THE IMPACT OF BUREAUCRACY ON CREATIVITY AND INNOVATION IN THE ADVERTISING AGENCIES OF PAKISTAN

Abstract

In the present era characterized by uncertain market conditions, mounting competition, spiraling diversity and mobility of workers, and increasing customer power, organizations should strive for achieving a lasting competitive advantage. It is believed that unless organizations focus on creativity and innovation, they cannot compete effectively and earn economic returns. The dynamic organizations like advertising agencies are especially required to be creative and innovative in order to lead, grow and compete. These organizations have mostly implemented bureaucratic control practices, such as formalization and centralization, to regulate and control the behaviors of workers. Prior research indicates that these bureaucratic practices stifle creativity and innovation. The paradox between bureaucracy, creativity and innovation has created a challenging situation for the managers in advertising agencies. The main objective of the study was to empirically investigate the impact of organizational bureaucracy on employee creativity and organizational innovation in the advertising agencies of Pakistan. Data for this study was collected through surveys distributed to a sample of 455 employees from the advertising agencies of Pakistan. Various techniques were applied to statistically analyze the data and test the hypotheses. Findings from statistical analyses indicate that organizational bureaucracy and its components, formalization and centralization; have a negative impact on employee creativity and organizational innovation. Also, creativity has a positive impact on innovation. Besides, the results of the indirect hypotheses support the postulation that creativity mediates the relationship between bureaucracy and organizational innovation in the context of advertising agencies of Pakistan. The study not only makes important theoretical contributions, but also presents valuable insights to the managers of the advertising agencies of Pakistan. Findings strengthen the nature of control-creativity paradox indicating that excessive bureaucratic control in organizations leads to reduced creativity and innovation. In addition, findings suggest that managers and policy makers should take into account the flexibility in administrative controls to encourage creativity and innovation in order to gain a competitive edge in the turbulent environment. Keywords: bureaucracy, formalization, centralization, employee creativity, organizational innovation, process innovation, product innovation, managerial innovation, advertising agencies