School of Business
Administration “Turība”, Latvia
Much academic research has been
carried out into the field of economics, but writers outside the mainstream
economic thinking have developed the idea that the entrepreneur has a
significant role in economic development. In the situation when the growth of
state economics is drawn up, the planned budget is not implemented and the
production is diminishing, and unemployment is increasing, we are more interested
in looking at important economic activity - enterprise. Its contributions now
have an important role, because attention has become more focused on the
importance of Small and Medium-Size Enterprise sector for economic development
and job creation.
At the end of the 20th century, entrepreneurship was explored from a cultural and social point of view. A business entrepreneur typically measures performance in profit and return, whereas a social and cultural entrepreneur assesses success in terms of the impact she/he has on society as well as in profit and return. Social and cultural enterprises are for ‘more-than-profit,’ using blended value business models that combine a revenue-generating business with a social-value-generating structure or component. A cultural entrepreneur in the twenty-first century will redefine entrepreneurship. There is a necessity to develop cultural entrepreneurship, because society does not believe in classic consumer market. Thus, economic crisis helps to evaluate the kind of enterprise, where entrepreneur is alert to opportunities and has a vision, courage, hope and faith.
At the end of the 20th century, entrepreneurship was explored from a cultural and social point of view. A business entrepreneur typically measures performance in profit and return, whereas a social and cultural entrepreneur assesses success in terms of the impact she/he has on society as well as in profit and return. Social and cultural enterprises are for ‘more-than-profit,’ using blended value business models that combine a revenue-generating business with a social-value-generating structure or component. A cultural entrepreneur in the twenty-first century will redefine entrepreneurship. There is a necessity to develop cultural entrepreneurship, because society does not believe in classic consumer market. Thus, economic crisis helps to evaluate the kind of enterprise, where entrepreneur is alert to opportunities and has a vision, courage, hope and faith.
Key words Entrepreneurship, social entrepreneur, cultural
entrepreneurship
Introduction
Writers outside the mainstream
economic thinking have developed the idea that the entrepreneur has a
significant role in economic development. Their contributions now have an
important place, because attention has become more focused on the importance of
Small and Medium-Size Enterprise sector for economic development and job
creation. It means also that a greater attention has been directed to theories
of entrepreneurship. According to Deakins (1996) developments in
entrepreneurship are seen as stemming from three sources: firstly, from the
contributions of economic writers and thinkers on the role of the entrepreneur
in economic development and the application of economic theory; secondly, from
the psychological point of view as an approach on personality characteristics
of the entrepreneur; finally, a social behavioural approach which stresses the
influence of the social environment as well as the traits of the personality.
Casson (2003) recognizes that the entrepreneur has different skills from
others. He emphasizes that entrepreneurs require command over resources if they
are to back their judgments and that they are likely to have personal wealth.
The lack of capital would thus be a barrier to successful entrepreneurship. The
term “entrepreneur” has been changing during the time and global market issues.
At the end of the 20th century, entrepreneurship was explored from a cultural
and social point of view. The academic discourse on the value of art and
culture has gradually become less polarized, more interdisciplinary and,
probably because of that, more insightful.
The aim of
the paper is to support the idea of cultural entrepreneur and promote sense of
development of cultural entrepreneurship. The following tasks have been set forth to attain the aim: to study the theory of
entrepreneurship from entrepreneurship until cultural entrepreneurship and to
measure the challenges of cultural entrepreneurship for further development.
Theoretical framework
Entrepreneur’s contributions now have an important place,
because attention has become more focused on the importance of enterprise
sector for economic development and job creation. It means also that greater
attention has been directed at theories of entrepreneurship. It is apparent
both to the historian and to the modern observer that entrepreneurs have an
important role in the market economy (Casson, 2003).
Deakins (1996) measured
entrepreneurship theory and gave two main theories – Kirzner’s and Schumpeter’s
view to entrepreneur. For Kirzner, the entrepreneur is someone who is alert to
profitable opportunities for exchange. Recognizing the possibilities for
exchanges enables the entrepreneur to benefit by acting as a middleman who
facilitates exchange. He or she is able to identify suppliers and customers and
acts as the intermediary. By contrast, Schumpeter’s entrepreneur is a special
person. Although Schumpeter is a writer classified in the Austrian School,
his views on the entrepreneurial function are quite different. Schumpeter
(1991) gives the core character of entrepreneur, and it is an innovator. The
entrepreneur brings about a change through introduction of new technological
processes or products. He argued that radical innovation destroys old
structures, as well as a necessity provides development of new knowledge, ideas
and structures.
It is possible to describe Kirzner’s
entrepreneur as the manager, person who is acting as an intermediary, person
who is a linkman. Schumpeter’s entrepreneur goes further, because he or she is
not a manager; he or she is a creator.
