the entrepreneurial dimension of the cultural and creative...

HKU(2010),TheEntrepreneurialDimensionoftheCulturalandCreativeIndustries 1

TheEntrepreneurialDimensionoftheCulturalandCreativeIndustriesDecember2010

TheEntrepreneurialDimensionoftheCulturalandCreativeIndustries

ThisreportwaspreparedbyUtrechtSchooloftheArts(HogeschoolvoordeKunstenUtrecht,HKU)intheNetherlands.TheFacultyofArt&EconomicsandtheFacultyofArt,Media&Technologyco‐operatedonthisstudy.TheresearchadviserwasProf.GiepHagoortandhismanagingeditorwasReneKooyman.Thestudywasco‐ordinatedbyDavidCrombieandtheresearchteammanagedbyEmmaTilquinwiththesupportofK2MLtdandEurokleisS.r.l.MoreinformationaboutHKUisprovidedintheAboutUssection.Formoreinformationregardingthisreport,pleasecontactPierreMerschatHKUinthePirstinstance:pierre.mersch@kmt.hku.nl.

Acknowledgements

Wewouldliketothankeveryonewhohelpedwiththisstudy.Firstly,wewouldliketothanktheexpertsintheculturalandcreativeindustrieswhoagreedtoparticipateinthestudyandgaveuptheirtimeforquestionnaires,interviewsandworkshops.Secondly,wewouldliketothankProf.JeroenvanMastrigt,DrGeorgeIoannidis,DrFrancescoBellini,andDrsRogerLenoirfortheirco‐operationandexpertise.Thirdly,wewouldliketothankourresearchers,namelyMauroNavarra,MariaFeliceArezzo,PierreMersch,GiovanniGiovinazzo,MarillaValente,SandratenZijthoff,ChiaraGerlich,ZameerRazack,KwakuAfriyieandLuzGutierrez.

Disclaimer

Thisstudyissubjecttoadisclaimerandcopyright.ThestudywascarriedoutfortheEuropeanCommissionandexpressestheopinionsoftheorganisationshavingundertakenthestudy.TheviewshavenotbeenadoptedorinanywayapprovedbytheEuropeanCommissionandshouldnotberelieduponasastatementoftheEuropeanCommission'sviews.TheEuropeanCommissiondoesnotguaranteetheaccuracyoftheinformationgiveninthestudy,nordoesitacceptresponsibilityforanyusemadethereof.

Copyright

CopyrightisheldbytheEuropeanUnion.Personswishingtousethecontentsofthesestudies(inwholeorinpart)forpurposesotherthantheirpersonaluseareinvitedtosubmitawrittenrequesttothefollowingaddress:EuropeanCommission,EducationAudiovisual&CultureExecutiveAgency,AvenueduBourget1,BOUR/BOU2*,BE‐1140Brussels

Reference

HKU,(2010),TheEntrepreneurialDimensionoftheCulturalandCreativeIndustries,HogeschoolvordeKunstenUtrecht,Utrecht.

Contents

...................................................................................................................ChapterOne:Introduction 5.......................................................................1.1.Overview,objectivesandstructureofthestudy 5

..............................................................................................................1.2.Approachandmethodology 7..........................................................................................................................1.3.TheCreativeEconomy 8

..................................................................................ChapterTwo:CreativeEntrepreneurship 10...............................2.1.DePiningentrepreneurshipintheculturalandcreativeindustries 10

........................................................2.2.Characteristicsoftheculturalandcreativeindustries 17...............................................................................................................2.3.FeaturesoftheCCIsectors 28

.................................................................2.4.Crosscountryanalysisofregulatoryframeworks 44.............................................................2.5.Supportingculturalandcreativeentrepreneurship 51

............................................................................................................................2.6.Concludingremarks 54

...........................................................................................Chapter3:MainThematicOutcomes 56....................................................................................................................................3.1AccesstoPinance 56..................................................................................................................................3.2.Accesstomarket 66

......................................................................................................3.3.IPRinstrumentsandCCISMEs 73

....................................................................3.4.Entrepreneurshipeducation,skillsandtraining 78...........................................................................................................................3.5.Accesstoinnovation 89

................................................................................................................3.6.Clustersandcollaboration 99.........................................................................................................................3.7.Concludingremarks 108

................................................................................................ChapterFour:Recommendations 109....................................................................................................4.1.Transversalrecommendations 109

...............................................................................................................................4.2.AccessingPinance 110.......................................................................................................................4.3.Accessingthemarket 111

...................................................................................4.4.Bridgingtheentrepreneurialskillsgap 112

...............4.5.Developingentrepreneurshipasnon‐technologicaldriverofinnovation 113..................................................................................................4.6.Supportinguseofdigitalisation 113

................................................................................................................................................Appendix 115

..................................................................................................................................................Aboutus 116

.........................................................................................................................................Bibliography 117

ListofFiguresFigure1:TheOECD/EUROSTATFrameworkforDeterminantsofEntrepreneurship 13Figure2:SizeofenterprisesbysectoracrossCCIs 19Figure3:DistributionofTotalTurnoveramongIndustriespersizeclassofenterprise 19Figure4:DistributionoftotalAssetsamongIndustriespersizeofenterprise 20Figure5:PercentageoffulltimeemployeespersizeclassenterpriseinDec.2008 21Figure6:PercentageofEmployeesperSector 23Figure7:TotalTurnoverperIndustry 30Figure8:PercentageofEnterprisesperSector 31Figure9:USTradeWholesaleElectronicBookSales,2002‐2010(1stquadrimestre) 37

Figure10:TheValuechainforculturalinstitutions 42Figure11:SimplelifecycleframeworkforsupportingtheCCentrepreneurandenterprise 51Figure12:EffectoftherecentPinancialcrisison2009turnover 57Figure13:MostimportantPinancialsource2007‐2008 57Figure14:FinancialandEconomicplanning(Budgetandbusinessplan)forCCIs 58Figure15:MainobstaclesforCCIstoaccessPinance 59Figure16:MostadequatetooltoincreasePinancialopportunitiesforCCIs 61Figure17:MostrelevantinitiativetoaccessPinanceforCCISMEs 63Figure18:MostimportantkindofPinancialinitiativesbestassistingCCISMEs 63Figure19:MostimportantphaseforPinancialsupport 64Figure20:MostSuitableAuthoritytosupportaccesstoPinance 65Figure21:MostimportantknowledgefactorimpedingCCIs 67Figure22:Preferredphaseinthelifecycleforsupporttoaccessthemarket 71Figure23:Mostappropriatephaseforcrossbordermarketsupport 72Figure24:Mostappropriatelevelforsupportingaccesstomarket 73Figure25:MostimportantregulatoryissuesfacedbyCCISMEs 73Figure26:MostcommonlyusedinstrumentsfortheprotectionofcreativeoutputsinCCIs 75Figure27:BestphasefortheprovisionofIPRadvice 77Figure28:Mostimportantbusinessrelatedchallengewhenstartingacompany 78Figure29:AgreementonsufPicientintegrationofentrepreneurshipineducationalsystem 79Figure30:Mostusefulsupportforacquiringentrepreneurialpracticesinthestartupphase 85Figure31:MostappropriatephaseforspeciPictrainingintechnologyandPinancialskills 85Figure32:PreferredphaseforLLLinlifecycle 86Figure33:NeedfordevelopmentofadviceandsupportcentresforCCIs 87Figure34:PreferredlevelfordevelopingadviceandsupportcentresforCCIs 87Figure35:PreferredlevelforLLLstrategies 88Figure36:AimofCCIswheninnovating 92Figure37:Mostimportantchallengesintermsofinnovation(Source: 93Figure38:MostrelevantsourcesofknowledgeforCCISMES 94Figure39:Waystoacquireknowledgeaboutresearchandinnovationinitiatives 95Figure40:Mostimportantmeasuresforthepromotionofinnovation 97Figure41:MostimportantphaseforinnovationsupportforCCISMEs 98Figure42:PreferredLevelsforinnovationinvestmentsforCCISMEs 98Figure43:Preferredlevelforpartnershipbetweenprivatebusiness,publicinstitutionsandCCISMEs 99Figure44:Co‐operationwithotherenterprisesinthesamesector 100Figure45:Co‐operationwithenterprisesinadifferentsector 100Figure46:Typeofnetwork 101Figure47:NeedfordevelopmentofadviceandsupportcentrespeciPicforCCI 105Figure48:Useofcollaborativebusinessenvironment(clusterorincubator)withinCCIs 105Figure49:Preferredphaseforcollaborativebusinessenvironment 106Figure50:Needforcross‐sectoralSMEco‐operation 106Figure51:Preferredlevelfordevelopingcollaborativebusinessenvironmentinitiatives 107Figure52:Needforanincreaseincross‐regionalco‐operationtoimprovegrowthofCCISMEs 107

ListofTablesTable1:PercentageofeconomicturnoveroftheCCIpercountryinseveralEuropeancountries 16Table2:DistributionofEnterpriseamongIndustriespersizeclass 18Table3:ClustersintheCCIs 29Table4:DigitalCinemasitesandscreeninEurope(2003‐2008) 36Table5:MostimportantregulatorymeasuresfacedbyCCIs 44Table6:Clusteringbycountrycharacteristics 46Table7:Europe’stopregionsforCCIemploymentclusters 50Table8:Personalmotivationinentrepreneurship 53Table9:CCISMEssupportforthedigitalmarket 70Table10:Waysofacquiringentrepreneurialskills 81Table11:WaystogetadviceandsupportwhenstartingaCCIcompany 104

ChapterOne:Introduction

1.1.Overview,objectivesandstructureofthestudy

Europeiswidelyrecognisedashavingarichdiversityinitsculturalheritageandculturalexpressions.However,inrecentyearsEuropehasbeenconfrontedwithseveralmacro‐economicchallenges,suchasthePinancialcrisisandastrongerglobalcompetition,aswellasinternalsocio‐economicchallenges.TheEurope2020StrategyhighlightedtheneedforourcontinenttotakeaninnovativepathtorespondtothesechallengesbybuildingupononeofEurope’skeystrengths;itstalentedanddiversecreativepopulation:1

“Smartgrowthmeansstrengtheningknowledgeandinnovationasdriversofourfuturegrowth.Thisrequiresimprovingthequalityofoureducation,strengtheningourresearchperformance,promotinginnovationandknowledgetransferthroughouttheUnion,makingfulluseofinformationandcommunicationtechnologiesandensuringthatinnovativeideascanbeturnedintonewproductsandservicesthatcreategrowth,qualityjobsandhelpaddressEuropeanandglobalsocietalchallenges.But,tosucceed,thismustbecombinedwithentrepreneurship,Ninance,andafocusonuserneedsandmarketopportunities”.2

Theimpactofcultureandcreativityor‘culturebasedcreativity’3hasattractedmuchattentioninfosteringandunlockingthepotentialofaEuropean‘creativeeconomy’.Theincreasingfocusontheculturalandthecreativesectorhasresultedinmanystudies,suchastheUNReportonCreativeEconomyin2008,whichwascollectivelypublishedbyPiveinternationalorganisations(UNCTAD,UNDP,UNESCO,WIPOandITC):

“Theinterfaceamongcreativity,culture,economicsandtechnology,asexpressedintheabilitytocreateandcirculateintellectualcapital,hasthepotentialtogenerateincome,jobsandexportearningswhileatthesametimepromotingsocialinclusion,culturaldiversityandhumandevelopment.Thisiswhattheemergingcreativeeconomyhasalreadybeguntodoasaleadingcomponentofeconomicgrowth,employment,trade,innovationandsocialcohesioninmostadvancedeconomies”.4

Inrecentyears,theEUCouncilalsofollowedthemovetorecognisethepotentialoftheculturalandcreativeindustriesincontributingtotheLisbonobjectives,5actingascatalysersofEurope’sinnovativepotential.Similarly,intheMaastrichtTreaty(theEULisbonprocessforstrengtheningtheeconomicgrowthinEurope),aswellasintheUNESCOConventionontheProtectionandPromotionoftheDiversityofCulturalExpressions(hereafternamedUNESCOConvention),6theroleoftheculturalandcreativeindustrieshasgainedgreaterattention.7Inparallel,severalEuropeaninitiativeshavebeenundertakentopromotetheideaofthecreativeeconomy;forexample,2009wasdesignatedtheEuropeanYearofCreativityandInnovationandtherecentGreenPaperon‘Unlockingthepotentialoftheculturalandcreativeindustries’(hereafterreferredtoastheCCIs)solidiPiedthisrecognition.8

1ECCommunication,(March2010b),Europe2020:AStrategyforSmart,SustainableandInclusiveGrowth,COM(2010)2020,p.7.2Ibid.,p.10.3KEA,(2009),Theimpactofcultureoncreativity,KEAEuropeanAffairs:Brussels4UNCTAD,(2008),TheCreativeEconomy,UNCTAD/DITC/2008/2,p.iii

5EUCouncilConclusions,(2007),ContributionoftheCulturalandCreativeSectorstotheAchievementoftheLisbonObjectives‐AdoptionoftheCouncilconclusions,9021/07,DGI‐2A,Doc8635/2/07CULT25REV26TheEuropeanCommunityispartytothisConvention.

