Firms In Arts and Culture (3) PDF

FIRMS IN ARTS AND CULTURE (3) Difficult to classify the firms operating in the arts and culture. The first issue is related to the ambiguity of the definition of culture. Different meanings: 1. The legacy, the social heritage → culture here is the expression of an individual and collecti...

FIRMS IN ARTS AND CULTURE (3) Difficult to classify the firms operating in the arts and culture. The first issue is related to the ambiguity of the definition of culture. Different meanings: 1. The legacy, the social heritage → culture here is the expression of an individual and collective rootedness in society. Culture is like a bank of knowledge, uses, traditions and customs. Important is the educational value of a culture, transmitted outside of market relationships. 2. A way of thinking, believing and being. Element of identity that allows people to recognise each other as similar, to stand out. Underlined the elements of relationship between the individual and the social groups with which one interacts, a relationship constructed also through economic exchanges and partially that takes place outside the market. 3. A mechanism that regulates the behaviour of both individuals and groups, unwritten but observed rules that define the belonging to a group → typical collective behaviours. EX: “ladies first”. Culture is an abstraction, but also a roadmap to decide how to behave. This definition highlights the regulatory and political value of culture. 4. The distinguishing features of individual’s lifestyles → this incorporates different markets for the economic exchange of goods and services. Culture is both individual and collective. It feeds on the past to interpret the present and it is expressed in and outside the market. Visible in products, services and rules. Working with culture means working with human beings’ dynamic capacity to live together in a civil manner and so with a series of relationships and activities that cannot be interpreted using market logic, because they respond to non-economic purposes. Companies in cultural industries contribute to building imageries which define markets. Cultural products have to contend with a problem of authenticity → they must possess features of reproducibility and appeal to clients. 2 aspects to consider: Culture as an expression of identity and shared values has a problematic relationship with monetary exchanges. Culture can be scarcely reduced to a product or service, to a point that sometimes it is excluded from the market to protect the cultural heritage of a community. It’s difficult to establish the boundaries of the firms → some are cultural products, some others are more leisure products. For some the reason to purchase are not linked to the products’ technical or physical features, but to social and cultural belonging and identification. Sectors like fashion and luxury goods have features that make them comparable with cultural products. Also the street art phenomenon is difficult to classify. There are many different classifications for firms that operate in culture and the arts. There are different functions involved in artistic and cultural activities (education, production, distribution and conservation) and also multiple macro areas of artistic activity (performing arts, liberal arts and content). With regard to functions: - Education in the artistic field is highly specialised. It takes place partially in schools and partially through a process of acceptance, legitimation and approval. In the professional field, artistic education wants to achieve a recognition and development of unique talents. Great distinction between amateur/professional training. Education = function performed by firms targeting arts. - Production processes are important → expression of society and contemporary life, these fields constantly produce new content. New books, new films, new music. Technological advance has reduced production costs and made equipment easier to use. The degree of industrialisation and reproducibility differs based on the area considered. - Distribution has different forms and happens through a large variety of channels: live in specialised venues, digital or broadcasted, displaying of permanent collections, temporary  exhibits. Temporary events could be iterative or one shot. The way artistic contents circulate are influenced by the public interest → interest in protecting the integrity of cultural heritage explains why it is illegal to protect the integrity of archeological artefacts. The features of distribution channels are conditioned by the existence of laws and contracts that regulate the integrity of intellectual property. - More cultural products are preserved and contribute to the formation of the legacy of a community. Preservation work is key to understanding the value of artistic and cultural assets + crucial to the creation of memory + construction of identity + has an important social and political value. Many nations state in their constitutions the duty to protect and preserve heritage. Firms involved in preservation and conservation are mostly public agencies or non profit. With regard to the macro-areas used to classify how human experience is represented and narrated: a. Performing arts Artists use their voices and bodies as means of artistic expression. These include different disciplines that have in common the live performance with an audience. Can be divided into dance, theatre, music and singing. The products are intangible, unreplicable and non-durable. The different types of performing arts differ from each other. From an economic pov thye are characterised by a high use of labour, high incidence of fixed costs and low productivity levels + they tend to become increasingly more expensive = cost disease. b. Visual arts Architecture, sculpture and painting have been defined as fine arts since the 16th century. In the 18th century they became figurative arts or plastic arts: ideas of generating a form. From the second half of the 20th century they became visual arts, to include any artistic products that can be consumed through visual perception, including less traditional, EX: photography. From an economic pov there is a need for mediators, who are organised in a network and are involved in processes of market-oriented legitimation. c. Content Here the artistic output is a product and can be reproduced with an industrial approach (text, audio, video…) or it can be a service (streaming audio or video) that could be accessed free or by paying for a subscription or for download. The organisations operating here are generally companies, sometimes government controlled. From an economic pov the production and distribution of content has high costs of production of the first copy, low reproduction costs, high fixed costs and difficulty in protecting intellectual property. The perception of the value is conditioned by peer judgement and by the system of legitimation/celebration (the star system). Digital technologies have led to major changes. From the combination of all these aspects different firms emerge, often related and interdependent. The interconnections are creative and production-related or distribution-related. Cost effectiveness depends on how far the artists and companies involved in production processes are able to negotiate. The economic actors are competing for a limited quantity of economic resources, for the attention of the public and for specialist artistic and technical skills. CULTURAL GOODS AND CULTURAL INDUSTRIES, MEDIA AND LIVE SHOWS The sector of heritage groups together firms whose main purpose is the safeguarding, preservation and promotion of a nation’s material and immaterial cultural, historic, artistic and landscape heritage. Museums, libraries, opera houses, archives and monuments. Driven mainly by non-economic missions. Aim is to preserve the heritage of rare goods and to introduce groups of specialists and non users to the wealth of the knowledge they bear. Often state-owned agencies or non profit and, if privately owned, they perform a public function of preservation, advocacy or education. The management has strong legal limitations, so the degree of managerial freedom is hampered. The expression cultural industries refers to companies which produce, distribute and disseminate content characterised by intangibility, high symbolic value and low interchangeability. The companies are private, they deal with content and medium, they are strongly differentiated and standardised to a small extent. Invest in significant amounts of money oìto launch new titles. Among the successful, some remain on the market for years and create collective imagination. To reduce the uncertainty of the selection and of the sales, companies tend to remarket successes through promotional activities. Formats, sequels and series. The expression media sector refers to companies that are specialised in the distribution and mass circulation of content, often classified in terms of the technology used. There are interdependent links among these companies, which often operate in strictly regulated competitive fields. The different broadcast and distribution technologies have led to a range of media and channels that are complementary and sometimes in competition. Digital art has to do with the production of visual art using digital technologies. Digital media refer to a broad number of firms involved in the production, distribution, aggregation and sharing of content in digital firms. The live performance sector groups together firms involved in the production and staging of one-off events or events taking place in permanent facilities (EX: theatres). Firms may have different legal forms, size and target audience. This sector also includes companies that organise sporting events and those specialising in management for live events’ broadcast. FURTHER CLASSIFICATION Within these fields, organisations can be further classified according to the type of technology used, the type of output produced or the categories of audience. The distinction among types of firms is linked to their history, their legal status and their potential to access public financing. If an organisation is particularly important then it will be named as “National”. There is a tendency for these sectors to be geographically clustered. The firms tend to be specialised by macro area of activity and by function, but there are examples of integrated companies. EX: museums, science centres… If we consider the impact of these firms on the economy and the society, the boundaries are broadened to encompass various organisations that enable to create social capital, sense of belonging, to generate economic development, high uniqueness and differentiation and to attract visitors and create jobs: 1. The large variety of digital operators involved in content distribution → digital platforms. 2. The creative sectors, including professionals and companies involved in the production of signs (people who are able to reinterpret traditional products or propose new ones to satisfy the tastes of urban global consumers. 3. Sectors and companies with a high symbolic value, notable for the production and sale of products that satisfy requirements of status and social belonging → power to stimulate the collective imagination and consumption models. EX: iconic products. 