Positive psychological capital: beyond human and social capital

or years, business academics and practitioners haveoperated in the belief that sustained competitiveadvantage could accrue from a variety of industry-level entry barriers, such as technological supremacy,patent protections, and government regulations. However,technological change and diffusion, rapid innovation, andderegulation have eroded these widely recognized barriers.In today’s environment, which requires flexibility, innova-tion, and speed-to-market, effectively developing andmanaging employees’ knowledge, experiences, skills, andexpertise—collectively defined as “human capital”—hasbecome a key success factor for sustained organizationalperformance. Traditionally, economic capital (both financial and tangi-ble assets such as plant and equipment) has received allthe attention. But enlightened managers today recognizethe importance not only of tangible assets, data, andphysical resources, but also of this intangible human capi-tal (sometimes called intellectual capital)—“human”referring to the people working at all levels of the organi-zation, and the economic term “capital” referring to theresources withdrawn from consumption that are investedfor future anticipated returns. Bill Gates has been knownto comment that the most important assets in his com-pany walk out the door every night. In other words, herecognizes that the collective knowledge, skills, and abili-ties of his employees represent a distinctive competencythat has created value and set Microsoft apart from itscompetitors.The value created when human capital is aligned withcorporate strategy and fully engaged in making the enter-prise effective has been researched extensively by Harter,Schmidt, and Hayes (2002) and others and found to havea significant positive impact on performance outcomes.Regardless of the recent downturn in the equity market,the past two decades have seen the market-to-book-valueratio of the S&P 500 go from about 1:1 to around 5:1.Oxman (2002) and others have attributed this increase tothe development of new models of company value that