7 FeselB.,Söndermann,M.,(2007),CultureandCreativeIndustriesinGermany,UNESCOBonn8ECGreenPaper,(April2010),UnlockingthePotentialofCulturalandCreativeIndustries,COM(2010)183

TheabundanceofstudiesontheCCIs,suchasthoseundertakenbyKEA,9NESTA,10theEuropeanClusterObservatory,theworkon‘Designasadriverofuser‐centredinnovation’,11thereportsproducedrecentlybytheEuropeanPlatform,andtheExpertWorkingGrouponCCIs12(setupaspartoftheEuropeanAgendaforCulture),havehighlightedthecriticalimpactofCCIsongrowthandemployment,13andacknowledgedtheirgreateconomic,social,culturalandinnovativepotential.CCIactivitiesactasimportantdriversof‘economicandsocialinnovation’withinthesectorbutalsooutsidetheCCIsector,14contributingtoEurope’sstrengthsintimesofchallengesand,assuch,areinlinewiththeEU2020Strategy.Withimaginativesolutionssuchastheintegrationofusercentredapproaches,thedevelopmentanduseofICT,thedesignofnewservicesforincreasedsocialinclusion,CCIscontributetodrivedynamicchangeintheeconomyaswellascontributingtobroaderculturaldiversity.Withnewprocesses,productsandservices,CCIsmayprovideinnovativeinputforothersectorsoftheeconomy.15AsinnovationisnowacknowledgedasencompassingmorethanjusttechnologicalandscientiPicchanges,16theCCIsoffertheopportunitytobringessentialchangeinnon‐technologicalinnovationforproducts,servicesandprocesses,contributingtoamoreinventiveEurope.Externalfactorssuchasglobalisationandthe‘digitalshift’haveopenedopportunitiesandenabledgreaterculturaldiversityandaredriversoffurtherdevelopmentfortheCCIs.17AdditionalfactorshavetobetakenintoconsiderationtoexamineconduciveenvironmentsforunlockingtheentrepreneurialdimensionofCCIs.FosteringentrepreneurshipintheCCIsmeansstrengtheningEurope’sculturalandcreativediversitybyreinforcingtheabilityofculturalandcreativeentrepreneurstoefPicientlycarryouttheiractivitiesandproposenewproductsandservices,andthiscanactasanontechnologicaldriverofinnovation.ThisstudyrespondstothegrowingimportanceofthecreativeeconomyandmorespeciPicallytotheroleoftheCCIsasameanstotacklefuturechallengesinthecontextofaglobalisedeconomy.18Thefocusonknowledge‐intensiveproductsandservicesandtheneedtocreatealevelplayingPieldforentrepreneursinCCIswasputforwardintherecentGreenPaperthroughafocusoncreativityandinnovation.19

ThestudyaimstoprovideabetterunderstandingoftheoperationsandspeciPicneedsoftheCCIs,especiallysmallandmedium‐sizedenterprises(hereafterreferredtoasSMEs).Itwillhighlightthetransversalproblemscommontoalltheseculturalandcreativeindustries,andindicatespeciOicchallengesthatcouldhamperinnovationandpreventCCIsfrombenePitingfromtheinternalmarketandnewtechnologies.ThisreportprovidesanoverviewofthemaincharacteristicsoftheCCIsandconsidersnationalenvironmentalfactorsthatinOluencethedevelopmentoftheseenterprises.Afterthisoverview,thestudysurveysthekeydeterminantstostrengtheningentrepreneurshipforCCIssuchasaccesstoPinance;accesstomarket;intellectualpropertyrights;educationandtraining;accesstoinnovation;andcollaborativeprocesses.

9KEA(2006),TheEconomyofCultureinEurope,Brussels:KEAEuropeanAffairs;KEA,(2009),TheImpactofCultureonCreativity,Brussels:KEAEuropeanAffairs10Seehttp://www.nesta.org.uk/publications11ECStaffWorkingDocument,(2009a),Designasadriverofuser‐centredinnovation,SEC(2009)50112EuropeanPlatformonthePotentialoftheCulturalandCreativeIndustriesandtheOpenMethodofCoordinationExpertWorkingGrouponMaximisingthePotentialofCulturalandCreativeIndustries,inparticularthatofSMEs.Reportsavailableathttp://ec.europa.eu/culture/our‐policy‐development/doc2240_en.htm.13EuropeanClusterObservatory,(March2010),PrioritySectorReport:CulturalandCreativeIndustries,Stockholm:EuropeanClusterObservatory,p.13.14ECGreenPaper,(April2010),op.cit.,p.3.15ECCEInnovation,(July2009),MappingInnovationOpportunitiesStemmingFromCollaborationbetweenCreativeIndustriesandOtherIndustries,Stuttgart:ECCEInnovation,p.11.16ECCommunication"Europe2020FlagshipInitiativeInnovationUnion",(October2010),COM(2010)546Pinal17ECGreenPaper,(April2010),op.cit.,p.3.18ECCommunication,(March2010b),op.cit.,p.2.19ECGreenPaper,(April2010),op.cit.,p.3.

Derivingfromthesekeychallenges,thestudysuggestsgeneralapproachesfordevelopingaconduciveenvironmentforCCIsaswellasspeciOicrecommendationstoprovidesupportforeachdeterminant,highlightingbestpracticesandtakingintoconsiderationsectordifferences;thedifferentlevelsofauthority;andthedifferentlifecycledevelopmentphasesinwhichtheCCIsPindthemselves.Chapter2providessomeunderstandingofthecommonfeaturesofallsectorsoftheCCIsandthedifferencesinspeciPicsectors,aswellasdescribingthegeneralenvironmentinwhichtheyoperate.ItPirstlydePinestheconceptofculturalandcreativeentrepreneurshipasadistinctfeaturefromthegeneralideaofentrepreneurship.ThisbuildsuponthediscussionofthecommoncharacteristicsandproblemsofCCIscomparedtootherindustrialsectors.Inordertoaddressthecommonissues,thedeterminantsofentrepreneurshipareconsidered.Moreover,asCCIsdonotoperateinavacuum,thestudyprovidesanoverviewoftheclustersofcountriesaccordingtothegeneralregulatoryframeworkthatshapesthecontextinwhichtheCCIsoperate.InordertodiscusssupportfordevelopingentrepreneurshipintheCCIs,aframeworkofanalysisbasedontheentrepreneuriallifecyclewasdevelopedtoexaminethedifferentlayersofsupportofferedbylocal,regional,nationalandEuropeanauthorities.Chapter3looksatthesixcorefactorsfordeterminingentrepreneurshipintheCCIs,namely;accesstoPinance;accesstomarket;intellectualpropertyrights(IPR);educationandtraining;accesstoinnovation;andcollaboration,networksandclusters.SpeciPicattentionisgiventotheeffectofdigitalconvergenceanditsinPluenceoninnovationandtheCCIs.ThestudyaimstoprovideapackageofrecommendationstotakeintoconsiderationwhenlookingatthecomplexrequirementsofCCIs,withafocusonmicro‐SMEs.Thisisnotintendedtobeacomprehensiveoverviewbutrathertoofferasnapshotofthecurrentsituation;toshedsomelightontheareaofcreativeentrepreneurshipthatremainsrelativelyunexplored;andinChapter4toprovidesomepolicysuggestions.Throughoutthisreport,around40BestCasesillustratekeyapproachesandinitiatives(Appendix1).Similarly,anonymisedcommentsfromthemanyexpertsinterviewedduringthestudyarepresentedwhereappropriate.Abibliographyofsourcescanbefoundattheendofthereport.

1.2.Approachandmethodology

Thegeneralapproachofthisstudyhasbeentoapplyablendofmethods,linkingsecondarysourceanalysiswithprimaryqualitativeandquantitativePieldwork.Differentmethodsofdatacollectionhavebeenused:bibliographicalresearch,comprehensivepolicyscans,quantitativestatisticalanalysesofCCIs,expertonlinequestionnaires,expertinterviews,onlinesurveys,casestudiesandvalidationseminars.IntermsofthestatisticalanalysisoftheCCIcharacteristics,thedatabaseuponwhichouranalyseswereconductedisbasedondatafromnationalChambersofCommerceintheEU‐27for2007.Statisticsfor2008werenotavailableatthetimeofthestatisticalanalysesin2009.ThewholedatabaseoftheEuropeanUnioncontains13millionregisteredcompaniesinEurope.Fromthis,companiesregisteredasactiveandresidinginoneEUcountryandundertherealeconomy(notPinancial)wereselected,whichleftadatabaseof7.117.559enterprises.Fromthiscompaniesforwhichtheprimaryactivity(primarycode)isoneoftheNACEcodesappointedfortheCCIswereapproached.TheNACEcodebasedontheclassiPicationfromtheKEAstudyin200620wasusedbutwithsomeadjustments(seeAppendix2.10formoreinformationconcerningthespeciPicmethodologies).InthePirstphase(duringOctoberandNovember2009),oneonlinequestionnairetargetedthesectoralassociationsaswellasexpertsfromacademia,culturalorganisationsandresearchinstitutes.Thisonlineexpertquestionnaire(referredtoasexpert

20KEA,(2006),op.cit.,p.56,p.64,p.308.

questionnaire)gatheredresponsesfromapproximately70ExpertsfromthedifferentcountriesoftheEU.21Inthesecondphase,anotheronlinequestionnaire(referredtoasonlinesurvey)wasconductedandwasopenfrommid‐Februaryuntilmid‐April2010.ThisquestionnairetargetedCCIsthemselves.670respondentspartiallycompletedthequestionnaireand310fullycompletedthequestionnaire.InordertoreceivemoreextensiveopinionsonspeciPicthemes,expertopinionswerealsogatheredthroughsemi‐structuredinterviews(referredtoasexpertinterviews)withrespondentscomingmostlyfromMinistriesofCultureandFinance,aswellassectoralexpertsfrommanydifferentcountriesandregions.Theseexpertinterviewstookplaceduringthesecondphase(FebruaryandMarch2010)togainadeeperunderstandingoftheissuesandseveralanonymisedquotesareusedthroughoutthisdocument.Thesequotesarereferencedaccordingtothetypeoforganisationoftheintervieweeaswellasthecountryclusteringinwhichtheorganisationoperates.Twovalidationworkshopstookplaceduringtheresearchprocess.ThePirstwasheldattheendofthePirstphaseoftheresearch(January2010),aftergatheringtheCCIstatisticalcharacteristicsandexaminingtheenvironmentalfactors.ThesecondwasheldaftertheoverallPieldresearchwascompleted(March2010)inordertoreceivefeedbackfromthestakeholdersontheinitialrecommendations.Paralleltotheexpertinterviews,throughoutthestudycontextualpolicyscansofnationalandEuropeanreportsandliteraturewereundertaken.Intermsofscope,theperformingandvisualartswereincludedaspartoftheCCIsinthisstudy.AlthoughinclusionofthesetwosectorswithintheCCIsvariesfromcountrytocountryandtheyareoftenregardedaspartofthecoreartssectorbutnotthecreativeindustries,22thisstudyincorporatestheperformingandvisualarts,astheywereincludedwithinthescopeoftherecentGreenPaper.23