4. The tourist sector that develops around existing natural and cultural attractions and that benefits from positive external influence from the cultural industries 5. The food and agriculture industry and traditional industries in general → high craftsmanship CULTURE AND COMMERCE: A DIALECTICAL RELATIONSHIP Each of the competitive fields comprises players with different sensitivity towards the public nature of the arts. In institutional terms the boundary between public and private in the nature of the activity performed does not always reflect the firm’s legal form. + the co-existence of these players is not always peaceful and the distinction between economic and non-economic purposes behind the firms is not always clear. One theory, connected with the Frankfurt school, suggests that the gradual formatting and banalisation of cultural products are behind the behaviours of an uninformed and irresponsible society. The best antidote to the spread of fake news today is the responsibility of the author. Other authors recognise the need to accept the co-existence of economic and non-economic logics, and some authors suggest cutting public funding for cultural institutions to push them to become more efficient and less bureaucratic. There has been growing interest in the economic dimension: The reductions of public budgets and the efforts to contain the public deficit have forced artistic and cultural organisations to become focused on cost-effectiveness of their activities, to diversify their resources of revenues and to employ professionals with managerial expertise Growing international mobility (demand for quality of life + more tourists) have encouraged companies that work in the cultural sector to develop appealing and sophisticated offerings and to develop a global positioning → making them look more like commercial enterprises. The possibility to offer high quality projects is bound to the availability of qualified, specialist personnel which is internationally mobile. There is high competition, so cultural organisations need to develop strong planning skills and awareness of the characteristics of job markets. To respond and intercept the entertainment demand of larger audiences, the number of events has grown significantly and this created wealth for the local areas. “Art cities”, “cultural capitals”... firms in the arts and culture are increasingly called upon to revitalise urban settings or to work in run-down areas with a view to inclusiveness and social improvement. Increasing interest in the idea that protecting heritage could be linked to preservation and enhancement of artisan skills, associated with local traditions. The local territory and the stakeholders have to take a more integrated approach to tangible and intangible heritage. This means a focus on environmental restrictions, the granting of manufacturing and trade licences,  the organisation of infrastructures and of local communication systems. This has to be done in order to protect and preserve the features of the genius loci. Apart from the economic pov, it is crucial to preserve heritage for its identity-related value. People must be allowed to enjoy the arts and they have an educational and identity-forming function that needs to be accessible to the public, no matter the status. Public intervention becomes necessary because market forces are incapable of creating self-regulating contexts. Public intervention is also justified by the fact that often the activities carried out are not profitable but they generate positive impacts (quality of life, development of cultural diplomacy, economic benefits…) on the surrounding stakeholders. These 2 aspects discourage private investment and make public investment necessary. Public support represents a form of repayment for the positive role performed by the organisation for the collectivity as a whole. A FIELD THAT IS DIFFICULT TO QUANTIFY There is a lack of adequate indicators to describe this field and to measure its activity and its results. It’s difficult to define precisely and difficult to quantify due to: a. The number of artists is not known. We do not know the number of artefacts, churches, monuments, collections and volumes. Catalogues exist but geographical dispersion and the variety of units of measurements to consider are such that the process of quantification is not precise. b. Not all cultural enterprises make cultural products or consider themselves as cultural enterprises. Many actors produce and distribute entertainment or leisure products without wanting to contribute to the collective imagination or define lifestyles. c. The recognition of a function of public utility or cultural output is not necessarily present for all cultural products. It’s difficult to recognise the cultural value of these products. d. “Needs of culture” are not necessarily satisfied by goods, and normally are less perceived by people who have the highest need (merit good). e. Sometimes core operations do not generate profits → cultural markets are highly imperfect. EX: a public library has all costs and zero incomes. We know that cultural heritage is growing, due to the passing of time and a growing sensibility to recognise the value of the heritage of different social groups. Cultural markets increase the number of people accessing culture and the number of people working with it. Cultural investments are key in urban regeneration projects, policy makers are incorporating culture in economic policies and public funding to cultural firms is decreasing. One indirect indicator of the size of the field regards the amount of public and private resources which it absorbs and mobilises → many differences among countries, due to the size and number of firms but also to public policies on arts and culture, which influence the size and proportion of public and private resources. Private contributions are underestimated. The ratio between public spending on culture and GDP (gross domestic product = PIL) is in line with that of other countries in Italy → spends around 0.4% of its GDP on cultural activities. These results do not consider the magnitude of heritage or the presence and role of private financing → inefficient indicator. Quantifying and characterising the audiences reached is difficult → cultural offerings are often free of charge: ➔ An opera house knows its season tickets, but not who purchases tickets from the ticket office, what % of the audience is foreign apart from the online sales. Same for museums and festivals. ➔ Libraries know how many members they have and how they are, but nothing on their consultations. ➔ For events and sites that are free of charge it’s often impossible to quantify the number of participants or visitors. ➔ Not possible to estimate the appeal of art cities, theatres, museums, festivals and monuments ➔ Visitor flows to cities are monitored but it’s not possible to distinguish the reason for visits  ➔ The numbers are also incomplete for cultural consumption. ➔ Sharing phenomena (crowdsourcing, file sharing) makes a contribution for the circulation of content but makes it difficult to quantify how much of it is accessed. The most problematic aspect of quantifying audiences lies in the difficulty of recording relationships in consumption of different types of cultural products. We can identify a portion of weak and occasional consumers, while the most assiduous consumers and audiences comprise stable groups of experts and frequent consumers of niche products + a group of intermediate “cultural omnivores”. There is little knowledge as to interdependencies in tastes and preferences in general. THE VALUE CREATED BY HERITAGE, ARTS AND CULTURE Given the meritorious nature of arts and culture, the value created by these organisations is, for the most part, non-economic. Analysing the nature of the value created is useful to appreciate the semi public nature of arts and culture. ★ Identity related value → nature of culture and the arts. Some nations place great importance on the identity related value of heritage, such that article 9 exists (requires the republic to protect its heritage and was introduced after fascism). This has led to the creation of the MiBACT - the ministry for cultural heritage and tourism, that safeguards cultural heritage. This ministry has limited resources compared to the overall state budget → the extent of this value is noticed by many only in a negative sense, in the wake of terrible events intended to destroy monuments and works of art. Before, heritage was under the responsibility of the ministry of education, growing also to include immaterial heritage (performing arts), then sports and tourism… Safeguarding, protection and preservation activities must be performed to express identity-related value → need for highly specialised and diversified skills. They are costly activities but they may be carried out to the benefit of international markets. Cultural heritage is a powerful vehicle that helps people recognise themselves as belonging to a community and can also become world heritage, but from the statistics only a tiny part of the population seems to perceive heritage as a common good that has an identity-related value. 2020 = Faro convention → says that culture is what a community considers as such, opposing the list of monuments. The value comes from the value attributed by people, it’s not the intrinsic value of an object. ★ Educational value and the creation of social capital → the arts have a potential to be a source of education and knowledge, EX: the Grand Tour around the main art cities in the previous centuries, something that was considered essential for a cultured man. The identity related value of arts translates into the development of social capital → cultural organisations contribute to social aggregation and cohesion, offering opportunities for contact and experiences that create and reinforce a shared heritage = basis for a civil co-existence. ★ Political value → value linked to status, power and the potential for conducting cultural diplomacy. This is connected to the idea that emerged in the French Revolution that preservation must be carried out for the public good. The political nature of the value created by arts and culture is obvious if we consider certain celebrative works → dictators used arts for propaganda purposes and for building imagery; from WW1 the spread of mass media communication made it possible to develop a visual culture. Monuments and statue destruction are strong political statements. Artists are also very frequently politically opinionated → debates can arise from the protest actions of contemporary artists. ★ Driver for local economic wealth → since the 1990s arts and culture have been considered strong drivers for economic wealth. Tourism is now a key element shaping the local economy, EX: after Turin lost 350k citizens because Fiat outsourced its production, the regeneration revolved around the necessity to create value from cultural industries. In other cases (VENICE), cultural institutions and attractions have become so popular that are now problematic. Arts and culture businesses play an important role in shaping a city’s character. Consumption and production on one hand is geographically concentrated, on the other its unique nature and specific features can be exploited as tourist attractions. Research on the economic wealth generated by the arts and culture focuses often on the impacts generated, but there are also studies aiming at showing how arts and culture contribute to the wealth and reputation of a territory. From an economic pov, this sector impacts on many supply industry sectors, which are an element of local characterisation (food, artisan manufacturing…) and contribute to the territory’s ability to attract visitors. The contribution of these sectors to GDP oscillates around 3-4% → these studies analyse the dynamism of these sectors in terms of new businesses started and job creation (often the work offered is unstable and poorly paid). The presence of specific