suggests that work engagement is positively related to job resources and personal resources, such as self-efficacy (Salanova, Lorente, Chambel and Martínez, 2011), trust (Chughtai and Buckley, 2009), job autonomy (Macey and Schneider, 2008; Leijten et al., 2015; Vera et al., 2015), feedback (Sarwar and Abugre, 2013), flexible work arrangement (Timms et al., 2015), social support (Matthews and Mills, 2014), organizational climate (Hakanen and Lindbohm, 2008), organizational justice (Park et al., 2016), organization-based self-esteem (Mauno et al., 2007), transformational leadership (Vincent-Höper, 2012; Ghadi et al., 2013), and positive orientation (Alessandri et al., 2015). Research also suggests negative relationships between work engagement and job demands (Bakker and Demerouti, 2007), occupational stress (Narainsamy and Westhuizen, 2013), emotional exhaustion (Wirtz et al., 2017), and unpleasant work circumstances (Leijten et al., 2015).

Despite progress made in the work engagement literature in recent years, several questions remain open for further investigation (Bakker, 2011). First, although empirical evidence shows that environmental and individual factors are related to employee work engagement (Chang et al., 2013; Airila et al., 2014), there is a lack of research on psychological capital and employee work engagement, two core constructs of positive organizational behavior (Luthans, 2007). Second, the extant literature to date has largely drawn on social learning theory to explain the impact of leadership positivity on employee well-being (Walumbwa et al., 2010; Bouckenooghe et al., 2015). There is a reason to believe that there are other processes through which leader positivity impacts employee well-being. For example, leader psychological capital is a variable that can impact employee work engagement since leaders serve not only as the role model to be perceived as behaving positivity (Bandura, 1977), but also as the agent representing the organization (Coyle-Shapiro and Shore, 2007). Last, there is relatively little known about the context in which leader psychological capital is likely to influence employee engagement (Walumbwa et al., 2010). As China becomes a world economic power (Bhagat et al., 2010; Liden, 2012), many changes are occurring in the workplace. For example, employees are expected to fully engage themselves at work and leaders are expected to play a more positive role than in the past. These changes are taking place even in the context of high collectivism. Therefore, China provides an appropriate research context to test our hypotheses regarding the relationships between leader and employee psychological capital, collectivism, and employee work engagement. This answers the call for needed research examining potential boundary conditions for leader positivity and employee engagement (Avey, Reichard, Luthans and Mhatre, 2011).

In order to fill the gaps in the literature mentioned above, using conservation of resource (COR) theory as a theoretical framework (Hobfoll, 1989), we argue that leader psychological capital, an important job resource, is associated with employee psychological capital, which in turn is linked to employee work engagement. We further argue that the linkage between leader psychological capital and employee psychological capital is moderated by team collectivism. Collectivism, as a social norm and an integral component of the cultural foundation of the Chinese society, significantly influences employee’s attitudes, behaviors, and their social relationship (Hofstede, 1994). Previous cross-cultural studies about leadership has shown that team culture indirectly impacts the leaders’ effectiveness (Schaubroeck et al., 2007; Mittal, 2015). To better understand the relationship between leader psychological capital and employee psychological capital, we propose that team collectivism is a boundary condition for this relationship. Figure 1 displays our theoretical model.

Theory and hypotheses COR theory COR theory posits that employees tend to acquire, retain, and protect their resources (Hobfoll, 1989). Employees with plentiful resources prefer to work harder to obtain more

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resources, while employees with limited resources might behave negatively to protect current resources. Resources can be anything that employees value, such as job resources (e.g. leader support, autonomy, or performance feedback) and personal resources (e.g. self-efficacy, resilience, or knowledge). Job resources refer to the psychological, physical, organizational, or social aspects of the job, and personal resources refer to an individual’s self-evaluations and a sense of their capacity to control and have mastery over certain external circumstances (Hobfoll et al., 2003). These job resources and personal resources have three functions: help to meet work goals, help to diminish job demands and the associated work costs, and motivate employee self-development and growth (Demerouti et al., 2001). As such, these resources play either intrinsically motivating roles through facilitating employees’ development and growth, or extrinsic motivational roles by promoting attainment of goals that determine employees’ work attitudes and behaviors. COR theory has been applied in past research that examined a variety of workplace outcomes, such as stress, work burnout, voice behavior, and well-being (e.g. De Cuyper et al., 2012; Ng and Feldman, 2012; van Woerkom et al., 2016). Previous studies (Xanthopoulou et al., 2007; Xanthopoulou et al., 2009; Hirschi, 2012; Salanova, Llorens and Schaufeli, 2011) have revealed that several job resources like supervisor support, job autonomy, and team atmosphere, and personal resources like self-efficacy, self-esteem, and positive affect are related to work engagement.

