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Management Series: leadership-entrepreneurship

How financial constraints can drive creativity

One might naturally assume that a wealth of available resources would enable creativity to soar amongst product developers. Cass Research finds that in many cases quite the opposite is true.

Author(s): Dr Irene Scopelliti - Cass Business School; Paolo Cillo - Bocconi University, Milan; Bruno Busacca - Bocconi University, Milan; David Mazursky

Are financial restraints a threat to creativity? It might seem natural to assume this was the case, but research has shown that some other forms of constraints can actually foster, not hinder, creativity when it comes to the development of ideas and products. For example, it is quite common for creativity and innovation to flourish through the necessity of working with just "what's at hand", otherwise known as input resource constraints. Similarly, moderate time constraints can inspire an innovative response to the demands of the work.

Researchers at Cass Business School and Bocconi University wanted to investigate if financial constraints could have a similarly beneficial impact on product development by conducting a series of experiments. The research first examined the effect of financial constraints on creativity of the outcome of a product ideation task. Then the effect of financial constraint was compared with the effect of another type of constraint, both the creativity of product and the amount of resources invested.

To investigate this the researchers asked chefs to devise recipes using either a limited number of ingredients or working within a strict budget.

The research found that where unlimited options could actually stymie creativity, constraints such as limiting the number of available materials or imposing a budget can actually lead to more creative solutions. The research also discovered that the more innovative people are, the more they benefit from imposed constraints and the better their creative solutions.

Significantly the research found that solutions devised under a constrained budget were just as creative as those solutions devised under other limitations, but at a reduced cost.

A presentation on this research was given at a Marketing breakfast briefing at Cass Business School in April. The full research paper is forthcoming in the Journal of Product Innovation Management. A version of the research paper will be published here shortly.

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