Organizational innovation climates have been found to be effective predictors of employee creativity and organizational innovation. As such, climate assessments provide a basis for useful organizational interventions in enhancing creativity and innovation. Researchers now call for better articulation of the motivational mechanisms that link social context to employee innovation. In responding to the above call, this study found that employee positive psychological capital (PsyCap) is more influential than organizational innovation climate on employee innovative behavior. With a large sample (N = 781) from 16 organizations and a cross‐level analysis, we examined the relationship between organizational innovation climate and employee innovative behavior with employee PsyCap as mediator. The results showed that both organizational innovation climate and employee PsyCap significantly affect employee innovative behavior, and more importantly, employee PsyCap fully mediates this relationship. The innovation journey is a challenging and risky one with many frustrations and discouraging moments from idea generation to idea implementation. The research results presented here imply that to be innovatively effective, organizations are advised to manage both social (organizational innovation climate) and psychological (PsyCap) resources of employees in enhancing employee innovative behavior. Other theoretic and practical implications are discussed.