The relation between business group (BG) affiliation and firm performance has been a subject of scholarly debate, marked by conflicting evidence about the impact of BG affiliation. Despite the advantages of business groups for affiliated firms, the utilization of these advantages to outperform standalone firms remains unclear. Grounded in a resource-based view (RBV), this study explores the role of Organizational Psychological Capital (OPC) as a mediating mechanism influencing BG affiliation and firm performance relationship, particularly within emerging economies. Using the generalized method of moments (GMM) estimator for 211 listed Indian listed firms from 2007 to 2017, our findings highlight the role of OPC as an outcome of BG affiliation. Further, the study shows the mediating effect of OPC in the BG affiliation and firm performance relationship. This relation is explained by identifying how OPC functions as a key intervening phenomenon, thereby recognizing OPC as a vital intangible resource for BG affiliated firms.