Creativity Meets Performance: How Does Performance Management Foster Team Creativity? a

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1 Creativity Meets Performance: How Does Performance Management Foster Team Creativity? a Aleksandra Klein b Abstract Practitioners and scholars have long been concerned with boosting creative performance to achieve competitive advantage. Individual creativity has been shown to depend on certain personality traits such as creative self-esteem and individual resilience. Performance management mechanisms interact with these personality traits to influence both individual and team creativity, thus fostering company performance. Existing research has shown that the fit between performance management mechanisms, team members personality traits and team dynamics is crucial for fostering team creative performance. This work suggests provisional theoretical model with proposed variables in scope for the further study of the impact of performance management mechanisms such as formalized procedures, results-based incentives and developmental assessments as well as strategic management/ leadership behaviors on the team creative performance in European design and advertising companies. Key words: creativity, performance management mechanisms, team creative performance, strategic management, leadership style, European design and advertising companies a This work is in draft form and is distributed for purposes of comment and discussion only. It may not be reproduced without permission of the copyright holder. Copies of this work are available from the author. b Author is a Doctoral candidate at Vienna University of Economics & Business, Department of Strategy & Innovation, supervised by Univ. Prof. Gerhard Speckbacher. Correspondence concerning this work should be addressed to Aleksandra Klein, Vienna University of Economics & Business, Welthandelsplatz 1, A1020 Vienna, Austria. [email protected]. 1 Draft as of June 2014

2 Introduction Scholars and practitioners have long been concerned with boosting creative performance to achieve competitive advantage. Creative performance is often seen as a crucial constituent of organizational innovation, generally denoted to the implementation of creative ideas and recognized as a key for long-term organizational success and survival. Initially, businesses drew their attention to understanding what personal traits are required for employees to be creative, but eventually they shifted the focus on creating organizational and team structures to support creativity performance (Amabile, 1988; Drazin, Glynn, & Kazanjian, 1999). Over time creativity management broadened to consider what can be done on organizational and/or team level to apply the right conditions and performance management mechanisms to support employee creativity (Amabile, Conti, Coon, Lazenby, & Herron, 1996; Ford, 1996; Woodman, Sawyer, & Griffin, 1993). In particular, what managers or team leaders can do to manage and control employees for creative performance (Mumford, 2000) and what can be done to enhance certain personality traits of employees to improve creativity (Oldham & Cummings, 1996). The aforementioned foci of business and academia point to the crucial combination of manager s leadership style, choice of performance management mechanisms as well as key employee creativity traits. A recent test on employee creativity predictors has analyzed individual traits, which were shown to be predictive of creative performance in the previous research (Imber, 2009). Among others, creative self-efficacy and individual resilience were shown to be the best predictors of personal creativity predictors in case of teamwork environment (Imber, 2009). The objective of this study is to investigate how certain management style of a team leader in combination with performance management mechanisms and creativity of team members, (based on individual creativity traits, i.e. creative self-efficacy and resilience), influences the team creative performance in creative teams. Therefore this investigation offers a means to identify the optimal performance management mechanisms, given strategic management style and key employee creativity traits to enhance the team creative output. Theoretical Research Model: Team Creative Performance Based on organizational and contextual factors of individual creativity and team performance, creativity is the generation of functional and novel ideas by individual or groups of people working together, (e.g., Amabile, (2013), Zhang et al. (2013), Bandura (2000), Amabile (1988), Amabile et 2 Draft as of June 2014

3 al. (1996), Woodman et al. (1993), etc.). The abovementioned definition of creativity underlines that that it can be produced on several levels, where various organizational elements combine. The following theoretical research model proposes a framework that jointly considers these facets. This conceptual model comprises suggested independent variables with direct and moderating effects on team creative performance. (Appendix 1 comprises proposed measurement instruments for the variables in scope). Strategic Management Style and Team Creative Performance An effective management of creative and innovation projects is a challenge facing today s organizations (Jansen, van den Bosch, & Volberda, 2006). The most extreme differentiation of strategic management/ leadership styles are entrepreneurial and conservative management, where former is associated with strategic postures that are risk-taking, innovative, and proactive, latter risk-averse, non-innovative, and reactive (Miller & Friesen, 1982, 1990; Hoskisson, Hitt, Ireland, Harrison, 2008; Jogaratnam & Ching-Yick Tse, 2006). Accordingly, the following hypotheses are proposed: Hypothesis 1a: Entrepreneurial leadership style will be positively related to the team creative performance. 3 Draft as of June 2014

