Management Accounting Section Midyear Meeting

Are Constraints good for Creativity? The Effect of Decision Rights and Performance-Dependent Incentives on Creativity

• In Event: Contracts

Abstract

Using an experiment, we examine how the allocation of decision rights over selecting most creative output and the form of incentive scheme interact to influence creative performance. The literature commonly assumes that creativity needs autonomy and that thereby unrestricted decision rights lead to higher creativity. Contrary to that position we propose that some restrictions can be good for the creative process. Specifically, we propose that not giving employees’ decision rights over selecting the most creative output leads to higher creativity compared to when employees have such decision rights. Having decision rights over selecting the most creative output leads to less creativity because employees with decision rights engage in a satisficing process and settle for lower creativity output. However, this satisficing process only leads to differences in creativity when employees have an incentive to exert effort, as it is the case in our creativity-dependent incentive scheme, but not when compensation is fixed. We find support for the predicted effects. Employees without decision rights produce more creative output compared to employees with decision rights when employees have performance dependent incentives, but not without performance dependent incentives. Supplemental analyses show that our findings support the notion of individuals satisficing when they have decision rights over selecting the most creative output. Specifically, individuals with decision rights appear to consistently check, evaluate, and settle for a lower performance level while producing output.

Authors

• Alisa Gabrielle Brink, Virginia Commonwealth University

• Erin Masters, Northern Kentucky University

• Bernhard E. Reichert, Virginia Commonwealth University

• J. Matthew Sarji, Virginia Commonwealth University