Business psychology, also known as industrial-organizational psychology, emerged in the early 20th century, largely influenced by the work of psychologists like Hugo Münsterberg and Walter Dill Scott, who applied psychological principles to workplace productivity and employee selection. During World War I, psychological testing gained prominence for assessing military personnel, which later translated to corporate settings. The field expanded in the mid-20th century, focusing on organizational behavior, leadership, and employee motivation, and has since evolved to address contemporary issues like workplace diversity, mental health, and remote work dynamics. Today, business psychology plays a crucial role in enhancing organizational effectiveness and employee well-being.
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