elements of wealth and value is not necessarily an automatic guarantee of economic viability, because the ability to maintain and cultivate non economic value does not necessarily translate into income for those working in the business. EX: tourist flows are not a signal of wealth created at the local level unless they translate into stays for a significant length. ★ Enhancing the system of relationships The non economic and economic dimensions of the wealth created by the arts are constantly interacting and should always be considered together. When there is too much interest in the economic aspect, this generates banalisation, standardisation and negative impacts; a lack of attention to the economic value leads to a loss of perceived relevance. We must enhance the system of relationships between stakeholders and the results of the artistic and cultural processes to express the value generated. In this sense there are no firms that make culture, but rather projects that together build a whole. Considering arts and culture in terms of processes and relationships is useful when it comes to appreciating the features of certain regions → here artistic and economic activities blend together to form a local character. THE IMPORTANCE OF GEOGRAPHY Historic and social events have shaped local economies and their heritage, leading to different ways to protect and promote that heritage. Tangible and intangible heritage is distributed unequally between different regions, leading to different vocations among regions and opening up different potentials and problems regarding the economic and social fabric and capital. The uneven presence of the state, of local bodies and of private individuals influences the potential for intervention, resources available and possible partnerships. Also audiences tend to be concentrated in some areas, resulting in wealth concentration. A rich offering distributed unequally throughout the country corresponds to a polarised range of audience access and visits. There are many mass-marketed sites, but there are also many under-valued sites. Large cities tend to feature a rich and complex offering and attract many visitors, but it’s in smaller towns that arts are strongly characterised elements. It’s impossible to think of a cultural management that does not involve mediation and negotiations with many stakeholders. For this reason it is fundamental to contextualise theories on how to manage cultural heritage, and to understand how regions are an experimental ground for complex relationships between different types of firms. GOVERNANCE OF HERITAGE The idea of investing in culture was already present in the registration of the roman law, which made explicit that lots of monuments had to be built because they were useful for the community + idea of decor urbis, publica utilitas, bonum commune, legatum ad patriam. There was the idea that investing in the arts and culture created effects for collectivity, and that the creation of beautiful things came both from antiquity and modern times. GOVERNANCE OF HERITAGE, ARTS AND CULTURE All the activities are covered by some organisations:  1. Cultural institutions → government-run firms with different degrees of autonomy for the management of cultural heritage and for the preservation activities and for identity-forming value creation. One of their functions is to support production in the content creating sector. 2. Non profit firms → engaged in activities of preservation, production, enhancement, advocacy, financial support and which operate across the board in all these areas. 3. Enterprises → involved in designing, producing and distributing cultural products, and sometimes supported financially by public agencies. There is a blend of economic and non-economic value. One might think that public-run agencies and non profit organisations specialise in processes aimed at creating non economic value, but in reality these are also major tourist attractions. Small businesses and nonprofits often position themselves in opposition to the large private groups or to the large cultural institutions. The main allies of nonprofits or micro-enterprises are often international real estate groups that allow artistic and cultural enterprises to occupy real estate for different periods of time. The variety of potential value drivers in this kind of heritage translates into a plurality of interests (public and private) → this is problematic because there are often diverging interests + the same interests involve different stakeholders. The multiple interests and different ideological premises are reflected in the relationship between centrally-run state agencies and local public agencies, between the PA and nonprofits and companies. Very different kinds of organisations coexist. PUBLIC GOVERNANCE OF CULTURE 3 issue when dealing with government structures and the role of the state in the governance of the arts: a. The best ways to conserve and protect through legislation (better to focus on the category of goods or on their organisations?) and what kind of attention must be paid to protecting intangible heritage b. Best ways to create economic value around this heritage → most suitable forms of cooperation between public and private players, and between state and local government. c. The increasingly global dimension of the arts and cultural heritage → leads to the question whether we should facilitate the circulation of artworks or not. The governance of arts leads to the co-responsibility of public and private actors. Many countries have an organisation at the national level that manages the assets of national interest. Local governments are the key actors for cultural policies at the regional level → their responsibilities vary, but concern choices and priorities for financing, sitting on boards of directors of nonprofits and taking parts in coordination boards. The local level is where the greatest variety of cooperative models and public-private partnerships take place. THE ROLE OF THE PRIVATE SECTOR The arts and culture sectors and its heritage is something deriving from a tradition dating back to the Italian Renaissance. Apart from the private firms, the nonprofits, the donors and the privates, there is an activity of corporate intervention → companies performing a public function to safeguard industrial memory. There are also 2 profiles of companies developing strategies in heritage management: 1. Companies operating in sectors (EX: fashion, luxury, food) in which the value creation process is dependent on the formation of the collective imagination → the development of cultural policies coincides with business-related requirements. 2. More frequent within medium-sized family businesses that have links to their geographic areas. Among the private actors to support the arts and culture one category is that of funding foundations (In IT banking foundations), which allocate a portion of their profits to cultural activities in their regions. Public-private partnerships may concern: - Decisions on allocating resources and priorities  Policy related choices of responsibility of state agencies. In some cases citizens and associations are called upon to participate in formulating cultural policies, EX: express their opinions through a referendum. - Management of cultural organisations In English speaking countries the most common management model is that of nonprofits. Where cultural organisations are managed by state-run firms (like IT), there are 3 scenarios: 1. Direct (in house) management takes place by offices within the public administration, which are allocated a budget to cover the running costs while other costs are distributed within the overall budget of the firm 2. Some activities are outsourced to contractors, so the public agency employs various external services → the business risk is maintained. 3. Indirect management is implemented through third-party contracts called concessions involving several businesses → the business risk is transferred to the concession holder. This type generates satisfactory results only for the most popular sites. - Governance of bodies and institutions Public agencies that have autonomous legal status can involve private actors in their governance. The participation is restricted to those that provide a financial contribution. - Financing of projects It can occur in 2 directions: private actors contribute to supporting firms that are managed by public actors, and public actors support companies and nonprofits committed to training, producing and distributing cultural content. Businesses and citizens can also support activities by nonprofits dedicated to arts and culture (called technical sponsorships, so the donation of goods/services instead of money). Public funding can be direct (including the concession of spaces) or indirect (incentives, tax breaks) THE VIABILITY OF ORGANISATIONS IN THE ARTS AND CULTURE FIELDS Viability concerns all types of organisation. Regarding economic equilibrium, the challenges vary according to the context. The cost structure is rigid, due to: Lack of flexibility of personnel contracts, if subject to public employment law High incidence of fixed assets (buildings, sites, technologies…) that are costly Some artists’ fees that do not consider cost-effectiveness criteria Smaller nonprofits that work with established organisations on some projects have a more flexible cost structure but depend on cash inflows to sustain their activities. They share with institutions a structural undercapitalisation. Firms with a high component of variable costs are more exposed to the uncertainty of having funding. This insecurity related to new titles is balanced by the potential for earning royalties on titles in the back catalogue. Consumers’ willingness to pay for products changes → discontinuous. User behaviour is not easy to predict. The difficulties of companies to achieve adequate revenue flows can be explained by the existence of “barriers”: ❖ Monetary barriers = culture does not fulfil the primary needs of individuals but their higher needs. People generally have a limited budget, so culture comes after other purchases. Same goes for donations ❖ Psychological barriers = even without monetary barriers, the benefits are not easily understood and accessible without education/information. The potential cultural consumer might feel uncomfortable or embarrassed when faced with something that is unfamiliar. ❖ Barriers of understanding = a consumer might be unable to understand the cultural asset or service and find it difficult to perceive the content, value… ❖ Information barriers = limited availability of information regarding cultural consumption  ❖ Distribution barriers = the opportunities to create and enjoy culture have never been equally distributed. The level of education and the cultural and economic background of the family have a great influence on the consumption. ❖ Civic barriers = not everyone enjoys equal opportunities regarding the decision making process, and this has major political and social implications. As for monetary equilibrium, the need to draw funding is linked to the different times of payment of different providers of funds: revenues from the sale of services are generally received in cash, but public funding has lengthy payment periods. Institutions and firms are not able to cover their costs, and their self-funding capacity is marginal. The plurality of funding sources allows firms to neutralise their problems of economic equilibrium and to balance their incoming and outgoing cash flows. In terms of efficiency, the ability to achieve cost-effectiveness is dependent upon several conditions: critical mass, so the fact that the number of sites with a high enough number of visitors to generate economic turnover is limited. The location of artistic heritage influences to what extent it’s possible to run effectively. The costs structure has high fixed costs and many legal restrictions + the flexible personnel management make it difficult to improve profit margins. Heritage does require assistance from the local community to attract visitors. Without a sufficient number of visitors even cultural promotion activities need financing. Critical mass is an issue = until a minimum threshold of visitors is reached, it is less expensive to guarantee the existence of the cultural asset without offering any additional service. A key element is the ability to guarantee fair remunerations → there are vast inequalities, and earnings in this field are low and unstable. This generates problems in terms of motivation, training and companies’ ability to retain talents. THE EVOLUTION OF STAT MUSEUM GOVERNANCE IN ITALY IT = 6000 cultural sites, 55 UNESCO world cultural heritage properties and 4 world natural heritage sites. For years the legal entity in charge of protecting our heritage has been the ministry of education, then Commissione Franceschini decided to create a specific agency. 