3.2.1. Leadership and creative slack

According to the leadership approach, the leader guides, orients and influences all company members to voluntarily move towards achieving a vision. The literature shows that the leader’s commitment to creativity and innovation activities is essential for an organization to be oriented towards innovative and creative projects (Amabile 1988; Andriopoulos 2003; Szostak 2006a; Dubois 2013). One of the most obvious reasons is that the leader has a major influence on the organizational climate (Ekvall 1996; Zhang and Bartol 2010; Carrier and Gélinas 2011a), whether to encourage members to be creative and innovative, to support them with resources in their creativity and innovation activities, or to select potentially risky ideas. However, this commitment must be clearly perceptible to all stakeholders, and first and foremost to employees, who, in SMEs, are close to the manager (Torrès 2015). The question then arises: how can this commitment be made perceptible, while taking into account the SME’s limited resources? Two points seem essential to us to consider closely.

For the first point, we would like to return to the main stakeholder who must engage in SMEs: the leader. Without discussing the psychological considerations for understanding the leader’s personality, traits and behavior, we retain research dedicated to these subjects, that there are several common attributes (Carrier and Gélinas 2011a⁷). While specifying that each leader is unique because of the combination of each of these attributes, Cardinal (2018) proposes five:

• – a clear vision in mind: the leader may seem obstinate; his objectives are unwavering;
• – self-knowledge: he knows who he is, and what he is not. The leader is clear about their strengths and weaknesses;
• – knowledge of others: insight allows the leader to surround himself with the right people to fill in the gaps;
• – effective action: the leader makes decisions, and, if possible, at the right time;
• – charisma: convinced of his vision, he makes his project credible and lead others.

With regard to creative slack or a pool of creative ideas, this means that the leader is constantly searching for new ideas. He is aware of his personal capacities in creativity⁸ and those of those around him (family⁹, friends, other members of the management team, employees); he is surrounded with different people (Box 3.1): and he shows how essential creative slack is. All these decisions and actions drive others to also seek to feed this pool of ideas. The SME leader therefore has a major responsibility to make the company’s commitment to identifying new ideas visible. He must closely examine his relationship with creativity, because “an organization can hardly be more creative than its leaders allow¹⁰” (Carrier and Gélinas 2011a, p. 14). And this is reflected in management style, which is the second point addressed in this section.

As a leader has a major role in SMEs to feed the pool of new ideas, they will put their personal creativity at the service of the company and become a role model for others (Carrier and Gélinas 2011a). In other words, they will be an inspiration. The leader offers a variety of ideas, identifies opportunities, uses skills and engages in the use of creative tools.

The leader will also support the creativity of others, and in particular that of employees. To this end, the organizational climate for which they are largely responsible should enable them to express their ideas, even the most comical ones, to experiment with new approaches through dedicated tools (Box 3.2), and to foster links between stakeholders. In addition, the leader publicly supports employees who have dared to propose their ideas.

In short, the SME manager will favor what is called “transformational leadership” (Bass 1999; Bass et al. 2003). This type of leadership is specific in that it involves a close relationship with employees, which is one of the strong characteristics of an SME (Torrès 2015). This involves taking the time to share a vision and listen carefully employees, recognizing their ideas and knowledge, cultivating a positive image, and paying particular attention to the individualized development of each employee’s abilities. More concretely, the practices implemented can consist of clarifying the meaning of various decisions in relation to innovation and in particular in what and how they are supposed to nourrish creative slack. It may also involve trusting employees in some of their decisions that are intended to generate ideas (purchasing databases, meeting experts, visiting creative places, etc.). Or, the leader can encourage the exchange of views on experiments in a positive and benevolent spirit. They will then express more humanist values in their form management: collaboration, support and consideration (Boudrias and Brunelle 2015).

