Does Contingent Reward Leadership Enhance or Diminish Team Creativity? It Depends on Leader (Un-) Predictability

Abstract

Although prior research has shown that reward provision might sometimes increase creativity, little is known about how leadership that clarifies effort-reward contingencies (i.e., contingent reward leadership) is related to team creativity. Drawing on the theory of learned industriousness, we argue that contingent reward leadership can enhance team knowledge exchange and, in turn, team creative performance. However, we propose that this relationship is moderated by leader unpredictability, which can create uncertainty about resource allocation, thereby undermining the otherwise positive effect of contingent reward leadership. In a two-source, lagged design (three-wave) field study with data from 60 organizational teams, we found a conditional indirect (moderated mediation) effect of contingent reward leadership on team creative performance through team knowledge exchange. This conditional indirect effect was positive when leader unpredictability was low, and negative when leader unpredictability was high. Our research provides leaders with clear and actionable advice by showing that contingent reward leadership promotes team creative performance only when leaders act in predictable and consistent ways.