CHALLENGES OF CULTURAL ENTREPRENEURSHIP

Ieva Zemīte
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.

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.
NEXT ARTICLE Next Post
PREVIOUS ARTICLE Previous Post
NEXT ARTICLE Next Post
PREVIOUS ARTICLE Previous Post
 

Delivered by FeedBurner

-->