To summarize, we believe that, if the leader is a major creative and innovative in all organizations, this is even truer in the case of SMEs. The leader is a source of new ideas and, as such, allows creative slack to exist. Through its ability to inspire others, this pool is also nourished thanks to the creativity of others. However, it should not be assumed that all SME managers are de facto transformational leaders. For some, this style of leadership in their company is only possible because of the existence of a Top Management Team composed of people corresponding to a character conducive to this leadership, if not the leader’s. However, SME managers should not believe that this is inaccessible to them. Boudrias and Brunelle (2015) show that a transformational leader is not necessarily an exceptional person and that they “do not need to have extraordinary personal characteristics to be perceived as transformational by fellow team members¹²” (Boudrias and Brunelle 2015, p. 28). They point out that a leader’s commitment to employees is an important prerequisite for the emergence of transformational leadership, which reminds us of their role in all organizations. This can be witnessed in small and medium-sized enterprises where there are strong local relationships between actors.

3.2.2. Employees and creative slack

In this section, we focus on the second internal component, which is potentially a source of creativity and new ideas. In line with section 3.2.1, it should be recalled that transformational leadership has a positive impact on employees’ affective commitment (or emotional attachment based on identification with the organization). It can also affect normative commitment (or a sense of moral obligation to other members of the company) (Dumdum et al. 2002; Bono and Judge 2003). The leader supports their individual creativity (Carrier and Gélinas 2011a). Also, it seems important to understand who these employees are. In this sense, we want to go beyond the actor’s rational approach by focusing on two aspects which, according to the SMEs with whom we are regularly in contact, seem essential in creativity management. The first is that employees are seen as emotional and sensitive actors; the second is that they are also autonomous individuals.

Concerning emotions, we consider that a person’s emotional state is to be distinguished from the affective state (feeling, mood, temperament) according to at least four criteria:

• – a high degree of particularity of the stimulus between the object and the person experiencing an emotion;
• – the high intensity of the reaction;
• – the short duration;
• – the characteristic somatic experience (red cheeks, sweaty hands, etc.) (Herbeth et al. 2016).

Emotions can include joy, pleasure, pride, excitement, surprise, fear, sadness, anxiety, shame, anger, guilt, contempt, etc. This state influences an individual’s ability to propose (or not) new ideas. The more positive the emotions, the more people express their creativity (Lubart and Getz 1997).

In addition, Zhou and George (2003) explain that employee creativity is influenced by the leader’s emotional intelligence. This type of intelligence refers to the ability to accurately perceive, evaluate and express emotions; the ability to access emotions and/or generate feelings when they facilitate thinking; the ability to understand emotions and emotional knowledge; and the ability to regulate emotions to promote emotional and intellectual growth (Mayer and Salovey 1997). Thus, employees are sensitive to this ability in their management, and will become more involved in creativity. SME management can therefore question the degree of emotional intelligence. Indicators can help, such as a high rate of turnover, absenteeism, illness, the existence of tensions within teams, etc., as well as, more simply, the nature and quality of the exchanges engaged on a daily basis with employees. It is also important that the leader takes into account the well-being and interests of employees during debates and discussions (Tesluk et al. 1997). This facilitates the freedom of expression and thus the expression of each employee’s individual creativity. For example, during a creativity session, employees must truly feel that the SME’s management appreciates their ideas, even if they question its decisions. The paradoxical injunctions “be creative, be free!” will not generally be enough. The leader will have to think about the organizational context favorable to their creativity (Ekvall 1996; Brion and Mothe 2017), upstream, and adjust it over the course of the session with regard to the interactions between the actors.

These results should therefore encourage the SME leader to be attentive to the employees’ emotions when involved in creative and innovative projects, and to their own discourses and actions, knowing that they can foster positive emotions. Close relationships in SMEs should encourage such attention. This can also be encouraged by creative methods that clearly integrate the actors’ emotions (Box 3.3).

With reference to Adler and Chen (2011) it is now known that when trust between employees exists, there is no fear of being robbed of their ideas. Rather employees feel more inclined to take risks and engage in creativity for the benefit of the company. A confident employee who respects ideas will feed more into the creative slack of the SME. Management contributes to this respect by implementing it at its level, but it also requires employees to commit to practising it, without necessarily being under the constraint of the Top Management Team. In this sense, research conducted on a population of students is instructive. Verzat et al. (2016) showed that when a group of students was able to demonstrate more freedom in its knowledge learning process, it developed more proactive behavior: the group created, took initiatives and transformed ideas into action. The researchers then highlight that this was possible because of several emotions: joy, pleasure, pride, excitement and surprise. In fact, the autonomy provided by the teacher allowed them to express their creativity more fully. Even if employees are not students and the leader is not a teacher, it is still possible to imagine that autonomous employees are more inclined to identify and share creative ideas.

