Int. Journal of Business Science and Applied Management, Volume 18, Issue 2, 2023
The Impact of Psychological Capital and Subjective Well-being
on the Relationship of Job Insecurity and Job Performance
Jamil Anwar
Department of Management Sciences
COMSATS University Islamabad, Abbottabad Campus
Tel: +923332122634
Maliha Sarfraz
Department of Management Sciences
COMSATS University Islamabad, Abbottabad Campus
Tel: +923320568556
Psychological Capital (PsyCap) as a personal resource is a central component of the positive behaviour of an
organization that motivates employees for productivity and performance. The components of PsyCap (self-
efficacy, hope resilience, and optimism) form the coping mechanism in reducing the adverse impact of Job
Insecurity (JI) on Subjective Wellbeing (SWB) of the employees and consequently on Job Performance (JP).
The purpose of this study is to investigate the impact of JI on JP through the lens of employees' SWB as
mediator and PsyCap as moderator from the perspective of Transactional Stress and Coping theory.
By utilizing a simple random sampling technique 357 responses were collected through a pre-tested
questionnaire from employees in the food and beverages industry of Pakistan. The SEM technique through
Smart-PLS was used for testing the hypothesis. The results show that JI has a negative impact on SWB and JP
while SWB mediates the relationship of JI and JP. Further, three components of PsyCap i.e., self-efficacy, hope,
and resilience, moderate the JI-SWB-JP relationship while the results for optimism are not consistent with our
hypothesis. The findings can help the managers to devise policies where JI can be reduced while SWB and JP
can be improved through the development of the PsyCap of the employees. Special attention is needed for
inculcating an optimistic approach to improve performance.
Keywords: job insecurity, subjective well-being, job performance, psychological capital
Int. Journal of Business Science and Applied Management /
Rapid changes in technology, volatile economic and political situations, and intense competition have
forced organizations to become more resilient and proactive. The internal and external political issues have led
Pakistan to chronic instability. The displacement of the internal population and the arrival of immigrants from a
war-torn neighboring country have created a huge burden on the job market (Zofeen Ebrahim, 2023), which has
resulted in job insecurity. According to the Pakistan Economic Survey 2021-22, the large number of refugees,
the persistent effects of Covid-19, the Russian-Ukraine conflicts in 2022, political turmoil and the devastating
floods in 2022 have all resulted in increased food and energy prices. Due to energy-fuelled inflation many
companies in Pakistan have closed their operations while others are expected to follow the same trend (Shahram
Haq, 2022). According to a report issued by the Planning Commission of Pakistan in 2022 the food and
beverage sector is the most affected because the food and livestock sectors suffered 3.7 billion dollars’ worth of
damage in the devastating floods that hit Pakistan between June and August 2022. To cope with the losses
incurred by energy-fuelled inflation and floods, many companies have started laying off their employees.
The most noticeable effect of this development is increased workforce job insecurity. JI, which implies
stress and anxiety about being laid off, is deemed to be a stressor that prevents employees' subjective
development (Hu et al., 2018). Researchers argue that the psycho-economic (psychological and economic)
consequences (e.g., life satisfaction, job performance) resulting from JI during any market uncertainty or
pandemic tend to be neglected and result in detrimental psychological or mental health consequences (Ornell et
al., 2020; Abbas et al., 2021).
Perceiving extreme employment stress brings about numerous outcomes, ranging from well-being to
different job-related behaviours and attitudes (De Cuyper et al., 2020). Job performance is often linked as an
outcome of JI, as it explains the degree to which each employee contributes to achieving the goals of the
organization (Desta et al., 2022), which is the main element that determines the overall performance of the
organization performance and each employee’s career success (Vuuren et al., 2020).
In fact, JI represents a critical employment risk element and also a core employment stressor that
negatively affects well-being both at the personal and organizational level (Darvishmotevali and Ali, 2020). JI is
constantly shown to damage both employees’ well-being (SWB) and their work behaviours i.e., job performance
(Saeed et al., 2023), while SWB leads towards improved organizational productivity, employee engagement,
and trust (Kundi et al., 2021). The study of Llosa et al, 2018, also uncovered the adverse effects of job insecurity
on their well-being. Studies demonstrated the deleterious impacts of JI on work outcomes: it triggers
absenteeism, anxiety, poor work performance, economic deprivation (Abbas et al., 2021; Darvishmotevali and
Ali, 2020; Etehadi and Karatepe, 2019; Maliha et al., 2023; Shin and Hur 2019).
Given that JI is a critical risk factor that persuades employees to engage in harmful behaviours through
negative psychological responses (Darvishmotevali and Ali, 2020), this study sought to empirically investigate
the mediating mechanism linking job insecurity to job performance through subjective well-being, an area that
requires academicians and behavioural researchers' attention (Ricjter and Naswall, 2019; Darvishmotevali and
Ali, 2020). Similarly, Jung et al., (2021) proposed that further studies need to identify coping in reducing the
negative influence of JI on the behaviours and actions of employees. Therefore, we believe that it is imperative
to understand the mechanism by which JI affects employees' JP through decreasing their work-related well-
being. Therefore, to address this gap, this study uses transactional stress theory to investigate how JI affects
employees' JP through decreasing their SWB. Additionally, the present study concurrently attempts to answer
the question: In what way can the detrimental impacts of JI be reduced?
