Psychological Capital, developed by Fred Luthans as a byproduct of the positive psychology movement, involve the study of how applied positive states, attributes, and behaviors can improve performance in the workplace. An organization's leader needs a proactive, positive approach that emphasizes hope, self-efficacy, resilience, and optimism to improve an organization's effectiveness (Luthans, 2002a). This study explored how a school principal's Psychological Capital influenced the school's culture, and the psychological states that best supported the school to flourish. A school leader is key in building a positive school culture, where administrators, staff, and students share a sense of purpose and commitment to improving student achievement. Evidence exists that positive leadership practices foster positive behaviors in employees, which lead to organizational productivity in a corporate environment (Gardner & Schermerhorn, 2004; Luthans, 2002a; Wright, 2003). In addition, Psychological Capital aligns with the adaptive leadership framework, developed by Ron Heifetz and colleagues, which allows a leader and an organization to adapt and thrive in challenging environments (Heifetz, Grashow, & Linsky, 2009).

For this study, the researcher surveyed Illinois public school principals to determine if the four Psychological Capital states contributed to a positive school culture. This study allowed for a mixed method analysis of data. These data were collected through a Psychological Capital Questionnaire (Luthans, Avolio, & Avey, 2007) tool, and then included a regression analysis of the four Psychological Capital states with two domains of the Illinois 5Essentials Survey. It was followed with an interview of three participants, allowing the researcher to probe more deeply into the school leaders' psychological states and leadership practices. Results of this study found that of the four PsyCap constructs, hope was the most influential on school culture. Other effective leadership qualities, such as adaptive leadership, were discovered after the qualitative interview data.