1.3.TheCreativeEconomy

Globalisationprocesses,fastercommunicationchannels,rapidlychangingtechnologiesandglobalconnectivityhaveradicallychangedourenvironmentandthewayweproduceandconsumeculturalproductsandservices.24Thisconvergencebetweentechnological,social,economicandculturalaspectshasforgedchangesthataffectourdailyenvironment.Creativityisnowacknowledgedasfosteringcultural,socialaswellaseconomicgains.25Inthiscontext,theconceptofthe‘creativeeconomy’isnowbroadlyacceptedandunderstood.Theinitialembryonicstageoftranslatingtheunderlyingconceptsintohigh‐levelpolicyisnowalmostcomplete.Differentmodelsexisttoexplainthecreativeeconomy,26butmostarebasedupontherecognitionoftheimportanceofservicesandthedynamiceffectsoftheCCIs.Eachmodelhasaparticularrationale,dependingonunderlyingassumptionsaboutthepurposeandmodeofoperationoftheCCIs.PerhapsthePirstusageoftheterm‘creativeindustries’canbefoundIntheUK’sDepartmentofCulture,MediaandSport(DCMS),whichbegandevelopingitsculturalandcreativeindustriesstrategyasfarbackas1997.IntheUKapproach,thecreativeindustriesarethoserequiring“...creativityandtalent,with

21Inthisreport,wehaveincludedbothPiguresfromtheonlineexpertquestionnaire(sectoralanddiverseexperts)andtheonlinesurvey(CCIs).ThePiguresreferringtotheformeraresourcedas“Eurokleis2009”,whilethePiguresfromtheonlinesurveyresultsaresourcedas“Eurokleis2010”.22SomeofthedePinitions,suchastheonefromtheDepartmentofCulture,MediaandSportintheUK,includedperformingartswithinthecoreartsorculturalorganisation,butnotaspartofthecreativeindustries.23ECGreenPaper,(April2010),op.cit.,p.5.24UNCTAD,(2008),TheCreativeEconomy,UNCTAD/DITC/2008/2,p.iii25KEA,(2009),op.cit.,p.33.p.44.26 SeetheWIPOmodel,theUKClassiPication,the“concentriccirclesmodel”andthedifferentnationalapproachestotackletheCreativeEconomy,suchas;Santagata,W.,(2009),WhitepaperonCreativity:TowardsanItalianmodelofdevelopment,Milan:BocconiUniversityEd;DCMS(2008),CreativeBritain‐NewTalentsfortheNewEconomy,London:DCMS;NetherlandsMinistryofCultureandMinistryofEconomics(2009),CreativeValue‐CultureandEconomyPolicyPaper,TheHague:NetherlandsMinistryofCultureandMinistryofEconomics

potentialforwealthandjobcreationthroughexploitationoftheirintellectualproperty.”27

Thereport‘CreativeEconomy’,publishedin2008byUNCTAD,UNESCO,theWorldIntellectualPropertyOrganisation(WIPO),theUnitedNationsDevelopmentProgramme(UNDP)andtheInternationalTradeCentre(ITC),wasalsoacornerstoneinentrenchingtheconcept.28Inthisreport,fourdifferentmodelsforthecreativeeconomywereconsidered,highlightingdifferentclassiPicationsystems.UNCTADmakesadistinctionbetween‘upstreamactivities’(traditionalculturalactivitiessuchasperformingartsorvisualarts)and‘downstreamactivities’(thoseclosertothemarket,suchasadvertising,publishingormediarelatedactivities)andarguesthatthesecondgroupderivesitscommercialvaluefromlowreproductioncostsandeasytransfertoothereconomicdomains.OtherapproacheshavedePinedtheCCIsinmanyways,includingthe‘core’artsorevenculinaryarts,aspartofthecreativeorexperienceeconomy.29

Thestudy‘TheEconomyofCultureinEurope’,commissionedbytheEuropeanCommissionin2006,wasthestartingpointforapoliticalrevaluationoftheCCIsinEuropeanditsmemberstates.30Itmakesadistinctionbetween‘culture’and‘economy’’andarguesthatalthoughtheEUwasformedonthebasisofeconomicandmarketforces,cultureandEuropeanculturaldiversityisanimportantfactorfortheEU’spolitical,economicandsocialstrength.Itmakesadistinctionbetweentheculturalsector,subdividedintoanindustrialandnon‐industrialsector;andthecreativesector.Notwithstandingthediversityofthesemodelsofthecreativeeconomy,itisremarkablethatthevariousdePinitionsleadtobroadlythesamecollectionofindustriesmakingupthecreativesector.Inthisstudy,'Culturalindustries'aredePinedasthoseindustriesproducinganddistributinggoodsorserviceswhichatthetimetheyaredevelopedareconsideredasaspeciPicattribute,useorpurpose,whichembodyorconveyculturalexpressions,irrespectiveofthecommercialvaluetheymayhave.31Theseincludethecoreartssuchasperformingarts,visualarts,aswellasPilm,DVDandvideo,TVandradio,games,newmedia,music,booksandpress.'Creativeindustries'arethoseindustrieswhichusecultureasaninputbutwhoseoutputsaremainlyfunctional.ThisclassiPicationincludesdesign,fashion,advertisingandarchitecture.Otherindustriesthatare‘peripheral’tothoseindustries,suchastourismorculinaryart,arenottakenintoaccount.TheCCIshavedevelopedconsiderablyoverthepastyears,contributingtoaround2.6%oftheEUGDPin2008andcreatingsubstantialemployment.Moreover,CCIsmaintainanddevelopEurope’sculturaldiversity,whichisalsoimportantintermsofsocialinclusion.LookingattheplaceofCCIsinMemberStates’nationalpolicies,theyplayanever‐increasingroleintermsofprovidingcontentaswellasservicesandinnovativespillovers.32

Theuseofthiscreativitytofoster“...creative,entrepreneurialandinterculturalskillsthatwillhelpbetterrespondtoneweconomicandsocialchallenges”33requiresustoreachadeeperunderstandingofthecomplexityofCCIsandthewaytheyareinPluencedandalteredbytheirenvironment.Forthesereasons,thisstudyseekstoprovideaclearpictureofthemaincharacteristicsofCCIsandtheprincipalrequirementsforsupportingentrepreneurship.

27DCMS,(2001),CreativeIndustriesMappingDocument2001(2ed.),London:DepartmentofCulture,MediaandSport28UNCTAD,(2008),op.cit.,pp.12‐15.29Santagata,W.,(2009),op.cit.,p.30.

30KEA,(2006),op.cit.,p.35.31ECGreenPaper,(April2010),op.cit.,p.5.32Bywayofillustration,theroleofCCIsisclearlyrecognisedinnationalpoliciesintheUK,Netherlands,Denmark,Sweden,Finland,FranceandGermanybutalsoinItaly,Portugal,Lithuania,CzechRepublic,Bulgaria,EstoniaandIreland.33ECGreenPaper,(April2010),op.cit.,p.18.

ChapterTwo:CreativeEntrepreneurship

InthischapterthedimensionsofentrepreneurshipintheCCIsareconsidered.Tothisend,itisnecessarytobriePlydiscusstheconceptofentrepreneurship,itsdeterminantsandthenecessityforaspeciPictermsuchas‘culturalandcreativeentrepreneurship’.ThisinvolvesexaminingthecharacteristicsoftheCCIsingeneralandthereafterthespeciPicfeaturesofCCIsectors.Inaddition,thewayinwhichenvironmentalfactorsinPluencecreativeentrepreneurshipanddeterminantsofentrepreneurshipisconsidered.BearinginmindthechallengingcontextoftheCCIs,thegeneralentrepreneuriallifecycleframeworkusedforthisstudyisdescribedforanalyticalpurposes.

2.1.DeOiningentrepreneurshipintheculturalandcreativeindustries

“Entrepreneurshipinthesesectorsmeanstohavecreativeideasandtopursuetheminacommercialway,withthepurposetomakeaproNit.However,theproNitaloneisnotthedriver;itisthecreativityandthepossibilitytobuildsomething,theselffulNilmentorbeingabletopursueyourowncreativeinterests.Thereisamixbetweentheentrepreneurialsideandthecreativeside”.(SectoralOrganisation,StructurallyStrongTraditionalEconomy)

AlthoughthereisanogeneralagreementonhowtodePineentrepreneurship,whetherasrisk‐bearing,enterprisecreationorstimulationofinnovation,thereisevenlessagreementonhowthiscanbedePinedwithintheculturalandcreativesector.3435However,giventhestrongeconomiccontributionmadebytheCCIsectortoGDPinMemberStates,36dePiningtheentrepreneurialdimensionofthissectorisclearlyimportant.Thisisneededinordertoconsiderhowbesttheseaspectscanbesupportedandtoexaminethevariousfactorsbearingupontheculturalandcreativeentrepreneur.WiththecomplexchangesthattheEUisexperiencingasaresultoftheongoingeconomiccrisisandthedigitalshiftanditsconsequencesforemerginginnovationpolicies,thereisaneedtoexaminehowculturalandcreativeentrepreneurshipcanbetterbedesignedinordertosupportmorecreativeEuropeaninnovationandcontributetoEurope’sfuturegrowth.37

2.1.1.Creativityandentrepreneurship

Theconceptof‘culturalentrepreneurship’hasgainedrecognitionduringthelastdecade.38DifferentmodelshavebeenputforwardasameansofprovidingasystematicunderstandingofthestructuralcharacteristicsoftheCCIsandinsodoingtryingtoformacommondePinitionofculturalandcreativeentrepreneurship.ThisisadifPiculttaskasitcombinestermsthatareseeminglydivergentandposesthechallengeofcrossingculturalandeconomicdiscoursetodePineadistincttermbytakingcomponentsfrombothworldsandunderstandingthespeciPicsupportthatthisentails.Eventhoughtheimageofartistscreatingsolelyfor‘art’ssake’ischanging,thereisstillastrongdividebetweenculturalandcreativeaspectsononesideandtheentrepreneurialaspectsontheother.ThemotivationsoftheculturalandcreativeentrepreneurwilllikelydifferaccordingtotheindividualandtotheCCIsectorinwhichtheyareoperating.Thetensionbetweenthecreatorofaculturalworkandtheentrepreneur,typicalofmanyCCIenterprises,isoftenrePlectedinthedesiretoprioritisetheculturalvalueofthecreationwithlittlemotivationforgeneratingeconomicvalue(creationoriented),whiletheentrepreneurwillprioritisetheeconomicexploitationoveritsculturalvalue(growthoriented).Thesetensionssuggestthatdifferentkindsofsupportneedtobe

34Hagoort,G.,(2007),CulturalEntrepreneurship.OntheFreedomtoCreateArtandtheFreedomofEnterprise,InauguralLectureJune6,Utrecht200735Kooyman,R.,(ed),(2009),PreliminaryLiteratureReview,HKU36UKTechnologyStrategyBoard,(2009),op.cit.,p.12.

37 ECCommunication,(March2010b),op.cit.,p.9‐10.38 Klamer,A.,(2006),CulturalEntrepreneurship,Rotterdam:ErasmusUniversity,AcademiaVitae

elaborateddependingonthenatureoftheorganisationandthesub‐sectorinwhichtheyoperate.

2.1.2.Entrepreneurship

Incommonparlance,beinganentrepreneurisassociatedwithstartingabusiness,butthisisaverylooseapplicationofatermthathasarichhistoryandamuchmoresigniPicantmeaning.Theterm‘entrepreneur’originatedinFrencheconomicsasearlyasthe17thcenturytomeansomeonewho‘undertakes’asigniPicantprojectoractivity.MorespeciPically,itcametobeusedtoidentifytheventuresofsomeindividualswhostimulatedeconomicprogressbyPindingnewandbetterwaysofdoingthings.TheFrencheconomistmostcommonlycreditedwithgivingthetermthisparticularmeaningisJean‐BaptisteSay.Writingaroundtheturnofthe19thcentury,Sayputitthisway,“Theentrepreneurshiftseconomicresourcesoutofanareaoflowerandintoanareaofhigherproductivityandgreateryield”.39Inotherwords,entrepreneurscreatevalue.Inthe20thcentury,theeconomistmostcloselyassociatedwiththetermwasJosephSchumpeter.40Hedescribedentrepreneursastheinnovatorswhodrivethe‘creativedestructive’processofeconomicsocieties.Inhiswords,“Thefunctionofentrepreneursistoreformorrevolutionisethepatternofproduction”.Theycandothisinmanyways:

“...byexploitinganinventionor,moregenerally,anuntriedtechnologicalpossibilityforproducinganewcommodityorproducinganoldoneinanewway,byopeningupanewsourceofsupplyofmaterialsoranewoutletforproducts,byreorganisinganindustryandsoon”.