Work engagement is an accumulation of resources (Halbesleben and Wheeler, 2008). Resources are crucial components of COR theory, which suggests that “people must invest resources in order to protect against resource loss, recover from losses, and gain resources” (Hobfoll, 2001, p. 349). Extending those studies, we draw on COR theory to understand how leader psychological capital can motivate employees’ work engagement through employee psychological capital. Psychological capital (self-efficacy, resilience, optimism, and hope) are helpful in generating other resources that are positively related to positive employee behaviors (Avey et al., 2009). Therefore, psychological capital can be viewed as a valuable resource for employee work engagement. Furthermore, leaders can enhance employees’ job performance by increasing their personal resources (e.g. Rego et al., 2012). Accordingly, leader psychological capital can serve as an employee job resource, helping employees to control their work situations and achieve work goals. As a result, we propose that leader psychological capital, a specific form of job resources, may improve employees’ psychological capital, a specific form of personal resources, which ultimately is related to employee work engagement.

Leader psychological capital and member work engagement Psychological capital consists of four positive capacities: efficacy, hope, optimism, and resilience (Luthans, 2002). Efficacy refers to employees’ confidence regarding their abilities to mobilize their motivation, cognitive resources, and courses of action so they can perform well in a specific task activity (Stajkovic and Luthans, 1998). Hope refers to the degree of

Group level

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Team collectivism

Employee psychological capital

Work engagement Figure 1.

Conceptual model

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employees’ goal-directed energy in performing a task and the means by which the task is accomplished (Snyder et al., 1991). Optimism refers to a positive explanation style of good and bad events (Carver and Scheier, 2002). Resilience refers to employees’ capability of bouncing back from a turbulent work environment (Luthans, 2002). Psychological capital has been shown to be positively related to desired outcomes, such as job performance, organizational citizenship behavior, and to help to decrease turnover intentions (see review of Avey, Reichard, Luthans and Mhatre, 2011). Because psychological capital is state-like and open to development, it can be enhanced by a supportive climate (Luthans et al., 2008), positive leadership style (Mcmurray, 2010; Walumbwa et al., 2011), and psychological capital intervention (PCI) (Russo and Stoykova, 2015).

According to Schaufeli and Bakker (2004), work engagement is a work-related state of mind that is positive and fulfilling. It has three dimensions: vigor, dedication, and absorption. Vigor refers to working with a high level of energy and inclination to invest efforts. Dedication refers to working with active involvement and great enthusiasm. Absorption is defined as being fully concentrated and happily engrossed in one’s work. Recent studies have shown that work engagement is a concept about employee well-being and positive behavior that can be discriminated from related concepts such as job embeddedness (Halbesleben and Wheeler, 2008), workaholism (Schaufeli, Taris and Bakker, 2006), and organizational commitment (Hallberg and Schaufeli, 2006). Recent research also shows that work engagement is associated with certain leadership styles (Gooty et al., 2009; Hartog and Belschak, 2012). For example, Hartog and Belschak (2012) found that ethical leadership had a positive effect on employee work engagement. Tuckey et al. (2012) also found that empowering leadership by fire brigade captains was critical to facilitating the motivational process of employees’ work engagement among volunteer firefighters.

We posit that leader psychological capital is related to employee work engagement for a number of reasons. First, leaders with high psychological capital tend to support their subordinates at work, which will act as a contextual resource for employees to invest themselves into work (Avey, Avolio, and Luthans, 2011). For example, when employees make mistakes at work, leaders high in self-efficacy, optimism, hope, and resilience can remain focused on the task and attribute mistakes to external situational variables rather than personal ability. Even if the mistake was due to the individual, leaders will respond in a positive way. As Macey et al. (2009, p. 13) state, employees will be engaged only, “when […] bosses and colleagues display courtesy, warmth and support in their interactions.” Under the supervision of a leader high on psychological capital, employees will likely not be afraid of punishment, and may be physically and emotionally more engaged with their work.

