How do financial constraints affect creativity?

Scopelliti, I., Cillo, P., Busacca, B. & Mazursky, D. (2014). How do financial constraints affect creativity?. Journal of Product Innovation Management, 31(5), pp. 880-893. doi: 10.1111/jpim.12129

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Abstract

This paper investigates the effects of financial constraints on the outcome of different types of creative tasks such as product ideation and product repair. Four experimental studies examine the effect of financial constraints on creativity of the outcome of a product ideation task, and compare the effect of financial constraints with the effect of another type of constraint (i.e., input restrictions) on creativity of products ideated and on the amount of resources invested in the development of the creative solution. Furthermore, these studies explore the type of creative process ignited by financial constraints and analyze the effect of financial constraints in interaction with an individual difference such as novelty seeking, which embraces more remote determinants of creative performance, on the creativity of the outcomes to a product ideation task, as well as on the creativity of the outcomes to a more constrained task such as repairing an existing product. The results suggest that constrained financial resources may be beneficial to creativity. Financial constraints lead to the ideation of more creative products. Yet these products are generated using fewer inputs and a lower budget than products generated in an unconstrained condition. Furthermore, while yielding outcomes as creative as the ones generated under input constraints, financial constraints induce a parsimonious mindset reflected in the use of less costly resources. More interestingly, financial constraints activate a top-down rather than a bottom-up processing strategy in approaching the creative task. Finally, the results show that the effect of financial constraints is stronger for individuals with inherent tendencies toward novelty seeking, because their stock of experiences and perspectives puts them under stress when facing an unconstrained problem space. This interaction effect holds not only for product ideation tasks, but also when the problem space is already constrained in nature, as in the case of repairing a product. These findings, which are quite counterintuitive from the perspective of classic new product development literature, suggest that, at least under certain conditions, the use of financial constraints might constitute a promising approach to foster new ideas' generation, one that leads to more creative outcomes despite using less costly inputs. In addition, our results suggest that, when dealing with a creative task, companies should modulate the adoption of this kind of constraint on the individual characteristics of their employees, specifically on their innate tendency to seek novelty.

Item Type: Article
Additional Information: This is the accepted version of the following article: Scopelliti, I., Cillo, P., Busacca, B. and Mazursky, D. (2014), How Do Financial Constraints Affect Creativity?. Journal of Product Innovation Management, 31: 880–893, which has been published in final form at http://dx.doi.org/10.1111/jpim.12129
Subjects: H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
Divisions: Cass Business School > Faculty of Management
URI: http://openaccess.city.ac.uk/id/eprint/4268

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