One of the authors of cultural economic theory Boumol[1]
(1993) also refers to two types of entrepreneur:
1) the firm-organizing entrepreneur;
2) the innovating entrepreneur.
Both these types are important for the
performance of the economy, but they are different in their roles, the nature
of their influence and the type of analysis their role requires. The innovator
has to find new ways instead of copying best practise examples as
firm-organizers have been done thousands of times. The idea of innovator is
important to join culture and business, social responsibility and profit making
activities. Baumol (2003, b)
maintains that for innovating entrepreneur the most important role is to
measure his aim, his mission, and then look for ways how to reach it.
Therefore, the development of entrepreneurship theory brings us to social
entrepreneurship.
Leadbeater (1997) shows social
entrepreneurs as community entrepreneurs, attempting to regenerate the
locality, estate or neighbourhood in which they are based. The core assets for
social entrepreneurs are forms of social capital – relationships, networks,
trust and co-operation. These values give them access to physical and financial
capital.
One of the large, worldwide
organizations is The Schwab Foundation,
who defined social entrepreneurs as drivers of social innovation and
transformation in various fields, including education, health, environment and
enterprise development. They pursue poverty alleviation goals with
entrepreneurial zeal, business methods and the courage to innovate and overcome
traditional practices. A social entrepreneur, similarly to a business
entrepreneur, builds strong and sustainable organizations, which are set up
either as not-for-profits or companies. The Schwab Foundation employs the
following criteria when looking for leading social entrepreneurs: innovation,
sustainability, reach and social impact. A social entrepreneur is a
leader or pragmatic visionary who:
·
achieves
large scale, systemic and sustainable social change through a new invention; a
different approach, a more rigorous application of known technologies or
strategies, or their combination;
·
focuses,
first and foremost, on the social and/or ecological value creation and tries to
optimize the financial value creation;
·
innovates
by finding a new product, a new service, or a new approach to a social
problem;
·
continuously
refines and adapts approach in response to a feedback;
·
combines
the characteristics represented by Richard Branson and Mother Teresa.
Leadbeater (1997) evaluates social
entrepreneurs believing that it is harder to work in social environment than in
the classical way of business. He gives the following qualities for a
successful social entrepreneur:
- Leader: They are very good at setting a mission for an organization and mobilizing people around it. The mission is the flag around which the staff, users and supporters can gather even if there is little to show by way of services or physical infrastructure.
- Storytellers: This storytelling capacity marks them out from business executives and politicians. Social entrepreneurs communicate their values and motives through stories and parables. This is what makes a social entrepreneur so compelling and persuasive. It encourages other staff and users to think imaginatively rather than analytically or procedurally.
- People managers: These organizations are people businesses par excellence: They usually have no other resources. Social entrepreneurs recognize that the knowledge and ideas of their staff, helpers and users are their most important resources.
- Visionary opportunists: Social entrepreneurs are visionary because they communicate their aims in moral terms. But they do not get hung up on plans and strategies. They are pragmatic and opportunistic. If an opportunity comes along, they will try to take it, even if it does not fit their original plan.
- Alliance builders: Their organizations are usually too poor and too frail to survive on their own. They can only survive by depending upon a wider network of support. Successful social entrepreneurs are good at networking. They will talk to anyone, of any political persuasion, if they think the conversation might help their project.
Baumol (2003, a) gives the context proving that the arts are among the most
desirable products of civilization and they are among the most worthy of the outputs
of the economy.
There is the study “The Economy of
Culture in Europe“ prepared for European Commission on 2006, which shows that
since 1997 the output of the culture industries, according to the UK
government, has grown by up to 20% a year, compared with less than 6% for the
economy as a whole. Again, according to the UK Trade Secretary, the creative
economy is growing at 8% per year. It accounts for one in five of all jobs in London and £ 11.4 billion of UK’s balance of trade “well ahead
of the construction industry, insurance and pensions, and twice that of the
pharmaceutical sector”. Other countries are focusing their attention on the
creative economy as a catalyst for social and economic health as well as
competitiveness. This study will in particular refer to the attention given to
the “creative economy” by some cities (New York,
Hong-Kong) and countries (Australia
and New Zealand).
In addition, France was one
of the first countries to demonstrate an active interest in gaining a better
understanding of the economics of culture and in the development of a solid
cultural statistics framework. Through the support of the Ministry of Culture
and Communication and other government bodies, France participated in a series of
international conferences on the economy and culture during the 1980s.
Despite that, arts and culture are
still far from economic development in traditional way. Klamer (2003) stresses
cultural entrepreneurs as successful only when they master both the rhetoric of
the arts, with the emphasis on cultural talk, and the rhetoric of the market,
which calls for knowledge of relative prices, purchasing power, marketing,
salesmanship, financing and the like.