Second, leaders who display high levels of efficacy, optimism, hope, and resilience will be seen by employees as more effective and in turn trustworthy as psychological capital has been shown to be positively related to desired work outcomes, such as job performance. Interpersonal trust between leaders and employees is critical for effective functioning in organizations as engaging in teamwork tasks is complicated and requires high levels of interdependence, collaboration, and information sharing (Agarwal, 2014). Work engagement involves investing one’s physical and psychological energy in pursuit of individual and team goals. If employees do not trust their team leaders, they are not willing to engage with their job. When employees believe that leaders have the ability to promote growth and productivity in the organization by making competent decisions, it will give employees increased confidence of a more promising future with the work team, and lead to an increase in their level of work engagement.

Last, employees could experience job stress under high demands and work overload. Leader psychological capital as job resources could decrease the effects of job demands on work engagement. Leaders with high levels of psychological capital tend to spread positive

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emotions in their team and improve employee morale that motivates them to display more energy, identify strongly with work, and experience “flow-like” states. For example, Hakanen, Bakker and Demerouti (2005) found that the negative relationship between job demands and work engagement was weaker for employees with high job resources. Therefore, the presence of leader psychological capital as a job resource could promote employee’s work engagement by stimulating their job motivation and decreasing job demands. In line with the literature discussed above, we pose the following hypothesis:

H1. Leader psychological capital is positively related to employee work engagement.

Employee psychological capital as a mediator Psychological capital as a positive psychological resource could be state-like and thus open to development and change (Luthans, 2002). We posit that leader psychological capital may facilitate the development of employee psychological capital, which in turn influences employee work engagement. Previous research has shown that there are many factors that influence employee psychological capital, such as leader positivity (Walumbwa et al., 2010). Leader psychological capital as a job resource could provide a supportive environment for the development of employee psychological capital. This can happen in a few different ways. Leaders who possess high levels of psychological capital can exhibit a lot of confidence, optimism, hope, and resilience in their daily interactions with employees, which will convey positive emotions among the work team. The experiences of positive emotions help to produce different ways of thinking that are flexible, original, and open (Isen, 2000), which over time create lasting psychological resources (Fredrickson, 2001). Meneghel et al. (2016) also found that positive emotions are associated with an increase of team resources and resilience. Thus, leader psychological capital may trigger employee psychological capital.

Another way for leaders to create a supportive environment is when leaders with high levels of psychological capital apply their efficacy, optimism, hope, and resilience to goal setting, task allocation, performance feedback, and rewards and punishment. When leaders set realistic objectives for employees, employees’ feelings of hope may emerge; when leaders have positive expectations for goal achievement, employees may be more optimistic for the future; when leaders express their willpower in the face of adversity, conflict, failure, and obstacles, employees’ resilience may be high; and when leaders have confidence regarding task allocation and execution, employees will feel more competent and valued by the organization and employees’ self-efficacy be high. Empirical evidence also shows that leader psychological capital is positively related to employee psychological capital (Walumbwa et al., 2011). Thus, the existence of leader psychological capital as a job resource may activate the psychological resources of employees. That is, when under a leader with high levels of psychological capital, employees’ own psychological capital (e.g. efficacy, optimism, hope, and resiliency) will be likely be enhanced.

When employees’ psychological capital increases, they are inclined to display high levels of work engagement. High psychological capital is a valuable resource to individuals (Youssef-Morgan and Luthans, 2015). The positive relationship between individual resources and work engagement has been well documented in past research (Bakker et al., 2008). Individual resources such as physical and psychological factors can help employees meet work demands, buffer against job stress, promote self-identity and self-actualization, and motivate an employee in terms of energy investment into tasks (Ryan and Deci, 2000). Employees who are engaged at work focus on three types of energy: physical effort, cognition, and emotion (Kahn, 1990). We propose that employees’ psychological capital has a positive association with work engagement by enhancing the above three types of energy to help employees be more strongly engrossed in their job. Physically, employees with a high level of

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psychological capital are likely to be efficacious in coping with stress, managing risks, and trying new things to enhance their well-being. Cognitively, employees who possess high psychological capital tend to obtain more positive and powerful cognition energy by being more positive about outcomes, confident about their ability to accomplish tasks, and adaptive to adversity. Emotionally, psychological capital could increase positive emotions, which in turn influence employee attitudes and behaviors (Avey et al., 2008). Thus, we propose the following:

H2. Employee psychological capital mediates the positive relationship between leader psychological capital and employee work engagement.