4 Hypothesis 1b: Conservative leadership style will be negatively related to the team creative performance. Performance Management and Team Creative Performance Previous research and empirical studies have long studied the perfromance management mechanisms or management controls of innovation without explicitly recognizing creativity, (e.g., Davila, Foster, & Li, 2009; Jansen, van den Bosch, & Volberda, 2006; Ettlie, Bridges, & O Keefe, 1984, etc.). A more recent alternative research node has started to investigate how to manage creativity. For example, Jeacle and Carter (2012) found that performance management plays a significant role in the interaction between the various subjects involved in the creative process. In general, the management accounting literature proposes a contingent view on the relationship between innovation and control and focuses, with only a few exceptions, on the development of products characterized by a relevant technological content. Presenting the latest work on creativity, performance measurement mechanisms and management control systems (MCS), Davila and Ditillo (2013) find two broad groups of mechanisms effecting creativity. The first type, directional mechanisms put the boundaries needed for the mastery that improves the creative process (Drazin, Glynn, & Kazanjian, 1999). These mechanisms form the playground where creativity happens and are analogous to mechanisms used in any new product development setting (Abernethy & Brownell, 1997; Nixon, 1998). That means, they do not motivate individuals towards the pre-defined goals, as these only occur along with the creative process development; in lieu, these mechanisms structure the process to boost the novelty of the final outcomes. Notably, the incentive provision that is typical for management control systems in other settings has a minor role in creative working envoronment (Davila & Ditillo, 2013). Another group of mechanisms, inspirational mechanisms, assists in directing the creative process, supporting the need to develop and reach consistency of ideas and meanings. Ideational, aesthetic and social networking controls stimulate people to create novel concepts that fit together. The function of these mechanisms endorses the concept from the creativity literature that balancing inspiration, compatibility of ideas, and external constraints is essential for creative settings (Davila & Ditillo, 2013). The aforementioned strategic management styles are also typical for certain performance measurement mechanisms. Entrepreneurial managers tend to use organic controls, which are comparable to the inspirational mechanisms; conservative managers more traditional ones mechanistic controls, in context of creativity comparable to directional mechanisms (Chenhall & Morris, 1995; Chenhall, 2003; McCarthy & Gordon, 2011; Svensrud & Åsvoll, 2012). 4 Draft as of June 2014

5 Accordingly the following hypotheses are proposed: Hypothesis 2a: Inspirational mechanisms will mediate the positive relationship of strategic management style and team creative performance. Hypothesis 2b: Directional mechanisms will mediate the positive relationship of strategic management style and team creative performance. Employee Individual Creativity Traits, Team Creativity and Performance Management and Team Creative Performance Even though the individual creativity boosts groups creativity, the creative team settings, managed by the team leader, also influence individual creativity (Zhang, Gloor, & Grippa, 2013; Bissola, Imperatori, & Colonel, 2014). This implies that the exposure of individual creativity traits within the team work is dependent on the project settings, comprising management style mediated by the performance management mechanisms. So, the following hypotheses are proposed: Hypothesis 3a: Although team members with higher individual creativity traits can contribute to high creative team performance, this condition is insufficient to obtain high creative team outcomes. Hypothesis 3a: Although team members with lower individual creativity traits could bring to low team creative team performance, this condition is insufficient to obtain low creative team outcomes. Below are discussed individual personality traits, which were recently reported as best predictors of creative performance in teamwork: creative self-efficacy and individual resilience (Imber, 2009). Creative Self-Efficacy Creative self-efficacy relates to a person s confidence in their ability to think creatively. A person s creative confidence is important because it directly influences the motivation and ability of a person to get stuck into creative problem-solving tasks. People who are ranking high on this dimension have a strong belief in their ability to generate creative ideas, will immerse themselves in tasks that require creativity, and will seek to get the best ideas out of themselves. Simply having this selfbelief has been shown to significantly increase a person s actual ability to think creatively (Bandura, 1982, 1997, 2000). Individual Resilience 5 Draft as of June 2014

