Introduction

In this day and age, it is agreed upon that innovation and therefore creativity have been and will be a
crucial pillar of organizations, as they are the foundation of organizational growth (Tohidi & Jabbari,
2012). Although innovation used to be presented as only the creation of something new, at present it
is more commercialized and connotated to creating competitive advantage (Sirková, Ferencová, &
Taha, 2016). Especially during times of crises, such as the current pandemic, it is essential to keep
nurturing creativity, innovating, growing and adapting as an organization. Not doing so would be
detrimental.

One could argue that the pandemic, which has been chaotic for the most part, has put a strain on
organizational growth. However, despite the chaotic situation, some educational institutions, eateries
and other organizations have managed to keep their heads up, innovate and adapt to the constantly
changing situation which is the pandemic. One might wonder how that is possible.

Prior studies
Most studies have found that there is a positive relationship between chaos, organizational creativity
and organizational innovation. This is because chaotic systems often manifest flexibility and
adaptability (Schuldberg D. , 2011), which are needed for creativity. Additionally, chaotic systems
bring about instability, and this can in a similar manner promote creativity (Schuldberg & Guisinger,
2020). Moreover, it was found that chaos can act as an ally when it comes to innovation as suggested
by chaos theory (Smith & Paquette, 2010). This is elaborated later on.

Although there have been several studies on this topic, there is a dearth of research that studies this
specific relationship in the deviating situation that COVID-19 created. As every chaotic system is
different and therefore has different outcomes (Schuldberg & Guisinger, 2020), it is worth re-
examining the relationship during the pandemic. Therefore, the main objective of this paper is to
further deepen the understanding regarding the link between chaos, organizational creativity and
organizational innovation. More precisely, this paper focuses on the question: What is the influence
of chaos on organizational creativity and organizational innovation?

For the question at hand the relationship between the variables is explained via chaos theory.
Moreover, a research model and a literature review of various studies are presented. The literature
review is concluded by the formulation of two hypotheses through examination of current research.

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Theoretical Background
Defining the variables: Chaos, Organizational Creativity and Organizational Innovation
The independent variable of this paper is chaos, which often has negative connotations associated
with it. While it is true that chaos is not stable and far from equilibrium, it should also be noted that it
is linked with growth, innovation, creativity and learning. In this paper, chaos is defined as the
“underlying interconnectedness that exists in apparently random events” (Briggs & Peat, 1999, p. 2).
Moreover, it is often referred to as a nonlinear dynamic system. (Snaselova & Zboril, 2015). Chaos is
thus uncertain, but not disorder. It is order without the predictability that usually comes with it
(Cartwright, 2007).

The first dependent variable, organizational creativity, on the other hand is easier to define.
Creativity can be divided into individual, group and organizational creativity (Mumford, 2012). In
this paper the focus lies on organizational creativity and not on creativity itself. However, it is worth
noting that the definition of creativity itself lies very close to that of organizational creativity. To
prevent confusion between these variables, it is important to understand what they mean and what
their main difference is. Creativity on its own can be defined as “the production of high quality,
original, and elegant solutions to problems” (Mumford, 2012, para. 7). The closely lying definition
of organizational creativity is “the creation of a valuable, useful new product, service, idea,
procedure, or process by individuals working together in a complex social system” (Woodman,
Sawyer, & Griffin, 1933, p. 293). Although similar, the definitions do differ. While creativity
stresses the creation of solutions to problems, organizational creativity revolves around the creation
of the new by individuals working together. Moreover, the definition of organizational creativity is
broader. It can include solutions to problems; however, it covers much more than only that. In this
paper organizational creativity and creativity will be used interchangeably. However, only the
definition of organizational creativity is applied.

The second dependent variable of this paper is organizational innovation. This is defined as “the
application of ideas that are new to the firm, whether the newness is embodied in products, processes
and management or marketing systems.” (Weerawardena, O'Cass, & Julian, 2006). Similar to those
of creativity and organizational creativity, this definition of organizational innovation is much the
same as the definition of innovation itself. Innovation can be defined as “The crafting, often
reworking, of creative problem solutions into new products, processes, or services” (Mumford,
2012). With these definitions, it can be argued that organizational creativity generates organizational

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innovation or in other words, organizational innovation is the result of organizational creativity. As
this paper focuses on organizations in specific, the phrases “organizational innovation” or
“innovation in organizations” are utilized.