Team collectivism as a moderator Team culture guides employees’ behavior, work values, and individual expression (Hogan and Coote, 2014). Hofstede (1991) defined workplace culture as the shared values, roles, and norms among employees. Employees count on the culture to decipher underlying expectations, and to display desired work behaviors. We posit that, in the workplace, collective culture would moderate the relationship between leader psychological capital and employee psychological capital by encouraging employees to focus on group interests instead of individual interests.

According to Hofstede (1994), a high collective culture tends to place more emphasis on collective goals, team achievement, and group benefits. In line with this view, Gelfand et al. (2013) found that employees in collectivistic cultures seek common interests and put collective goals ahead of self-development. A highly collective culture endorses employee self-sacrifice and a spirit of devotion, but discourages independence-seeking and self-pursuit. According to Luthans (2012), psychological capital defines “who you are” and “who you are becoming,” and represents an individual’s motivation of self-development. In a high collective culture, employees may perceive they should restrain from increasing personal resources and place the team’s interests above their own goals/rights. As a result, the employees are likely to pay less attention to their leaders’ psychological capital, and accordingly, the relationship between leader psychological capital and employee psychological capital will tend to be weakened under a high collective culture. By contrast, a low collective culture tends to place more emphasis on self-interest, personal goals, and self-achievement. In a low collective culture, employees are more likely to employ leader psychological capital to gain and retain personal resources to achieve their development and accordingly, the relationship between leader psychological capital and employee psychological capital will be strengthened under a low collective culture. Therefore, we propose the following:

H3. Team collectivism moderates the relationship between leader psychological capital and employee psychological capital such that the positive relationship becomes stronger when there is lower team collectivism and weaker when there is higher team collectivism.

Method Sample and procedures Participants were employees from four companies located in Mainland China. We distributed surveys to 608 employees and 60 immediate supervisors in four organizations. The organizations included a hospital, a trading company, a communication company, and a real estate firm. In total, 307 employees (a response rate of 50.5 percent) and 44 team supervisors (73.3 percent) returned usable surveys. Among the 307 employees, 51.5 percent were male and 48.5 percent were female. The mean age was 32 years and the age range was between 27 and 45 years. The job categories of the participants included general services, finance, manufacturing, and marketing.

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Measures Two surveys were created, one for employees and another for supervisors. Employees were asked to answer questions about psychological capital, work engagement, and demographic information and were given a week to respond. One week after the employee surveys were collected, we distributed the supervisor surveys. Supervisors were also asked to take a week to fill out the survey about their psychological capital and team collectivism at work.

We translated and back-translated (Brislin, 1980) the surveys before distributing them because the participants were Chinese and all measures were originally in English (unless indicated elsewhere). First, all the items in the survey were translated from the original English version into Chinese by a bilingual professional. Then, these Chinese translations were translated back into English by another bilingual professional. Finally, the back-translation version and the original version of each measure were compared to ensure that there were no semantic differences.

Psychological capital. We used the 24 Chinese items published in Li (2008) to measure the four dimensions of psychological capital: self-efficacy, hope, optimism, and resilience. Employees and their supervisors were asked to indicate the extent to which they agreed to each statement. All items were rated from 1 (strongly disagree) to 5 (strongly disagree). Sample items included: “I feel confident in representing my work area in meeting with management” and “I always look on the bright side of things regarding my job.” The Cronbach’s α for employees was 0.87, and the Cronbach’s α for supervisors was 0.89.

Work engagement. We used Schaufeli, Bakker and Salanova’s (2006) Utrecht Work Engagement Scale to assess the three dimensions of work engagement. The three dimensions were vigor, dedication, and absorption. Employees rated their work engagement on a five-point scale ranging from 1 (strongly disagree) to 5 (strongly agree). Some sample items are: “today, I felt strong and vigorous while working” and “today, I was completely immersed in my work.” The higher the score, the greater the magnitude of work engagement. The Cronbachs α for employees was 0.93.

