How Entrepreneurship Impacts The Creative Industry - Essay Example

How Important is Entrepreneurship in Creative Industry 1. Executive Summary Entrepreneurship has become a recurrently used catchphrase now a day. Entrepreneurship can be seen paving ways to encourage creation of job, nurturing structural transformation and building comparative advantages. It is quite evident those pioneering ventures put out of place less innovative incumbents, hence resulting in an enhanced and proliferated economic growth. As far as creative industries are considered, think tanks in the developed and industrialized countries argue that these are among few industrial sections (except biotechnology) with very placid potentials for development and job generation (e.g. EC 1998, Marcus 2005). As a matter of fact it can be quoted quantitatively from sources that creative industries is associated with mere 5% of GNP many European Union nations (EC 1998). It is believed that creative industries in turn make available important inputs to several other industries like tourism, hospitality and manufacturing etc. This paper endeavours to highlight the important correlation between that of creativity and innovation, between artistic objectives of product innovation and its commercial viability. Amusingly this correlation between entrepreneurship and creative industries is rarely made overt. 2. Creative Industries The pool of creative industry itself is quite heterogeneous in nature. It was originally termed cultural industry. In fact it includes all industries pertaining to intellectual and creative products and services along with the public cultural sector. The history of the term ‘cultural industries’ per se was not originated from academia but it has origin in the economic policy circles. The nomenclature per se dates back to 1980’s. Greater London Council (GLC) used it to lay emphasis on that some cultural activities which did not under the arena of public funding system but manoeuvred commercially. These were important creators of wealth and employment. This concept took over the geographical boundaries and was adopted not only in the United Kingdom but also in Australia and Germany. Moreover there are some counter views also. For an example, for observers like O'Connor (1999) the concurrence of ‘industry’ and ‘culture’ is meaningless and contradictory itself. Cultural industries thus can be defined as the industries whose manufacturing or creation activities revolves round the creation of representative or figurative goods with stringent intellectual property right protections. Hence the above definition embraces followings: Traditional arts which includes visual arts, theatre, music theatre, literature, museums, galleries etc. Commercial arts which include broadcast media, publishing, recorded music, architecture, new media. Figure 1: The creative industry Cluster (Based on illustrative rendering by Deb Perugi) It can be a matter of argument that in modern day’s art creation is passing through a transition phase and can be called as vacillating between the above two extremes. But to an economist it cannot be said to be analytical to draw a line between ‘art’ and ‘commerce’. Cowen and Tabarrok (2000) presented one of the interesting explanations in this context. According to them it can be inferred that artists take non-financial gains by creating artworks which satiate their own quench for innovation. Hence it can be easily and safely assumed that creative industry encompasses wide range of activities spanning form the arts to consumer products and from electronic to digital means of communication. On the same league even the software industry can be considered as the part of creative industry (Florida 2002). Although there has been an stunning difference in definition of a creative industry (Kulturdokumentation/Mediacult/Wifo 2004), (Marcus 2005), yet a holistic approach can be taken. All the definitions can be covered by categorising the creative industry into three different components. a) Economic activity pertaining to the group set involving arts like visual arts, performing arts, literature and publishing, museums, galleries, cultural heritage etc. b) Activities pertaining to media like press, publishing, broadcast industries and digital media etc. c) Design pertaining activities like architecture, industrial design, fashion and product design). Table 1: SIC codes for creative industry (Source http://www.scotland.gov.uk/Resource/Img/26800/0026473.gif) Creative industries for a very long time were observed only through the lenses of cultural policy. But recently they have been also considered in terms of their trade and industry credence in a way to promote employment and associated advantages. Such many relevant research has been undertaken in the US and Europe. Department for Culture, Media and Sport (DCMS) in the UK (DCMS 1998, 2001) defined cultural industries as: “Those activities which have their origin in individual creativity, skill and talent and which have a potential for wealth and job creation through the generation and exploitation of intellectual property.” 3. Economic Characteristics of Creative Industry By the virtue of the prevalent heterogeneity which distinguishes the creative industry from others, there are some unique economic characteristics too. These are discussed as below: a) Creative industries offer products which are typically intangible in nature and are experience goods. It is through consumption that the taste for such products can be acquired. Hence it becomes very difficult to decouple demand form that of supply and the other way round (Blaug 2001, p. 127). b) Apart from being an intangible experience goods which correlates with the consumer at individual level, the products of this industry is figurative. Thus the goods or services goods derive their value from cultural values. According to Shubik (2003, p. 195), According to him: “Unlike the evaluation of many consumer goods, the problem in the evaluation of the worth of an art object is by far more dependent on cultural norms and social acceptance than the perceived needs of the consumers.” c) Products and services of creative industries vary capriciously in the quality levels which consumers perceive in them. Accordingly there remains a great deal of uncertainty about the way a consumer will value a new creative product. d) There is a very high level of product differentiation. e) Most of the products can be used over and over again and hence are resilient in nature. f) There remains specificity of technological development. These economic characteristics are not equally prevalent across sectors of creative industry. Some of these properties are more attributable in one sector than others. 