6 Individual resilience is all about a person s psychological ability to deal with stressful situations. People who are high in resilience bounce back easily from disappointments and failures, and can remain optimistic when things are not going their way. On the other hand, people who show high levels of resilience perform more creatively at work. This is because creativity often involves experiencing failure, e.g. rejected ideas and implemented ideas performing poorly. Being able to bounce back from rejections is critical to maintaining creativity and enthusiasm (Sweetman, Luthans, Avey, & Lithans, 2011; Windle, Bennett, & Noyes, 2011). Task Interdependence According to their latest study on the team creative performance in 2013, Hon & Chan have shown the moderating role of team task interdependence between empowering leadership on team creative efficacy. Given that creative self-efficacy is a part of the team creativity in this study and entrepreneurial strategic management style comprises empowering leadership features, the following is proposed: Hypothesis 4a: Team task interdependence will moderate the relationship between strategic management style of team leader and team creativity in a way that entrepreneurial management style has a strong positive impact on the team creativity when the level of team task interdependence is high. Similarly, the need for leadership and the use of certain performance measurement mechanisms depends on work tasks (Wageman, 1995; Hon & Chan, 2013). Thus, the following hypothesis is postulated. Hypothesis 4b: Team task interdependence will moderate the relationship between strategic management style of team leader and performance management mechanisms in a way that the entrepreneurial/conservative strategic management style has a strong positive relationship with inspirational/directional mechanisms when the level of team task interdependence is high/low. Next Steps Considering the aforementioned theoretical framework as well as proposed hypotheses, further empirical study is required. Using a variety of validated instruments, (see Appendix 1 for provisional measurement instruments for variables in scope), the study is planned to begin with surveys sent to the creative team members, team leaders, (if applicable), and heads/management representatives of the European design and adverting agencies. 6 Draft as of June 2014

7 Surveys will comprise: general questions on teams and personal creativity traits for the team members, questions on performance measurement mechanisms for the team leaders (or agency heads), (e.g. formalized procedures, results-based incentives, development assessments, etc.), and questions regarding strategic management/ leadership style for the heads of the agencies. Consequently, the intended study will provide state-of-the-art results of existing research on creative performance in teams and present unique data analysis for discussion. The results of the study will include propositions for the best practices of performance management mechanisms use. 7 Draft as of June 2014

8 List of References Abernethy, MA & Brownell, P 1997, 'Management control systems in research and development organizations: The role of accounting, behavior and personnel controls', Accounting, Organizations and Society, vol. 22, no. 3-4, pp Amabile, TM 1988, 'A model of creativity and innovation in organizations', in M Staw & LL Cummings (eds), Research in organizational behavior, JAI Press, Greenwich, CT, vol. 10, pp , Componential theory of creativity, Sage Publications, < Amabile, TM, Conti, R, Coon, H, Lazenby, J & Herron, M 1996, 'Assessing the work environment for creativity', The Academy of Management Journal, vol. 39, no. 5, pp Bandura, A 1982, 'Self-efficacy mechanisms in human agency', American Psychologist, vol. 37, no. 2, pp , Self-efficacy: The exercise of control, W.H. Freeman, New York , 'Cultivate self-efficacy for personal and organizational effectiveness', in E Locke (ed.), Handbook of principles of organizational behavior, John Wiley & Sons, Ltd, Chichester, United Kingdom, pp Bissola, R, Imperatori, B & Colonel, RT 2014, 'Enhancing the creative performance of new product teams: An organizational configurational approach', Journal of Product Innovation Management, vol. 31, no. 2, pp Chaudhary, R 2014, 'Occupational self-efficacy expectations among Indian executives: Examining the psychometric properties of occupational self-efficacy scale (OSES)', Global Business Review, vol. 15, pp Chenhall, R 2003, 'Management control systems design within its organizational context: Findings from contingency-based research and directions for the future', Accounting, Organizations and Society, vol. 28, no. 2-3, pp Chenhall, R & Morris, D 1995, 'Organic Decision and Communication Processes and Management Accounting Systems in Entrepreneurial and Conservative Business Organizations', Omega, vol. 23, no. 5, pp Cohen, BP & Cohen, EG 1991, 'From groupwork among children to innovation teams', Advances in Group Processes, vol. 8, pp Cohen, BP & Zhou, X 1991, 'Status processes in enduring work groups', American Sociological Review, vol. 56, no. 2, pp Davila, A & Ditillo, A 2014, 'Controlling creativity: Design and use of management control systems in creative environments', Bocconi University. 8 Draft as of June 2014