Indeed, autonomy, which etymologically means “governing oneself according to one’s own laws”, is a significant characteristic in studies of organizational creativity (Amabile 1988). This may seem contradictory to the status of being an “employee”, which implies a subordinate relationship between individuals in different positions, as well as specific functional and operational rules and practices. In fact, autonomy as a characteristic of the organizational context allows actors to exploit areas of uncertainty in the organization, not only for their power (Crozier and Friedberg 1977), but also to seize opportunities, adapt to changing situations, propose solutions resulting from “system D” for example to overcome a lack of resources in an innovative project in SMEs. In addition, employees now have new expectations of their work and aspire to more equal relations with management (Chanlat 2003). In innovation, this is reflected, for example, in the development of collaborative tools for managing creativity and innovation (internal FabLab, competitions, etc.), behavior such as intrapreneurship (Box 3.4) or procedures such as communities of practice (Box 3.5).

We would like to highlight two limitations to the ideas developed here. Firstly, employee autonomy is not innate. It can be learned, however it requires a certain maturity to understand the company, to understand oneself and others in the broadest sense (employees, customers, shareholders, suppliers, etc.), and to deconstruct the rules in force to invent new ones. For an SME, the question then arises: how are employees considered? Are they considered as autonomous people – even in the process of becoming autonomous? What is being done to increase their autonomy? Answers can be found in scientific research, particularly that dealing with postmodern enterprises (Silva and Strohl 2016). As inspiration, we can use the work of Hill et al. (2014). They show that innovation in all organizations depends on two dimensions: will and capacity. While in SMEs, the will is mainly based on the leader within his role the ability to innovate requires, according to these researchers, three organizational capacities:

• – creative abrasion is the first ability; its objective is to foster collaboration in order to produce ideas. Discussion and debate are the goals, that is speaking out, defending points of view with arguments and listening to others;
• – the second ability is creative agility: it consists of testing ideas and experimenting with them by trial and error using conceptual euristics;
• – creative resolution is the third capacity, which provides the opportunity to make a decision that gathers potentially opposing ideas.

The second limitation concerns the desire to make employees proactive. Karoline Strauss (2018) shows that, while proactivity has positive consequences, the other side of the coin, in this case stress at work, should not be neglected. Indeed, proactivity implies that people question the routines in place, or even challenge authority, which is a source of conflict. Moreover, since managers, and in particular the management team and the SME manager specifically, often consider this type of quality to be part of their prerogatives, they may not see favorably that employees also do so, which can be a source of tension. In fact, according to Strauss (2018), this stress is all the more significant as employees force themselves to be proactive, when they are not motivated to be so. This should therefore encourage the SME leader to take into account the motivation of individuals.

To recall, we retain that the creative slack in SMEs is nourished by employees, who are seen as emotional individuals, and sensitive to the leader’s emotional intelligence. They are also considered autonomous, and therefore capable of deconstructing existing rules and creating new ones. On the other hand, this implies that SME management must set up a favorable and encouraging organizational context, while considering the real motivation of individuals to commit themselves to innovation and creativity, as well as accepting with humility that they are not always so central and the “champion” of innovation. While these two internal components of the organization contribute strongly to creative slack, they are not isolated from their environment. It can, in fact, be a space of constraint, a strategic resource for SMEs by drawing ideas from it, or even a space to be transformed by new ideas.