1974 = creation of the ministry for cultural and environmental heritage. 1998 = the ministry was merged with the department of performing arts and was renamed ministry for cultural heritage and activities. 2001 = apart from the function of tutela, the ministry also obtained the function of enhancement of cultural and natural heritage. 2014 = the reform has created a system of state museums with financial autonomy + has created fiscal incentives to companies and private donors to contribute to the restoration of public monuments (art bonus). The % allocated to this is the 0.4% of the state budget → structural costs + distributed to local public agencies. PUBLIC MUSEUMS IN ITALY, THE ROLE OF LOCAL GOVERNMENT The financial crisis in 2008 led to cuts in the fundings and this affected local governments’ budgets. Of the 6000 cultural sites in the territory, 84% of them are museums → 66% are public, but only 8% are state owned. Ministry of the arts, local government (regions, municipality), associations of municipality (manage specific areas and cultural sites), super national entities and institutions (UNESCO). These public players interact with: - Associations - Families/individuals - Companies and foundations and other NGOs. The amount of funding allocated to public museums has decreased over the time, but they are required to step up in the growth and enrichment of their social and economic environments → many have been promoting development projects centred around cultural organisations. To build a museum network there are both economic and cultural factors:  a. Share the roles to rationalise the costs, divided among many members b. The good reputation of some participants draws resources that will benefit also the others c. Networking has been used as a strategic response to environmental instability d. Building systems of inter-organisational relationships to make the most of the resource by sharing roles, offices and means. e. Most museum networks provide a limited form of sharing that excludes any form of alignment on the decision making process. Organisations decide on their own how to use their resources. Most public museums are entrenched within the public administrative system, being governed internally as part of the Culture departments. Some public museum networks have been transformed into foundations, nonprofits controlled by the municipal government. They have financial and institutional autonomy through the board of directors and they must have an auditor in charge of the administration. This allows for private partners to participate by contributing to the endowment or supporting the foundations with contributions. EX 1: MuVE Foundation owned and founded by the municipality of venice, that owns all the buildings. All governance powers have been transferred to a separate organisation with greater financial and administrative autonomy. Its primary concern is the quality of the offer, and the management of the conservation, expansion and promotion of the heritage. Goal = provide alternatives, different sizes and levels of appeal. Entrance fee varies. EX 2: FONDAZIONE TORINO MUSEI The local government is the main founder and grants the use of the buildings and the collections to the foundation. The purpose is to preserve the tangible heritage and ensure accessibility to the public while conserving the restoration of works, acquiring new pieces and cataloguing the collections. ORGANISATIONAL DESIGN AND PEOPLE MANAGEMENT (7) Organisations are created for economic reasons and to reach goals impossible to reach for individuals. Organised people work in the interest of other people and they carry in the firm their own interests and expectations that serve the needs of other people. Certain organisational choices must be made to leverage these benefits. These concern: 1. The division of labour, so breaking down of activities into tasks and assign them to people who are specialised in performing them. Creating mechanisms to manage a critical factor of production. This has advantages in terms of economies of specialisation and learning but it can lead people to become too focused and this increases the risk of failing to make adequate use of the resources → decline in results. Important to use the best mechanisms to transform potential conflict into cooperation, otherwise the centrifugal forces may induce people to pursue their individual goals. As suggested in the theory of human capital, an organisation’s success is linked to the knowledge and skills of its members, especilìally in the context of knowledge economy. 2. It's important to decide who does what and define the criteria whereby people and resources are allocated to the different tasks required. Define hierarchy and create mechanisms that permit the flow of info , control and plan. 3. An organisation also needs to manage its relations with the external environment = all elements that exist outside its boundaries and have the potential to affect all/part of its activities. There are 4 issues that complicate the organisational problems faced by cultural institutions: - 3 different professional areas co-exist within these organisations a. The artistic area = all the artistic production and performance processes b. The managerial and administrative area = people who deal with organisational activities, financial management and accounting, marketing and personnel management  c. The technical area = professionals engaged in staging and supporting the performances The coexistence of these 3 presents problems in terms of coordination and integration. There is a need to have good artistic, technical and managerial teams. Need for quality of the cultural product. Sector which is labour intensive → small in turnover but high in terms of people working, many primadonnas, difficult equilibrium → need to balance the artistic and managerial aspect and with the audience, need to understand what the market wants. - The importance of the human factor, because cultural organisations are labour intensive = the firm’s results are influenced by the characteristics of the people working in it. This also happens in sectors such as consultancy or advanced tertiary industries, where the production process features low interchangeability of labour with other productive factors. Human capital is the most critical resource, so it’s crucial to be able to recruit people with adequate skills, knowledge and abilities. It’s also important to support people to leverage their talent and abilities. Implementing HRM for cultural institutions is difficult, especially for artistic figures. - Choosing the leader, because the director has a dual role: he is responsible for internal management but he also represents the institution’s external image. He influences the institution’s ability to attract resources and obtain consensus from the audience and from the relevant professional community and the public institutions that provide financial support. He is responsible for the results achieved and must succeed in reconciling objectives and requirements that tend to clash together. He must have very specific skills. + define hierarchy - The specific flexibility required in order for cultural firms to face the risk and uncertainty of their markets, but also the complexity of their production processes. 2 organisational solutions are used: 1. Networks = structured relationships for cooperation with other organisations involved in different stages in the production chain or in the local area 2. Temporary systems or project based organisations (also cultural events) = all the temporary projects that can be produced by an existing cultural institution or by a group of people who join forces to organise an event. These forms offer benefits but involve various issues. They are complex in nature and are geared towards a specific goal that has a specific deadline. PBO refers to organisational forms implying the creation of a temporary system leading to a specific output, being it one shot or recurring. Need to adjust in terms of recognising temporary leadership + different and changing shapes as an organisation. In terms of leadership, PBO requires a high level of coordination among team members. It can be achieved via socialisation processes and by a charismatic leader focused on deadlines. Diffused in the cultural sector. ORGANISATIONAL STRUCTURE It is the result of the choices made regarding the division of labour and coordination. The first concerts who does what the second regards who relates to whom. In small organisations, coordination can take place through informal mechanisms like mutual adaptation. As they grow in size, formal mechanisms are introduced. In large organisations it is necessary to have organisational units, so creating a sub-group of people performing a specific set of activities and who are responsible for achieving specific outcomes. Each unit contains different positions. Designing the organisational structure = defining the tasks and activities of different units and the coordination mechanisms to align the goals and specific actions of each unit with those of the whole organisation. Graphic representation = organisation chart or organigram → provides a summary overview of the organisational units and the hierarchical and horizontal relationship between them. There are different types of structures: the elementary one, the functional one and the divisional one. Important to note: There is also the matrix structure which features a combination of elements from the last 2. Rarely used in cultural organisations They are archetypes and are more complex in real life. These structures cannot be described as good or unsuitable → each one is consistent with features of the relevant working environment and the goals that must be reached. The value of a structure depends on its fit with the environmental variables. ELEMENTARY/SIMPLE STRUCTURE The elementary is perfect for small and family run businesses and it can be adapted for the start-up phase of new businesses. The elementary structure has a limited sub-division into hierarchical levels and specialist (operational) units and uses informal coordinating mechanisms. The structure usually contains 2 hierarchical levels: - the higher level is responsible for all strategic decisions and the results = usually the owners - Lower level = various operational units or even by individuals who carry out operational tasks. They have a limited