2.1 Organizational psychological capital as an intangible resource in SMEs
In order to survive times of crises, companies can make use of their unique resources (Sirmon & Hitt,
2003). According to Barney (
1991) and the RBV, competitive advantages and increased performance may result by leveraging a company’s unique resources (Crook et al.,
2008). The RBV favors big publicly traded companies in times of crisis, as their access to financial and human resources is substantially better. This is supported by empirical evidence that especially SMEs as well as younger firms suffer throughout crisis, as they are more vulnerable to shocks and the following long-term effects (e.g. Cucculelli & Peruzzi,
2020). In line with the concept of liability of smallness (Alrich & Auster,
1986; Fackler et al.,
2013), SMEs usually face constraints accessing financial capital (Karlsson,
2020) which is especially critical to situations like complete shutdowns as experienced throughout the COVID-19 pandemic. Many SMEs rely on their regular cash flow to finance their operations, which means that they depend on their revenues to survive (Runyan,
2006).
However, certain researchers stress that in our modern world, traditional resources including financial, physical, and technological capital may no longer be sufficient to provide companies with a competitive edge and that rather intangible resources like human capital (Crook et al.,
2008), social capital (Arregle et al.,
2007), and psychological capital (PsyCap) (Luthans,
2002a,
b) entail the potential to increase or strengthen performance of companies (Luthans & Youssef,
2004). The latter, although initially defined as an individual construct, is lately receiving attention at higher levels of analysis as there is growing evidence, that PsyCap also exists in collective structures (Broad & Luthans,
2017; Clapp-Smith et al.,
2009; Dawkins et al.,
2015,
2018). PsyCap on a company’s level (i.e., OPC) was introduced by McKenny et al. (
2013).
Both constructs, PsyCap and OPC, are rooted in POB research (Luthans,
2002a; Wright,
2003) and thus related to positive psychology (Gable & Haidt,
2005; Luthans,
2002b). They also clearly distinguish themselves from other constructs such as emotions or the Big Five personality dimensions (Barrick & Mount,
1991). The Big Five personality traits are considered to be characteristics which are very stable in their nature, so that they tend to change rather little over the course of a lifetime and are therefore considered to be personality traits (Luthans et al.,
2007). PsyCap and OPC, however, are psychological states, which are subject to change. POB focuses on positive psychological resources and abilities within humans, which can be improved and managed, ultimately influencing performance (Luthans,
2002a). By considering a cost–benefit view POB differs from positive psychology (Wright,
2003), which only focuses on the positive psychological abilities and resources within individuals (Gable & Haidt,
2005) not taking potential gains into consideration. PsyCap was introduced to the management literature in the early 2000s (Luthans,
2002a,
b) with a broad body of studies published on the topic (for a comprehensive overview, see Luthans & Youssef-Morgan,
2017).
Lately researches consider that PsyCap exists within collective structures (e.g., group, collective, and organizational level) (Broad & Luthans,
2017; Clapp-Smith et al.,
2009; Dawkins et al.,
2015,
2018; McKenny et al.,
2013; Memili et al.,
2013). As OPC does not perform perfectly isomorphic (Kozlowski & Klein,
2000) to PsyCap, which means that the sum of the individual PsyCap values of a group does not necessarily reflect the organizational level of the construct, adjustments for the collective level are required (Luthans & Youssef-Morgan,
2017). In their article McKenny et al. (
2013) conceptualize OPC using the referent-shift model according to Chan (
1998). To provide scientific rigor, they validate the OPC construct according to the framework for validating multilevel constructs by Chen et al. (
2004). In this regard we follow the approach of McKenny et al. (
2013) and base our definition on individual PsyCap by Luthans et al. (
2007). We define OPC “ […] as the organization’s level of positive psychological resources: hope, optimism, resilience, and confidence [i.e. efficacy]” (McKenny et al.,
2013, S. 157) and thus consider it to reflect the organization’s positive psychological state.