Studies of occupational stress demonstrate that work-related stress and anxiety hinges to a great extent on
the personality and behaviours of individuals. Research identifies personal resources as a means of helping
individuals to disable the harmful effects of stressful situations (Bakker et al., 2021). A number of studies have
examined the personal characteristics as a moderator for mitigating the deleterious impacts of JI on employees'
well-being. For example, Shin and Hur (2021) focused on help and prosocial motivation as moderators to
overcome the negative impact of JI on work engagement and JP. Another study of Hu et al. (2018) examined
work centrality as a moderator to reduce the negative effect of JI on SWB. However, the psychological
mechanisms relating JI and SWB to its behavioural consequences (e.g., JP) demands attention. Consequently,
we suggest investigating the moderating role of PsyCap, considering its components to mitigate the negative
impact of JI on the SWB of employees and consequently their JP. PsyCap, as a personal resource, is a central
component of the positive behaviour of an organization that motivates employees to be productive and
contribute towards organizational goals (Kalyar et al., 2021). According to the transactional stress and coping
theory (TST), the components of PsyCap (self-efficacy, hope resilience, and optimism) form the coping
mechanism to reduce the adverse impact of JI on the SWB of the employees and consequently on JP.
Therefore, this research contributes to the literature in several ways. First, drawing upon Transactional
stress and coping theory, the study examines the role of hope, resilience, optimism, and self-efficacy as a coping
strategy against the deleterious effects of JI on employees' outcomes. This will enhance the understanding of
whether PsyCap mitigate the deleterious effects of a severe economic stressor i.e., job insecurity. Second, the
Jamil Anwar and Maliha Sarfraz
context of the research i.e., the culture and industry (food and beverages), enriches the literature. Third, this
study provides insights to manager to train their employees in ways that makes their personal resources strong
and capable of mitigating the adverse impacts of uncertainty in the workplace. Finally, most of the studies were
conducted in developed countries. The present research was conducted in a developing country during times of
political and economic instability. Because of the inadequacies in employment protection laws and due to the
poor economic conditions, employees in developing countries are more likely to suffer stress regarding job
insecurity in turbulent times in comparison to the employees in developed countries with strict employment
protection laws (Abbas et al., 2021). The findings of the Global Consumer Confidence Index in Pakistan, 2019,
revealed that 83% of Pakistanis experienced JI and were extremely stressed about the inflation, unemployment,
and inadequate economic situation in the country. Hence, the present study’s sample provides a distinctive
context as workers in the developing countries with weak socio-economic growth and high unemployment are
more sensitive towards JI.
The next section presents the theoretical background and develops the research hypotheses. We then
present the results of the hypothesis testing along with a discussion. Lastly, we close the paper with a
conclusion, theoretical contributions, and managerial implications.
Transaction stress and coping theory (Lazarus and Folkman, 1984) is adopted as an overarching theory to
drive the study along with two other supporting theories: Job demand resource (JD-R) theory (Demerouti et al.,
2001) and Conservation of resource (COR) theory (Hobfoll, 1989).
2.1 Transaction Stress Theory
The theories of stress have experienced various modifications from their inception. The Transactional
stress theory, as clarified and advanced by Lazarus (1966, 1993, 1999, 2001, 2007; Lazarus and Folkman,
1984), originally developed from the historical conceptualization of stress and grew as a substitute meta-
theoretical process system from previous behavioural premises of stress as an incitement or reaction (Dillard,
2019). The transactional stress theory (TST) of Lazarus and Folkman (1984) claims that stress arises from the
cognitive judgments of the meaning of a situation and the individual’s ability to cope with the situation’s
demands. TST theorized the construct of JI as a stressor that affects employees' work behaviours and their
personal well-being (Chirumbolo and Arien, 2005; Sverke and Hellgren, 2002).
The transactional model of stress and coping developed by Lazarus and Folkman (1984) defined coping as
a phenomenon that involves both cognitive and behavioural responses that an individual uses to manage the
internal or external stressors perceived to exceed their personal resources (Echemendia et al., 2019). Mostly, the
cognitive assessment for moderating stress is affected through the individual’s personality traits, the
circumstances of the situation, beliefs, and personal resources.
2.2 Job Demand Resource Theory
JD-R is a work stress model, which depicts the dynamic interaction among different job demands and
personal resources that impact the employees' well-being and performance because of those interactions (Bakker
and Demerouti 2007; Kwon and Kim 2020). In JR-D theory, demands such as JI are assumed to fuel a health
diminishing procedure within which the cognitive and physiological resources of workers are depleted (Pap et
al., 2020).