decision-making autonomy, so no particular integration mechanisms are required to guarantee coordination. The hierarchy structure and direct supervision is sufficient. The degree of formalisation is low and there is limited use of formal procedures and rarely any need for drawing up job prescriptions (formal prescriptions of the tasks that an individual/unit has to perform). The same principles apply to cultural organisations. The main advantage = simple to manage, inexpensive + more rapid in promptness to respond thanks to the 1 decision making centre → this is also the main drawback. Risk = not enough considerate decisions + little time for strategic planning + problem of succession at the top of the pyramid. FUNCTIONAL STRUCTURE It contains organisational units that are specialised on a technical basis = groups who possess the same skills perform the same activities. The functional structure is the result of a criterion of a division of labour where people with similar skills are grouped together under the same organisational unit (function of department). Each function reports to the strategic head and is guided by a function director/manager → they are given responsibility for their unit, so they have power to take all actions to reach their goals. They help to implement the corporate strategy, managing personnel… if the firm grows in size, there are more hierarchical levels to control it. This applies also to cultural organisations. Advantages = it provides learning economies and specialisation + helps achieve economies of scale, absorption of fixed costs and economies of scope. People can develop organisational routines, a shared language and coordination mechanisms. Disadvantages = The high specialisation can hinder communication and cooperation and could lead to inter-functional conflicts. This happens if individuals are focused on their goals and make incompatible decisions with other functions. Communication problems could also be created by the different backgrounds that people have → necessary to manage these differences well. Integration mechanisms are used = they allow the functions to maintain their own characteristics while coordinating their activities with those of the organisational units. There are different integration mechanisms: 1. Procedures = if there is little need for integration between functions it can be useful to write rules and norms of behaviour that decide who is responsible for what, rules of communication and info exchange. The aim is to define actions that all members must follow. When everyone follows the rules, there is an automatic alignment of actions.  2. Hierarchy = managers perform their role of coordination and integration by exercising their authority. Vertical relationship → the manager is an instrument for coordination 3. Organisational culture = if there is a strong organisational culture, people tend to follow its values spontaneously. Developing shared values that support cooperation is useful for integration 4. Information systems = alignment of information and selective distribution are effective. These are technologies dedicated to gathering and making available info that can support decision-making, control and coordination processes 5. Task force and teams = based on the principle that people from different functions are gathered together temporarily (task force) or permanently (team). These methods are used if there is a low need for integration between functions. They do not involve changes to the organisational structure and act within the existing one, making people exchange info to permit cooperation. If there is a high need for integration it is common to add stable integration roles: a. product manager, a specific organisational role that can cut across a firm to coordinate the competencies present in the different functions that are required to deliver a service/product. The aim is to preserve the specialisations of the functions while coordinating them and establishing a shared responsibility for a product/service. b. project manager c. brand manager These 2 have a similar role, but the coordination does not regard a product/service but a project or a brand. In all cases, introducing these figures creates a permanent change, giving rise to a modified functional structure. These solutions can also be used in cultural institutions. The project manager often appears as a role in cultural institutions, but it can be a temporary solution (unlike with the product manager). Inter-functional coordination mechanisms are important tools that can be used to align the activities of its functions. There is no integration mechanism that is better, because the choice of which to use must fit the firm’s characteristics and how important integration is. Super important that the people appointed to the integration roles display specific personal qualities and skills. MULTIDIVISIONAL STRUCTURE The functional structure is suitable for not-that complex firms that offer a limited range of products/goods. If the target is bigger, a divisional structure is better. Here the division of labour is made on 3 specialisation criteria: By product or service By market or target consumer By geographical area The divisional structure features entities called divisions (or business units) which are responsible for producing a product/service, for satisfying a market/consumer segment or for a geographical area. Every division has considerable managerial autonomy for its own areas, and overall coordination is assured by the general management. Every division is structured using the functional structure method and thus it contains second-level entities, so functional units. These principles also apply to cultural firms. The divisional structure makes it possible to meet the integration requirements resulting from the growth and differentiation of products or services provided → by aggregating in the same division all the technical-specialist competences (marketing, conservation and educational services) required to supply the product/service for which it’s responsible. This can lead to a duplication of resources, reducing economies of scale and increasing costs. A less efficient use of resources is justified because every division needs dedicated functions. It is advisable to decentralise those functions that will benefit most from specialisation and cluster those who won’t benefit from it or which will allow greater economies of scope/scale if managed centrally. In some cases fundraising can be a functional unit that works alongside the divisions, creating a divisional structure with centralised functions. Advantages = suited to complex firms because it is better for managing operations in different markets or the production of a variety of goods. It is more flexible + possibility to create new divisions from scratch without causing imbalance. Disadvantages = increase in organisational costs due to the duplication of functions performing the same activities. It can suffer the same coordination problems found in functional structures → can lead to communication problems between the divisions. The high degree of autonomy of each division can lead to them focusing only on their goals. PEOPLE MANAGEMENT Part of organisational studies. Managing people = managing the relationship between individuals and a firm. This interplay is difficult to depict and so to work with. Organisations need to manage their human capital to operate and so they need to implement Human Resources Management systems. This involves timely investments in practices aimed at recruiting the best people, motivating them… when people are well managed both individual and organisational improvements are reached. The selection process is costly, the issue is to keep the selected workers. Managing people means also considering their differences and aligning their individual goals with those of the organisation → difficult but necessary to be successful. Also management of exit: firing and retirement. Promoveatur or amoveatur → vertical or horizontal growth. Need to assess performance = measurement of performance and potential associated with different organisational roles. Efficiency associated with the task one has, being trustworthy, fitting in a team and being a good team member and someone that wants to grow WITH the firm he works in. In cultural institutions (labour intensive field) the human side is fundamental in determining the firm’s performance. The use of HRM systems allows for a greater integration between managerial attitudes and cultural systems. Managing people is complex, especially when it comes to artistic figures who have specific career preferences and specific motivational drivers. Artists tend to identify with their professional community, with whom they share the same values, choices and educational backgrounds. Very common for artists to move from one organisation to another → this can be problematic for cultural institutions. High levels of personnel turnover imply greater costs in terms of recruiting or losing the knowledge/skills that people have developed. + Artists are a determining factor for the success of a firm, so when they leave it can be difficult to replace them. It is crucial to be able to retain their human resources by offering opportunities and recruiting well. RECRUITING AND SELECTION The goal is to find and select the best person to fill a particular role within a firm. The starting point is the emergence of an organisational need in terms of HR. It is important to define the ideal profile of the candidate, then one starts looking for candidates. Then a choice must be made between looking to: a. the internal labour market (those who already work in the firm) b. the external one (anyone not working in the firm, that could be employed or not with other firms) This also applies to promotions. Opting for a. Reduces recruitment costs because there is no need to invest in adv/recruitment firms + internal candidates do not need to adapt to the work environment. Going on continuity, the organisation trusts you and your skills. Opting for b. Implies greater costs but introduces new knowledge and new profiles to the company → could boost its innovation. No competition within the firm + possibility of finding someone skilled. The recruitment process is aimed at sourcing a sufficient number of people who are potentially suited to fill the vacancy. The selection process is aimed at selecting from the range of candidates the person most in line with the requirements for the position. Selection is subject to multiple cognitive distortions and features a market asymmetry of info. There are normally 2 stages:  - CV screening - Selection interviews → can cover multiple aspects of the candidates. CAREER This set of practices includes internal mobility programs, which lead people to fill higher organisational positions involving greater responsibilities, difficulties and pay. Career paths have become more complex → moving towards a model in which organisations offer different opportunities to grow, instead of hierarchical progressions. Common in industries like IT or pharmaceuticals, where companies adopt dual ladder career paths → separate but equally interesting paths for specialist technical personnel and for those who have managerial-type responsibilities. This is to meet the ends of both types of workers: promotion to managerial positions is not the only way to grow within the hierarchy, professional-type career advantage is also possible so it is based on their wealth of technical-professional content and not on the person’s level of managerial responsibility. Workers in cultural industries have characteristics typical of professional communities (low loyalty, identification in shared values…) so they can benefit from separate career paths as well- Advantage = staff in cultural organisations can choose the most motivating career path in terms of their interest in the content of the work and potential for putting their skills to use, while also allowing the development of mixed professional figures, both artistic and managerial. Drawback = people who choose a specialistic-technical career can at the most aspire to enter a hierarchical position (EX: director of collections) which is normally subordinate to that of the museum director. THE ROLE OF THE EXECUTIVE DIRECTOR Selecting the executive director is a critical decision that embodies all the typical problems in management for cultural institutions. Need to choose the profile most suited to ensuring that the company is run efficiently and effectively. The choice is typically between people with previous experience in the arts and culture world (technical background) and those with a managerial background. The choice is essential to manage both the artistic and the economic aspects → economics is the rational part of human decisions, while culture stands for the more passionate and creative aspects. The role is very complex because the person has to coordinate all the internal resources and manage the relationships with external stakeholders. Baia Curioni says that cultural firms operate across 3 main markets, developing relationships with 3 stakeholder groups: 1. Private users → all the potential consumers of a cultural institution’s activities. Anyone who uses the services/products, those who rent the institution’s spaces… need to manage activities that contribute to determining its value for private users. 