Determinants of organisational creativity: a literature review

Determinants of organisational creativity: a literature review
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Determinants of organisational creativity: a literature review

Constantine Andriopoulos Hunter Centre for Entrepreneurship, University of Strathclyde, Glasgow, UK

Keywords Creativity, Corporate culture, Leadership, Organizational structure

Abstract In today’s competitive business environment, global competition forces companies to perpetually seek ways of improving their products/services. Organisations increasingly aspire to become more creative and capitalise on the benefits of creativity, and perceive the development of conditions that encourage creativity within their working environment as a long-term process rather than a quick fix to their current problems. While the capability of an organisation to become more creative must start at the level of the individual, individual creativity in itself is not enough. A vital, often ignored component of creativity is the creativity that occurs at the organisational level. This paper reviews writings in an attempt to clearly identify the factors that influence organisational creativity and hence that need to be taken into consideration when managing creativity in organisational settings. The literature review summarises five key factors that affect organisational creativity, namely organisational climate, leadership style, organisational culture, resources and skills and the structure and systems of an organisation.

Introduction Over the years, the topic of creativity has inspired voluminous research aimed at explaining why certain individuals, teams or organisations are more likely than others to formulate novel and useful ideas, processes, services or products (Amabile, 1996). Early studies in the area of creativity mainly focused on discovering and associating personality characteristics (MacKinnon, 1960, 1962) and cognitive abilities, such as linguistic ability and mental flexibility, with creative achievement (Mednick, 1962). Scholars have tried to portray the relationship between individual creativity and organisational innovation (Amabile, 1997) as well as to demonstrate the relationship between individual, team and organisational aspects of creativity (Woodman et al., 1993). Drawing on their work, this paper reviews relevant writings to address “how can organisations encourage creativity in their working environments?” and “what are the key factors that influence organisational creativity?”.

Determinants of organisational creativity The literature review highlights five major organisational factors that enhance creativity in a work environment: 1 organisational climate; 2 leadership style; 3 organisational culture; 4 resources and skills; and 5 the structure and systems of an organisation (Figure 1). Scholars argue that these factors create conditions that enhance creativity both at the team and individual levels. The following

Management Decision 39/10 [2001] 834±840 # MCB University Press [ISSN 0025-1747]

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sections explain how companies can use each of the five determinants of organisational creativity to enhance creativity within workplace environments.

Organisational climate Organisational climate is concerned to a large extent with “atmosphere” or “mood” (Morgan, 1991). A “working atmosphere” favourable to creativity and innovation requires participation and freedom of expression, but also demands performance standards (Bower, 1965). Feurer et al.’s (1996) research within Hewlett Packard suggests that creativity is best achieved in open climates where several steps are taken to achieve these ends: . Interaction with small barriers. . A large number of stimuli. . Freedom to experiment. . The possibility of building on earlier ideas.

Leadership style There is a consensus that a democratic, participative leadership style is conducive to creativity (NystroÈm, 1979), whereas more autocratic styles are likely to diminish it. Bowven and Fry (1988) suggest that in managing novelty effectively it is not enough simply to avoid the practices and procedures that inhibit it; there is a need to actively attend to the management of ideas. The leader’s vision is therefore a key factor when managing creative individuals (Locke and Kirkpatrick, 1995). Vision is a transcendent goal that represents shared values, has moral overtones, and provides meaning; it reflects what the organisation’s future could and should be. Cook (1998) proposes that leaders must effectively communicate a vision conducive to creativity through any available formal and informal channel of communication and constantly encourage employees to think and act beyond current wisdom. This vision must be communicated from the highest to the lowest levels of

Constantine Andriopoulos Determinants of organisational creativity: a literature review