3.3.1. The territory: a cognitive space for the emergence of ideas

SMEs generally demonstrate strong integration in their local environment (Julien 1993). They establish privileged relationships with other actors (public and private, large or small companies) present in their environment to respond to calls for projects or develop innovations (Rogers 2004). SMEs are also involved in local social and societal actions, particularly when developing a Corporate Social Responsibility (CSR) strategy (McWilliams and Siegel 2001; Bocquet et al. 2012). Yet it exploits accessible resources, for example in competitiveness clusters, while helping to increase them (e.g. the creation of new knowledge) (Kogut 2000; Szostak 2007; Deltour et al. 2016). Thus, and as highlighted in Chapter 1, the external environment is not only a constraint that determines the company’s strategy and, more generally, decisions according to a deterministic approach. It is also not ignored, to the benefit of the company’s internal resources in accordance with a “resource” approach. It is itself a resource that feeds creative slack.

Many researchers have been interested in the role of the territory in innovation from the Marshall district to the creative territory (see, among others, Marshall 1906; Arrow 1962; Nelson and Winter 1982; Florida 2005). In fact, the concept of a “territory” is difficult to define because of the many approaches involved (Gay and Picard 2001; Lauriol et al. 2008; Loilier 2010). Above all, it is a social and political construction that evolves over time and can be modulated in terms of physical space. Here, we consider it under the prism of creativity and we propose to show how it participates in the emergence, capture, selection and implementation of new ideas feeding the creative slack in SMEs. We are not discussing the merits of this or that approach, but we acknowledge its role in new ideas. Three axes seem important to note for SMEs: the territory as a framework for creative slack (section 3.3.1.1.1), the territory as a source of inspiration (section 3.3.1.2) and the limits to be retained to these approaches to the territory (section 3.3.1.3).

3.3.1.2. The territory: a source of inspiration for the creative slack

The second axis proposes to consider the territory as a source of inspiration for new ideas, from which SMEs can benefit by opening their borders (Chesbrough et al. 2006; Vanhaverbeke 2017; 2018). We refer here in particular to the creative territory (Florida 2005), which is composed of three interacting levels. The first is the upperground. According to Simon (2009), this includes institutional organizations, innovative, renowned and recognized companies in the following sectors of technology, art, culture and education. The second level is the underground, which brings together creative individuals engaged in activities such as painting, sculpture, fashion, cooking, etc. These individuals participate in the creation of a specific creative climate on the territory. The third level is between the two previous ones, the middleground. It allows isolated creative individuals, and those who tinker in their garage, to share their creative ideas with upperground actors through devices set up at middleground level. These may include idea competitions (Hutter et al. 2011; Liotard and Revest 2015), cafés or restaurants where everyone can exhibit their work, street demonstrations, etc. (Cohendet et al. 2011). SMEs can benefit from this creative territory in different ways depending on their access to a specific level (Figure 3.1).

Studies show that these three territorial levels influence organizational creativity (Sarazin et al. 2017). More precisely, Dechamp and Szostak (2016) conclude, in their research on industrial SMEs, the importance of procedures set up at the middleground level to fully exploit this creative territory, while leaving the SME free to decide whether or not to get involved (Box 3.7). Indeed, the influence of the creative territory depends on the participation of the organization in the activities of this territory. This influence is not permanent and involuntary. On the contrary, it is the result of the organization’s decision to participate, for example, in an ideas competition, to seek ideas in ephemeral exhibitions during street demonstrations, or others. This echoes the leadership commitment discussed in section 3.2.

This research also emphasizes that the boundaries of the SMEs studied are open to the environment, but not continuously; rather, it is a sequential opening (Gandia et al. 2011). This sequential opening would allow SMEs, on the one hand, to preserve internal balances, which are in fact disrupted by new ideas, and, on the other hand, to effectively manage the creative slack (Cohendet and Simon 2007). If new ideas emerge or are constructed, there is still a need to carry out work to capture and implement them, taking into account the SME’s resources (see Chapter 4).

3.3.2. Inter-organizational relationships in SMEs: a source of new ideas

As Spithoven et al. (2013) point out, SMEs engage in open innovation strategies because of their resource constraints, and open up to their environment as detailed in section 3.3.1. However, in this section, we are changing the level of analysis of this environment. From the territory as a source of new ideas, we focus on the inter-organizational relationships of SMEs. The main reason is that, according to SME managers we work with, it is important to look at the actors who make up this environment, and that a macro approach remains insufficient to really appreciate the role played by the space around the SME, in innovation.