2. The professional and scientific community → opinion leaders, the media, professionals and other institutions in the sector. Need to define its cultural project’s value in terms of artistic quality. The opinion of these stakeholders helps shape the firm’s reputation, influencing potential partnerships. 3. Members of the political world → public institutions, regional entities which recognise the cultural institution as having social or economic value due to its ability to create positive impacts for a territory. The activities of a firm will define the value generated in terms of socio-economic impact on a territory, so that stakeholders could want to provide support. A cultural institution must manage its relationships with all 3 groups. The director is required to reconcile the different (and maybe conflicting) interests of the categories. For the internal management the director has the responsibility to coordinate all the activities and the available resources to achieve the target objects. He must decide who does what, supervise and motivate. EX: consider the figure of a theatre director and its job prescription: Defining the goals of the theatre Formulating the schedule of activities = develop an action plan to translate the goals into actions and divide responsibilities among the units Defining the annual budget = he is responsible for the financial results Defining the cultural offering  Managing human resources and stakeholders Change management Some studies have identified 4 options available to a cultural institution: It may decide to recruit 2 people, so having 2 directors with authority in different areas: one is the administrative director/executive director and the other is the artistic director. This is a diarchy. EX: Piccolo Teatro in Milan, with Strehler for the artistic part and Grassi for the managerial one. Disadvantages = the tasks are correlated to each other, so conflicts between the 2 parts may arise. Measures like the definition of shared objectives, investments in communication systems and the insertion of cushion figures. If a cultural institution has just one person at the top, the choice must distinguish between: - a director with an artistic/specialist background = the advantages are having a person who knows how the sector works. Shortcomings are related to the risk of choosing someone that cannot hold a managerial position / finding someone that does not like some parts of the job and loses motivation. Solution is to flank them with specialist figures. EX: Martone, head of the Teatro Stabile of Rome. - one with a managerial background = advantages linked to a better match between the skills possessed and the job’s responsibilities. Risk = failure to understand and adapt to a different world. He must be able to grasp the specific features of these firms, while having the knowledge/language to interact with those who cover the technical-artistic areas. Solution = have people working alongside the director. EX: Museum of science and technology, Milan and the director Galli. Option of the clan = a situation where a cultural institution is guided by a group of people with different skills and backgrounds. This is generally used in informal contexts or new institutions. 2 pros: the variety of skills covers all areas of activities and improves the decision-making process + a clan is usually made of people who know each other well → easier to align individual behaviours. Disadvantages = lack of formalisation, because a clan becomes less effective as the firm grows in size, scope of activity and complexity. EX: the Chicago museum of contemporary art, set by critics and collectors. The director must not be decided a priori, one must start from the mission, the goals and the project. This can reduce interference from local political players and can establish a pact with internal personnel and stakeholders. The mission could still change over time. EX: of behavioural competencies a cultural director should have: a. Emotional skills = achievement orientation, self control, achievement orientation and ability to recognise when change is necessary and to find practical solutions b. Social competencies = empathy, leadership and developing others c. Cognitive competencies = visionary thinking They have to be part of the field → the rules of the game may not be evident. Also difficult to create turnover → strong personalities that stay in the sector a lot. MANAGING RELATIONSHIPS WITH THE EXTERNAL ENVIRONMENT Managing these relationships depends on the make or buy choices, which concern what an organisation decides to develop internally and what it decides to purchase externally from specialist businesses. These choices contribute to determining the organisational boundaries, then the organisation must decide that type of relationship to establish with the actors operating in the external environment. 2 options: Option of the market relationship, based upon which an organisation establishes an exchange regulated by the price paid for a good/service, and by a contract intended to specify all the duties and rights of the parties involved. An organisation can also develop more cooperative and long lasting relationships, of which a network is the most common. A network is made of all the stable relationships which a firm establishes with various actors in the external environment. It consists of a select, lasting and structured group of actors which decide to work together for a period of time while also staying autonomous. Networks are based on social coordinating mechanisms that guarantee the effective management of relationships between individual members (nodes). The actions of the members are coordinated based on mutual adjustment, not on formal mechanisms, and are disciplined by shared values, by collective penalties and by reputation. The number of members is limited. Widely used in cultural organisations and common in competitive and dynamic sectors, like fashion. Network forms of cooperation can regard both the artistic and managerial aspect, but cultural firms have troubles especially in artistic areas, because they are unwilling to give up their creative autonomy. More common are network forms in the managerial area, with benefits like the lowering of costs and the boost in efficiency. Important to consider the centrality of networks → they could range from being centralised or decentralised. Centralised networks typically include situations where one member of the network plays a central role and maintains ties with all the nodes, who rarely relate to each other directly. Aim of centralising and providing services mainly for the managerial-administrative variety. Decentralised networks generally consist of a small number of organisations that have close relationships. In the case of cultural organisations, members have informal and long-lasting ties, they share the same approach/views on projects and culture. Belonging to a network offers various advantages to cultural firms: gaining access to more funding, creating more innovative/higher quality artistic projects, improving the image and reputation, becoming more efficient… These benefits allow the organisations to make up for the costs of a network (communication, staff…). Cooperating means giving up a degree of autonomy → for cultural firms it is inevitably a political and financial phenomenon. MANAGING CULTURAL EVENTS The word event is used to indicate a set of endeavours such as conferences, trade fairs, workshops, film previews, concerts and festivals. Goldblatt defines events as moments that are unique in time and are celebrated with particular rituals and ceremonies. Getz defines events both from the pov of the organiser and that of the audience → for the audience an event is a social experience that differs from normal everyday activities, while for the organiser it is a unique undertaking that transcends the normal activities. Their complexity varies according to the size and type of audience. There are local and international events, the last being high-impact occasions that require organisational efforts to succeed. Local events imply less complexity can have great effects on the territory in terms of economic impact, image of the area… The organisation of an event requires a specific organisational form: the project based organisation (PBO). This refers to all organisational forms that involve creating a temporary system to produce a project aimed at fulfilling a goal. Temporary system = a group of people with different specialisations and skills collaborating for some time to carry out a difficult and non-routine activity. Need to be committed, flexible and quick. Have to be a clan → strong sense of belongingness, sharing the same core values = common in informal/young activities. This structure can also be used to manage activities that fall outside normal routine → this structure has gained ground due to the rise in the number of cultural events organised. But PBO can also be used in more traditional economic sectors to provide greater flexibility, focus on goals and more effective integration. Just like with movies, also for events there is the need to create a project team. The members need to have positive relational dynamics amongst themselves → cohesion and leadership processes are crucial. Cohesion processes = refers to the relational dynamics that help the individual components of a group to work in coordination with the others → they have to define their roles and coordinate to reach a common goal Leadership processes = refer to one/+ member that helps the group by coordinating the individual actions and managing conflicts. Need to have a project manager who ensures that the goals are achieved, monitors budget and time limitations. Delicate role, many critical tasks. 