Rejections, Incentives, and Employee Creativity: When Chocolate Is Better Than Cash

Abstract

Although creative ideas frequently meet with rejection in many organizations, the consequences of such rejection on future creative performance remain largely unexamined. Using an experiment, we examine whether the effect on future creative performance arising from the rejection of creative ideas depends on the type of rewards employees subsequently receive. We find that the rejection of creative ideas leads to lower future creative performance compared with the acceptance of creative ideas. We further find that the effect of rejection manifests only when cash rewards are used to motivate future creativity, but not when tangible rewards are used. Our results are consistent with theories in behavioral economics on the differential sensitivity to probability assessment for monetary versus nonmonetary outcomes. Our study extends the literature on creativity by investigating the role of rejection on innovation and highlighting the potential benefits of using tangible rewards to motivate rejected employees.