Abstract

Creativity has been recognized as a critical factor in innovation development companies. Small companies find it more difficult to develop creative activities and achieve innovation, thereby affecting their competitiveness significantly. In this study, we examine the barriers to creativity in a sample of 154 manufacturing small and medium enterprises (SMEs) in Chile. The barriers related to the environment, managers, and employees, which limit the development of creativity, were examined. Besides, the moderating role of institutional networks was studied. Results show that (1) creativity positively affects innovation in SMEs; (2) environmental barriers impact barriers related to on both managers and employees; (3) managers' barriers influence employee barriers; and (4) employee barriers negatively impact creativity, although this negative effect is diminished by the moderating effect of developing activities with institutional networks, such as higher education institutions, research centres or business associations. These results have important implications. Managers should encourage greater cooperation between companies and universities and be mindful of their impact on their employees. Government policies that encourage and support collaboration with SMEs can enable companies to be competitive and develop innovation, directly impacting employment and economic growth in a country.