Creative Capacity, Multidimensional Incentives, and Creative Performance

• In Event: Incentives and Creativity

Abstract

I conduct an experiment to examine whether an individual’s creative capacity – the potential to produce creative outcomes – influences the efficacy of creativity-weighted-quantity incentives. To remain commercially viable, organizations desire creativity while also maintaining efficiency. The challenge is to design a management control system to achieve a trade-off between these desired dimensions. Prior research finds that incentivizing both creativity and quantity of production is detrimental to quantity and has no effect on creativity. However, these studies do not consider the creative capacity of individuals. Drawing on psychology and economics literatures, I predict and find that creativity-weighted-quantity incentives lead to an improvement in creativity for individuals with high creative capacity, but not for individuals with low creative capacity. The creative performance is sustained over time for individuals with high creative capacity but declines for those with low creative capacity. These results suggest that creativity-weighted-quantity incentives are effective for the types of individuals who are typically employed for creative work.

Author

• Ajanee Ranasinghe, University of Melbourne