9 Davila, A, Foster, G & Li, M 2009, 'Reasons for management control systems adoption: Insights from product development systems choice by early stage entrepreneurial companies.', Accounting, Organizations and Society, vol. 34, no. 3-4, pp Davila, T, Foster, G & Oyon, D 2009, 'Accounting and control, entrepreneurship and innovation: Venturing into new research opportunities', European Accounting Review, vol. 18, no. 2, pp Drazin, R, Glynn, M & Kazanjian, R 1999, 'Multilevel theorizing about creativity in organizations: A sensemaking perspective', The Academy of Management Review, vol. 24, no. 2, pp Ettlie, J, Bridges, W & O Keefe, R 1984, 'Organization strategy and structural differences for radical versus incremental innovations', Management Science, vol. 30, no. 6, pp Ford, C 1996, 'A theory of individual creative action in multiple social domains', The Academy of Management Review, vol. 21, no. 4, pp Glynn, MA & Webster, J 1993, 'Refining the nomological net of the adult playfulness scale: Personality, motivational, and attitudinal correlates for highly intelligent adults', Psychological Reports, vol. 72, no. 3, pp Hon, AHY & Chan, WWH 2013, 'Team creative performance: The roles of empowering leadership, creative-related motivation, and task interdependence', Cornell Hospitality Quarterly, vol. 54, no. 2, pp Imber, A 2009, The creativity formula, Liminal Press, Melbourne, Australia. Jansen, JJP, van den Bosch, FAJ & Volberda, HW 2006, 'Exploratory innovation, exploitative innovation, and performance: Effects of organizational antecedents and environmental moderator', Management Science, vol. 52, no. 11, pp Jeacle, I & Carter, C 2012, 'Fashioning the popular masses: Accounting as mediator between creativity and control', Accounting, Auditing and Accountability Journal, vol. 25, no. 4, pp Kratzer, J, Leenders, RT & van Engelen, JM 'Team polarity and creative performance in innovation teams', Creativity and Innovation Management, vol. 15, no. 1, pp McCarthy, I & Gordon, B 2011, 'Achieving contextual ambidexterity in R&D organizations: A management control system approach', R&D Management, vol. 41, no. 3, pp Miller, D & Friesen, PH 1982, 'Innovation in conservative and entrepreneurial firms: Two models of strategic momentum', Strategic Management Journal, vol. 3, no. 1, pp Mumford, MD 2000, 'Managing creative people: Strategies and tactics for innovation. Human Resource Management', Human Resource Management, vol. 10, no Draft as of June 2014

10 Nixon, B 1998, 'Research and development performance measurement: A case study', Management Accounting Research, vol. 9, no. 3, pp Oldham, G & Cummings, A 1996, 'Employee creativity: Personal and contextual factors at work', The Academy of Management Journal, vol. 39, no. 3, pp Pethe, S, Chaudhary, S & Dhar, U 1999, Occupational self-efficacy scale and manual, National Psychological Corporation, Agra. Schilpzand, MC, D.M., H & Shalley, CE 2011, 'Members' openness to experience and teams' creative performance', Small Group Research, vol. 42, no. 1, pp Svensrud, E, & Åsvoll, H. 2012, 'Innovation in large corporations: A development of the rudementary theory of effectuation', Academy of Strategic Management Journal, vol. 11, no. 1, pp Sweetman, D, Luthans, F, Avey, JB & Luthans, BC 2011, 'Relationship between positive psychological capital and creative performance', Canadian Journal of Administrative Sciences, vol. 28, no. 1, pp Tierney, P & Farmer, S 2002, 'Creative self-efficacy: Its potential antecedents and relationship to creative performance', Academy of Management, vol. 45, no. 6, pp Wageman, R 1995, 'Interdependance and group effectiveness', Administrative Science Quarterly, vol. 40, no. 2, pp Windle, G, Bennett, K & Noyes, J 2011, 'A Methodological Review of Resilience Measurement Scales', Health and Quality of Life Outcomes, vol. 9, no. 8, pp Woodman, R, Sawyer, J & Griffin, R 1993, 'Toward a theory of organizational creativity', The Academy of Management Review, vol. 18, no. 2, pp Zhang, X, Gloor, P & Grippa, F 2013, 'Measuring creative performance of teams through dynamic semantic social network analysis', International Journal Organisational Design and Engineering, vol. 4, no. 2, pp Zhou, J 1998, 'Feedback valence, feedback style, task autonomy, and achievement orientation: Interactive effects on creative performance', Journal of Applied Psychology, vol. 83, no. 2, pp Draft as of June 2014