Schumpeter’sentrepreneursarethechangeagentsintheeconomy.Byservingnewmarketsorcreatingnewwaysofdoingthingsbycreativelyinnovating,theycreatevalueandmovetheeconomyforward.Entrepreneurshipisincreasinglyrecognisedasanimportantdriverofeconomicgrowth,productivity,innovationandemployment,anditiswidelyacceptedasakeyaspectofeconomicdynamism:thebirthanddeathofPirmsandtheirgrowthordownsizing.AccordingtoSchumpeter,anumberoffactorsembodyentrepreneurialbehaviour:

Developingnewandinnovativeproducts Proposingnewformsoforganisation Exploringnewmarkets Introducingnewproductionmethods Searchingfornewsourcesofsuppliesandmaterials

Seenfromanoccupationalperspective,culturalandcreativeentrepreneursownandmanagetheirbusinessenterpriselikea‘general’entrepreneur.Theycanbecategorisedas‘businessowners’;theycreatevalue.Inessence,thecreativeentrepreneurisacreatorofeconomicalvalue.41

Theysharewiththegeneralentrepreneurthewillingnesstoassumerisksinthefaceofuncertainty.Forexample,riskssuchasapossiblelossofbusinesscapitalorpersonalPinancialsecurity,orrisksassociatedwiththeuncertainoutcomeofanentrepreneurialundertaking.42Theyalsosharethealertnessofopportunity;thefocusonthedetectionofentrepreneurialopportunitieseitherforPinancialproPit,orforsakeofnewcontent.Thisalertnessallowstheentrepreneurtoexploitmarketopportunitiesthathavebeen

39 Say,J‐B.,(1803),Traitéd'économiepolitique,ousimpleexpositiondelamanièredontseforment,sedistribuent,etsecomposentlesrichesses,Paris

40 Schumpeter,J.A.(1975).Capitalism,Socialism,andDemocracy,NewYork:Harper41 Sternberg,R.andWennekers,S.,(2005),“Determinantsandeffectsofnewbusinesscreationusingglobalentrepreneurshipmonitordata”,SmallBusinessEconomics,Volume24,Number3,pp.193‐220.

42 Knight,F.H.,(1921),Risk,Uncertainty,andProPit,Boston:Hart,Schaffner&Marx

overlookedorgoneundiscoveredbyothers.43Likeotherentrepreneurstheysharethechangeperspective.‘Entrepreneursseechangeasthenormandashealthy’.44Entrepreneursareinvolvedinnetworksofmultipleandchangingclients,competitors,colleagues,etc.‘Whatdifferentiatesentrepreneursfromnonentrepreneursisthatentrepreneurscreateorganisations,whilenonentrepreneursdonot’.45Baseduponanextensiveliteraturereview,theOECDestablishedthefollowingseriesofdePinitionsonthe‘general’entrepreneur:46

Entrepreneursarethosepersons(businessowners)whoseektogeneratevaluethroughthecreationorexpansionofeconomicactivity,byidentifyingandexploitingnewproducts,processesormarkets.

Entrepreneurialactivityisenterprisinghumanactioninpursuitofthegenerationofvaluethroughthecreationorexpansionofeconomicactivity,byidentifyingandexploitingnewproducts,processesormarkets.

Entrepreneurshipisthephenomenonassociatedwithentrepreneurialactivity.WhenanalysingtheinPluencesthatdeterminetheperformanceofanenterprise,inadditiontothenatureofentrepreneurialactivities,threetopicsarise:

Organisingresources,whichincludesaccessto:(i)physicalcapitalsuchaspropertyorplantandequipment,(ii)PinancialcapitalsuchasdebtPinanceorequity,and(iii)intangibleresourcessuchasintellectualpropertyortechnology.TheseresourcescantypicallybeboughtandsoldbyPirmsorindividuals.ChangesintheseresourcescanhavedramaticimplicationsforPirmperformance,typicallyresultingfrom(i)creativeinventionsordiscovery,or(ii)unusualanduniquecombinationsoftheseresources.

Entrepreneurialcapabilities,whichincludesthehumanandsocialexpertiserequiredtoleverageaPirm’sresourcesandbringthemtomarket.Inanentrepreneurialcontext,theseinnovativecapabilitiesincludetheperceptionandrecognitionofamatchbetweencreativeresourcesandmarketopportunities.Thismayincludenovelandskilledcapabilitiesaswellasuniqueorunusualsocialnetworksandconnections.

Marketsandmarketconditions,whichincludetheperceptionanddiscoveryofmarketopportunitiesasoneofthemostimportantabilitiesofsuccessfulentrepreneurs,marketentryandmarketdistortions.47

Thereareanumberof‘determinantsofentrepreneurship’thatcanhelporhinderentrepreneursintheiroperations,48anddeterminethelandscapeofentrepreneurship.49However,thedifferencesbetweenvariousstudiesontheseareoftenlargelysemantic;mostagreeforexamplethatentrepreneursandentrepreneurshiparecreatedbyacombinationofthreefactors:opportunities,skilledpeopleandresources(capitalbeingthemostcritical).50Thesethreefactorsareallaffectedbytwoimportantcontexts:thesurroundingregulatoryframeworkandculture.

43 Kirzner,I.M.,(1973),CompetitionandEntrepreneurship,Chicago,IL:UniversityofChicagoPress44 Drucker,P.F.,(1985),Innovation&Entrepreneurship,NewYork:HarperandRow45 Gartner,W.B.,(1988),“‘Whoisanentrepreneur?’isthewrongquestion”,AmericanJournalofSmallBusiness,Volume12,Number4,pp.11‐32.46Ahmad,N.,andSeymour,R.,(2008),DePiningEntrepreneurialActivity:DePiningSupportingFrameworksforDataCollection,Paris:OECDStatisticsWorkingPaper

47 Ardichvili,A.,Cardozo,R.&Sourav,R.,(2003),“ATheoryofEntrepreneurialOpportunityIdentiPicationandDevelopment”,JournalofBusinessVenturing,Volume18,pp.105‐23.

48 Kooyman,R.,(ed),(2009),DeterminantsofEntrepreneurshipintheCCIs,HKU49 Schramm,C.,(2006),TheEntrepreneurialImperative,NewYork:HarperCollinsPublishers50 EuropeanCommissionGreenPaper,(2003),EntrepreneurshipinEurope,COM(2003)27Pinal,availableat:http://ec.europa.eu/enterprise/entrepreneurship/green_paper/green_paper_Pinal_en.pdf

TheOECD/EUROSTATEntrepreneurshipIndicatorProjectidentiPiedsixthemes(Fig.1.)thatdescribethedeterminantsaffectingentrepreneurialperformanceinordertoencouragecountriestousethesamedePinitions,methodologiesandclassiPicationswhendiscussingentrepreneurialactivities.51

Figure1:TheOECD/EUROSTATFrameworkforDeterminantsofEntrepreneurship(Source:OECD/EUROSTAT,2008)

Themaincharacteristicsofthesethemescanbedescribedasfollows: CapitalandAccesstoOinance:Coversallphasesofbusinesslife,fromaccessto

earlyseedfundstoaccesstothestockmarkets. TechnologyandResearch&Development:R&Dandtechnologycreatesnew

inventionsthattheentrepreneurandentrepreneurialbusinessescanturnintonewproductsorprocesses.TheR&Dinthiscontextshouldbeunderstoodasaresourcethatcanbecreatedorpurchased,whetherdirectlyorinanembodiedordiffusedform.

Entrepreneurialcapabilities:Theentrepreneurialcapabilitiesincludethehumanandsocialcapitaloftheentrepreneurs.

Marketconditions:Opportunitiesarecreatedbythemarketconditionsinthecountry.Thesemarketconditionsincludepublicinvolvementinmarkets,competitioninthemarkets,accesstoforeignmarkets,procurementregulation,andstandardisation.

Regulatoryframework:Entrepreneurshiphappenswithinaregulatoryframework,whichaffectsperformance.Acombinationofopportunity,capabilitiesandresourcesdoesnotnecessarilyleadtoentrepreneurshipifopportunitycosts(e.g.forgonesalaryandlossofhealthinsurance)andstart‐upcostsoutweighthepotentialbenePits.Inthisframework,theregulatoryframeworkisdePinedverybroadlyandincludesalltaxes,regulationsandotherpublicrulesandinstitutionsaffectingentrepreneurship.

Culture:affectsallpartsofthemodelandisincludedasthePinalfactorintheframework.CultureinPluencesanentrepreneur‘sbehaviour,attitudes,andoveralleffectivenessand,moreover,isoftenunnoticedbytheentrepreneursinceitistheconduciveenvironment.Inthisframework,culturecompriseseachindividual‘sassumptions,adaptations,perceptionsandlearning.52

EachofthesethemesisconsideredinChapter3andadaptedtothespeciPiccontextoftheCCIs.ReturningtoSchumpeter’sdePinition,whereasthe‘general’entrepreneurcombinesinnovationandcreativity,thecreativeaimoftheculturalandcreativeentrepreneurmayhaveadifferentfocus.Howkins(2001)53combinedSay'sdePinitionwiththeCreativeEconomy:

“Entrepreneursinthecreativeeconomy…operatelikeSay’soriginalmodelentrepreneurbutwithanimportantdifference…theyusecreativitytounlockthewealththatlieswithinthemselves.Liketruecapitalists,theybelievethatthiscreativewealth,ifmanagedright,willengendermorewealth".

51OECD/EUROSTAT,(2008),MeasuringEntrepreneurship.Adigestofindicators,Geneva/Paris:Eurostat/OECD

52 Ivancevich,J.M.,Konopaske,R.,andMatteson,M.T.,(1996),Organizationalbehaviourandmanagement.Chicago:UniversityofHouston

53 Howkins,J.,(2001),TheCreativeEconomy:HowPeopleMakeMoneyFromIdeas,NewYork:Penguin,p.129.

ThistypeofcreativityiswhatKEAnamed‘culturebasedcreativity’initsrecentreportontheImpactofCultureonCreativity,54whichentailsanuancefromgeneralentrepreneurialcreativity.Withthisbasicunderstandingofentrepreneurship,thetermculturalandcreativeentrepreneurmaydivergefromthegeneraltermduetothetypeofcreativitybeingusedandhowitrelatestoentrepreneurialdrive.Theuseof‘culture‐basedcreativity’canbelinkedtotheculturalandcreativeentrepreneur,allowingforthecombinationofculturalandcreativedrivesalongsidetheentrepreneurialones.

2.1.3.Culturalandcreativeentrepreneurship

CulturalandcreativeentrepreneurshavespeciPiccharacteristics:theyoperateindifPicultmarketconditions;producegoodsthatare'cultural'bynature;workwithpeoplethatareoftenmorecontent‐driventhancommerciallyoriented;andusuallycreateverysmallenterprisesthatexistonthebasisofmorepermanentnetworks.Arisingfromtheartsmanagementarena,theexaminationofculturalentrepreneurshipasadistinctapproachforderivingeconomicandsocietalvaluehassomeconsiderablemerit.CulturalentrepreneurshipcanbedePinedas:

“...theprocessofintegratingtwofreedoms:artisticfreedomasimmaterialcontentorientedvalue,andentrepreneurialfreedomasmaterialvalue,supportivetoimmaterial(cultural)values”.55

Withthisfoundationinmind,andaccordingtothegeneralsocietalresponsibilityofentrepreneurs,culturalentrepreneurshipcanbedescribedastheconceptofrunningaculturalorcreativeorganisation;drivenbyanexplicitstrategicculturalmission;takingrisksinbalancingcreativeandmanagementvalues;andcontributingtoavitalinfrastructureinitsdirectenvironment.