Challenges of cultural entrepreneurship
Firstly, there is a challenge of
cultural entrepreneurship as a blurring of the demarcation line between entrepreneurship and cultural entrepreneurship. Cultural entrepreneurs create,
produce and market cultural goods and services, generating economic, cultural
and social opportunities for creators while adding cultural value for
consumers. Cultural enterprises are diverse in nature and size. They range from micro and Small – Medium
Enterprise to large firms. Cultural enterprises operate in the following fields: performing arts, museums, music, literature,
publishing, film, photography, folk art, design, architecture, education,
cultural and creative tourism, new multimedia. They include, for example,
publishing houses, production companies, photo agencies, markets, galleries or
museum enterprises.
It is hard to define where classical
entrepreneurship ends and cultural entrepreneurship starts. Cultural economist
of Erasmus University in Rotterdam Arjo Klamer
(2006) gives the following elements for description of cultural
entrepreneurship:
- The economy is about the realization of values. Economic values stand for the income and other revenues that allow people to realize the important social and cultural values. In case of social values think of relationships, social status, an identity and the like, and cultural values refer to spiritual, esthetical and other values that convey a sense of meaningfulness to life.
- Art tends to be realized as a common good, that is, as a good that is shared by a group of people. Realizing the value of art, therefore, it requires the inclusion in one conversation or another in which the commonness can come about.
- The realization of values takes place in different spheres. Economists tend to focus on the spheres of the market and the government and perceive the realization of values mainly in those domains. Businesses, governments and markets account for the gross national product. Yet, there are two other spheres for the realization of other values, such as social and cultural values. Being focused on the (cultural) content, being about the art itself and the creative process is a moral attribute of the cultural entrepreneur. The economics has to be an instrument for them in order to realize cultural values.
Secondly, there is a challenge of
cultural entrepreneurship as blurring of the demarcation line between culture manager and culture entrepreneur. Organization The Global Center for Cultural
Entrepreneurship[2] shows that entrepreneurs pursue opportunities without regard to
resources currently under control and take calculated risks in order to achieve
outcomes that benefit people widely. Managers, on the other hand, apply
standard practices to sustain functional organizational systems. The training and development of cultural
entrepreneurs are different from that of cultural managers. Cultural
entrepreneurship is an emerging area of practice and theory. By the view of
organization, The Global Center for
Cultural Entrepreneurship points that the cultural entrepreneur creates a
vision for a cultural enterprise that bridges a market need with cultural
traditions, cultural experiences and cultural innovations, enhancing the
livelihoods of cultural creators and workers and enriching the consumer. The
cultural entrepreneur holds the passion to master the resources and the people to
make the enterprise a reality and sustainable.
There are many cultural
entrepreneurs, who are ready to share their knowledge and ideas worldwide.
Celeste Tell and Genevieve Trembley[3]
established web page Culturalentrpreneurs.com,
where they are proving that cultural entrepreneurs provide strategic innovation
planning for organizations at the convergence of the arts, education, and
technology. They use research, systemic and integrative thinking, and creative
problem solving to understand the issues, challenges, and opportunities facing
organizations and articulate possibilities for innovation and change. Two
Swedes Lotta Lekvall and Olav Fumarola Unsgaard have established another web
site Culturalentrepreneur.se[4].
It is said that entrepreneurship makes someone take a new direction; new angles
are found and developed. If the meaning of entrepreneurship is”taking action”,
it is easy to see that culture and civil society are built on entrepreneurs.
Artists, writers, poets, dancers, actors and cultural practitioners are all
exceptional in their way of grasping possibilities, seeing an empty physical,
psychological or virtual space and making something new out of it.
Finally, the challenge for cultural
entrepreneurship is to combine individualistic values with
collaborative working. Leadbeater and Oakley (1999)
educed that entrepreneurs, those working in the cultural arena
are ‘independent’ in character, working according to their own beliefs and at
their own pace. This independence has been seen as integral to the fostering of
entrepreneurial innovation and creativity, and in its turn as culture has been
described as common goods or common value (Musgrave, Baumol, Peacock) cultural
entrepreneur has to work for society more than classic entrepreneur. Although there has been some debate
amongst cultural economists (Throsby, Towse 2003) as to whether cultural goods
and services can be differentiated from ordinary economic goods and services,
and, if so how, it is reasonable to suggest that a cultural good is one which
has involved human creativity in its making. Casson (2006) gives response that
cultural products are simply one of the means through which fundamental values
and beliefs are expressed. Culture is therefore an economic asset because it is
shared by communication between the members of social group.
Underlying the growing interest in
cultural entrepreneurship is the understanding that sustainable change can only
be developed when innovations are grown from cultural knowledge and traditions.