Chaos Theory
The principal theory used in this paper regarding the link between the variables is chaos theory. This
theory regained its importance in the early 1980s and was mainly used in physical, chemical and
mathematical problems. However, nowadays it is also applied to other fields, such as psychology and
economics (Jayanthi & Sinha, 1998). Chaos theory is paradoxical to today’s scientistic culture as it is
based on how in nature order is found in chaos. Nowadays, the feeling of being in control is what
many people, organizations and societies strive to gain, and therefore people, especially in Western
societies, are attached to logic, reason, structure, control and order; uncertainty and unpredictability
are preferably eliminated (Smith & Paquette, 2010). However, chaos theory suggests that this
gratification need for control and predictability is impossible.

The theory advocates for open evolution structures in which the focus lies on the process structure
concepts rather than on solid system structures; this means that we should for instance not view
organizations as rigid and constant but as flexible and continuous and thus more uncertain and
chaotic. The theory then suggests that if this new orientation and understanding of constantly
changing and growing systems that interact and adjust to their environment is implemented, more
and more complex relationships will emerge in which society is collective and collaborative. In
organizations these complex relationships translate into the relationships individuals in organizations
have (Smith & Paquette, 2010).

The theory suggests that organizations should recognize the value each individual carries to
potentially trigger a continuous process of interaction and growth which will eventually lead to
innovation and that they should therefore decide to choose innovation and progress over
predictability. In other words, organizations should embrace chaos and uncertainty to generate
innovation. If organizations do otherwise and chaos is not utilized, chaos theory postulates that
organizations will then fall back in their inherent structure; they will then never change and always
stay the same (Smith & Paquette, 2010).

With the theory in mind, the connection between chaos, creativity and innovation can be clarified.
Chaos theory suggests essentially that chaos is needed for organizational innovation and growth.

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Moreover, the theory suggests that when a more chaotic world view is adopted, room for
collaborations, complex relationships and continuous processes is created which will lead to
organizational creativity as we define organizational creativity as “the creation of a valuable, useful
new […] process by individuals working together in a complex social system” (Woodman, Sawyer,
& Griffin, 1933, p. 293).

Hypotheses
One study suggested that order and already established structures needed to be broken as moving
away from equilibrium and therefore creating incremental changes and chaos would generate
organizational creativity (Borghini, 2005). They even claimed that core rigidities, the relaxation and
postponement of improvement activities of a company, would negatively influence creativity and
because of that chaos was needed to grow.

Furthermore, another study that examined organizational creativity, highlighted that although chaos
carries destruction of order, it also carries much positive aspects with it (Vicari & Troilo, 2000). One
of those being creativity. The study illustrated how noise and disorder due to perturbations can
spawn creativity. This is one of the reasons why the study sees crises as something positive as crises
bring chaos and therefore creativity and opportunities to grow.

Moreover, it was found that creativity occurred more in flat structures than in hierarchical structures
(Kim & Zhong, 2017). In flat organizations chaos, uncertainty and failure are more accepted and
encouraged than in hierarchical ones as shown in a study on creativity, chaos and knowledge
management (Smith & Paquette, 2010). This study depicted how Google, which is a flat
organization, encourages chaos for the sake of developing new ideas and products. Therefore, it can
be concluded that in flat organizations, there is more room for chaos than in hierarchical
organizations and that there is a clear link between chaos and organizational creativity.

As theoretical evidence and most studies suggest that there is a positive relationship between chaos
and creativity, the following is excepted.
• H1 A higher level of chaos will lead to a higher level of organizational creativity.

Although chaos theory indicated a relationship between chaos and organizational innovation, there is
a scarcity in papers that discuss this relationship. What researchers did find was the following. In a
study regarding creativity in the work environment, the following was stated in the conclusion: “[…]

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creativity in organizations, which is the root of innovation.” (Amabile, Conti, Coon, Lazenby, &
Herron, 1996). This shows that creativity leads to innovation. Thus, it can be assumed that if there is
creativity, there is innovation. Therefore, if chaos and creativity have a positive relationship, chaos
and innovation will also have a positive relationship and vice versa.

In addition, it has been shown that innovation is found in chaos as innovation is a process of a
nonlinear dynamical system which is unpredictable, unstable and random (Cheng & Van de Ven,
1996). This is in line with the definition of chaos that was established earlier. This finding further
supports the relationship that was established above.

Additionally, one study found that an increasing number of innovative companies try to manage
chaos and to some degree, they do and still manage to innovate (Quinn, 1985). This would then
render “chaos is needed for innovation” as obsolete. However, the study also admitted that chaos was
essential for innovation and that “Lucky “accidents” are involved in almost all major technological
advances.” (Quinn, 1985) Technological advances being one example of organizational innovation.
Therefore, it can be concluded that chaos is necessary for innovation.

In agreement with the theoretical evidence and research studies found, the following is hypothesized.
• H2 A higher level of chaos will lead to a higher level of organizational innovation.

Figure 1.1
Research Model

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Appendix

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