Figure 1 Factors affecting organisational creativity

Management Decision 39/10 [2001] 834±840

management (Delbecq and Mills, 1985; Kimberley and Evanisko, 1981). In other words, the leader must abide by all aspects of vision concerning creativity in the organisation, even in informal settings, because every action is observed and interpreted by subordinates. Over the years, scholars have proposed a number of elements that leaders must possess in order to develop the conditions upon which organisational creativity can flourish. Amabile and Gryskiewicz (1989) point out that leaders should possess the ability to constitute effective work groups. Work groups should reflect a diversity of skills and consist of individuals who trust and communicate well with each other, challenge each other’s ideas in constructive ways and are mutually supportive. Leaders should also be in a position to balance employees’ freedom and responsibility, without domination or control, while at the same time they have to show concern for employees’ feelings and needs, generously recognise creative work and encourage employees to voice their own concerns, provide feedback, and facilitate skill development (Amabile, 1998; Pelz, 1956).

Organisational culture When managing organisational creativity, a key challenge is to create an organisational culture, which nourishes innovative ways of

addressing problems and finding solutions. Organisational culture has been defined as the deepest level of basic values, assumptions and beliefs, which are shared by the organisation’s members and are manifested by actions especially from leaders and managers (Locke and Kirkpatrick, 1995; Morgan, 1991; Johnson and Scholes, 1984; Cook, 1998). In other words, organisational culture is perceived as a set of collective norms, which influence the behaviour of members within the company. Irani et al. (1997) note that these values, assumptions and beliefs are manifested in many ways, such as the rites and routines that take place within an organisation, the language used, the stories, legends and myths that are told and retold and finally the symbols that are found throughout the company. To encourage creativity within their working environments organisations need to develop what Brand (1998) defines as an “innovative” (divergent and learning) and “supportive” (empowering and caring) culture. “Controlling” (convergent and efficiency conscious) and “directive” cultures (profit before people) hinder creativity in the working environment. Kay’s (1989) study in the high tech industry generates similar findings. He proposes that to succeed in such an environment, a company needs a set of principles based upon a common set of values, an organisational culture that

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provides the desired guidance. Every employee needs to understand and accept the core principles and values, which apply to everyone in the organisation. Unsurprisingly, many authors also regard the open flow of communication as crucial for encouraging creativity in social settings and, thus, norms that promote open information exchange should facilitate creative performance (Amabile, 1988). Conversely, certain norms can have a negative impact on creativity. For example, high conformity appears to be anathema to creative behaviour in many settings. Rigid and/or punishing norms promoting conformity usually restrict creativity (Amabile, 1988). Moreover, cultures that encourage and support risk-taking should enhance creative achievement (Amabile, 1988; Sternberg et al., 1997). Kahneman and Tversky (1982) found that people are generally risk-averse when choosing between potential gains and riskseeking only when choosing potential losses. People are usually reluctant to change despite the fact that the majority claims to value novel ideas. Zajonc (1968) states that one of the most solid findings in psychology is the “mere-exposure effect”: people like most that which is familiar to them. The more they hear or study something, the more comfortable they become with it, and the more they like it. Robinson and Stern (1997) also propose that a creative culture should encourage selfinitiated activity, where individuals and teams own problems and their solutions, so that intrinsic motivation is enhanced. Jones and McFadzean (1997) note that employees should be encouraged to challenge their assumptions and perceptions regarding procedures, products and processes. Creativity is fostered when individuals and teams have relatively high autonomy in their day-to-day conduct and a sense of ownership and control over their own work and their own ideas (Amabile, 1996). Amabile and Gitomer (1984), on the same line of argument, suggest that individuals generate more creative work when they can choose how to go about achieving their assigned tasks. Another important element of organisational culture identified by the literature review as enhancing organisational creativity is that of stimulating and ensuring participative safety (Anderson et al., 1992). It is suggested that employees can only be encouraged to think creatively if they are not afraid of criticism and punishment. Therefore, as indicated by Brand (1998), creative employees need to be in an environment where top management

takes a long-term view in order to tolerate a few mistakes. On the contrary, shorttermism may increase intolerance. An organisational culture, which supports creativity, should nourish innovative ways of representing problems and finding solutions and regard creativity as both desirable and normal and consider innovators as role models to be identified with (Locke and Kirkpatrick, 1995).