Collectivism. We used Wagner and Moch’s (1986) 20-item scale to measure the three dimensions of team collectivism. The three dimensions were beliefs, norms, and values. Team leaders rated the team collective climate on a five-point scale ranging from 1 (strongly disagree) to 5 (strongly agree). Some sample items are “My work group is more productive when its members follow their group interests and concerns” and “I like when members of my group do things with others all the time, rather than working on their own.” The Cronbachs α for this measure was 0.73.

Control variables Employees’ age was controlled for because of its potential effect on team members’ work engagement (Kooij et al., 2013). Age was measured in years using three categories (1 ¼ below 32; 2 ¼ 32-45; 3 ¼ equal to or above 45). Team size was also controlled for because prior research suggested that size might influence the level of work engagement on the part of employees (Denton et al., 2008). Team size was measured by the number of individuals on each team.

Results Confirmatory factor analysis (CFA) As our data at the individual level and at the group level were collected from the same source concerns regarding common method bias (CMB) may be raised. To address CMB (Podsakoff et al., 2003), we conducted Harman’s (1976) single-factor test, which was a widely used option in existing studies. CFA results suggested that the two-factor model for the team variables (leader psychological capital and team collectivism) showed the acceptable

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discriminant validity ( χ2/df ¼ 1.94, EMSEA ¼ 0.05, GFI ¼ 0.91, CFI ¼ 0.92, NNFI ¼ 0.94), the two-factor model fit the data much better than the single-factor model ( χ2/df ¼ 2.64, EMSEA ¼ 0.19, GFI ¼ 0.79, CFI ¼ 0.79, NNFI ¼ 0.69). The CFA results also showed that the measurement model for the individual-level variables (employee psychological capital and work engagement) were distinctive ( χ2/df ¼ 2.22, EMSEA ¼ 0.08, GFI ¼ 0.97, CFI ¼ 0.98, NNFI ¼ 0.96), and the two-factor model fit the data much better than the single-factor model ( χ2/df ¼ 12.5, EMSEA ¼ 0.19, GFI ¼ 0.83, CFI ¼ 0.84, NNFI ¼ 0.76). These results suggest that CMB was not a serious issue in this research.

Descriptive statistics Table I reports the means, standard deviations, and correlations for all the study variables. Employee psychological capital was positively correlated with employee work engagement (r ¼ 0.62, po0.01) and leader psychological capital was positively correlated with team collectivism (r ¼ 0.53, po0.01). These results provide initial support for our hypothesis. All correlations were below 0.70, indicating that the data did not have significant multicollinearity (Hair et al., 1995).

Analytical strategy We employed hierarchical linear modeling (HLM) (Bryk et al., 2004) to test our hypotheses since the data included a group-level variable (e.g. supervisor psychological capital and team collectivism) and individual-level variables (e.g. employee psychological capital and work engagement). Following Zhang et al.’s (2009) recommendation, we estimated all the parameters with the full maximum likelihood. Variables at Level 1 were centered with “group-mean centering and adding the group mean on Level 2” while those at Level 2 were grand-mean centered. First, we ran null models to test if there were significant between-group differences in work engagement. The result showed significant between-group variance in work engagement ( χ2 ¼ 85.44, df ¼ 43, po0.001), which indicated that 12 percent of the variance resided between workgroups. Similarly, we found significant between-group variance on employee psychological capital ( χ2 ¼ 104.38, df¼ 43, po0.001), which indicated that 17 percent of variance resided between workgroups. These procedures justify HLM as the appropriate analytical technique.

To test the proposed mediation, we followed the four-step approach suggested by Baron and Kenny (1986). According to their approach, mediation occurs if there is a significant relationship between the predictor and the outcome, a significant relationship between the predictor and the mediator, a significant relationship between the mediator and the outcome after controlling for the predictor, and the effect of the predictor on the outcome becomes significantly weaker or non-significant when the mediator is present.

