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Research has consistently demonstrated that psychological capital (PsyCap) is an important predictor of various employee outcomes. Despite this, there is a paucity of knowledge regarding antecedents of PsyCap and the boundary conditions that influence PsyCap relationships. This study aimed to address these gaps by investigating how ethical leadership (EL) influences employee PsyCap, and in turn, predicts a range of desirable and undesirable employee attitudes. Furthermore, the study examined the moderating role of length of the leader-follower relationship (LLR) and organisational identification in these relationships in a novel moderated-mediation model.

Data were collected from 269 full-time employees in Australia via an online survey across two time-points.

The results show that PsyCap mediates the relationship between EL and employee attitudes. The results also indicate that LLR moderates these relationships, whereby these relationships are strengthened as LLR increases.

This study responds to calls for further investigation of antecedent and outcome variables related to PsyCap, as well as moderators of the relationships between PsyCap and antecedent and outcome variables. The findings also extend the application of social exchange theory to the context of EL and PsyCap.