3 groups: - Interpersonal activities = managing the relationship dynamics, between teen members and with external parties. A manager can perform liaison tasks (networking) and figurehead tasks (representing the team externally). - Information activities = managing communication and sharing of info for the success of the project. Tasks of monitoring (observing the environment and gathering info), disseminating (circulating info or being a spokesman for the team). - Decision making activities THE LIFE CYCLE OF A CULTURAL EVENT 6 phases: 1. The conception phase, the definition of the content, features and goals. Outlining the strategic profile of the project and identification of the needs of the stakeholders. Analysis of all potential competitors to define the event’s profile and target audience + define the mission, to identify the direction and specify the goals → differentiated by importance, by time-scale (short, medium, long) and by category. Important to choose the physical space, the date and line up. 2. Initiation = the time to check the actual feasibility of the event in relation to the resources and time available. The purpose is to conduct a feasibility study → organisational, logistics, communication and economic aspects. Define the governance of the project, so identifying the party (individual or legal entity) responsible for the event + define partnerships. The output is to draw up a project document with all the funding elements: title of the event, mission, target, program, budget and communication strategies. 3. Planning phase = operational scheduling of the event → identify the activities to execute, the time they will take, resources needed, methods to monitor progress… planning tools can be the draw up of the work breakdown structure (WBS). This structure is a hierarchical composition of the work to be executed by the project team to accomplish the goals and create deliverables. It organises the goal of the project, each level represents an increasingly detailed definition of the project work. Another tool is the responsibility matrix = allows to outline the roles of the project team members and assign tasks. Useful tool to manage timelines is the Gantt chart = offers an overview of the activities to complete according to their deadlines. Representation of the interdependencies between the activities. 4. The execution phase 5. The closure phase = when the project is delivered, by implementing the decisions and indications of the previous phases. The closure phase includes all the administrative tasks connected with the receipt of public and private funding. 6. Evaluation = reviewing the work done and the results to check if the goals have been achieved. It forms the basis for the conception phase of the next event. Important to draw on impact assessment studies → estimating the impact generated by the event to the activities in the surrounding area. To measure economic impact = estimate of the tourist traffic, changes in spending, employment in the area… measure of 3 types of effects:  a. Direct impact = the returns on direct spending by the organisation and by the visitors who have come specifically to attend the event b. Indirect impact = the subsequent effects of the newly injected money to the economy that indirectly boosts the local economy (the additional spending of companies to provide greater quantity of goods to meet the new demand) c. Induced impact = the change in income of residents following the event and the increased spending capacity of residents that will affect the local economy. Regarding socio-cultural impacts → measure the potential to attract new audiences, create networks… These analyses can be useful to monitor and support the planning and design of cultural investments made by public bodies. FESTIVALS It is periodical, there is a ritual → one wants to build an expectation. Cultural festivals date back to 1969 = Woodstock’s festival, 3 days in the middle of nowhere with music. They expected 50k people, and ended up having 450k. It was a temporary initiative with a high symbolic value, high visibility and high impact in social and economic terms → positive or negative. Some festivals change location every time, some maintain their location. Some occur once per year, some don’t. Because of all these characteristics, one of the specificities of festivals in presence and permanent = there is an element of innovation, which is the magnet of attraction of the public. Sometimes these events change an industry, EX: the promotion of books after Festivaletteratura Mantova. Huge coordination costs and negative externalities. Sometimes it’s better to attract a small number of people, but let them stay → the place could not be right. Festival evolution. Points: - Increased complexity and variety of goals - A changing socio cultural context - A different stakeholder system = from counterculture to mainstream - Less spontaneous and increasingly market driven → less political and some are strongly economic - A growing attention to results and impact THEATRE OF ROME AND MARTONE’S CASE He resigns. The case is about internal disagreements in management. The director has an artistic background. Issue of appropriate profile of the director of a cultural organisation + issue of stakeholders management. He had an innovative pov creatively. Martone, by being the director, had to manage ALL workers of the theatre. The relationship with politics is also important, especially with public institutions. Not always the people nominated care about the goal and the organisation. + managers in cultural organisations are politically inclined. When dealing with cultural organisations peers are very important → not everyone will like the vision. The difficult thing is to find the target and the audience. Culture is a political act. The pressure from political parties is inevitable, because most of the organisations cannot differentiate the revenues. Revenue diversification is fundamental → public funding, solid ticketing, commercial revenues, private sponsors… safer artistic situation. Many industries will change due to the advent of AI → they won’t die but they will likely change shape due to technology + the content of the job changes → need to understand which competencies are required. Some jobs disappeared (people preparing newspaper’s pages, had to be precise and fast. Not that high on status but lots of power). An activity part of a flow had a disproportionately high power and started being rewarded more, independently of the status. Category of job wiped away. The audiovisual sector is another nervous sector → writers are worried they are going to be substituted by AI. One element has to do with the power of originality, but there is some sort of progressive increase of the average quality and competition within the talent business, but still we have professionals of the sector. The challenge is to implement AI to elevate them, not to substitute them (could be an efficiency enhancer). THE CHICAGO CASE Strike of 113 days, apparently won by the screenwriters. But some studios had to close. The article focuses on what happened to the industry after the strike. The strike ended in February 2008 and cost over 2$ to the California state. Writers protested for a good cause and obtained something, while at the same time the studios were worried that the workers would unify and completely dictate the schedule and production/release of contents. A strike can be a very powerful means of protest, but also a very costly one. New formats were introduced as a consequence of this strike, EX: realities. BOOK CITY Authors, libraries, municipality, audience, publishers, press, volunteers… Milano was labelled the city of books, because it has always been the city for publishing books. Now there is a concentration of production, because the 4 most important publishing houses are headed here in Italy. There were already 2 important book festivals in the country: one in Turin and one in Bologna. Investing in books allows to reduce social tensions, because they potentially cut across age, social status… The municipality wanted to do city branding and also social welfare, and publishers wanted to do a fair (something that was not that interesting in economic terms). The 4 publishers set up an association with the municipality → wanted to promote Milano as the capital of books. They decided to take some important public spaces (directly or indirectly controlled by the municipality) and offer them to publishers, to promote their authors. Not a fair, but free space to bring authors. In order for it to not be elitarian, the idea was that anybody could organise an event and promote it on the website → bars, cultural associations… They only had to fill up a form to present the idea of the event. Universities also are taking part, but why? To affirm that Milan is a university city. Idea is to have events for everybody and everywhere. The costs are spread so that the organisation has to worry about a few categories of costs, and the greatest part is distributed among all the stakeholders. Inefficient, reward is enjoyment. INSTITUTIONAL STRUCTURE The institutional structures define the boundaries of the organisations, since they identify the areas over which the responsibility of a firm’s ownership, governance, control and management extend. These boundaries are legal borders, but they can also be defined in terms of influence. Many of the relationships among firms are not solely economics, but are influenced by cultural, political, ethical and social links. Characteristics: - In many enterprises, the responsibility for the sale is entrusted to agents who act in the name of the firm but are independent. There is a mutual interest in the relational mechanisms and maintaining long-lasting relationships. - For historical reasons a company might be relevant within a territory - A firm’s degree of influence depends on its significance with respect to the economy of specific suppliers. During their life firms can decide it makes sense to diversify their activities by creating new firms or buying competitors. EX: Facebook bought Instagram → the first neutralised a competitor and the second increased in its users. There are always many possibilities among firms. EX: Gamma company produces textiles and has collaborated with Delta for years on the finishing phase. 1. Gamma acquires delta and absorbs it → one firm with gamma shareholders.  2. Gamma acquires delta but delta remains an independent legal entity. 2 different companies with the same shareholders and governance structures. 3. Gamma and delta form a single company → gamma holds a larger share of capital, names the CEO. Delta can appoint the president and a member of the board of directors. 4. Gamma and delta exchange share packets → they remain separate but share a % of the companies + appoint a board member in the other. 