Target Difficulty, Psychological Capital, and Work Engagement

Abstract

This study investigates whether psychological capital (PsyCap) moderates the relationship between target difficulty and work engagement. PsyCap is an individual’s positive state of psychological development characterized by efficacy, optimism, hope, and resiliency. Based on goal setting theory, we expect that there is a positive relationship between the difficulty of employees’ targets and their work engagement. In this relationship, we propose a hypothesis that explores whether PsyCap as a core construct influences the relationship between target difficulty and work engagement. Data from 1,404 employees of a listed Japanese firm were analyzed to test the hypothesis. The results show that after controlling for economic uncertainty, past performance, and other factors (i.e., attributions of employees and branches), there is a positive relationship between the difficulty of employees’ targets and work engagement. Further, we find evidence that PsyCap strengthens the relationship between target difficulty and work engagement. This study contributes to management accounting research, especially from a psychological perspective, by providing new evidence for the moderating effect of PsyCap on the relationship between target difficulty and work engagement.