Abstract: This study examines the mediating effect of psychological capital (PsyCap) and the moderating effect of procedural justice on the relationship between transformational leadership and followers’ job performance and satisfaction. PsyCap refers to an individual's positive psychological capacities consisting of elements of hope, optimism, resilience, and self-efficacy. We argue that transformational leadership shapes followers' PsyCap, which in turn, contributes to their job performance and satisfaction. Transformational leadership is able to influence followers' PsyCap in that each of its components (i.e., charisma or idealized influence, inspirational motivation, intellectual stimulation, and individualized consideration) is able to foster followers' state of hope, optimism, resilience, and self-efficacy. To further explicate the mediating effect of PsyCap, our second objective is to examine the moderating role of procedural justice. Drawing upon the relational model of authority, we hypothesize that procedural justice moderates the relationship between transformational leadership and PsyCap, and consequently the indirect relationship between transformational leadership and followers' job performance and satisfaction. Specifically, the relationship between transformational leadership and PsyCap is stronger when procedural justice is high rather than low. Data were collected from a logistic company in China. A total of 801 frontline employees and their immediate supervisors participated in the survey. Our sample consisted of 785 employees and 49 supervisors. Among the supervisors, males covered 69.2%, with an average age of 39.0 and organizational tenure of 17 years. Among the employees, males covered 71.3%, with an average age of 35.6 and organizational tenure of 7 years. We used regression analysis and bootstrap methods to test our hypotheses. The mediating test shows that followers' PsyCap acted as a mediator between transformational leadership and followers' job performance and satisfaction. In addition, hierarchical regression analysis shows that the relationship between transformational leadership and followers' PsyCap became stronger as followers' procedural justice growing from low to high. Furthermore, conditional indirect effect test shows that the mediating effect of followers' PsyCap on the transformational leadership –performance and satisfaction linkage was significant only among followers who perceived high levels of procedural justice. All hypotheses were supported. Our findings contribute to the literature in several ways. First, this research offers a new approach to the influence of transformational leadership by examining followers’ positive psychological states. This finding also enriches the literature on PsyCap. Second, our results concerning the moderating effect of procedural justice on the relationship between transformational leadership and followers' PsyCap (and job performance and satisfaction) contribute to the integration of justice research and leadership theory. To sum up, this study deepens our understanding of transformational leadership by examining the mediating effect of PsyCap and moderating effect of procedural justice in one theoretical framework.

Key words: transformational leadership, psychological capital, procedural justice, performance, moderated mediation