The organizational theory approach to creativity examines the types of structures and cultures that heighten creativity. It is a mistake to assume that traditional hierarchical organizations have nothing to offer in terms of promoting creativity. These organizations obstruct creativity when bureaucratic and conservative administrators create an atmosphere in which creativity is not valued, but they can be highly effective if they affirm valuable creative activities while maintaining the discipline of the organization, thereby improving the overall efficiency of decision making. In this chapter, we discuss about the dynamics of knowledge creation in an organization by using the mathematical model.