Formostoftheexpertsinterviewedforthisstudy,thecharacteristicsofculturalandcreativeenterprisessuchasproductdifferentiation,thelabourmarket,marketconditions,theneedforco‐operationandnetworking,andthedifferencesinproductionanddistribution,justiPiedtheneedforthisdistinctiveterm.ThereiscertainlyaneedtoacknowledgethedifferentenvironmentinwhichtheCCIsoperate:

“Marketsaretotallydifferent.ThisisthewholepurposeofsomespeciNicpolicies,thatareadaptedtothecreativeindustries,tothecharacteristicsoftheenterprises,ofthemarket,ofbusinessmodels,andlabs...itcanbeusefultohaveadaptedpolicieslinkedtotheterm”.(InnovationCluster,StructurallyStrongTraditionalEconomy)

MostrespondentsfeltthatsuchadistinctionwasneededtoprovidespeciOicsupportiveschemesadaptedfortheCCIsector,thoughnoteveryoneagreed:

“‘Creativeentrepreneurship’isaredundantdimensioning.InthetermofSchumpeter,entrepreneurshipisalwayscreative.IntheCCIs,whenwetalkaboutcreativity,wespeakaboutthecontent”.(RegionalCCSMESupportcentre,StructurallyStrongTraditionalEconomy)

IntheinterviewsconductedacrossEuropeforthisstudy,twomainopinionsemergedwhenattemptingtodePinetheterm.Themajoritystronglysupportedtheusefulnessofthedistinctconceptofculturalandcreativeentrepreneurshipwhileontheotherside,somepreferredtoblendthetermwithinotherexistingdeOinitionsofentrepreneurship.Therewas,however,generalagreementthatthetermusefullyhighlightsthepotencyofthecombinationbetweencreativeandeconomicimpulses:

“Creativeentrepreneurisauseful[term],Iwouldaddthetermcultural.Culturalandcreative,becausetheentrepreneursintheculturalsectorarepeoplethatarefocusingontheculturalvalueoftheirproductsandtheculturalsectorshavealotofspeciNicitiesthataredifferentwiththeothersectors...becausethereareculturalproducts,becauseofwhattheycanspread.Ithinkthetermisimportanttohave.

54 KEA,(June2009),op.cit.,p.31.55Hagoort,G.,(2007),op.cit.

Creative,alotofpeoplecouldhavethis,butculturalandcreative,...thatisimportant”.(EuropeanSectoralOrganisation)

DisagreementsaboutthetermweremostlyduetothefactthatitwasageneralisationanddidnotdifferentiatethevarioussectorswithinCCIs,implyingalackofdifferentiationbetweenthedivergingmotivesofculturalandcreativeenterprises.ThetermisoftennotwellacceptedintheculturalsectorsasitisstilloverlyassociatedwithaOinancialdimensionwhilenotsufPicientlyrecognising,orprioritising,theculturalandsocialvaluesbehindthis.Ontheotherhand,theclichéoftheartistwhocannotmanageabusinessandlacksOinancialskillsisstillcommonlyheldamongeconomicpolicymakersandinPluencestheongoingdistinctionbetweenentrepreneurshippoliciesandculturalpolicies.Regardlessofthesedifferentperspectives,thereisaneedforaspeciPicdistinction,aspeciPictermtorecognisetheculturalbasisofcreativityandofthistypeofentrepreneurship.Despitethefactthatitencompassedadiverserangeofsectors,mostrespondentsrecognisedtheneed,atthistime,tomakeacaseingeneralforculturalandcreativeentrepreneurshipasthevalueofculturalandcreativeindustrieshasnotyetbeensufOicientlyrecognisedandtranslatedinthepolicyarena,despitenewinitiatives,suchastherecentEurope2020Strategy:56

“That'sabigdiscussion:whetherornotthereshouldbeacommondeNinitionfortheCCIs.Maybenowitisusefultodistinguish[theCCIsfromtheotherindustries].Inthefuture,whenwehaveprobablyevolvedtowardamorecreativeeconomyandcreativesociety,thisdistinctionwon’tbeusefulanymore.Nowitisusefultobeabletounderstandthethinking,theprocessandhowtosucceed.Itisalsousefulinordertohaveitonthepoliticalagenda”.(RegionalCultureMinistry,StructurallyStrongTraditionalEconomy)

Inessence,aculturalandcreativeentrepreneurcanbeunderstoodassomeonewhocreatesorinnovatesaculturalorcreativeproductorserviceandwhousesentrepreneurialprinciplestoorganiseandmanagehis/hercreativeactivityinacommercialmanner.However,achievingabalancebetween‘culture‐basedcreativity’andentrepreneurshipisnotstraightforwardandasnotedentrepreneursdifferaccordingtotheirmotivationsandthesectorsinwhichtheyoperate.Thetermthusreferstothefactthattheseenterpriseshavecertaincharacteristics(seesection2.2below)whichwillaffectthemanagementoftheirentrepreneurialactivity.Thetermculturalandcreativeentrepreneurshipthusattemptstodrawtheseworldstogether:recognisingthelatententrepreneurialspiritofanartist,thelatentcreativespiritoftheentrepreneurandtheparticularenvironmentsinwhichculturalandcreativeenterprisesoperate.Havingframedthedistincttermincomparisontothegeneralterm,theentrepreneurialdimensionofCCIscanbebetterunderstoodusingthedeterminantsofentrepreneurshipadaptedtothecharacteristicsofCCIs(seeChapter3below).

2.1.4.Combiningcreativityandentrepreneurshipforinnovation

Theconceptof‘culture‐basedcreativity‘recognisesthatthecombinationofpersonalabilities,culture,creativity,technicalskillsandsocialenvironmentscanhaveasubstantialimpactonstimulatingresearch,optimisinghumanresourcesandinspiringpeople.57Theeconomicvalueofthis‘culture‐basedcreativity’hasbeenincreasinglyrecognised,58asseenbelowinTable1.whichillustratesthetotalturnoverofCCIsinseverallargercountries.AccordingtotheKEAreportof2006,thecreativeeconomygeneratedaround2.6%oftheEuropeanGDPin2003andemployedover5millionpeople.59ThelatestresearchbyTerraconsultestimatedthatin2008itgenerated4.5%ofthetotalEuropeanGDP.Inthesamestudy,theyestimatedthatinFrance,thecoreactivitiesoftheCCIs(not

56 EuropeanCommissionCommunication,(March2010b),op.cit.57KEA,(June2009),op.cit.,p.80.

58 Ibid.,p.42.59 KEA,(2006),op.cit.,p.6,andEuropeanCommissionGreenPaper(2010),op.cit.,p.2.

includingthesupportenterprisessuchaslawyers)generated4.9%oftheGDP,inGermany4.2%,3.8%inItaly,and3.6%inSpain.60

Table1:PercentageofeconomicturnoveroftheCCIpercountryinseveralEuropeancountries61

(Source:Terraconsult2010)

Theinterviewsforthisstudyshowedthatculturalandcreativeentrepreneursareanessentialpartofapost‐industrialeconomywhichisincreasinglydemand‐driven,user‐centredandwhichismorefocusedontheexperiencetakenoutofproductsandservices.62Oneofthekeyargumentsistheneedtofocusonincentivesforcultureand‘culture‐basedcreativity’asresourceforcreativity,entrepreneurshipandinnovation,ratherthansolelyfocusingontechnologicalinnovation.

Tappingintothepotentialofculturalandcreativeentrepreneurs,andrecognisingtheir‘culture‐basedcreativity’alongsidetheirentrepreneurialdrive,canallowenterprisestounleashinnovativesolutionsthatarenotnecessarilytechnology‐based.EntrepreneurshipintheCCIscanthusbelinkedtoadvancesinnon‐technologicalinnovation.Recognisingthelinkbetween‘culturebasedcreativity’,thedeterminantsofentrepreneurshipandnewformsofinnovationisthuscrucialforunlockingCCIs’potential.

However,sincemostoftheEUbasedOinancialsupportforinnovationremainslargelyfocusedonfunctionalandtechnologicalinnovation,theKEAreportunderlinedthatEUeffortshavenotbeensufPicientlytargetedtocultureandtonon‐technologicalandnon‐scientiPicinnovation.63Artsandculturearethusseenasessentialindevelopingandfosteringacreativeenvironmentofferingarichculturaldiversity,aswellasprovidinginnovativeprocessesessentialforachangingeconomicandsocialenvironmentbydevelopingexperience.64TherecentpolicychangesatEUlevelareacknowledgingthisneedwiththeplanstoreviewinnovationpolicyinachangingeconomythatisincreasinglydePinedbyexperience,non‐technologicalinnovationandqualityoflifeconcerns.Inthisrespect,CCIshaveaspeciPicroletoplayininnovationbyfosteringcreativityandproducingoutputsthatcanserveasinputtotheinnovationprocess.65ThereisaneedforgreaterfocusontheprocessofinnovationasanexperiencetowhichtheCCIscanmeaningfullycontribute.However,inpracticalterms,thetensionbetweentheprocessofcreationandthenecessityofdealingwiththeadministrationandmanagementofanentrepreneurialactivityisparticularlydifPicultfortheCCIentrepreneur.Theartistorcreatormaynothave

Chapter 1 / The Contribution of the Creative Industries to the European Economy – 17

Table 5 – Weight of the creative industries in UK, France, Germany, Italy and Spain (2008)

UK FRANCE GERMANY ITALY SPAIN

Creative Industries VA Jobs VA Jobs VA Jobs VA Jobs VA Jobs

Core 6.2% 5.4% 4.9% 3.7% 4.2% 4.1% 3.8% 3.6% 3.6% 3.5%

Interdependant & support 3.4% 3.8% 2.6% 2.6% 2.3% 2.8% 2.1% 2.5% 2.0% 2.4%

TOTAL creative industries 9.6% 9.2% 7.5% 6.2% 6.5% 6.9% 5.9% 6.1% 5.6% 5.9%

Creative GDP (billion !) 175 142 162 93 62

Creative employment (million)

2.7 1.7 2.7 1.4 1.2

Source — TERA Consultants analysis

We have estimated the economic contributions of the creative industries at a national level for the five main European countries (the UK, France, Germany, Italy and Spain), representing three-fourths of European GDP contributions. The core creative industries can be assessed with the same methodology as at the European level.

Regarding the non-core creative industries, there is a technical difficulty in determining the weight of the non-core industries on a country level because of gaps in the Eurostat data, which form the basis of the calculation. To overcome this limitation we

1.3. !CONCLUSION

Our analysis of the weight of the creative industries based on the KEA findings and the WIPO Guidelines provides a more complete assessment of the true scope of these industries in Europe, exceeding previously reported results. We estimate that the creative industries represent a major European economic force, corresponding to 6.9% of European GDP, and 6.5% of the European workforce. This translates into !860 billion revenues and 14 million jobs, reinforcing the importance of these sectors to Europe’s economy. The creative industries’ economic contribution is comparable to other key traditional industries, like automotive, and with greater weight than utilities or chemical industries. This major European economic area is being challenged by the threat of piracy.

calculated the “core/non-core” ratio observed at the European level, resulting in the non-core industries representing 54% of the value added of the core creative industries and 70% of the employment of the core creative industries. We then applied this ratio at a national level.

Given this procedure, these results shall be considered with caution. However, our assumptions remain valid since the objective is to provide orders of magnitude of the weight of creative industries in order to portray the economic ecosystem at risk from widespread piracy.

60Teraconsultant,(March2010),BuildingaDigitalEconomy:TheImportanceofSavingJobsintheEU’sCreativeIndustries,p.17,seehttp://www.iccwbo.org/uploadedFiles/BASCAP/Pages/BuildingaDigitalEconomy‐TERA(1).pdf61Independent&Supportincludeactivitiesrelatedtofacilitatingbroadcast,communication,salesofwork.Theyincludeafractionofgeneralwholesaleandretailing,generaltransportation,telephonyandtheInternet.62Ibid.,p.40.