Robinson and Stubberud (2009) explain how these relationships impact innovation in SMEs, despite the costs and risks involved. Thus, the time spent managing the relationship can be counterproductive (Watson 2007). However, many studies show that, for an SME, inter-organizational relationships have a positive impact on innovation capacity (Robinson and Stubberud 2009; Vanhaverbeke 2017 and 2018), in particular by directing the search for new ideas. Indeed, it allows SMEs to access resources not owned, to share the risks mentioned earlier in this chapter, to increase their organizational capacities (by sharing expertise, skills, knowledge, etc.), or to share activities in a fragmented value chain.

These relationships established by a company with other actors (suppliers, customers, competitors, partners, laboratories, institutions) go hand in hand with coordination, and therefore the need to plan, organize, structure and arrange the work induced by the purpose of the relationship. For example, when developing a video game, studios establish relationships with video game console manufacturers, but also with publishers and distributors (Gandia et al. 2011). Their creativity therefore depends on these relationships, because if, on the strength of the demands of the players’ market, publishers demand this or that type of game, this guides the story, the characters and the sets created by the studios. However, if we acknowledge the impact of these inter-organizational relationships on the innovation capacity of SMEs, we wish to qualify it with regard to at least two aspects: the nature of the relationship and the quality of the other partner.

Concerning the first aspect, Pisano and Verganti (2008) show the importance of being more precise in the approach to these collaborations, if two important questions are retained:

• – is the project membership open or closed? In other words, can everyone participate in the innovation project? The difference between the two cases comes from the potential clear identification of the other partner;
• – is the network governance structure hierarchical or flat? In other words, who defines the problem and chooses the solution: the group or a named actor?

This leads to highlighting four ways of collaborating in innovation (Table 3.1).

Among these four ways of collaborating, we would like to focus our attention on the case of crowdsourcing¹⁸, which is developing strongly in our economy (Chesbrough 2017; Felin et al. 2017; Wang et al. 2018). Three characteristics should be noted. Firstly, this search for ideas from anonymous individuals, many of them and all different from each other, adopts the premise that it is not necessary to be an expert on a subject to have relevant ideas. Secondly, it is the company in its own right, which intentionally engages in crowdsourcing, according to a logic of production and wealth creation, by proposing a business model (Burger-Helmchen and Benin 2011). And, thirdly, an intermediary generally facilitates the relationship between the company and the host of individuals for reasons mainly of transaction costs (Penin and Burger-Helmchen 2012); this is often a digital platform.

While there are so few studies interested in crowdsourcing in SMEs (Benin and Burger-Helmchen 2012; Ruiz 2016; Ruiz et al. 2017), we can highlight, however, several factors to be taken into account in the exploitation of this mode of collaboration, which feeds the creative slack.

Through its study on the company Raidlight, a French SME specializing in outdoor sports and present in Asia and the United States, Ruiz (2016) puts forward:

• – cultural factors: SME identity, employee involvement, support for the Top Management Team;
• – organizational factors: coordination methods with the crowd, activity management, integration of the system into the company;
• – knowledge factors: management and exploitation of external knowledge, development of absorptive capacity.

Cultural factors are particularly important to take into account when deciding to adopt this mode of collaboration. Organizational ones mainly play a role in the concrete implementation of crowdsourcing. Knowledge factors are particularly decisive at the end of crowdsourcing operations, in order to ensure that this mode of collaboration is sustainable. For an SME, this requires it to take these factors into account in order to limit or even avoid the barriers to innovation specific to this mode of collaboration. However, it is worth being aware of the fact that they accumulate with each other as forms of crowdsourcing adoption progress (Ruiz 2016).

