Organizational Psychology

Public sector organizations are government-owned and government-funded entities that are primarily focused on serving the interests of the general public and there is no profit-maximizing focus as well as little potential for income generation. Today, employee job performance is a major priority for all organizations seeking to realize its objectives and it is widely regarded as the most effective indicator of an organization's strength and commitment to achieving its objectives. Purpose. The objective of this study was to investigate the effects of psychological capital on job performance in the Ethiopian public sector, with employee engagement as a mediating factor. Methodology. Using a quantitative approach, data were collected through surveys from 342 employees across four zonal-level public sector organizations in Ethiopia. Structural Equation Modeling (SEM) was employed to test the hypotheses. Findings. Regression analysis results indicate that psychological capital (PsyCap) has positive effect on both employee engagement and job performance significantly. Employee engagement also positively affects job performance and partially mediates the relationship between PsyCap and job performance. These findings will contribute to the literature by demonstrating the importance of PsyCap and employee engagement in enhancing job performance in public sector organizations in emerging economies. Value of results. The study provides practical implications for public sector managers and policymakers in fostering employee psychological capital and engagement to improve organizational performance.