63 Ibid.,p.125.64 EuropeanCouncilConclusions,(May2009),Conclusionsfor“CultureasaCatalystforCreativity”,2941stEducation,YouthandCultureCouncilmeeting

65 Potts,J.,(2009a),“CreativeIndustriesandInnovationPolicy”inInnovation:Management,PolicyandPractice,Volume11,No2,pp.138‐147.

alltheskillsandknowledgetodealwiththecomplexityofabusiness.Certainorganisations,suchasFlandersDistrictofCreativity(seeAppendix1,BestCase1),havecatalysedtheneedtomatchtheculturalandcreativeentrepreneurwithaprofessionalmanagertomitigatetheirlimitedentrepreneurialskills.Creativeindividualswillincreasinglyrequireenhancedabilitiesandskillstoblenddisciplines,methodsandinstrumentsinordertogenerateandexploitthesehighlydynamicmarkets.TheculturalandcreativeentrepreneurhastobeabletodrawuponexpertknowledgefromseveralareasanddisciplinesandtomoveefPicientlybetweentheminordertodealwithboththeartisticcreationandtherequirementslinkedwithanentrepreneurialactivity.Forexample,Arteconomybringstogethertheartisticandbusinessworldsbystimulatingcollaboration(seeAppendix1,BestCase2).Supportingculturalandcreativeentrepreneurshipmeansnotonlydevelopingaconduciveenvironmentforageneralentrepreneurbutalsosupportinganenvironmentthatrecognises‘culturebasedcreativity’,encompassingbothaspectsoftheculturalandcreativeentrepreneur.Amorefavourablecreativeclimatewill,inturn,resultinmoreideas,andgreatercreativityisassumedtoincreaseR&Dandinnovativeactivities,andcontributetofosteringinnovativesolutions.Ultimately,creativitycanbefoundinourcultures,inoursurroundingterritory,inthequalityofoureverydaylifeandourproducts.Itisnotanendinitself,butaprocess,anextraordinarymeanstoproducingnewideas.66

Inthissense,creativityandculturearethepillarsofsocialquality,seeninthecontextofafree,economicallydeveloped,fairandculturallylivelycommunitiesenjoyingahighqualityoflife.Creativityandcultureareinextricablybound.Theyareasuccessfulcombination,whichcanstrengthenEuropeaninnovationatatimeofstrategictransitionintheinternationalprocessofglobalisation.

2.2.Characteristicsoftheculturalandcreativeindustries

TheCCIshaveaparticularcharacterthatismarkedlydifferentfromotherindustries.Whenconsideringthesecharacteristicsseveralissueswereconsidered67including:

SizeofCCIenterprises CharacteristicsoftheCCIlabourmarket CharacteristicsofCCIenterpriseprocesses Marketconditionsandshiftingbusinessmodels

RegardingtheselectionoftheNACEcodes,68severallimitationshavetobeclariPied.GiventheimpossibilityofaccuratelyestimatingthecompaniesrelatedtoCCIswithinthe17NACEcodes(intermsofthetotalnumberofPirms,employeesandturnover),certainsectoralbiasesareincludedinthestatisticalanalyses.TheseareexplainedinAppendix2.10.

FlandersDCFlandersDCisaFlemishgovernmentalorganisationthatpromotesentrepreneurialcreativityintheregioninordertoboostFlanderscreativityandinnovation.Theyofferpatronageservicesforthefashionsectorandmatchingwithbusinessmanagers.(SeeAppendix1,BestCase1)

ArteconomyArteconomyconnectsartandtheeconomythroughvariousformsofcollaborationsuchaslongtermprojectswithartistsincompanies,workshopsforartistsandentrepreneursandatelierswhereartistsandentrepreneurscanmeet.Arteconomywantstostimulateabroadrangeofpeopletothinkabouttheconvergencebetweenartandtheeconomy.(SeeAppendix1,BestCase2)

66Santagata,W.,(2009),op.cit.,p.17.67Kooyman,R.,(ed),(2009),EnvironmentalfactorsintheCCIs,HKU68FromtheFrench'NomenclaturestatistiquedesActiviteseconomiquesdanslaCommunauteEuropeenne'‐StatisticalclassiPicationofeconomicactivitiesintheEuropeanCommunity

2.2.1.ThesizeofCCIenterprises

ThediversityofCCIsisrePlectedinitsrangeofbusinesses.Thisincludeseverytypeofenterprisefrommulti‐nationalcorporationstosectorscharacterisedbyahighproportionofSMEs(forexample,architecture,fashion,crafts);andothersthatincludeabroaderspectrumoflargeandsmallbusinesses(notablysoftware,publishingandtelevision).69However,themajorityofCCIsareverysmallenterprises.70Around80%ofenterprisesintheCCIsconsistofSMEswithmanysoletradersormicroSMEsemployingonlyahandfulofpeople.Infact,CCIworkersaremorethantwiceaslikelytobeselfemployedasthewholeeconomyaverage.71However,althoughthevastmajorityofCCIbusinessesaremicro‐enterprises(employingfewerthan10people),theyareresponsibleforonlyamodestpercentageofthetotalturnoveroftheCCIs(18%).AsseeninTable2.below,withinthismajorityof'microenterprises',almost60%areverysmallbusinesseswithonly1to3employees.72ThestatisticalanalysisundertakenduringthisstudyconPirmsthattheoverwhelmingmajorityofCCIenterprisesareverysmallmicro‐SMEs.Thenumberoflargescaleenterprisesismarginal,atlessthanonepercent,buttheyareresponsibleformorethan40%oftheannualturnover.

Enterprisesize Classofenterprise(#ofemployees)Classofenterprise(#ofemployees)Classofenterprise(#ofemployees)Classofenterprise(#ofemployees)Classofenterprise(#ofemployees)

SMEsSMEsSMEsSMEs

Sector 13 49 1049 50249 250+

Advertising 60.74% 24.28% 13.60% 1.19% 0.19%Architecture 62.71% 22.86% 12.59% 1.63% 0.22%Book&Press 58.74% 23.95% 14.37% 2.38% 0.56%Design 45.17% 29.49% 21.50% 3.36% 0.47%Fashion 51.59% 25.30% 18.95% 3.57% 0.58%Film&Video 59.73% 25.69% 12.75% 1.60% 0.24%Music 69.18% 18.35% 10.20% 1.83% 0.44%PerformingArts 63.01% 21.93% 12.52% 2.25% 0.30%Radio&Television 47.40% 26.86% 20.94% 3.96% 0.84%SoftwarePub. 62.34% 20.60% 13.91% 2.64% 0.51%VisualArts 61.62% 21.97% 12.86% 2.96% 0.59%Average 58.38% 23.75% 14.93% 2.49% 0.45%

Table2:DistributionofEnterpriseamongIndustriespersizeclass(Source:Eurokleis2009)

ThesestatisticsconPirmanimportantbasiccharacteristicoftheCCIs:namelythatwhilethevastmajorityofenterprisesareSMEsandmicro‐enterprises,thelargerenterprises(withmorethan50employees)contributeasubstantialpartoftheoverallrevenues.Notsurprisingly,thischaracteristichasimportantimplicationsforpolicy‐makers.Fig.2.belowillustratesthesizeofenterprisesacrosstheCCIsbysector.

69 ProportionofemploymentaccountedforbyUK‐ownedSMEs:Designerfashion96%,Architecture92%,Softwareandcomputergames57%,TVandradio28%,Publishing28%.DCMS,(Aug2007b),CreativeIndustryPerformance:AStatisticalAnalysisforDCMS,FrontierEconomics,London:DepartmentofCulture,MediaandSport

70 ReidlS.,Steyer,F.(2006),ZwischenUnabhängigkeitundZukunftsangstQuantitativeErgeb‐nissezurArbeitindenWienerCreativeIndustries,Vienna:Forba

71 See:DCMS,(Aug2007a),AnAssessmentofProductivityIndicatorsfortheCreativeIndustriesLondon:DepartmentofCulture,MediaandSport;andSondermann,M.(Feb2009),CultureandCreativeIndustriesinGermany,Berlin:BMWI

72 EichmannH.andReidl,S.,(2006),ErwerbstätigkeitinderArchitektur–einhartesPPlaster,BaukulturReport2006.Retrieved25August2009:http://www.baukulturreport.at/index.php?idcat=48

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ThischaracteristicofCCIsisoftencalledthe'missingmiddle’:mediumsizedenterprisesseemtobealmostabsent.Inviewofthestatisticalobservationsandtheintervieweesconducted,thereisasubstantialdifPicultyforsmallenterprisestogrowintomedium‐sizedPirms.Thegapbetweenthe‘biggerplayers’andthemicro‐SMEsrendersthegrowthofmicro‐SMEsdifPicultandincreasesthedifPicultyinaccessingmarketsforthe‘smallerplayers’.AscanbeseeninFig.3.andFig.4.below,thereareextremedifferencesinturnoverandassetdistribution.

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73Atthetimeofthestatisticalanalysis,thedePinitionofnewmediawasnotspeciPicandthecategory‘softwarepublishers’inthiscasecombinesbothnewmediaandvideogames.

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Averysmallnumberoflargescaleenterprisesdominatethesectoralmarketsandhavelong‐establishedinfrastructuresforresearchanddevelopmentactivitieswhile,ontheotherhand,microSMEsdonothaveaccesstosimilarpathstogrowthastheydonothavethesameinfrastructuresandarethereforeforcedtoadoptahighlyPlexibleattitudeandPindadhocsolutionstospeciPicproblemsinordertosustaintheirexistence.Nonetheless,therearesomeexamplesofgoodinitiatives,suchasthatofAIEinItaly(seeAppendix1,BestCase3)whoactivelyseektoenhanceandsupportindependentSMEs.Thestrategiesusedbythesemicro‐SMEsarenecessarilysmall‐scale,highlydynamicandrequirerisk‐takingtocompetewithmoreestablishedenterprisesthatdonotrequiresuchPlexibility.ThestructuralcharacteristicsofthesemicroSMEsimposearequirementtomaintainahighlevelofdynamicentrepreneurialskillstoremaincompetitive.However,theseskillsareusuallylearnt‘onthespot’anddonotseemtobesufPicienttoprovideclearpathstoenterprisegrowthforCCISMEs.

2.2.2.CharacteristicsoftheCCIlabourmarket

Asmentionedabove,manyCCIenterpriseshavetointegratebothartisticfreedomasanimmaterialvalueandentrepreneurialfreedomasamaterialvalue,supportivetoimmaterial(cultural)values.InmanywaystheyareacombinationofHomoEconomicusandHomoLudens.74Someentrepreneurswillbemore‘growthoriented’whileotherswillbemoredrivenbytheculturalandartisticvalueoftheirproductsorservices;thatis,more‘creationoriented’.SpeciPicpatternsofemploymentwillbemaintainedbycertainCCIsinordertocombinethePlexibleapproachofCCISMEs.Thisinherenttensionbetweenthetwo‘types’ofentrepreneurisoftenreOlectedinorganisationalstructures.

2.2.2.1.SMEsandfreelancers

Culturalandcreativeentrepreneursarefarmorelikelytoholdnonconventionalformsofemployment,suchaspart‐timework,temporarycontractsandfreelancing,than

AIE:ItalianPublishersAssociationAIEisasectoralorganisationsupportingthepublishingindustry.AIEhasactivelyestablishedanumberofcoreactivitieswhichareespeciallyfocusedonsupportingSMEsintheItalianpublishingindustry.ThebookfairPiùliberiisanindependentpublishersbookfairaimingatincreasingthevisibilityofindependentSMEs.(SeeAppendix1,BestCase3)

74 MokreM.,(2006),MyCreativity:ConventiononInternationalCreativeIndustriesResearch,Amsterdam.Retrieved25August2009http://transform.eipcp.net/correspondence/1166104888

theworkforceingeneral.75InmostCCIsectors,full‐timeworkersreceivingregularpayareintheminority.76MultiplejobholdingisacommonformulaastheculturalworkersneedaminimumincomeforsurvivalandsomedegreeofPinancialsecurity.MostCCIsectorsshowthespeciPicdynamicsoffrequentjobchangesandworkingonshorttermcontractsisnormal.77Duetothelowrecognitionoftheirintangiblecreations,someculturalandcreativeentrepreneurswillcombineboththeirfreelancingactivitieswithotherprofessionsthatoffersufPicientPinancialstabilitytosustainthesecreativeactivities.Thisleadstoasituationinwhichthedistinctionbetween‘employed’or‘unemployed’isobscured,blurredandproblematic:

“Theculturalsectorischaracterisedbyahighshareoffreelancersandverysmallcompanies.Anewtypeofemployerisemergingintheformofthe‘entrepreneurialindividual’or‘entrepreneurialculturalworker’,whonolongerNitsintopreviouslytypicalpatternsoffulltimeprofessions”.78

Manyoftheperformingartists,writers,directors,visualartists,craftspeople,composers,designersandotherscanbeconsideredselfemployedfreelancers.Onaverage,creatorsacceptbelowaveragepecuniaryearnings.Thiscanbepartiallyexplainedeitherbyrisk‐seekingbehaviour,79orapreferenceforcreativeworkoverothertypesofemployment.80

Itemergedfromtheonlinesurveythat54%oftheCCIenterpriseshadlessthantenfulltimeemployeesintheircompany(seeFig.5.below).Asnotedabove,thisfragmentationofCCIsintosmallenterpriseshasconsequencesfortheirstructures.Tocompetewithlargercompanieswithstructuraladvantagesintermsofadministrationandresearch,thesmallerenterprisestendtoadoptamorePlexibleanddynamicattitudewhenrespondingtomarketopportunities.Thismayinvolveoutsourcing,takingupmultipleprojectsorclusteringwithdifferentorganisationsinordertobenePitfromalargercollectivestructure.Tomitigateagainstthislackofguaranteeofsuccess,CCIsoftenworkonmultipleprojectstospreadtherisk81andoftenfocusonproject‐basedinvestmentratherthancompanyPinance.82

Question:Howmanyfulltimeemployeesdidyourenterprisehaveon31stDecember2008?

