Purpose The purpose of this study is to investigate the relationship between psychological climate and employee performance, in the Indian environment, in order to understand better the conditions that foster high levels of in‐role and extra‐role performance. Design/methodology/approach Based on a literature review, the paper includes organizational citizenship behaviour (OCB) and job satisfaction as mediating variables. Further, it uses data obtained from 357 managerial employees in the manufacturing and service sectors in India to analyze the relationships. Findings The results support the hypotheses that an individual's perception of the psychological climate in the organization has a significant positive impact on his/her willingness to engage in OCBs, as well as on his/her job satisfaction levels. Further, OCB and job satisfaction levels have a significant impact on individuals' performance. Research limitations/implications The present study relies exclusively on cross‐sectional data, limiting the ability to generalize beyond a point. Further, a significant majority of the respondents were male, again limiting generalizability. Practical implications The findings suggest that Indian organizations need to pay attention to employee perceptions of the work environment, and that human resource strategies should go beyond establishing policies and procedures to fostering a employee‐friendly work environment that promotes both in‐role and extra‐role performance. Originality/value This study emphasizes the importance of both in‐role and extra‐role performance in the Indian context. Further, given India's rise on the world economic scene, the findings suggest that organizations wishing to sustain their competitiveness and growth levels need to pay attention to their employees' perceptions and beliefs.
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