11 Appendix 1 Variables in Scope and Measurements In the following, variables in scope as well as proposed measurement methods are presented. Both are based on the archetypal structure of creative teams in design and advertising agencies, where both, active team member, e.g. planner, or management representative, i.e. creative or art director, could be creative team leader, (based on the personal communication with board member of Art Directors Club*Europe, Vienna, June 17 th, 2014). Team Creative Performance Previous research shows that measuring creative performance is infamously challenging. In general, there are two commonly used methods to measure creative. First one is based on standardized performance test on group or individual level. The second method includes the rating of actual products in response to open-ended instructions (Kratzer, Leenders, & Van Engelen, 2006). Here, however, none of the methods is applicable, given the complexity and polygonal nature of tasks in creative teams. Taking into consideration the character of work in creative teams, it is proposed to use the team creative performance measurement based on the questionnaire initially reported by Cohen (Cohen & Cohen, 1991 Cohen & Zhou, 1991; Zhou, 1998; Schildzand et al., 2011) and Oldham & Cummings (1996) and adapted by Kratzer et al. (2006). Questionnaires have to be filled by the team members, who rate the teams creative accomplishment, (including such aspects as new idea generation, invention of new methods, approaches, or applications), on a 7-point scale (from not at all to highly ). Strategic Management Style There are two principal ways of measuring: 1) surveying team leaders, (e.g. based on the questionnaire from Miller & Friesen, 1982), 2) including relevant questions into the general survey for all team members, (e.g. based on Oldham, G., & Cummings, 1996). In interest of the multilevel analysis, both measurement constructs will be used. Performance Management Measurement constructs will be developed based on the latest work on creativity, performance measurement mechanisms and management control systems (MCS) by Davila and Ditillo (2013). Thus, two broad groups of mechanisms effecting creativity will be tested: directional and inspirational mechanisms. 11 Draft as of June 2014

12 Employee Individual Creativity Traits Below are presented measurements for the individual personality traits, which are the best predictors of creative performance in teamwork: creative self-efficacy and individual resilience (Imber, 2009) (For the team creativity, both, global measure of individual creativity as the average within teams as well as its standard deviation to account for diversity and variability should be considered). (Bissola et al., 2014) Creative Self-Efficacy Measurement of creative self-efficacy is done by indexing survey items using questions related to occupational efficacy, based on Bartuda s theory on self-efficacy and Pethe s et al. Manual for Occupational Self-Efficacy Scale. Another example of measuring employee s efficacy for creative work is an existing creative self-efficacy instrument (Tierney & Farmer, 2002). The instrument consists of 3 items using a 7-point scale ranging from 1 very strongly disagree to 7 very strongly agree (sample item: I feel that I am good at generating novel ideas ). Individual Resilience Given that there is practically no empirical evidence of measuring the impact of personal/ team resilience on his or her/ team s creativity or generally work performance, it is proposed to measure personal resilience based on the previous psychosocial research on reliance (Sweetman, Luthans, Avey, & Lithans, 2011). From previous studies on resilience measurements, no gold standard measure of resilience was found so far. Yet, Connor-Davidson Resilience Scale, Resilience Scale for Adults and Brief Resilience Scale received the best psychometric ratings (Windle, Bennett, & Noyes, 2011). Task Interdependence From the previous research on team performance (Wageman, 1995; Hon et al., 2013), five-item scale is used to measure the extent to which team members depend on each other. Exemplary scale items are My team has to work closely with other members to do our work properly and My team depends on other members for the completion of our work. 12 Draft as of June 2014