4. Entrepreneurship In Creative Industries The process of innovating a new product or service in the creative industries is time and again rooted in bits and pieces. By virtue of small size of the firms in the creative industry the project oriented approach is prevalent and it often becomes a necessity to cooperate with each other. In a way it can be said that knowledge- sharing is an integral part and feature of this industry. Figure 2: Creativity and Entrepreneurship (Source http://www.freeworldacademy.com/newbizzadviser/images/11.gif) Figure 3: Pillars of Entrepreneurship It can be argues that technological change often revolutionize the creative industry. The examples can be that of printing press which revolutionized publication firms. The audio recording electrified the music industry. As a matter of fact creation of any new products in the creative industry is considerably different from other industries. Unlike technological innovations as book printing, which has made making of manuscript obsolete, there is no extinction of the core products of creative industries. Let us take the example like Shakespearean plays or plays by Geothe have not become archaic because of new books by Stephen King. On the same league paintings by Klimt have not become outdated by new paintings by Gilbert and George. Thus, this is the basic difference between technological and organizational innovation as far as creative industry is concerned. In a nutshell it can be seen that entrepreneurship is taking the centre stage in has in the modern economies. Explaining further Florida (2002) talks about the creative economy and Audretsch and Thurik (2001) worked on the entrepreneurial economy. They provided the explanation of the comeback of entrepreneurship in western world. They also explained he basis of this re-emergence on increased globalization which itself is responsible for the shift of the comparative advantage towards knowledge-based economic activity. They also argued that in knowledge economy entrepreneurship becomes more important as entrepreneurship provides a way by which knowledge created in one firm can be commercialized by a new firm. Jovanovic (2001) put forward an argument that entrepreneurial endeavour becoming more important in the new economy as technologies and products are becoming obsolete at a much faster rate. He said "it is clear that we are entering the era of the young firm. The small firm will thus resume a role that, in its importance, is greater than it has been at any time in the last seventy years or so". There is a lack of any unanimously accepted definition of entrepreneurship. This lack of any uni-dimensioned definition of entrepreneurship makes entrepreneurship an essentially multidimensional concept (Peneder 2005). Going through varied literature it is evident that entrepreneurship is a heterogeneous activity which includes arena of activities like putting up a new business, dealing with innovations, launching a new product in market and many more. All of these measures indicate that entrepreneurship as a quite heterogeneous in nature. Moreover entrepreneurship is fashioned by very many factors. These factors may be economic, social, cultural and political ones. 5. Conclusion This assignment put forwards an exploratory research on entrepreneurship creative industries. While there is no unanimously accepted definition of creative industries and even though there is a vast heterogeneity among creative industry, these industries share a number of unique characteristics that make them alike. Study of entrepreneurship also shows a lack of unanimously accepted definition. This assignment also highlights the importance of entrepreneurship in different settings of creative industries especially as far as new economic set up is concerned. 6. References 1. Florida, R. and Tinagli, I. (2004) Europe in the Creative Age, Pittsburgh, Carnegie Mellon Software Industry Center. 2. O’Connor, J (1999) “The Definition of ‘Cultural Industries”, mimeo, Manchester Institute for Popular Culture, Manchester Metropolitan University. (http://www.mipc.mmu.ac.uk/ iciss/reports/defin.pdf) 3. Cowen, T. and Tabarrok, A (2000) An Economic Theory of Avant-Garde and Polular Art, or High and Low Culture, Southern Economic Journal 67: 232-253. 4. Department for Culture, Media and Sport (DCMS) (1998, 2001) Creative Industries Mapping document. Creative Task Force. U.K. Government, Department for Culture, Media and Sports. 5. Florida, R. (2002) The rise of the creative class, New York: Basic Books. 6. Kulturdokumentation/Mediacult/Wifo (2004), Untersuchung des ökonomischen Potenzials der "Creative Industries" in Wien, Februar 2004. 7. Marcus, C. (2005) Future of Creative Industries: Implications for Research Policy, Directorate-General for Research, Foresight Working Document. 8. Blaug, M. (2001) Where are we now on Cultural Economics, Journal of Economic Surveys 15: 123-143. 9. Shubik, M. (2003), Dealers in Art, Towse, R. (ed), (2003), A Handbook of Cultural Economics, Cheltenham: Edward Elgar, 194-200. 10. Audretsch, D.B. and A.R. Thurik (2001) What is New about the New Economy: Sources of Growth in Managed and Entrepreneurial Economies, Industrial and Corporate Change, 19: 795-821. 11. Jovanovic, B. (2001) New Technology and the Small Firm, Small Business Economics, 16: 53-55 12. Peneder, M. (2005), Industry Classifications. Aim, Scope and Techniques, Journal of Industry, Competition and Trade, 3: 109-129. Read More