We define the four dimensions on the company level as follows: The idea of organizational hope draws directly from the concept of hope by Snyder et al. (
1991) and embodies the positive state of motivation within an organization. It is expressed in a common goal-oriented dynamic with a shared belief that the objectives can be achieved in different ways (Luthans et al.,
2007). Thus, organizations showing a high level of organizational hope are able to develop and share several company-related goals, which contain both, a long-term and a short-term horizon, and share the common perception that these objectives can be achieved in a multitude of ways (Hmieleski et al.,
2015; McKenny et al.,
2013; Snyder et al.,
1996). The concept of organizational efficacy is based on the work of Bandura (
1997,
2012). It is expressed through a shared trust of the company in its own abilities and cognitive resources, which are necessary to perform certain tasks, and the belief that these can be mobilized (Luthans & Youssef,
2004). This positive assessment of the companies abilities is reflected in a shared confidence in the capabilities of the organization (Stajkovic & Luthans,
1998). Consequently organizations that show a high level of organizational efficacy rely strongly on their capabilities and thus are able to pursue more ambitious goals than companies low in this psychological resource (Bandura,
2012; McKenny et al.,
2013). Rooted in clinical psychology (Masten,
2001; Masten & Reed,
2002), the concept of organizational resilience characterizes the psychological capability that enables the organization to overcome setbacks and crises jointly and to recover, thereby improving its performance over the initial level (Luthans,
2002b). Thus, companies high in organizational resilience are better able to “bounce back” from adverse developments as they tolerate those developments and thus constructively deal with such situations by aiming to solve the situation (Luthans et al.,
2006; McKenny et al.,
2013). In contrast the psychological resource of organizational optimism represents the organizations shared positive reasoning that assigns positive developments to lasting and persistent triggers and negative events to local, transient, and situation-specific occurrences (Luthans & Youssef,
2004). Thus companies with a high level of organizational optimism use positive reasoning when facing obstacles, expecting positive outcomes (McKenny et al.,
2013; Scheier et al.,
2001). Those four positive organizational resources, when combined represent the higher-order construct of OPC (Luthans et al.,
2015).
However, little is known on how psychological resources on an organizational level (e.g., collective structures) influence the SMEs ability to deal with the quickly changing reality during crisis and how those companies can use positive psychological resources to survive or even thrive in adverse circumstances. First empirical evidence by McKenny et al. (
2013) shows that OPC impacts the performance of large and publicly-traded companies positively. They further argue that the influence of OPC might be even higher in SMEs due to the stronger and more direct influence of each employee working within the company. Thus, further research which considers OPC as an intangible resource is encouraged. Especially in difficult times, it might provide SMEs with a competitive edge increasing their chances of survival (Memili et al.,
2013; Sirmon & Hitt,
2003). The potential of OPC becomes even more evident, considering the malleable nature of PsyCap and presumably OPC. As previously mentioned PsyCap can be regarded as a state-like resource, which can be altered (Luthans et al.,
2007). Studies have already shown that the PsyCap can change over time (Avey et al.,
2010a; Peterson et al.,
2011) and that it can be increased through short training interventions (Dello Russo & Stoykova,
2015). This changeability of PsyCap has an immense potential for entrepreneurship and management research, given that a positive influence is exerted on various desirable outcomes such as employee’s performance (Luthans et al.,
2010), their behavior (Avey et al.,
2011), and attitudes (Larson & Luthans,
2006).
Complementary to McKenny et al. (
2013), Pearson and Clair already proposed a psychological view on crisis management in 1998. They argue that individuals and groups play a crucial role in organizational crisis as their coping behaviors (i.e., cognitive, behavioral, and emotional responses) shape the direction of the crisis within the company. Even though crises are considered as negative events, James et al. (
2011) suggest that a positive psychological view on crises can enhance the understanding of reactions to crises in organizations. In this context research already shows that positive cognitive responses help to maintain the functioning of an organization in such critical times (Dewald & Bowen,
2010). Besides that, Penrose (
2000) shows that the perception of opportunities and thus a positive view on the situation improve the organizations dealing with a crisis. We therefore follow the call to include positive psychology in crisis research by focusing on OPC. To the best of our knowledge, no study has yet examined the possible influence of OPC on a company’s behavior during crisis. First empirical evidence on a possible influence exists for the individual PsyCap of leaders. Milosevic et al. (
2017) investigate how Winston Churchill in his role as a country leader leveraged his PsyCap during World War II by analyzing transcripts of his speeches during that time. Results show that leveraging on PsyCap during crisis exhibits the opportunity to activate behaviors to overcome adverse situations.
