This study explores the intersection of target difficulty, psychological capital (PsyCap), and work engagement, contributing to management accounting research with a psychological lens. Psychological capital, comprising efficacy, optimism, hope, and resiliency, is identified as a crucial moderator in the relationship between challenging work targets and employee engagement levels. Grounded in goal-setting theory, the research hypothesizes and demonstrates that employees with higher PsyCap experience increased engagement when facing challenging targets, a finding supported by data from 1,404 employees of a Japanese firm.
The study also examines the role of long-term employment by analyzing two groups of employees based on tenure. The results show that for employees with shorter tenure, the interaction between target difficulty and PsyCap has a stronger positive association with work engagement. For long-tenured employees, however, PsyCap remains positively associated with work engagement, but the interaction with target difficulty is less pronounced. This indicates that the effects of target difficulty and PsyCap on engagement may vary depending on an employee’s organizational experience.
By integrating psychological insights into management accounting, this research provides practical implications for managers. Considering target difficulty with employees’ PsyCap and investing in PsyCap development can enhance engagement and performance. Furthermore, recognizing tenure-related variations in the dynamics between target difficulty and PsyCap can help organizations design more effective motivational strategies tailored to their workforce.
This paper is forthcoming at the European Accoutnign Review, and can be found here:
Full article: Target Difficulty, Psychological Capital, and Work Engagement