5. The 2 enter into a long-term supply agreement → exclusive production. Collaboration relationships allow for different degrees of autonomy between the companies, and the possibility they might have a single shareholding structure. In all cases, the relationship between the 2 is formalised. Formal collaboration can be achieved among businesses that operate in different sectors. Companies can implement forms of lasting collaboration that are characterised by common strategies about their areas of activity → we speak of aggregates of companies or of business networks and social networks. Companies grow in terms of the breadth of activities carried out, the number and variety of processes used and through the geographic extension. Growth can lead to further complexity and changes in institutional structures. Aggregates allow also for managing relations with other businesses, increasing both vertical and horizontal extension. The collaboration between companies can take place by habit or it can be formalised through long-term contracts, or it can be institutionalised through an exchange of shares or of sharing of economic governance bodies. The variables to which aggregates are classified are: The singularity or plurality of companies from a legal pov The unitary or non-unitary form of governance The degree to which the firm’s activities are formalised and explicit. These are the aggregates based on the previous characteristics: a. Economic groups This class is divided into these forms: private and public groups of production companies, joint-ventures and groups that manage family assets. Multiple areas of activity are controlled by separate companies but governed by a unitary system. Each company has its legal, decision making and financial autonomy, as a whole they represent a single economic unit for institutional purposes. The unitary nature does not mean that each business is totally owned by the company. Each business can autonomously draw on resources from different sources (having multiple shareholders) but the control remains unitary. From a legal pov the groups can have different structures but there is often a leading company = group leader or holding company. A form of economic group is the joint-venture → 2 or more firms decide to collaborate on a project, creating a company that can be legally independent regarding the firms that created it. If it is independent, each firm shares the risks and remuneration on a pro rata basis. These are common in sectors with high-intensity of research and development and investment: chemicals, the automotive sector… b. Formal associations of companies It includes these aggregates: consortia of firms and public firms, cartels, associations based on franchising, licences and concessions, associations based on framework agreements, trade associations or consumer businesses. Consortia = established among many companies that come together to carry out an activity in order to reach critical mass and exploit economies of scale and range of action. They usually regard research, purchase or promotion activities. Form of aggregate in the tourism sector because it facilitates collaboration between actors operating in a territory. They are ad hoc companies performing services for the member companies. A cartel = a set of companies that join to develop and implement common policies and actions to reduce competitive pressure. They bring together firms that compete on products with low differentiation like raw materials. The firms protect themselves against price wars, leading to maintaining high prices to the detriment of consumers. Cartel agreements are not formalised. The word regards the explicit forms of agreements allowed by law. Franchising networks = made up of a central franchisor that sets the rules, and firms linked to it, known as franchisees linked to the franchisor by specific business agreements. The franchisor transfers the right to use the trademark and some know how. Each franchisee agrees to follow contractually defined rules → the products sold are uniform and constant among the different points of sale. Franchising is present in a variety of businesses, especially in the sale sector like hotels, restaurants. If the agreements are limited to the transfer of rights to trademarks or patents, there is a licensing or concession relationship. Licensing contracts are more frequent in the fashion sector. Concession contracts are common for firms in the public administration. In case of complex supply or collaboration relationships, firms use framework agreements = long term contracts where 2 firms make mutual commitments and define the conditions of the collaboration, referring to other contracts regarding specific agreements within the collaborative arrangement. Common among public agencies to define long term collaborations. Formal trade associations = established between firms belonging to the same sector or with similar characteristics to pursue common interests not linked directly to exchange or competition relationships. They provide services for their members and express interests in different contexts. They exist also among businesses that don’t produce anything = associations of consumers. EX: altroconsumo. c. Informal association of companies Important and widespread in some areas where there are many small enterprises highly specialised in manufacturing sectors. Different types: subcontracting networks, constellations of companies, districts and various informal understandings. Subcontracting networks = a principal firm with the tendency to outsource its activities and different firms whose activities depend on that firm. If the aggregate is made of a small number of firms of small-medium size that carry out complementary activities but are independent → constellations of firms. Very common in Italy. District = to identify a set of firms that are closely connected by market and located in a limited area. They are defined by a geographic and product dimensions. The relationship between firms in the same district can be both supportive and competitive. Advantages linked to to aggregates among firms: 1. In the case of holding structures, the possibility to guarantee the control of a network of companies with limited investment 2. The possibility to spread production costs over a greater number of product units (economies of volume and scale) 3. The possibility to exploit knowledge and resources in other areas of activity (economies of scope) 4. The possibility to integrate distinctive skills 5. The possibility to share costs (transaction economies) 6. The sharing of risks 7. The possibility to neutralise a competitor and generate monopolistic income There are also non-economic benefits: a. The possibility to exploit networks of social relations b. The tendency towards domination c. Relationships of solidarity and political affinity Economic obstacles are:  - organisational complexity linked to the need for strong investments to generate consent - The need for different management orientation to improve the management of different activities - The risk of erosion of knowledge and distinct skills in the company Non economic obstacles regard the orientation toward independence and competition, and to divergences of values and interests. There are also environmental factors that can facilitate/hinder the creation of aggregates, like the systems of communication/transport, the characteristics of the capital market, economic legislation (antitrust laws!!) and the prevailing economic and political culture. INSTITUTIONAL STRUCTURES AND ECONOMIC VIABILITY The choices of governance bodies must be aimed at guaranteeing the possibility for the company to survive over time, to remunerate all production factors (including risk capital) and balance the tendency of the governance and management bodies to aim at short term results to ensure continuity. Each bankruptcy business is a loss for the public in general. Economic viability is the ability of a company to survive over time, without being pathologically dependent on third parties. Aspects of the interdependency between economic viability and institutional equilibrium: Institutional equilibrium allows for durability due to the convergence of stakeholders’ interests, a synthesis between short and long term goals, unitary intent, governance and management. The stakeholders are motivated to share the goals because they know they’ll be rewarded. Economic activity uses resources and generates resources → each firm must have enough resources to remunerate all conditions of production and consumption it uses, unless other firms are willing to cover losses The possibility to generate resources to sustain growth is a condition to guarantee a company’s autonomy in developing its goals. This autonomy legitimises and strengthens the institutional structures. If the firm is not able to last it must find another factor to cover the losses or diminish its economic activity, but whoever does this will want to have a say on choices. The impossibility to survive over time and to operate autonomously jeopardise its existence and reason for existence. Viability is a constraint on the functioning of any type of business. If the business depends on third parties it is unable to control the resources flow. Viability is an essential factor. The institutional structures must tend to the firm’s viability. Only if the firm survives over time it will be able to pursue its institutional aims. If economic equilibrium is not reached the firm will cease to survive or will be absorbed by another company or modify its ownership structure. Viability is essential for institutional equilibrium. A business is viable when it is in financial equilibrium → when it is able to attract and mobilise the resources necessary to remunerate all of the production and consumption factors necessary to carry out its activity. This may not happen for limited periods of time but in the long run it is necessary. Conditions for it to be present: ★ Economic equilibrium = the use of revenues to remunerate all of the production factors, at market conditions, including the loan capital and risk capital. In the short term this may not be reached because firms often have costs before they are able to generate revenues and so they could ask for help from third parties + it can be that firms (like non profits) do not remunerate the production factors at market conditions. If the management is not able to balance costs and revenues the firm will not be viable. ★ Fundamental to have sufficient financial resources to cover the initial investments and sustain initial losses ★ Efficiency = the firm’s ability to use the resources available in the best way possible. In times of scarce resources we have to maximise the output, the income created or freeing up resources for operations. Operations based on efficiency favour economic equilibrium. Thanks to the presence of outside factors, firms can also generate income despite not being efficient. The improvement of efficiency has to do with the tension towards innovation.  ★ The appropriateness of remuneration = if the remuneration is not at market conditions the firm could suffer economic and reputational harm, when discovered. Microenterprises run by families often do not calculate adequately the cost of labour of the owner and family members, overestimating the income. In the case of remuneration of risk capital the problem is poor performance regarding alternative investments, the difficulty to divest in the event and the risk of seeing a reduction of the capital invested because of poor management. ★ Monetary equilibrium = expresses the firm’s ability to meet payment obligations at any time, thanks to the availability of monetary resources. The business is out of equilibrium if the outflow > inflow. This is difficult to reach if there are many sunk costs, if payments for suppliers are due before the arrival of payments from clients, or if the firm does not reach short term economic equilibrium. A business can be in economic equilibrium but not in a monetary one and vice versa. Reaching stable financial equilibrium requires respect for all these conditions. When economic and monetary equilibrium are not reached at the same time, financial operations act to cover the gap: the company takes out loans to obtain external resources. The recourse to external financing requires prudence, because indebtedness has a cost that impacts the company’s capacity to generate income. To reach viability in the long run the firm has to maintain constant flexibility. In the case of families, the balance between consumption and income is critical for financial equili