2.3 Conservation of Resource Theory
The COR theory developed by Hobofall (1989) has emerged based on psychological theories of stress and
motivation. According to COR theory personal resources (e.g., self-efficacy, intrinsic motivation etc.) act as a
buffer against the negative effects of stressors. The theory also proclaims that individuals who can retrieve and
can properly use their personal resources can better deal with stress regarding insecure jobs. Accordingly,
psychological capital refers to the personal resource that enables an individual to use available resources and
capabilities to manage stressful circumstances (Luthans and Youssef-Morgan, 2017; Carmona-Halty et al.,
2019). The construct of psychological capital is found to be largely related to boosting the individual's mental
health, job performance and involvement as well as psychological well-being (Probst et al., 2017; Setar et al.,
2015; Mensah and Amponsah-Tawiah, 2016).
Based on the above discussed theories the constructs- job insecurity, subjective well-being, job
performance and psychological capital (self-efficacy, hope, resilience, and optimism) of our research are
explained in detail in the subsequent sections.
Int. Journal of Business Science and Applied Management /
3.1 Job Insecurity and Job Performance
Job insecurity (JI) indicates an employee’s stress and anxiety concerning the continuity of the existing job.
It involves experiencing an uncertain state regarding either the discontinuity or the loss of jobs (Sverke &
Hellgren, 2002; Wilson et al., 2020). Employees’ wellbeing and job performance deteriorate due to the
unexpected changes at the workplace or an abrupt swing from a feeling of security to insecurity (Bohle et al.,
2018). Akgunduz and Eryilmaz (2018) defined JI from two perspectives: cognitive and affective. Cognitive JI
is related to an understanding about losing the position or the perks associated with the job in the near future
while the affective view is associated with emotional stress and worries about these plausible deficits. Both
cognitive and affective insecurities negatively affect the performance of the whole organization (Jiang and
Lavaysse, 2018; Maliha et al., 2023).
JD-R theory reflects JI as a job demand which causes work strains and negatively impacts JP (Shin and
Hur, 2020). Being a conspicuous workplace stressor, JI commonly has an adverse impact on staffs work
behaviours (Huang and Ashford, 2018). Research shows that there is a negative association between JI and JP.
Employees who suffer stress are unable to assign appropriate drive to their responsibilities in the workplace
leading to reduced job performance (Qian et al., 2019). For instance, the study by VO-Thanh et al. (2020)
showed the negative effect of JI on hotel employees' job performance. Vuuren et al. (2020) tested the
association between JI and JP across different employment groups and the results revealed that the negative
association between JI and JP is stronger among contractual workers. Likewise, the meta-analysis and review by
Cheng and Chan (2008) and also Shoss (2017), correspondingly, strengthened the negative association between
JI and JP (Bhole et al., 2018). Based on the above discussion we propose the following hypothesis:
H1: The impact of Job Insecurity on Job Performance is negative.
3.2 Job Insecurity and Subjective Well-being
Subjective Well-being (SWB) signifies an individuals overall affective assessment of the quality of their
life and is mostly distinguished through the satisfaction with life or overall happiness (Diener et al., 2009).
According to JD-R and Transactional stress theory (TST), people face a decrease in well-being when their
resources are exposed to threatening circumstances as they are unable to devote their resources to coping with
uncertain situations (Darvishmotevali and Ali, 2020). According to TST theory, secure employment enables
individuals to attain additional forms of resources such as shelter, personal resources, and the successful
adaptation to the surroundings (That et al., 2020). JI represents a decline in resources, which in turn lowers their
well-being (Harr et al., 2020).
Prior studies show a negative relationship of JI with SWB. For example, the Giunchi et al. (2019) study
results revealed that French workers perceive JI represents a threat and hindrance towards attaining a balanced
well-being at both the workplace and in life. Based on a sample of 500 Chinese employees, the research of Hu et
al. (2018) indicated that JI is negatively related to employees' SWB. Silla et al. (2009) tested the hypothesis
with a sample of 639 Belgian employees from multiple organizations and the findings indicated that JI is related
to poor well-being. Thus, we propose that:
H2: Job Insecurity negatively impacts Subjective Well-being.
3.3 Subjective Well-being and Job Performance
Pandey (2019) posits that JP is influenced by the different nature of stressors, which could be physical,
affective and cognitive. SWB influences JP in three different ways. Firstly, as a positive note, when the mind is
in a relaxed mode having more positive thoughts, the cognitive abilities of employees help with improved
creativeness and an effective problem-solving state (Bryson et al., 2017). Secondly, higher SWB inculcates an
optimistic attitude towards the job, which results in more supportive behaviour and a willingness to take more
responsibilities (Salgado et al., 2019). Thirdly, a higher level of SWB means good health, greater energy, and
more effort put into the job (Diener and Chan, 2011) with connected emotional responses (Salgado et al., 2019).