Education, traditions and heritage give to nation Cultural knowledge, through
which comes innovation how to get to market and use market opportunities. The
economics has to be an instrument for cultural entrepreneur to achieve the aim
- to realize cultural values (see Figure
1).
Figure1
Cultural and economic
development
Conclusion
One of the core meanings of
entrepreneur is innovator; that means culture and cultural society is built on
entrepreneurs. Artists, writers, poets, dancers, actors and cultural
practitioners are all exceptional in their way of grasping possibilities,
seeing an empty physical, psychological or virtual space and making something
new out of it and giving it to society.
One
of the main challenges for cultural entrepreneurs is possibility to create
product or service for everyone. The characteristics of cultural and creative
goods are that they cater essentially for a local audience, its languages and
cultures. This makes it difficult for the production of cultural goods and
services to shift to other countries, because mostly they will understand
culture in a different way. On the other hand, it gives competitive capacity on
global world for cultural entrepreneurship to be unique and develop cultural
tourism.
There is a competitive race to
attract talent and creators to localised environments supporting the clustering
of creativity and innovation skills. Every country risks experiencing a talent
drain in sectors abroad by better financial conditions. It is easier to be an
employee on worldwide company, than to start up new business on culture field.
Finally, cultural entrepreneurs are
grown of business environment, which more and more is focused on innovation,
education and technology. Thus, economic crisis has proved that traditional way
of economic development – buy cheap and sell high-priced does not work forever;
society and researchers are looking for new forms of economy. Cultural
entrepreneurs provide strategic innovation planning for organizations at the convergence
of the arts, education, and technology.
Literature
a)
Baumol, J. William (2003). Applied
welfare economics.// A Handbook of Cultural Economics. Edited by Towse
Ruth. UK: Cheltenham.
20. – 31.
b)
Baumol, J.William. (2003). On Austrian
analysis of entrepreneurship and my own.//Austrian Economics and
Entrepreneurial studies. Edited by Koppl Roger. UK: Elsevier Science. 57. – 66.
Baumol, William J. (1993). Formal
Entrepreneurship Theory in Economics: Existence and Bounds. Journal of
Business Venturing 8, 197–210.
Casson, Mark. (2006). Culture and
economic performance.//Handbook of the economics of art and culture. Volume
1. Edited by Ginsburg A. Victor and Throsby David. 2006. Amsterdam: Elsevier. 359.-395.
Casson,
Mark. (2003). The entrepreneur. An
economic theory. Second edition. Cheltenham,
UK. Edward
Elgar Publishing. pp.271
Deakins,
David (1996). Entrepreneurship and small
firms. London:
McGraw-Hill. pp. 248
Gordon, C. John
and Helen Beilby – Orrin. International
measurement of the economic and social importance of culture. Accessible http://www.oecd.org/dataoecd/26/51/37257281.pdf
[retrieved 20.01.2010.] pp.30.
Klamer, Arjo. (2003). Value of
culture. // A Handbook of Cultural Economics. Edited by Towse Ruth. UK: Cheltenham.
465.-469.
Klamer, Arjo. (2006). Cultural
entrepreneurship. Accessible www.klamer.nl [retrieved 01.11.2009.]
Leadbeater, Charles. (1997). The
rise of the social entrepreneur. London:
Demos. pp. 116
Schumpeter, A Joseph. (1991). The
economics of sociology capitalism. Priceton: University Press. pp. 492
Schwab Foundation for Social
Entrepreneurship. Accessible http://www.schwabfound.org [retrieved
21.11.2009.]
The Economy of Culture in Europe.
(2006). Study prepared for the European Commission. Accessible http://www.keanet.eu/ecoculture/studynew.pdf [retrieved
20.01.2010.] pp. 32.
The Global Center for Cultural Entrepreneurship. Accessible http://www.culturalentrepreneur.org
[retrieved 03.10.2009.]
Throsby, David.(2003). Cultural
capital. // A Handbook of Cultural Economics. Edited by Ruth Towse. UK: Cheltenham.
166.-169.
[1] William J.Baumol and William G.Bowen, Performing Arts: The
economic dilemma. A Twenty century fund study, 1966. New York. This research is the
beginning of cultural economic theory.
[2] The Global
Center for Cultural
Entrepreneurship is networked community of cultural entrepreneurs, cultural
investors, and cultural entrepreneurship educators.
[3] http://www.culturalentrepreneurs.com/about.html
Organization established by two women –
Celeste Tell and Genevieve Trembley
in 2001.
[4] http://www.culturalentrepreneur.se/about-culturalentrepreneurse-and-the-authors/
- authors Lotta Lekvall Director of
Nätverkstan, a Cultural Organisation in Sweden and Olav Fumarola Unsgaard
Teacher, writer and co- editor of the journal Ord & Bild (Word&Image)
and member of the editorial board of the theoretical journal Fronesis.