Luthans was one of the first management scholars to apply behavioral science to better understanding and effectively manage human behavior in organizations. This evolved into the now widely recognized discipline of organizational behavior, by far the largest division in the Academy of Management. His book Organizational Behavior. (now going into its 12th edition), is generally recognized as the first mainline text (1973) in this field.
Drawing from his University of Iowa behavioral psychology education, Luthans’ first research stream applied reinforcement theory and techniques to improve employee performance. This led to his second seminal book on Organizational Behavior Modification (co-authored with one of his former doctoral students Robert Kreitner in 1975). A meta-analysis mainly consisting of his studies indicated a strong relationship between his "O.B. Mod." approach and improved employee performance in both manufacturing and service organizations. A recent quantitative analysis published in the Academy of Management Learning and Education Journal on the importance, scientific validity, and practical usefulness of all theories in the field found Luthans’ Organizational Behavior Modification Theory among the eight highest rated (along with those by Kurt Lewin, David McClelland, J. Richard Hackman, Edwin A. Locke, John B. Miner, Victor Vroom, and Bernard Bass).
In the 1980s, Luthans conducted rare observational research to answer the questions of “What do managers really do in their day-to-day activities?”; “What do successful managers (those who rise rapidly in their organizations) really do?”; and “What do effective managers (those who have satisfied and committed employees and high quantity and quality outcomes in their units) really do?” This led to his third book Real Managers (1988). His research found that the relatively most frequently observed activity contributing to managers’ success was their social network skills (defined behaviorally from naturalistic observation methodology to be socializing/politicking and interacting with outsiders). Effective managers, on the other hand, were observed to give relatively most frequent attention to communicating and human resource management activities, with networking given the least attention. This finding that managers who were successful exhibited quite different activities than did their effective counterparts challenged conventional wisdom that promotions are based on doing activities that result in effective outcomes. This research empirically demonstrated the importance of playing the game (networking and politicking) in order to get ahead in organizations.
In the 1990s, with globalization taking the forefront in the management field, Luthans’ research took on an international focus and resulted in his next major book (co-authored with now deceased Richard Hodgetts and now Jonathan Doh) International Management (1991, now in its seventh edition). Luthans previous work in both behavioral management and managerial activities were tested in other cultures, mainly Asia and Eastern Europe.
In recent years, drawing from the positive psychology movement and his own early research on positive reinforcement and, with former doctoral student Alex Stajkovic, on self-efficacy (their meta-analysis published in 1998 indicating a very strong relationship between self-efficacy and work-related performance is one of the most cited in the entire field), Luthans has initiated, defined, built theory and conducted research on what he terms positive organizational behavior or simply POB. With former doctoral student Carolyn Youssef and University of Nebraska colleague Bruce Avolio, this work has resulted in his latest book Psychological Capital (2007).
This positive psychological capital or simply PsyCap is made up of positive psychological resources of self-efficacy, hope, optimism, and psychological resilience. These four PsyCap components have been determined to best meet his POB definitional criteria of being theory/research-based, having valid measurement, being state-like/open to development, and having performance impact. Luthans and colleagues research has demonstrated that this PsyCap is a higher order, core construct. Each of the four dimensions has been found to load onto the overall core factor of PsyCap, which in turn has been more consistently related to both performance and satisfaction than each of the individual components. The key differentiator between PsyCap and most other positive constructs is that it is “state-like” and open to development. Luthans and colleagues (especially former doctoral student James Avey) research has demonstrated that, compared to randomly assigned control groups, PsyCap can be developed in relatively short (2-3 hour) intervention workshops. Luthans and colleagues utility analysis of investing in and developing psychological capital has to date yielded a very high (over 200% in one study) what they call return on development (ROD). This work on PsyCap has resulted in Luthans receiving the 2008 Outstanding Research and Creative Activity (ORCA). Award from the University of Nebraska system.
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