Despite early suspicions regarding the directionality of the association between SWB and JI previous
research has further confirmed the link between SWB and JP by isolating the cofounding variables: exhaustion,
anxiety and job satisfaction (Wright et al., 2007; Wright and Huang, 2012; Darvishmotevali et al., 2017). The
findings of four-year follow-up study of Salgado et al. (2019) regarding SWB showed SWB predicts JP, as an
increase in employees’ SWB increases their work performance. The meta-analytic examination conducted by
Moscoso and Salgado (2021) found that SWB positively correlates with JP. Harter et al. (2002) reported a
positive association between SWB and overall firm level productivity. Harter et al. (2010) also showed similar
results, finding that an increase in SWB boosts the business unit profitability. Thus, we propose that:
H3: Subjective Well-being is positively related to Job Performance.
Jamil Anwar and Maliha Sarfraz
3.4 Subjective Well-being as Mediator between Job Insecurity and Job Performance
According to JD-R theory JI is considered as a job demand/stress and JI refers to employees’ concern about
the future of their job and threat of losing their job (Musumeci and Ghislieri, 2020). Being a crucial work
stressor, JI triggers adverse social, psychological and physical outcomes, not only at the individual level but also
at the organizational level (Blom et al., 2018). Russo and Terraneo (2020) showed that JI negatively impacts the
well-being (psychological stress) of permanent as well as contractual employees. TST assumes that stress arises
from an unsuccessful interaction between individuals and their external or internal environment. TST theory
involves two cognitive evaluation procedures, primary and secondary evaluation (Li et al., 2018). In primary
assessment the insecure employees recognize the risk of losing their job and also the benefits associated with the
job although the occurrence of this loss is not certain. The second assessment involves the evaluation of
resources and also the strategies that will be applied for coping. Uncertainty regarding the future continuity of
employment makes it difficult for an employee to identify and initiate suitable managing strategies (Li et al.,
Certainly, numerous studies have shown the negative consequences of JI for both organizations and
employees by way of depressing physical and psychological well-being, reduced work engagement,
commitment and performance (e.g. De Witte et al., 2016; Shoss, 2017; Chirumbolo et al., 2020). Prior research
has well documented the negative consequences for individuals and organizations, but the effects of SWB on the
employees' behavioural outcome and specifically the mediating role of Subjective well-being in the relationship
between JI and the employees' behavioural outcome (i.e., job performance) needs more attention (Richter and
Naswall, 2019; Darvishmotevali and Ali. 2020). In our study we aim to clarify the association between JI and JP
as a consequence of diminishing SWB as a result of psychological stress, which is a consequence of workstation
stressors. Based on the above discussion and the findings of empirical studies we propose the following
H4: Subjective Well-being will mediate the relationship between Job Insecurity and Job Performance.
3.5 Psychological Capital as Moderator
JI is a critical work stressor (Musumeci & Ghislieri, 2020) and is characterized by uncertainty regarding
future, since the uncertain situation is difficult to predict with fixed strategies and resources, and determining
effective coping mechanisms is difficult (Darveishmotevali and Ali, 2020). Niesen et al. (2018) call for more
research concerning the deleterious psychological impacts of JI and the buffering role of distinct constructs for
averting, controlling and minimizing the deleterious effects of JI. Meanwhile, it seems impracticable for the
employees to perform their assigned tasks in the absence of any stress over their job conditions. Jung et al.
(2021) also suggested investigating the influence of JI on the behaviours and actions of employees and
determining in what way this could be reduced. However, to minimize the damaging influence of JI, the
employees' positive personal resources can help them to handle the stressful conditions (Costa and Neves,
2017). TST theory describes the individual’s cognitive assessment in worrying situations such that the cognitive
assessment lowers stress response levels as a coping strategy. Lazarus and Folkman (1984) defined coping in
their stress theory as the cognitive and behavioural effort that an individual undertakes to manage a stressful
situation. The cognitive assessment and managing strategies are affected through the individual’s personality
traits, the circumstances of the situation, beliefs, capacities, and personal resources. Furthermore, the
conservation of resource theory (COR) developed by Hobofall (1989), suggests that individuals who can
retrieve and can properly employ their personal resources can better deal with anxiety caused by a threat to the
continuity of their job.
Consistent with COR theory, it is suggested that the psychological resources provided by PsyCap can
reduce the “psychological debt”, including JI, stress, and burnout (Avey et al., 2009; Probst et al. 2017). They
also boost the individual’s managing tactics for demanding conditions (Raja et al., 2020). Investment in PsyCap
can positively impact the creative performance of the organization directly and indirectly through creating trust
among the employees (Ozturk and Karatepe, 2019). Costa and Neves (2017) performed a study and found that
PsyCap is a buffer that lowers the negative effects of JI on the job outcomes. PsyCap represents the positive
characteristics of an individual, involving hope, resilience, optimism, and self-confidence (Luthans and
Youssef-Morgan, 2017).
3.5.1 Self-efficacy
The COR theory suggests that self-efficacy is a vital resource that enables employees to cope with stressors
while having confidence in their abilities to achieve desired objectives (Probst et al., 2017). Self-efficacy can be
emphasized as a significant factor in individuals' reactions to the uncontrollable essence of JI (Adewale et al.,
2019). A high level of self-efficacy regulates stress activity. It increases the individual’s psychological as well
as physical well-being and raises JP (Byars-Wiston et al., 2017). Ozyilmaz et al. (2018) found that self-efficacy
prompted employees' JP and organizational citizenship behaviours. Hence, employees create plans and use
control even though they are managing problematic situations (Borgogni et al., 2013). Raub and Liao (2012)
Int. Journal of Business Science and Applied Management /
uncovered the role of self-efficacy in enhancing hotel employees' service performance. Based on the above
discussion we propose that:
H5: Self-efficacy decreases the negative effect of Job Insecurity on employees' Subjective Well-being and
Job Performance.
