When employees feel envy: The role of psychological capital

Researchers have demonstrated an increasing awareness of two factors that are vital to the health of an organization—employee emotions and the relationship quality between an organization’s leader and its members. What remains unclear, however, is the following: When employees perceive the relationship quality to be low, does this impact employees’ emotional responses and, if so, what mechanism underlies such impact. This study aims to shed light on this by exploring the relationships between LMXSC, malicious and benign envy, and psychological capital (PsyCap). Results of a scenario-based experiment with U.S. hoteliers found that employees who perceive a less intimate relationship with a leader than that experienced by their peers (LMXSC) may be subject to malicious envy and benign envy. Results further suggest PsyCap plays an important role as a psychological mechanism that can alleviate hostile emotions and induce constructive ones. Theoretical and practical implications are discussed based on the study findings. •The employees subjectively perceive the low LMX through the social comparison.•The hotel employees are psychologically influenced as a result of observing managers’ favoritism towards in-group employees.•Both malicious and benign envy is likely to be experienced in the LMXSC context.•Psychological capital serves as a mechanism to alleviate malicious envy and strengthen benign envy caused by low LMXSC.