THE CREATIVITY-BUREAUCRACY BALANCE MODEL FOR SMALL AND MEDIUM-SIZED ENTERPRISES IN GLOBAL VALUE CHAINS

Abstract

Small and Medium-sized Enterprises (SMEs) face significant challenges in balancing their creative capabilities with bureaucratic demands when participating in Global Value Chains (GVCs). While extensive research exists on SMEs' creative aspects and compliance challenges independently, limited attention has been paid to the interaction between these forces. This paper proposes a model, named Creativity-Bureaucracy Balance Model, to address this research gap by examining the dynamic interplay between SMEs' creative capabilities and bureaucratic pressures within GVCs. Drawing on theoretical foundations from creativity theories and institutional frameworks, the model identifies three key creative capability factors (innovation and product development, adaptive creativity, and dynamic capabilities) and four bureaucratic pressure factors (regulatory compliance, institutional pressures, power asymmetry, and regulatory fit). The model also incorporates mediating factors (resources, partnerships and networks, and market and institutional contexts), which influence how SMEs navigate these dual pressures. The Creativity-Bureaucracy Balance Model reveals that successful SMEs participation т GVCs depends on effectively managing these contradictory forces, leading to outcomes such as enhanced GVC positioning, improved growth potential, and increased resilience. Through empirical examples across various sectors, the paper illustrates how SMEs can strategically leverage creative capabilities to address compliance challenges while maintaining market competitiveness. The report calls for further empirical validation of the model to refine its applicability across different sectors and regions. Ultimately, it underscores the importance of balancing creativity and bureaucracy for the sustainable growth and competitiveness of SMEs in GVCs.