3.5.2 Hope
Hope can be defined as the sum of perceived abilities and capacities, along with perceived motivation for
utilizing these to achieve the stated objectives (Madrid et al., 2018). In a work environment, hopeful employees
think about and plan their paths independently and autonomously by displaying their willpower to achieve goals
(Kim et al., 2019). Malinowski and Lim (2015) examined hope’s function in employed staff’s general well-
being and found that hope is essential at the workplace as it reduces stress and raises individuals’ general well-
being. Grover et al. (2018) conducted a study in which they surveyed 401 nurses working in the Australian
healthcare-sector and found that hope and efficacy provided positive cognitive resources to them to cope with
job demands. Similarly, Ozturk and Karatepe (2019) found that high hope can manage a sudden change in the
work situation as well as meet stakeholders’ expectations. Therefore, considering these findings we propose that
hopeful employees may manage the stress of JI and this lowers the adverse influence of JI on employees' SWB
and subsequently JP. Therefore, we hypothesize:
H6: Hope lowers the negative impact of Job Insecurity on employees' Subjective Well-being and Job
3.5.3 Resilience
Resilience can be described as an individual’s propensity to bounce back from anxiety and adversity. It
permits individuals to positively deal with devastating circumstances (Cavus and Gokcen, 2015). Resilience is
directly linked with the individual’s well-being as resilient employees have a tendency to recover rapidly from
distressing incidents. This consequently positively influences the individual’s work performance (Huang et al,
2019). Cooper et al. (2019) found that well-being based HRM procedures boost the resilience of employees and
in turn resilience improves individuals' work performance. Research on moderating effects indicated that
resilience weakened the associations of JI with cynicism, emotional exhaustion, and psychological contract
(Aguiar-Quintana et al., 2021). Further, workers with higher resilience can boost their job performance (Walpita
and Arambepola, 2020) and job engagement as well as reduce their intention to leave the organization (Dai et
al., 2019). Hence:
H7: Resilience lowers the negative impact of Job Insecurity on employees' Subjective Well-being and Job
3.5.4 Optimism
Optimism as a mental attitude involves positive expectations regarding favourable outcomes in the present
situation and in future (Nolzen, 2018). Optimistic anticipations empower employees to cope with challenging
and stressful conditions and these anticipations should be close to reality. Employees with high optimism work
hard under uncertain situations and overcome the numerous obstacles to success (Bouzari and Karatepe, 2020).
Martinez and Ruch (2017) demonstrated that optimism boosts the level of satisfaction with life. According to
Zheng et al. (2014), optimism aids in overcoming the negative influence of JI and reinforces satisfaction along
with improved performance. The findings of a Meta-analytic review by Alarcon et al. (2013) indicated that
optimism and life satisfaction i.e., SWB, are positively correlated. Employees with high degrees of optimism
can cope with the job demands and are satisfied with assigned tasks and responsibilities (Lu et al., 2018).
H8: Optimism lowers the negative influence of Job Insecurity on the Subjective Well-being of employees
and Job Performance.
4.1 Sample and Procedure
A simple random sampling procedure was applied for data collection from the food and beverages industry
located in the industrial estates of Haripur and Abbottabad districts of KP, Pakistan. The research design is
cross-sectional. A total of 450 survey questionnaires were circulated among the employees, out of which 357
were valid for analysis, showing a response rate of 79.33%. Demographic information indicated that 88.2%
respondents were male and 11.8% respondents were female. The respondents were between 19 and 60 years of
age. Most of the respondents (47.6%) had an intermediate level of education, 14.8% had higher school
certificate, 22.4% had a bachelor's degree, 5.3% had a master’s degree and 9.8% had technical diplomas. The
data we received from manufacturing posts was 49.0%, which is higher than all other posts including
Jamil Anwar and Maliha Sarfraz
Management (14.3%), Technical (15.1%), Logistics (13.4%), Marketing and Sales (7.8%). Blue collar
employees dominated the sample at 69% and white-collar employees represented 31%. 42.3% respondents were
on short term contracts while long term contracts with a 3-year term were 28%, Permanent contracts with no
fixed term were 19.9% and those on call were 9.8% of the sample.
4.2 Measurements and Data Analysis
Pre-tested multi-item questionnaires on a 7-point Likert scale were used for measuring the study’s items,
with 1 “Strongly Disagree” to 7 “Strongly Agree. JI was measured by four items initially used by De Witte
(2000), while SWB was measured through five items from Diener et al. (1985). These measures were also
recently used by Darvesmotivali and Ali (2020). PsyCap was measured through 24 items adopted from Luthans
et al. (2007) and Wang et al. (2018). Each component of PsyCap has six statements for measuring self-efficacy,
hope, resilience, and optimism. JP was assessed by using 7 statements established by Williams and Anderson
(1991) and recently validated by Lin and Huang. (2020).