2.2 Organizational citizenship behavior, solidarity, cooperation, and creative innovation during crises
Besides the role of psychological resources, companies take actions which help them to thrive during crises. Many companies and individuals offered their support to assist those affected most by the situation to overcome those troublesome times. This assistance is usually called prosocial behavior (Jonas,
2012). For example, after hurricane Katrina, which hit the USA in 2005, Rodríguez et al. (
2006) found that prosocial behavior was the dominant response for the broad majority. Apart from the psychological literature, a similar construct describing this behavior has been established in the management literature, namely, organizational citizenship behavior (OCB) (Organ,
2018). OCB reflects a set of positive behaviors in the workplace which are not part of the work tasks of the respective employees but rather are taken voluntarily (Podsakoff et al.,
1990). Another kind of prosocial behavior that was witnessed in the early research on the effects of the COVID-19 pandemic can be described as solidarity. Companies started to shift their manufacturing focus on products to help contain the virus, sometimes even donation parts of their production (He & Harris,
2020). Evidence focusing on SMEs shows that they widely engage in disaster relief for their community (Bin & Edwards,
2009), proofing that besides governments and globally operation cooperation, also entrepreneurs and SMEs become active (Markman et al.,
2019) and take responsibility as they understand solidarity actions as part of their societal mission and also like to return something to the community (Acs & Phillips,
2002). Furthermore, as shown in his very early research on the impact of the COVID-19 pandemic on young and relatively small firms, Kuckertz et al. (
2020) find that the companies widely activated their networks to receive support from external stakeholders. In line with this results, Doern et al. (
2019) show that the activation of the external network helps SME’s to recover from crisis. Furthermore, they show that a positive perspective of the respective firms also facilitated their recovery, also in the respect that they positively perceived the support of external sources.
Besides the shown behaviors of SMEs, further research suggests that in crisis context those companies react in a more creative way to the emerging opportunities than larger companies (Williams et al.,
2017) which can ultimately help SMEs to survive the adverse time (Battisti & Deakins,
2017). These opportunities arise as a result of changing conditions, which becomes evident by the following example in the COVID-19 crisis: People’s consumption habits and needs shift during the pandemic, which lead to an increase in online shopping (Kottika et al.,
2020). For stationary retailers and restaurants, the lockdowns presented a major challenge. These companies could not offer and sell their products as usual. It becomes evident that especially SMEs faced great challenges in this regard, as they are often small, independent stationary stores or restaurants that do not have online stores or do not offer a delivery service (Ibn-Mohammed et al.,
2021). A large part of SMEs reacted to the governmental restrictions with creative changes in distribution, products, and other areas by implementing online accessibility of their products, delivery solutions, or started to produce products whereas demand increase due to the pandemic (He & Harris,
2020; Welter et al.,
2020). Thus the COVID-19 circumstances offered a wide range of opportunities for companies to react in a flexible and creative way by using their bricolage (Kuckertz et al.,
2020). This exploitation of opportunities by innovating has been proven to help SMEs survive in crisis circumstances (Mayr et al.,
2017).
Creativity is broadly defined as the thinking and generating of novel ideas by individuals or groups, whereas innovation represents the successful implementation of such an idea (Amabile,
1988; Heunks,
1998; West & Farr,
1996). Thus creativity forms the basis for innovation in companies and both are part of the same progress (Amabile & Pratt,
2016). Since the creativity and innovation process during the COVID-19 pandemic was likely very rapid and integrative in the companies, and as in a general sense both concepts are intertwined in the process (Amabile & Pratt,
2016), it would be difficult to clearly separate the two constructs in our study; thus we consequently use the term creative innovation in the following.
In the RBV it is commonly accepted that the innovation ability of companies strongly depends on their resource base and their ability to make use of them (Kusunoki et al.,
1998). Hitt et al. (
2001) stress that intangible resources in companies will help to establish a stronger competitive advantage than other resources, as those are difficult to copy for the competitors. Consequently, we theorize that the OPC of companies, which is considered to provide especially SMEs with an intangible resource that can lead to a competitive advantage (McKenny et al.,
2013; Memili et al.,
2013), will help them to cope with the COVID-19 crisis. In the following, we hypothesize why OPC increases the OCB, solidarity, and cooperation of SMEs during times of crisis, ultimately leading to a higher creative innovation, thus increasing performance during a crisis.