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75 Benhamou,F.(2003),L’Economiedelaculture,Paris:LaDécouverte,4thed.76 Throsby,D.,(2001),op.cit.,pp.126‐28.77 Towse,R.,(2004),op.cit.,p.8.78MKWWirtschaftsforschungGmbH,(2001),Exploitationanddevelopmentofthejobpotentialintheculturalsectorintheageofdigitalization,PapercommissionedforEuropeanCommission,DGEmploymentandSocialAffairs,Munich

79 Towse,R.,(2004),“Towardsaneconomyofcreativity?”inFOKUS,(2004),CreativeIndustries:Ameasureforurbandevelopment?Vienna:FOKUSp.8.

80 Throsby,D.,(2001),op.cit.,andCaves,R.,(2000),CreativeIndustries:ContractsBetweenArtandCommerce,Cambridge:HarvardUniv.Press81UKTechnologyStrategyBoard,(2009),op.cit.,p.17.82KEA,(May2010),PromotingInvestmentintheCulturalandCreativeSector:FinancingNeeds,TrendsandOpportunities,ReportpreparedforECCEInnovation‐NantesMetropole,p.24.

Figure5:PercentageoffulltimeemployeespersizeclassenterpriseinDec.2008(Source:Eurokleis2009OnlineSurvey)

Moreover,CCIsrequireskilledemployeesandareconsequentlymanuallabourintensive.Thecreativeproductsandservicesrelatedtotheseindustriesusuallyrequirenotonlystrictlycreativeemployeesbutmanygeneralorcommercialemployeesthatcontributetotheoverallproductionandsupplychain.Traditionally,culturalandcreativeentrepreneursareinterestedmainlyinthedevelopmentoftheirproductsandservicesratherthanfocusedontheirdistribution:inotherwords,‘R&Disthemainactivity,whileproductionissecondary’.83Thecompanywillgenerallyretainasmallcoreoffulltimeemployeeswhilecallingonadditionalemployeesasrequired,accordingtothecompany’sneeds.84

2.2.2.2Diversityinskillsacquisition

Duetotheabundanceofpractitionerswithverydiversebackgrounds(certiPicationbydegree,acquiringexperiencethroughinternship,vocationaldegree,etc.),thereareoftendifOicultieswhenrecognisingorcertifyingthequalityandreputationofculturalandcreativeentrepreneurs.ThismakesthepositionofthepotentialemployerintheArts(ascomparedtootherlabourmarkets)especiallydifPicultbecauseofalackofinformationandqualitycriteria.85Awardscanactasintermediatestandardsonthequalityoftheculturalandcreativeentrepreneur.86CommissionersintheArtsplacelittlerelianceoncertiPicationbasedonformalschoolingandoftenusetheirownscreeningdevices(artcompetitions,referees,peer‐reviews,etc.).Learning‘onthePly’iscommonforculturalandcreativeentrepreneurs.Inouronlinequestionnaire,78%oftherespondentsvaluedtheironthejobtrainingasmuchastheirprofessionaltraining.

Ononehand,themajorityofenterprisesachieveverylowrewards,signiOicantlybelowworkforcesinotherindustrieswithsimilarhumancapitalattributes.Ontheotherhand,therearearelativelysmallnumberof‘stars’withveryhighturnover.87

2.2.2.3.CCIemploymentbysectors

Fromtheaggregateddatainthestatisticalanalysis,thelargestindustriespernumberofworkersemployedare:Fashion(31.41%,oftotalemployees),Design(20.12%),Architecture(10.74%)andBook&Press(9.89%).Theinclusionoftheretailsectorwithinthefashionsectormayexplaintheunexpectedlyhighnumberofworkersinthissector(SeeFig.6.).ThesenumberscoverthetotalnumberofemployeesindifferentsectorsoftheCCIs.Asnotedabove,culturalandcreativeentrepreneursarealsoemployedinmanyothersectorsoftheeconomy,contributingtothedevelopmentofthe‘creativecapacity’ofnonCCIcompanies.Forexample,theUKTechnologyStrategyBoardestimatesthatfromthe1.1millionpeopledirectlyemployedinthecreativeindustriesintheUK,thereareanother800,000individualsworkingoutsidetheculturalandcreativesector.88

83 Lash,S.andUrry,J.,(1994),EconomiesofSignsandSpace,London:SagePublications,ascitedin:HandkeC.,(2006),SurveyinginnovationintheCreativeindustries,Berlin/Rotterdam200684UKTechnologyStrategyBoard,(2009),op.cit.,p.18.

85 Towse,R.,(ed)(2003)AHandbookofCulturalEconomics,Cheltenham,EdwardElgar.86 SeeWijnberg(2003)foradiscussionoftheroleofawardsinthearts.Wijnberg,N.(2003)‘Awards’in:Towse,R.(ed)AHandbookofCulturalEconomics,Cheltenham,EdwardElgar:pp.81‐84.

87 UNCTADetal(2008),TheCreativeEconomy,UNCTAD/DITC/2008/2,Geneva88UKTechnologyStrategyBoard,(2009),op.cit.,p.12.

Figure6:PercentageofEmployeesperSector(Source:Eurokleis200989)

Inanotherexample,therecentECWorkingPaperon‘Designasadriverofuser‐ledinnovation’conPirmedthistrendinthedesignsector,demonstratingthatmanydesignersworkedinnon‐designindustriesasin‐housedesigners.90ThissuggeststhattheculturalandcreativeentrepreneurandtheCCIshaveagreaterimpactontheeconomyasawholethanaccountedforinthestatistics.

2.2.3.CharacteristicsofCCIenterpriseprocessesandoutputs

InadditiontothespeciPiccharacteristicsofCCIsbothintermsofstructureandlabour,theprocessesofproductandservicecreationinwhichtheCCIsengagearehighlydistinctive,especiallyduetotheirsmallsize.CCISMEsoftenengageinnetworkbasedprocesses.SomeofthesevalueandknowledgecreationprocessesareoftennotrecognisedastraditionalresearchapproachesandCCISMEsmaythereforebeunabletoaccessresearchfundingresources.CCIsoftensupplycontentthatrequires‘culture‐basedcreativity’asknowledgebasedandlabourintensiveinputthatishardtomeasureintermsofeconomicvalue.ThiscomplicatestheprovisionofPinancialsupporttoCCIs,astheycannotalwaysdemonstratetheeconomicviabilityoftheirproductsandservices.CulturalandcreativeproductsandservicesoftenhavespeciPiceconomiccharacteristics:forexample,theycanbeproduced‘onthespot’andcannotbeconsumedinanyothercontext(theatreperformances,dance,liveconcerts).Theseproducts/servicesareanextremeexampleofproductdifferentiation.91Thefactthatmanyproductsandservicesareintangibleassets,subjectiveinvalueandoftenproject‐based,92distinguishesthemfromothermanufacturedproducts.Duetothehighdegreeofuncertaintysurroundingthesuccessoftheseintangibleassets,thecontentbasedindustriesinparticularwilltendtoworkonseveralprojectsatthesametimeinordertobalancetheriskassociatedwithlesssuccessfulproductsorservices.However,thisalsoimpliesthattheculturalandcreativeentrepreneursmay

89ThestatisticalanalysisonPirmcharacteristicswastakenfromtheChambersofCommerceasexplainedinsection1.290ECStaffWorkingDocument,(2009a),op.cit.,p.27.

91 TheUNESCOconsiderslocalculturalindustriesrelevanttocounterbalancethestandardisationofcultureasaresultoftheongoingprocessofglobalisationintheinformationsociety(UNESCO,2001:13;UNESCO,19/11/2001:1‐3;UNESCO,21‐22/09/2000;UNESCO,14‐15/06/1999).92EspeciallysectorssuchasPilm,TV,music,games.UKTechnologyStrategyBoard(2009),op.cit.,p.18.

receiveonlypartialPinancialadvancesforcertainproductsorservicesthatwillnotbesuccessfulandthismayleadtosigniPicantPinanciallimitationsfortheentrepreneurs.Naturally,intangibleinnovationishardtoquantifyandisnoteasilyrecognisedbythoseoutsidetheCCIs.Currently,thesoftinnovatorsarenotlabelledascontributingtoR&D andcannotreceivefundingorequalrecognitionfromeitherscientiPicorappliedresearchinitiatives.ScientiOicresearchinstitutesstillreceivemostoftheR&Dfundingasopposedtoappliedresearchinstitutesorotheremergingcommunities.InarecentstudyoninnovationinSwedishservicecompanies,itwasshownthat50%oftheinnovationcamedirectlyfromcustomers,35%fromemployeesandonly3%fromexternalR&D.93

2.2.3.1Productionprocesses

Productiontakesplaceeitherinsmall‐scaledirectcontactbetweenproducerandconsumer,orwithreproducible,massmediaproducts,innetworksofintermediaries.Theseintermediariessuchaspublishers,Pilmproductioncompaniesorrecordcompanies,bringculturalproductsandservicesandanaudiencetogether.Theyexploiteconomiesofscaleandscopethatapplyinparticulartocapital‐intensiveaspectsofproductionandpromotionratherthaninthelabourandknowledge‐intensiveprocessofcreation.However,theincreasingdigitisationofcontentandserviceshasopenednewproductionanddistributionpossibilities.94TheimportanceofdigitalcontentfortheCCIshasledtothedevelopmentofnewapplicationsandtheintegrationandre‐aggregationofexistingmedia.CrossoverLabsisanexampleofanorganisationthatsupportsintegrationintheproductionprocess(seeAppendix1,BestCase4).MuchlikeCrossoverLabs,theGATEprojectintegratesdifferentactorstoapplynewtechnologyforthegamesector(seeAppendix1,BestCase5).Thecreativecontentindustryisgrowinginimportanceandiswelldevelopedthroughoutthevaluechain.TheInternetandchangingconsumerpreferencesareaddingtothecomplexityofthePlowoffundsbetweenthedifferentplayersinthesevaluechains.Consumerspendingisthesinglemostimportantsourceoffunds.Physicalmediastillrepresentasubstantialpartofthemarket,butthisismostexposedtoonlinesubstitution.95

Thetraditionalideaoftheproductionchainisnowevolving,andinmanycasesintermediariescanbebypassed.96Takingitsdistancefromthelinearproductionprocessimpliedintheconceptofavaluechain,theterm‘valuecreatingecologies’encompassestheideaofa‘constellationofPirmsthataredynamic,withvaluePlowbeingmulti‐directionalandworkingthroughclustersofnetworks’.97

CrossoverLabsCrossoverLabsintheUKorganisesworkshopswithmulti‐disciplinaryparticipantsaimedatexchanginginformationinordertocreateinnovativeprojectswiththeuseofnewmediatools.(SeeAppendix1,BestCase4)

GATEGameResearchforTrainingandEntertainment(GATE)intheNetherlandsisasectoralprojectforgamesaimingatimprovinglearningsystemsandadvancingnewtechnologytoSMEsinordertoadvancethesectoranddevelopingknowledgefromappliedresearchwithSMEs.(SeeAppendix1,BestCase5)

93ALMEGA(2008),SurveyoninnovationinSwedishservicecompanies,takenfromKoefoedQuinn,M,TheEUperspectiveonICTandCreativeIndustry,CReATEInternationalConference,TurinNovember2009,http://www.lets‐create.eu/Pileadmin/_create/downloads/presentation_conference/02_20091104_CReATE_‐_Mette_K_Quinn.pdf94UKTechnologyStrategyBoard,(2009),op.cit.,p.18.