SEM was applied through Smart-PLS 3 for testing and analysis. This technique is appropriate when the
research model involves complex model structures (Hair et al., 2017) and moderators are involved
(Darvishmotevali & Ali, 2020).
4.3 Measurement Model Assessment
The initial step in the PLS-SEM analysis involves the assessment of each construct's reliability and
validity. To this end, each indicator's internal consistency, reliability, convergent and discriminant validity was
Table I and II reflect the results of the measurement model assessment. Table I shows the outer loadings
of each indicator. The items PsyCapR1(R) and PsyCapO2(R) were removed as their outer loadings were below
the acceptable threshold of 0.60 (Gefen, 2005). Composite reliability ranged from 0.864 to 0.966, which were
above the threshold level of 0.70 (Hair et al., 2019). The convergent validity was established by determining
average variance extracted (AVE). The value of AVE ranges from 0.560 to 0.876, which is above the
acceptable value of 0.50 (Hair et al.,2019).
Int. Journal of Business Science and Applied Management /
Table I: Indicators, Loadings and Validity
C α
Psychological Capital
Job Insecurity
Job Performance
Subjective Well-being
In Table II to analyze the discriminant validity of each construct the Heterotrait and Monotrait (HTMT)
Ratio is calculated. The most conservative threshold value of the HTMT ratio is less than or equal to 0.90 (Hair
et al., 2019). In the present study all the HTMT values are below the threshold value of 0.90. All these results
confirm that the measurement model is fit for structural analysis.
Table II: Descriptive Statistics, Correlations and Discriminant Validity using HTMT
Notes: Square root of AVE for each construct is shown on the diagonal in bold values. Below the diagonal elements are the
correlations between constructs. Italicized values above the diagonal elements are HTMT ratios. the upper triangular
Abbreviations: JP, Job Performance; SWB, Subjective Well-being; JI, Job Insecurity
Jamil Anwar and Maliha Sarfraz
4.4 Structural Model Assessment
Structural models reflect the paths hypothesized in the research framework. A structural model is evaluated
on R
, Q
and the significance of the paths.
explains the explanatory power of the model, which is how much variation is caused by an exogenous
construct in the endogenous construct (Shmueli and Koppius 2011). As shown in table 3, the value of R
above 0.1, which indicates satisfactory predictive accuracy of the model (Hair et al, 2019). Furthermore, Q
calculated using a blindfolding procedure for determining the predictive relevance of the dependent variables.
The values of Q
are above 0 (see Table III). Moreover, to evaluate the model fit a standardized root mean
square residual (SRMR) has been performed. The value of SRMR was 0.031, which is below the threshold
value of 0.10. As Hu and Bentler (1999) defined the standards for acceptable fit, the values of SRMR should be
below the threshold level of 0.10. Finally, path coefficients and their significance were assessed. We tested the
hypotheses with a bootstrapping technique using 5000 bootstrap samples, no sign changes option and 95% bias
corrected confidence intervals.
4.5 Hypothesis Test: Direct Relations and Mediation Analysis
As seen in Table III, our first hypothesis (H1) stated that JI has a negative relationship with JP. The
hypothesis is supported by the results = -0.559, p = 0.000). Our second hypothesis that JI has a negative
impact on SWB is also accepted as the results support this statement as well = - 0.523, p < 0.001). (H3) that
SWB has a positive relationship with JP is accepted as well (β = 0.701, p < 0.001). The hypothesis (H4) on the
mediation effect states that SWB will mediate the relationship between JI and JP. The results confirm that JI
negatively affects SWB (β= -0.523, p < 0.001) and by reducing the effect of SWB = 0.562, p < 0.001) it
shows a negative impact on JP. Hence, SWB partially mediates the adverse effect of JI on JP since both direct
and indirect effects are significant.
Table III: Direct Relations
Path Coefficients
P values
R2 JP =0.54
Q2 JP = 0.41
R2 SWB = 0.27
Q2 SWB = 0.21
Table IV: Mediation Analysis
Total Effects
Direct Effects
Note: JI, Job Insecurity; SWB, Subjective Well-being; JP, Job Performance.
Figure 2: Final Structural model and results of Path analysis
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4.6 Moderation Analysis
Table V displays the interaction analysis of each moderator i.e., self-efficacy, hope, resilience, and
optimism. Moderated regression analysis for each moderator has been done, both directly and indirectly.
Table V: Moderation-Mediation Analysis
Note: JI, Job Insecurity; SWB, Subjective Well-being; JP, Job Performance; SE, Self-Efficacy; HO, Hope; RES, Resilience;
OPT, Optimism.
The direct moderation analysis revealed a positive and significant interaction effect of JI and self-efficacy
= 0.237, p< 0.005), JI and hope = 0.285, p< 0.005), JI and resilience (β= 0.206, p< 0.005) on SWB.
