Investors respond negatively to executives’ discussion of creativity

Abstract

Creativity and innovation are often considered to be essential characteristics of effective organizations. However, recent experimental research suggests that individual-level creativity in the workplace is not always perceived positively because of the uncertainty inherent in creative ideas. Although this research has advanced our understanding of perceptions of individual creativity in organizations, less is known about whether this creativity bias holds in real world contexts and, if so, whether there are organizational consequences. In this paper, we examine the organizational implications of executives’ use of words related to creativity and innovation (i.e., creativity-speak) during quarterly earnings calls. We predict that due to the association between creativity and uncertainty, market reactions to creativity-speak will be negative. However, we also predict that these same discussions of creativity will be associated with higher firm financial performance. We find support for our predictions, and additionally find that the creativity bias can be ameliorated through executives’ use of a positive tone when discussing creativity and innovation. Our study has a number of theoretical implications for the study of creativity, innovation, and executive communication.