Drawing on the social exchange theory (SET), the study aims to investigate the influence of forgiveness climate (FGC) on a firm’s overall performance and the mediating role of positive psychological capital (PPC), organizational citizenship behaviour (OCB), job satisfaction (JBS) and employee performance (EMP). We collected responses using a structured questionnaire by online survey method from 408 selected service providers and analyzed the data using smart partial least squares structural equation modelling (PLS-SEM) and statistical package for the social sciences (SPSS). Our study reveals that FGC is positively related to a firm’s overall performance. It finds the mediation effect of PPC, OCB, JBS, and EMP between FGC and perceived firm performance (FOP). The findings have practical implications for business firms, suggesting that fostering an FGC in the workplace can significantly enhance positive workplace behaviour that positively affects a firm’s overall performance. As clearly outlined in the study, these implications are crucial for organizational researchers, HR personnel and practitioners.
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