The impact of inter-organizational relationships on the innovative capacity of SMEs should also be put into perspective according to the quality of the other partner involved. And it is the second aspect discussed in this section that echoes the closed inter-organizational relationships, to use the terminology of Pisano and Verganti (2008). In this case, the identity of the actors is clearly announced. The classic case is that of a company’s relationship with an external stakeholder¹⁹. The impact, however, is different depending on stakeholder identity. In this sense, a study of design agencies in France shows that the creative performance of these SMEs is explained by several types of inter-organizational relationships (Szostak 2006b). Thus, institutions, which are emblematic of the upperground in particular, allow these innovative SMEs to develop creative practices. This result is contrary to the conclusions on isomorphism²⁰ induced by institutions (Szostak 2006b). If this is in line with one of the specific features of design companies, which is to be able to manage multiple constraints (Borja de Mozota 2002), this result shows that design institutions legitimize design professionals. It would also be a mistake to approach these institutions from the unique perspective of isomorphic pressures, and to ignore their support for the emergence of new ideas.

The same study also shows that the nature of customers influences the creative performance of SMEs. The more a design agency works for well-known clients, the less it expresses its creative performance to companies in various sectors. For these agencies, it appears that the requirements imposed by reputable clients (leaders and/or CAC40²¹ listed companies) limit their freedom of creativity. With regard to national partners, such as specialized service providers and industrialists with expertise in a specific technique or expertise, the creative performance of these SMEs is a decreasing function of the multiplicity of these relationships. While design agencies certainly benefit from such relationships, it seems that the fear of being controlled or even spied on in terms of their creativity hinders their ability to express new and useful ideas (Amabile et al. 1996).

In short, if the inter-organizational relationships of these design agencies allow them to feed their creative slack, institutions are more stimulating than reputable clients and other partners. Without generalizing these results, we note that, for SMEs, not all inter-organizational relationships are as rich in identifying new ideas, and that, to increase innovation capacity, they must therefore be analyzed very closely.

3.5.1. Family businesses and innovation: the same DNA or expression of a paradox?

Céline Barrédy is a doctor of finance, a specialist in family businesses and currently a full professor at the University of Lorraine. Her work concerns the finance and governance of family businesses. She is particularly interested in the valuation of family businesses and in the interactions between family and external partners. Her publications include work on the role of external directors on the boards of directors of family businesses, legal structures as a governance mechanism for family businesses, the role of private equity in family businesses and the influence of family law doctrine on the value and longevity of family businesses. She participates in international projects around the family business such as the STEP project led in France by Audencia Business School.

Family businesses are the prevalent form of enterprise in the world: they account for 80% of the global socio-economic landscape. They are characterized by a dominant family in the ownership structure and by the presence of at least one family member in the management. The family business is characterized by a desire for the transgenerational transmission of ownership and mangement. The family continuity can last for centuries, as is the case with Beretta in Europe, founded in 1526 and still a family company today. Yet others are struggling to make it through the second generation. While these companies have the particularity of going through the ages, they are sometimes presented as retrograde and struggling to innovate. If innovation is defined as the set of activities carried out by a firm to design, manufacture and market new products, technologies, systems or techniques (Freeman 1976), then there is a debate about the ability of family businesses to innovate, with innovation having been identified as a major determinant of business survival and their ability to generate superior performance. Is the ability to create new products, new processes or new forms of organization a paradox for family businesses? On the contrary, are their longevity explained precisely by this ability to innovate? In this case, wouldn’t innovation in family businesses be different in nature and implementation compared to non-family businesses? How does the particular nature of family businesses lead to innovation procedures that are different from and therefore less known than non-family businesses?

3.5.2. The territory of French Polynesia: a space of constraints, opportunities and resources for small businesses

Interview with Damien Charitat, founder of several companies, including LOGIC and the Académie des Télécoms. He holds a doctorate in Management Sciences.

Damien Charitat entered the telecom sector in 1997. He started his consulting activities in 1999 and those as a trainer in 2000 still in his preferred sector of activity: telecoms. He was President of Numélink²², the first French cluster of companies operating in the digital world, and is a business expert for several institutions (Datar, Agence de développement économique de la Loire, Comité d’entreprise de l’OPT-NC, SIPF, etc.). In addition to his private practice, he is also an associate lecturer at the Université de Lyon 2 and a professor at Télécom Saint-Étienne (Institut Mines-Télécom). LOGIC – Académie des Télécoms has had a secondary school in French Polynesia since 2017 and this SME has been present in the South Pacific since 2009.