Resources and skills Organisational creativity also requires companies to make strategic choices with regard to their human resources. Cook (1998) suggests that creative organisations must explicitly strive towards the attraction, development and retention of creative talent, if they want to remain competitive. The notion that organisations need to attract and develop their intellectual capital is also noted by Brand (1998) who proposes that organisations should hire people who are knowledgeable, intelligent, creative in their thinking processes and willing to work tenaciously to attain their goals. In general, creative organisations should focus on employing people with broader interests, who are eager to learn and prepared to take some risks. But how can creative organisations develop and retain their employees? Senior management must provide sufficient resources and training, encouragement for developing new ideas, time to work on pet projects and/or financial support (Anderson et al., 1992; Jones and McFadzean, 1997). Amabile and Gryskiewicz (1989) note that these resources include an array of elements: adequate time for developing novel work, people with necessary expertise, sufficient funds, material resources, systems and processes for work, relevant information, and the availability of training. However, Amabile (1998) argues that the two main resources that affect creativity are time and money. She stresses explicitly the importance of the quantity of time and money that should be given to employees, since they can either support or constrain creativity. For instance, when managers do not allow time for proper experimentation, they are unwittingly standing in the way of the creative process. Lack of project resources can also constrain employees’ creativity. Amabile (1998) points out that managers must decide on the funding, people, and other resources that a team legitimately requires to complete a project. She suggests that there is a “threshold of sufficiency”, and when resources are added above this threshold, creativity is not

Constantine Andriopoulos Determinants of organisational creativity: a literature review Management Decision 39/10 [2001] 834±840

enhanced. Below that threshold a restriction of resources can limit creativity since employees will be more occupied with finding additional resources and not with actually developing new products or services. Amabile et al. (1996) add that employees’ perceptions of the adequacy of resources may have an effect on their beliefs about the intrinsic value of the projects that they have undertaken. Moreover, the flow of ideas across an organisation needs to be facilitated by participative management and decisionmaking in order for creativity to flourish within the working environment (Kimberley and Evanisko, 1981). Osborn (1963) as well as Parnes and Noller (1972) suggest that the probability of creative idea generation increases as exposure to other potentially relevant ideas increases. Without question the most important consideration for the creative mind to flourish is the creative organisation’s attempt to accommodate personal idiosyncrasies. Allowing employees some personal discretion, such as choice of clothing, suggests that they are valued for their contributions, not for their ability to meet a dress code. Amabile (1998) shares the same opinion but proposes that employees should be given autonomy concerning the means ± that is, concerning process but not necessarily the ends. Autonomy around process fosters creativity because it strengthens employees’ sense of ownership over a project or a situation. Discretion about the process also allows employees to resolve problems in ways that better utilise their expertise and their creative thinking skills. Of particular interest is the finding that some degree of pressure within the work environment can have a positive influence on creativity if it is perceived as arising from the urgent, intellectually challenging nature of the problem itself (Amabile, 1988; Amabile and Gryskiewicz, 1987). Such a challenge can have a positive influence on creative employees. For instance, time pressure as a consequence of an urgent deadline may add to the perception of a challenge and this can positively correlate with intrinsic motivation and creativity (Amabile, 1988). What is also clear is the importance of matching individuals to work assignments, on the basis of both skills and interests, to maximise a sense of positive challenge in the work and, therefore, enhance employees’ creative abilities (Amabile and Gryskiewicz, 1989; Paolillo and Brown, 1978; Siegel and Kaemmerer, 1978; Amabile, 1998). Using the same line of argument, Amabile (1997) suggests that employees are more likely to be

creative in pursuits they enjoy. If employees do not enjoy an activity, they will not invest the often extensive amounts of time and energy necessary to succeed in it. Therefore, managers can match people with jobs that reflect their expertise and their skills in creative thinking, and ignite intrinsic motivation. Amabile (1998) also stresses the importance of the amount of “stretch” within organisations. Employees should not be stretched too little as they may become bored, or too much, because this could make them feel overwhelmed and threatened by a sense of loss of control (Amabile, 1998). To balance this process managers need to have rich and detailed information about their employees and available assignments. However, such information is often difficult to obtain and time consuming to gather.