Variables Mean SD 1 2

Individual level (nindividual ¼ 307) (1) Agea 3.23 0.82 (2) Employee psychological capital 3.57 0.42 0.01 (3) Work engagement 3.40 0.61 0.05 0.62**

Group level (nteam ¼ 44) (1) Team size 6.97 2.67 (2) Leader psychological capital 3.98 0.44 0.07 (3) Collectivism 3.92 0.42 −0.01 0.53** Notes: a1 ¼ under 32, 2 ¼ 32-45, 3 ¼ 45 or older. **po0.01; two-tailed tests

Table I. Means (M), standard deviations (SD), and correlation coefficients

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HLM results Table II presents the HLM results. H1 posits a positive relationship between leader psychological capital and employee work engagement. Model 2 of Table II shows that leader psychological capital is significantly and positively related to employee work engagement (γ ¼ 0.16, po0.05), which supports H1. H2 states that leader psychological capital positively influences employee work engagement through employee psychological capital. To test this mediation, four conditions should be met: leader psychological capital positively affects employee work engagement, leader psychological capital positively affects employee psychological capital, employee psychological capital positively affects work engagement after controlling for leader psychological capital, and the effect of leader psychological capital on employee work engagement becomes non-significant or weaker while controlling for employee psychological capital. The first and second conditions were met since leader psychological capital is positively related to employee work engagement (γ ¼ 0.16, po0.05, Model 2, Table II) and employee psychological capital (γ¼ 0.15, po0.05, Model 4, Table II). The third and four conditions were also met. As shown in the table, the effect of leader psychological capital on employee work engagement was not significant any more (γ ¼ 0.06, ns), but the influence of employee psychological capital on employee work engagement still remained significant (γ ¼ 0.91, po0.001). Therefore, H2 received support.

H3 states that team collectivism moderates the relationship between leader psychological capital and employee psychological capital. As shown in Model 5 of Table II, there was a significant interaction between leader psychological capital and team collectivism (γ ¼ −0.25, po0.05). Following the steps suggested by Aiken and West (1991), we further plotted the significant interacting effect in Figure 2. High team collectivism corresponds to the value of one standard deviation above the mean of high team collectivism and low team collectivism represents the value of one standard deviation below the mean of team collectivism. As shown in Figure 2, team collectivism moderated the relationship between leader psychological capital and employee psychological capital such that the relationship became stronger with lower team collectivism and weaker with higher team collectivism. Therefore, H3 was supported.

Discussion This study explored how leader psychological capital influenced employee work engagement via employee psychological capital. We found that leader psychological capital was positively related to employee work engagement, and that the relationship was

Work engagement Employee psychological

capital Models 1 2 3 4 5

Level 1/2 control variable Intercept 3.41*** 3.43*** 3.43*** 3.58*** 3.58*** Age 0.00 0.00 −0.06 −0.06 Team size −0.03 −0.03 −0.01 −0.01

Level 2 independent variable Leader psychological capital 0.16* 0.06 0.15* 1.10*

Mediator Employee psychological capital 0.91***

Cross-level interaction Leader psychological capita × Team collectivism −0.25* Notes: Nindividual ¼ 307, Nteam ¼ 44. γs are reported with robust standard errors. *po0.05; ***po0.001; two-tailed tests

Table II. Hierarchical linear modeling results

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mediated by employee psychological capital. We also found that the relationship between leader psychological capital and employee psychological capital was more pronounced among teams that were low in collectivism.

Theoretical implications Our research adds to the literature by showing that employee work engagement is an outcome of leader psychological capital. Previous research has mostly focused on leader psychological capital and financial outcomes (Avey, Reichard, Luthans and Mhatre, 2011). Our study integrates the motivational aspect of work engagement with the motivational propensity of psychological capital. Such a perspective has been encouraged in the extant literature (Bakker et al., 2008). Our findings parallel that of Calderón et al. (2013) where they found that supervisor support can help foster employees’ work engagement. This is one of the main contributions of the current study – casting leader psychological capital as an antecedent to employee work engagement.

In addition, we applied a COR model of positive leadership on employee engagement that is mediated by the employee psychological capital. This study enriches our understanding of leader psychological capital as a job resource for employee behaviors. Previous research has suggested that employee psychological capital fully mediates the relationship between supportive organizational climate and performance (Luthans et al., 2008). Comparatively, our findings highlight the role played by a leader as part of a supportive climate, with high-level psychological capital, in developing team member work engagement through employee psychological capital.

Last, results from this study extend research on psychological capital by specifically testing boundary conditions such as team collectivism. Although recent work has stressed the importance of positivity of leadership in employee performance and attitude, the psychological capital literature, in general, has paid relatively little attention to the underlying theoretical foundation and psychological mechanisms through which psychological capital supports employees. Indeed, although prior studies have suggested that the psychological capital of leaders may produce important outcomes (Walumbwa et al., 2011), potential boundary conditions and contextual issues have not yet been explored. As found in our study, team culture, specifically team collectivism, altered the strength of relationship between leader psychological capital and employee psychological capital.

