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Unlike multinational companies, small and mid-size enterprises (SMEs) have budget constraints and, thereby, cannot invest heavily in improving the creativity of employees. They look for alternative budget-friendly ways to do the same. The authors of the current paper attempt to identify two psychological-based constructs which positively influence creativity among employees. Both these psychological constructs may be improved among the employees using suitable interventions from the human resource (HR) professionals and line managers working in the organization. This study is an attempt to test the influence of organization-based self-esteem (OBSE) and psychological capital (PC) (both malleable) on creative performance behaviour (CPB) among SME employees.

Validated instruments were used to collect data. Structural equation model (SEM) was used to evaluate the 377 responses collected from the employees working in three SME's in India. All three SMEs work in the area of innovative process design and require a high level of creativity among employees.

PC fully mediates the relationship between OBSE and the CPBs of employees. Employees experiencing higher levels of OBSE will develop higher self-esteem, and these employees will exhibit more creative behaviours, increasing the likelihood of achieving creative results.

This study provides valuable inputs to the creativity literature as it describes the process of how self-esteem influences the creativity of an employee. HR professionals working in SMEs can work on enhancing the OBSE and PC (both malleable) of employees to improve creativity among employees.

To the best of the researcher's knowledge, this is the first attempt to identify frugal ways to improve creativity, especially in SMEs.