Furthermore, the direct analysis of the interaction effect of JI and self-efficacy (β= 0.134, p< 0.005), JI and hope
= 0.160, p< 0.005), JI and resilience (β= 0.107, p< 0.005) on employees' JP is also positive and significant.
The indirect result of moderated regression analysis showed a positive and significant impact of JI and self-
efficacy (β= 0.134, p = 0.000), JI and hope (β= 0.160, p= 0.000), JI and resilience (β= 0.107, p= 0.003) on
employees' SWB and an improvement in performance. In this way our H5, H6, H8 are accepted.
On the flip side, the interaction effect of JI and optimism is insignificant as (β = 0.044, p=0.102). Hence,
our H7 is not accepted. The results for path analysis are shown graphically in Figure 2.
The purpose of this research was twofold: First, to investigate a psychological mechanism by which JI
negatively impacts employees SWB and consequently their JP; Second, to construct a robust bond in the light of
Transactional stress and coping theory determining a coping mechanism for overcoming the deleterious impacts
of JI on employees' well-being and work-related behaviours in today’s unpredictable business environment. The
present research offers important insights by examining a coping mechanism for managing JI, as coping with JI
is the key for effective employees' performance during stress and strains at the workplace.
The study’s results supported JD-R theory’s health diminishing process, which claims that JI, as a
hindrance job stressor, erodes the physical and psychological abilities of employees and leads towards negative
work behaviours. Our findings showed the presence of JI among employees and its negative impact on
employees' performance (β= - 0.559, P = 0.000). These results are in line with earlier studies (e.g., Bohle et al.,
2018; Hu et al., 2018; Darvishmotevali & Ali, 2020). There is a direct relationship of JI with the depression of
employees and an inverse relationship with the employees' happiness. The results confirm that JI lowers SWB
because of the perceived uncertainty regarding the continuity of their job = - 0.523, P< 0.001) these findings
are consistent across studies (Hu et al., 2021; Stankeviciute et al., 2021). SWB positively predicts JP (β= 0.701,
P< 0.001). The results are consistent with Salgado et al. (2019), who concluded that SWB wholly with its
components predicts JP in a positive way. The results also indicate that SWB mediates the impact of JI on JP
(0.562, p = 0.001). Consistent with JD-R theory J1 as a severe work stressor affects employees' SWB, as SWB
describes how an individual assesses their life based on negative or positive experiences. Under the situation of
JI, employees encounter a decline in SWB as they come across the uncertainty regarding the continuity of their
job, which is their utmost vital employment associated resource that can fulfill several necessities in their life.
SWB JP Variables SWB JP
Coeff (t)
Coeff (t)
Coeff (t)
Coeff (t)
Job Insecurity
Job Insecurity
Interaction Term
Interaction Term
Coeff (t)
Coeff (t)
0.134 (5.146)
SWB JP Variables SWB JP
Coeff (t)
Coeff (t)
Coeff (t)
Coeff (t)
Job Insecurity
Job Insecurity
Interaction Term
Interaction Term
Coeff (t)
Coeff (t)
0.044 (1.635)
Jamil Anwar and Maliha Sarfraz
The mediation results are also consistent with the Transactional theory of stress, which pertains in an uncertain
situation for the process of accessing any suitable coping strategy, leading to stress and anxiety, which in turn
leads to a deterioration in well-being. The findings of the mediation results are consistent with the findings of
(Darvishmotevali and Ali, 2017; Tsalasah et al., 2019).
Furthermore, our results on the moderating role of PsyCap in buffering the deleterious impacts of JI on
SWB showed that employees with high PsyCap perceive their job demands in a positive way and they can
assess stressful circumstances. They confidently evaluate the situation and then respond to them accordingly by
using suitable coping strategies. The findings are consistent with Transactional Stress and Coping theory of
Lazarus and Folkman (1984), who asserted that the way employees evaluate an uncertain situation directly
influences their coping mechanisms and emotional reactions. This theory also emphasised the importance of
cognitive evaluation in mediating thoughts, actions and determining an appropriate coping strategy, that leads
towards improved results. As we have anticipated in this present research, self-efficacy as PsyCap’s constituent
diminishes the negative effects of JI on SWB as well as JP (β= 0.134, p = 0.000). The results are consistent with
other studies (e.g., Etehadi and Karatepe, 2019; Peltier et al., 2022). Further, hopeful employees appraise the
situation of JI as less intimidating and are persistently searching for different options for accomplishing their
objectives when original possibilities are obstructed (β= 0.160, p= 0.000). The result is consistent with the
research of Yang et al. (2021). Moreover, the results indicated that resilience moderated the negative effects of
JI on SWB and in turn JP (β= 0.107, p= 0.003), which is in line with the results of prior studies (e.g., Aguiar-
Quintana et al. 2021; Darvishmotevali and Ali, 2020).
