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Abstract Organizations that rely heavily on employee creativity face a dilemma: the particular nature of creative production calls for a substantial use of formal control, yet such control can undermine employee creativity. We examine this dilemma by analyzing how an organization's reliance on creativity influences its choice of control practices. More specifically, we argue that an organization's high reliance on employee creativity generates two types of cost, which will be reflected in the control choices made by its top management. First, a high reliance on employee creativity brings with it particular risks of dysfunctional employee behavior such as an overly narrow focus on the individual task or the opportunistic use of task-specific expertise. Second, it generates costs when it induces organizations to abstain from the use of (otherwise effective) controls because such controls increase the risk of undermining employee creativity. We identify two characteristics of the work setting – the importance of employees' intrinsic task motivation and the lack of task-specific cause–effect knowledge on part of managers – which help us to better understand the sources of the cost of creativity. Using survey data from 457 companies, we provide evidence that the importance managers attach to their employees' intrinsic task motivation is associated with a higher emphasis on assessments of non-task related performance, while a perceived lack of task-specific cause–effect knowledge on the managers' side is associated with more use of predefined targets for performance evaluation. Both work characteristics contribute to explaining higher emphasis on employee selection processes and increased delegation in work settings that heavily rely on employee creativity.