Structure and systems Amabile (1998) proposes that creativity is truly enhanced when the entire organisation supports it. Leaders must therefore put in place appropriate systems and procedures, which emphasise that creative effort is a top priority within the company. Cook (1998) proposes organisational structure and systems are about both formal and informal processes within the company. Systems include rewards, recognition and career systems. To encourage creative achievement, Brand’s (1998) research with 3M suggests that senior management must have a long-term commitment with regard to their employees’ careers. He highlights that lifetime employment and promotion from within are important traditional 3M policies. Moreover, structures in creative organisations tend to be flexible, with few rules and regulations, loose job descriptions, and high autonomy. Brand (1998) notes that creative organisations should adopt a flat structure since this will allow for important decisions to be made at all levels. Fair, supportive evaluation of employees’ individual contribution is also an important aspect of organisational encouragement (Cummings, 1965). Field experiments have demonstrated that supportive, informative evaluation can enhance an intrinsically motivated state that is most conducive to creativity (Deci and Ryan, 1987). Sternberg et al. (1997) also highlight the fact that to some extent, employees’ thinking-style preferences follow the reward structure of their environment. In other words, employees prefer styles that get rewarded. A series of studies by Amabile (1979, 1983, 1990) suggest that ill-considered evaluation and the use of extrinsic rewards can suppress creativity.

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Amabile (1998) proposes that organisations that aim to support the value of creativity within their environments should consistently reward creativity, but at the same time they should avoid using money to “bribe” people to come up with innovative ideas. Leaders can support creativity by encouraging information exchange and collaboration and by minimising politics within the organisation. Amabile (1998) suggests that infighting, politicking, and gossip are particularly damaging to creativity because they can distract employees’ focus away from work. The sense of mutual purpose and excitement, which is so central to intrinsic motivation, invariably lessens when people are within cliques or at war with one another. Amabile’s research suggests that intrinsic motivation increases when people are aware that those around them are excited by their jobs. When political problems abound, people feel that their work is threatened by others’ agendas. People with agendas are more likely to evaluate their colleagues’ work with a negative bias. Amabile (1998) argues that this sort of negativity can have severe consequences for creative contribution. First, it encourages people to focus on the external rewards and punishments associated with their outputs, thus increasing the presence of extrinsic motivation and having negative effects on intrinsic motivation. Second, it creates a climate of fear, which again undermines intrinsic motivation. Several organisational theorists suggest that creativity can be enhanced by expecting a reward that is perceived as a “bonus”, a confirmation of one’s competence, which can take the form of a financial reward or verbal praise (Abbey and Dickson, 1983; Cummings, 1965; Amabile et al., 1986). Quinn (1985) suggests that innovators value a sense of achievement and observes that innovation can provide clear satisfiers of economic, psychological and career goals for these individuals. Amabile’s (1979, 1987, 1990, 1997, 1998) ongoing research in the area of creativity shows that there are two types of motivation, extrinsic and intrinsic, the latter being far more essential for creativity. Amabile (1998) points out that extrinsic motivation comes from outside a person ± whether the motivation is a carrot or a stick. For instance, the most ordinary extrinsic motivator used is money. However, Amabile (1998) discovered that on many occasions, financial rewards can have a negative effect on creativity, especially when employees perceive the financial incentive as a means of being bribed or controlled. She concludes her reasoning by suggesting that financial

rewards per se do not necessarily make employees passionate about their work and hence may hinder creativity in the long run. Amabile (1990, 1997) notes that motivation can also be intrinsic, i.e. a person can have the internal desire to do something. In other words, deep interest and involvement in the work, curiosity, enjoyment, or a personal sense of challenge can drive motivation. Amabile (1997, p. 46) proposes the following intrinsic motivation principle: Intrinsic motivation is conducive to creativity. Controlling extrinsic motivation is detrimental to creativity, but informational or enabling extrinsic motivation can be conducive, particularly if initial levels of intrinsic motivation are high.