In contrast to general expectations, the moderating impact of optimism on SWB and JP is not significant
= 0.044, p=0.102), although this is consistent with Setar et al. (2015). One possible reason could be the
influence of culture and traits on the composition of PsyCap as each country's culture is distinctive. Research
has revealed that PsyCap is the variable that has been influenced by national culture. The construct of PsyCap
varies from country to country e.g., the PsyCap construct in Chinese society is dissimilar from western cultures
as it involves calm, optimism, hope and confidence (Qingshan et al., 2014).
5.1 Theoretical Contributions
Theoretically, the present research findings enrich the existing literature on JI, SWB, PsyCap and JP by
exploring the relationship between them grounded on transactional stress theory, conservation of resource
theory and job demand resource theory, as the interaction with JI for improving SWB has not been studied and
examined much in detail (Jung et al., 2021). This study contributes to understanding the nature of JI and the
mechanism by which JI impacts on performance. We aimed to describe the mediating process by applying
work-related stress theories. The researcher’s interest in examining the mediating constructs between JI and its
consequences has been increasing. To our knowledge the existing research is among the few studies to test the
process by which JI negatively impacts employee’s performance through the intermediary role of SWB. The
present study’s findings provide empirical evidence to support the vital role of employees' SWB in maintaining
the employees' JP in stressful situations.
A review of prior studies shows that researchers have focused on the factors that help to reduce the
negative effects of JI. However, in the present study we focused on the interaction with JI to enhance SWB,
which has not been thoroughly examined. The significant contribution of our research is to describe the
moderating role of the individual components of PsyCap by applying transactional stress theory. Based on TST
we have explained that the components of PsyCap help employees cognitively assess the environmental
concerns (JI) and manage the job demands/stresses. Employees' development policies play a major part in
enhancing their PsyCap, developing employees' psychological strength to retain their SWB in threatening
situations. This research has expanded the current knowledge on the value of individuals' PsyCap by providing
opportunities for the improvement of this personal resource in food and beverages companies as a crisis
management business strategy.
5.2 Practical Implications
This research provides some practical implications for managers for making constructive decisions to
minimize the adverse costs of JI. For an organization, human capital is a key source of long-term competitive
advantage as an employee’s physical and psychological well-being plays a crucial part in the application of their
intelligence (Desta et al., 2022). By looking after and nurturing the positive internal resources of the workforce,
companies can enhance organizational outcomes. The present study’s findings highlight the role of PsyCap in
minimizing the deleterious impact of JI on employees' SWB and their JP. In a competitive business
environment, companies need to focus on investing in their staff’s PsyCap and their positive capabilities.
Consequently, realistic strategies for improving the staff’s PsyCap should be established to assist the employees
to adjust to their workplace conditions. This can be done through laser focused training programmes along with
contemporary leadership practices, problem solving practice, and involvement in the change process.
Int. Journal of Business Science and Applied Management /
Managers need to be aware that employees with strong personal resources will frequently focus on
problem-focused coping approaches in contrast to emotional reactions i.e., distancing thinking. By engaging the
employees in unfavourable event analysis processes managers can enhance the staff’s level of optimism via
concentrating on positive results. To improve employee retention, a well-established monitoring system should
be executed, accompanying experienced personnel support that can perform as mentors. Based on Herzberg’s
two-factor theory (1959), managers can boost workers’ motivation to do their job through job enrichment.
Enriched job opportunities are more likely to boost employees’ commitment, motivation and their ability for
stress management (Darvishmotevali et al., 2017).
In a highly uncertain environment, a decentralization strategy can be effective (Vlachos, 2009). By
implementing a decentralized structure, the organization enables employees to generate and execute creative
practices and innovative ideas by providing them with more autonomy and authority. Organizations with this
kind of structure can quickly identify the threats and respond to them accordingly. Further organization level
interventions, such as the involvement of employees in planning, the circulation of information, execution, and
assessment of actions to endure preferred results, are proposed to manage the effects of JI during organizational
5.3 Limitations and future research
This work has examined one industry. Future research could examine more industries in diverse industries
and sectors for example, the telecommunication sector and the health care sector. Moreover, the present study’s
research design is cross-sectional. Future researchers could use longitudinal data. Future research could gain the
opportunity of exploring stress as part of the model, for instance by examining the model under various stress
stimuli (chronic/episodic, challenging/hindering, etc.). Additionally, the relationship between various sub-types
of stress and the choice of coping directions could be examined, for example looking at whether the stress of
organizational constraints increases coping by acceptance, because the environment cannot be changed.
5.4 Conclusion
The Pakistani economy was recovering after being depressed due to Covid-19. Political turmoil, economic
downturns, catastrophic floods, and industrial closure have made matters worse. Being a developing country, the
unemployment rate was already high and with this it has climbed sharply and the individuals with jobs are
exposed to JI. In this perspective our study is timely and significant as it uncovers the underlying process of JI,
which elucidates how the individuals working in the food and beverages industry who are exposed to job stress
consequently lose their well-being and try to recoup their resources in the form of decreased JP. By examining
the self-efficacy, hope, resilience, and optimism as the coping mechanism, the present research has shown that
employees with high PsyCap effectively mitigate stress and maintain an acceptable level of performance under
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