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Figure 2. Team collectivism as a moderator between leader psychological capital and employee psychological capital

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Practical implications Our findings have some implications for managerial practice. As found in our study, employees tend to have high levels of psychological capital under the supervision of leaders who hold high levels of psychological capital and, consequently, display high work engagement. Thus organizations should encourage high levels of employee work engagement by paying attention to the psychological capital of both employees and their leaders. Previous research has shown that psychological capital could be developed through training interventions (Luthans et al., 2006, 2010), and organizations could implement PCI through a series of exercises specific to each of the four constructs to develop the overall psychological capital of leaders and employees. Our results suggest that both leader and employee psychological capital are important factors worthy of attention when organizations want their employees to be highly engaged at work.

Our finding that team collectivism is a moderator between leader and employee psychological capital indicates that organizations should consider the level of team collectivism when fostering employee psychological capital through leader psychological capital. For teams which are low in collectivism, organizations may need to put more effort into fostering leader psychological capital. In contrast, organizations may need not to put as much effort in developing leader psychological capital in teams with high collectivism because in such teams, leader psychological capital is less effective for creating employee psychological capital.

Limitations and future research directions Before concluding, the study limitations and needed future research should be noted. First, our study may contain common method variance because we measure employee psychological capital and work engagement from the same source. However, several steps were taken to address the potential limitations of CMB. First, we collected our data from two different research participants – team members and their immediate leaders, allowing us to reduce CMB (Podsakoff et al., 2003). Second, we also undertook CFA tests that provided evidence against the presence of CMB. Nonetheless, future research should strive to measure leader variables, team member mediators and employee outcomes (e.g. member psychological capital and work engagement) from different sources to rule out potential CMB.

As another limitation, our measure of leader-member relations focused only on positive outcomes of leader psychological capital, which is consistent with our focus on the leader psychological as a potential information resource for employees. Nonetheless, it is possible that leader psychological capital could be related to employee job burnout, the opposite of work engagement. Future research should consider the relationship of leader psychological capital with both positive and negative employee attitudes and behavior to better understand the importance of psychological capital.

A third limitation is that our study used a cross-sectional design which limits inferences regarding causality. Future research using experimental or time-lagged designs would provide more concrete evidence for the suggested causal sequence. Finally, we collected data mainly from one region of Mainland China. Because there are regional differences in culture across China (Kwon, 2012), we suggest future research collect data from different subcultures in order to cross-validate our findings. We also suggest collecting data from a wider range of industries.

Although some potential limitations were addressed methodologically, a number of avenues exist for future research on psychological capital, team value, and work engagement. First, more research is needed on how team climate shapes the way employees respond to leader positivity. Additional team climate variables, such as tradition and values, may play a critical role in the resource conservation process. For example, the impact of the leader’s positivity on employees may be influenced by past traditions and values in terms of motivating employees to exert more psychological capital.

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Second, while this research extends the understanding of moderators on the relationship between leader psychological capital and employee outcomes at work, future research should continue to investigate both moderators and mediators at multiple levels within and between teams and cultures to fully understand why and how leader positivity influences employee well-being.

Third, according to the Hobfoll’s (2002) COR theory, the relation between job resources and personal resources are reciprocal. Our results revealed that leader psychological capital as a critical job resource is positively related to employee psychological resources. It is also possible that employee psychological capital can in turn enhance leader psychological capital. Future research could conduct a cross-lagged panel study to investigate the cumulative resource gains and gain spirals in the reciprocal process.

Finally, previous research revealed that leaders not only directly influence employee resources and behaviors (Liu et al., 2010), but also indirectly moderate the relationship between employee resources and behaviors (De Cremer and Van Knippenberg, 2004; Shin and Zhou, 2007). Future research should also investigate the moderating effect of leader psychological capital on the relationship between employee psychological capital and work engagement.

In conclusion, this study provides evidence that employee psychological capital is not only related to their work engagement but also mediated the relationship between leader psychological capital and work engagement. The study also showed that team collectivism moderates the relationship between leader psychological capital and employee psychological capital. These findings have some important theoretical and practical implications.

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Corresponding author Yan Liu can be contacted at: [email protected]

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