This principle suggests that employees will be most creative when they feel motivated primarily by the interest, satisfaction, and challenge of the work itself ± and not by external pressures. However, Amabile et al. (1996) and Amabile and Gryskiewicz (1987, 1989) acknowledge that extrinsic motivators, such as reward and recognition for creative ideas together with perpetual constructive feedback, support creative achievement.

Conclusions and implications Drawing on earlier work, this paper reviewed writings that address how organisations can encourage creativity in their working environments and identified the key factors that influence organisational creativity. The literature review highlighted five major organisational factors that enhance creativity in a work environment: 1 organisational climate; 2 leadership style; 3 organisational culture; 4 resources and skills; and 5 the structure and systems of an organisation. Scholars argue that these factors create conditions that enhance creativity both at the team and individual level. The study has several implications for academics and practitioners.

Implications for academics This literature review synthesised existing academic writings explaining what makes certain organisations more creative than others. The identification of certain organisational factors, related to organisational climate, leadership style, organisational culture, resources and skills, and structures and systems that can enhance creativity at the organisational level, provides an initial explanation of this complex enquiry.

Constantine Andriopoulos Determinants of organisational creativity: a literature review Management Decision 39/10 [2001] 834±840

Organisational creativity literature, however, heavily relies on conceptual papers and surveys. Moreover, although several authors have concentrated on enhancing creativity at the individual level, there are relatively few reports on managing creativity in an organisational setting. There is therefore a clear lack of organisational studies providing holistic and functional perspectives. Research on organisational creativity by definition should focus on multiple levels of analysis. However, academics in the area of organisational creativity have tended to avoid multilevel research due to both their theoretical orientations and because of methodological and conceptual problems inherent in collecting data across different levels of analysis. This study therefore encourages academics to: . apply inductive methodological approaches to the identification of management practices that enhance employees’ creative potential in practice; and . bring the creativity question into the “person-organisational conditions” interplay and conduct further research in this area so that new insights can arise.

Implications for practitioners Understanding the key factors that influence creativity within the working environment allows practitioners to become more aware of issues that need to be taken into consideration when starting a new creative business or when they are in the process of aiming to sustain or revitalise creativity in their workplace. The findings from this literature review can be used as a diagnostic tool by supervisors or managers within creative environments for assessing workplace creativity by identifying and managing its components at both an individual and team level. When aiming to foster creativity in the workplace, this study suggests that practitioners should focus on the following issues: . Creative organisations’ values and objectives should aim to create a working environment conducive to creativity by carefully addressing the identified factors. . Creativity per se is not enough, it must align with organisational goals. A key challenge for managers, therefore, is to channel their employees’ creative contribution toward the generation of products, services and processes that are not only innovative, but also profitable for the organisation and create competitive advantage. . There must be a radical shift in perspective, from controlling people to

creating the conditions where employees can seek directed expression and selffulfilment, without unnecessary control mechanisms and conformity rules. In summary, the key challenge for organizational researchers and managers will be to find further enabling factors, which encourage and develop the personality characteristics, cognitive styles, knowledge and intrinsic motivation that are conducive to creativity. The effective management of people and the working environment within which they operate can produce substantially enhanced creative performance.

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Application questions 1 What do you feel is the most important factor that influences organisational creativity? Why?

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2 How is creativity nurtured in your organisation?