From startup to success: The power of PsyCap for new venture growth

Abstract

Psychological Capital (PsyCap, the HERO within) has emerged as a crucial construct in positive psychology and organizational behavior, facilitating positive experiences of change and agentic action. While PsyCap’s potential to empower individuals in coping with dynamic changes is recognized, its application in the entrepreneurial context remains underexplored. Limited but promising insights suggest that PsyCap positively impacts new venture formation and growth, with entrepreneurs reporting lower stress levels and a greater likelihood of persevering. In this way, PsyCap can be a key ingredient for the long-term sustainability of new ventures, aiding founders in overcoming growth-related challenges. However, the specific role of PsyCap in enabling new ventures to persevere through their formative years remains a gap in the literature. This article addresses this gap by examining how PsyCap empowers founders and founding teams to navigate five key challenges in the startup years of a new venture: securing resources, developing capabilities, building teams, managing risk, and navigating disruptions. By elucidating how PsyCap components—efficacy, hope, resilience, and optimism—enable founders and teams to overcome these challenges, this article not only offers avenues for future research but also underscores the practical utility of PsyCap for entrepreneurial success.