What drives innovative behavior?- An experimental analysis on risk attitudes, creativity and performance

Abstract

In this paper, we propose a novel laboratory experiment that examines the role of individuals’ self-perceived creativity and risk preferences in their willingness to innovate. In our experimental setting subjects are involved in two main activities: performing a real-effort task for multiple rounds and deciding on whether to try to obtain an innovation in the real-effort task. The decision to innovate has been designed as a matter of solving a creative task or playing a lottery. If the subjects were successful in solving the creative task or winning the lottery, they obtained a simplified version of the real-effort task, which is to say that they successfully implemented an innovation. We also elicited the subjects’ risk attitudes and their self-perceived creativity. We found that risk-taking attitudes were positively correlated with the willingness to innovate only when the outcome of the decision to innovate was determined by the lottery. On the other hand, there was no significant effect of either self-perceived creativity or risk-taking attitudes on the willingness to innovate when the innovation outcome was the result of solving a creative task. However, self-perceived creativity was positively correlated with the likelihood of solving the creative task successfully. Our results also showed that the performance in the real-effort task was influenced by how the decision to innovate was framed. Our study not only provides more insights into how to foster the decision to innovate at the individual level but also contributes to the use of experimental methods in the innovation literature.