95 AnalysisMason,(May2009),FosteringcreativeambitionintheUKDigitalEconomy,London:AnalysisMason,London96 Hearn,G.N.andRoodhouse,S.C.andBlackey,J.M.(2007),“Fromvaluechaintovaluecreatingecology:Implicationsforcreativeindustriesdevelopmentpolicy”,InternationalJournalofCulturalPolicy,Volume13,Number4,pp.419‐436.

97 Ibid.,p.6.

ThisideacanbetterrepresenttheshiftexperiencedbymanyCCIs,fromconsumerstoco‐creatorsofvalue,fromproducttonetworkvalue98andfromsimplecompetitiontocomplexco‐ompetition.99Theculturalandcreativeentrepreneuroftenhastocreatedirectuserproducerinteraction.Theyhavetointeractcloselywiththeirtargetaudiencesothattheycanmonitortrendsorinitialreactionsbyearlyconsumersoftheirownproducts.Technologicaladvances,suchasmulti‐platformcapabilities,makeitpossibletohavegreaterconnectivitywiththeuserandcanprovideafeedbackinthelooptoproduction,allowingausertointeractdirectlyandallowingtheproducertoadapttochangingdemand.Theincreasinginclusionoftheuser/consumerasco‐producercoupledwithefPicientcommunicationchannels,hasledtoaconvergencebetweentheconsumptionandtheproductionstages.Theincreaseinthenumberofknowledgesourcesandknowledgeinformationsharingalsohastheindirectconsequenceofblurringtheboundariesbetweenthesectors100andleadstoariseinmultidisciplinaryteams.Forexample,b.TWEENisaplatformthataimstoincreasetheexchangeofideasusingdigitalmediamethodsinordertoincreasethecreationoforiginalideas(seeAppendix1,BestCase6).Theactivitiesthatdirectlycontributetothecreationofanoriginalculturalproduct/serviceareembeddedinalandscapeofadministrative,organisationalormanufacturingactivities.Thesenetworksoflawyers,businessmanagersoraccountantscontributetothespeciOicationofcontractualarrangementsintheCCIsandareanintegralpartoftheindustries’structure.

2.2.3.2Outsourcing

ManyCCIsare‘creation‐oriented’andmanyofthemchoosetoremainsmallinordertokeepthisOlexibilityandadaptabilitythatlargerCCIenterprisesdonotnecessarilypossess.Asnotedabove,largercompanieshaveastructuraladvantageintermsofresearch,development,administrativemanagementanddesignactivitiestowhichthemicro‐SMEshavelittleaccess.Equally,thereproduction,distributionandpromotionofcreativeproductsandtheadministrationofrightsarecomplexprocedureswherelargercompanieshaveanadvantagecomparedtothesmallerones.However,thelargerenterprisesdonottakethesamerisksasmicroSMEs.101Micro‐SMEsoftenadoptaPlexibleattitudewithnewdynamicandsmall‐scaletoolsandprocessestoprovidesolutionstospeciPicproblemsinorderforthemtocompetewithlargerorganisationsthatarenotcapableofbeingasversatile.ThisallowstheCCISMEentrepreneurtomaintainarisktakingattitude.Thisattitudeisnotnecessarilyeasytosustaininalargercompany,asexpressedbyoneinterviewee:

“Thecreativeindustriescanbeamodelforhowtheknowledgeeconomyingeneralisdeveloping.SosmallercompaniesareNlexible,theyhavemorecollaboration,morefreelancers,andthereforetheycanbeatestbedfortryingoutnewsupportmechanismsthatcaneventuallyberolledouttothewidereconomy”.(EuropeanThinkTank)

b.TWEENb.TWEENisacrossplatformdevelopmentlabintheUKthatfosterstheexchangeofideasbetweendifferentdisciplinesaswellasofferingadviceandmethodsforblendingdigitalmediamethodswithintheCCIenterprise.(SeeAppendix1,BestCase6)

98Ibid,p.10.Networkvalueisthuscreatedandextractedinanetworkofrelationshipsandvaluecanbestbeunderstoodholisticallyasafunctionoftheentirenetwork.

99 Ibid.,p.7.:Thecombinationofcompetitiveandcooperativeprocessesistermedco‐ompetition.Inavaluecreatingecology,theCCIsmodelsfollowtheideasofsimultaneousco‐operationandcompetitionbetweenmembersofaneco‐system,Ibid,p.14100UKTechnologyStrategyBoard,(2009),op.cit.,p.11.

101 ECGreenPaper,(2010),op.cit.,p.7.

ThestructureoftheCCISMEenterpriseismoreadaptive,preferringoutsourcingsolutionsforadhocserviceswhilemaintainingasmallcoreteamofemployees.ThesolutionfavouredbymanyorganisationsintheCCIsistovarythedegreeofintegrationandcontrolovervariousaspectsofproductionandtooutsourcethistosmaller,risktaking,dynamicenterprises.

Eventhelargestintermediaryenterprisesregularlyorganisetheproductionofnewmediacontentinrelativelysmall,semi‐autonomousteams.Outsourcingalsoresultsintheneedformicro‐SMEstobeabletocombineboththecreationaswellastheadministrationlinkedtotheirfreelanceactivities.Asnotedbyaregionalinstitute:

“ThebigcompaniesintheCCIshavereducedtheiremployeesinthepast50years...theyoutsource.Thedegreeofoutsourcingisveryhigh.Thisalsomeansthatpeopledon'tdowhattheyaregoodat(theyneedtoacquirethejob,havetomaketheirowntaxes,havetodoeverything,marketing)…Andinthepastthiswasdealtwiththroughthedivisionoflabour.Socreativepeoplelosealotoftimedoingthingstheyarenotgoodatandthatshouldn'tbetheirjob!”.(RegionalInstituteforCCI,StructurallyStrongTraditionalEconomy)

ThefactthatCCIshaveconsequentdisparitiesinsizeandgrowthstrengthensthetendencytooutsource,especiallyinsectorsinwhichautomationofproductionenablesoutsourcing,suchastheretailworkinthefashionsectororincertaincomputergames.Further,todealwiththemonopolistictendenciesofsomeCCIs,ahighpercentageoffreelancersandmicroSMEsrelyonnetworksandpersonalcontactsinordertoactasagroup.

2.2.3.3.CharacteristicsofCCIoutput

Internationalbodies,suchasUNESCOwithitsConventionontheProtectionofCulturalDiversity,102notethatculturalgoodshavetobesetapartfromstandardisedmassconsumptionorevenexcludedfrominternationaltradeagreementsandcompetitionregulations.103Culturalproductsarenot‘simplymerchandise’,butexpressculturaluniquenessandfosterculturaldiversity.104

Theirutilityandqualityforanyindividualcannotoftenbedeterminedwithanycertaintypriortoconsumptionandsometimestastechangesasaresultofrepeatedconsumption.Ingeneral,demandwillincreasewithexposure,inaprocessof‘rationaleaddiction’.105Culturalandcreativeproductsandservicesarealsoexperiencegoods.106Culturalproductsandservicesstageanexperiencethatisdirectlyrelatedtotheuser.Inordertostagethisexperience,theuser’sdemandswillbetakenintoconsiderationinthedesignoftheproductsandservicescontinuously,through‘feedbackloops’.Theseprocessesofinteractionformindirectoutputsoftheproducts/services.ThesefeedbackloopsimprovethedesignoftheproductortheserviceofferedbytheCCIenterpriseandusersareactivelytakingpartintheremouldingoftheproduct.Theend

102 InOctober2005,148countriessupportedtheUNESCOConventionontheProtectionandPromotionoftheDiversityofCulturalContentsandArtisticExpressions;expressingtheposition,thatmechanismstomaintainanddevelopdomesticproductionarenecessarybecausethediversegoodsproducedaroundtheworldarenotsimplymerchandise,butexpressionsofrichindividualuniquenessandculturalidentities.

103 UN/UNESCOGattsAgreement,Unesco’sGlobalAllianceonCulturalDiversity,EUexceptionsoncompetitionlaw,exemptionsonstateaidandthestateaidprocedure.Stateaidisusuallyconsideredasincompatiblewiththecommonmarketwhenitdistortscompetitionbyfavouringcertainundertakingsortheproductionofcertaingoods.FinancialsupporttoSME’sinthesectoroftheculturalandcreativeindustriescanbejustiPiedwhenitis(1)promotingeconomicdevelopmentofareaswithanabnormallystandardoflivingofseriousunderemployment,(2)itisfacilitatingthedevelopmentofcertaineconomicactivitiesofcertaineconomicareas,(3)itispromotingcultureandheritageconservation.Retrievedat14Dec.2009from:http://www.europa.eu.int.scadplus/leg

104 Foradiscussiononthetensionsbetweencommercialisationontheonehandandculturalmeritontheother,see:StedmanG.,(2006),“FromGentlemanlyPublishingtoConglomerates:TheContemporaryLiteraryFieldintheUK”InEisenberg,C.,Gerlach,R.andHandke,C.,(eds.),(2006),CulturalIndustries:TheBritishExperienceinInternationalPerspective,Berlin:HumboldtUniversity

105 Throsby,D.,(2001),op.cit.,p.115.106 KEA(2009),op.cit.,p.39.

resultofthesefeedbackloopsmayprovideinsightintodesignprocessesthatcanbere‐usedinthefuture.Assuch,theCCIenterpriseoutputisnotmerelyaproductoraservicebutalsoincludesadesignprocess.ThebenePitsofbeingabletoreplicatethesedesignprocessesareobviousinacommercialsense.AnadditionalbenePitisalsoavailableforthedesigner,whocanexamineandrePlectuponhisownworkPlowsandthismayleadtonewoutputsintermsofimprovedproductsorpathsthatappeartoleadinapromisingdirection.However,thedesignprocessofformingaproductoraserviceisnotalwaysexplicit.Thoseworkinginthecross‐mediasectorarefamiliarwiththeartefactsfromparticularcreativedomainsbutarerarelyabletoaccessthedesignprocessesthatcreatedtheseartefacts.Byprovidinganintuitivelevelofaccesstothesedesignprocesses,SMEsworkinginthecreativeindustries(suchasadvertising,mash‐up,curatorsetc.)arefarbetterabletoimagine,explore,analyseandpredictthemostfavourabledirectionsinwhichtheirassetscanthenbedeployed.Creatinganexperienceis,however,highlysubjectiveandtheeconomicvaluecannotbepreciselydeterminedinadvanceandthissubjectivecomponentmeansthattheculturalandcreativeentrepreneurisconstantlytakingrisks.InviewofthesizecharacteristicsofthemajorityofCCIsandthehighcompetition,theCCIentrepreneurisconstantlylookingforinnovativesolutions,newtrends,productsandservicesthataremoreinlinewithuserandconsumerdemand.107Asoneintervieweenoted:

“Somethingthatpeopleneedistolookatwhattheycandisrupt,theyneedtogobacktodisruption.Cantheydisruptrealisation?Cantheydisruptdistribution?Cantheydisruptthewaytheycreateideas?”.(ResearchInstituteforCCI,KnowledgeEconomy)

Culturehasnotexclusivelybeenseenfromthetraditionalpointofviewofconservingculturalheritagebutmoreasameanstopursuingaqualitativelyhigherlevelofdevelopment.ThisPlexibleconcepthashadthemeritoflinkingtheideaofculturetoaseriesofactivities–fromfashion,todesignandtheengineeringofcomputergames–previouslyconsideredoutsidethesphereofculturalpolicies.

2.2.4.Uncertainvalueandchangingbusinessmodels

Asnotedabove,themarketforculturalgoodsisbothvolatileandunpredictable,promotingbusinessstrategiesthatare'emergent',provisional,highlyresponsivetouser‐demandandbasedon'intuitive'and'emotional'knowledgeasmuchasstandardmarketresearch.Consumersareoftennotawareoftheirtastesinculturalmarkets.Rathertheydiscoverthemthroughrepeatedexperiencesinasequentialprocessoflargelyunsystematic‘learningbyconsuming’.AsthereisaninPinitevarietyofcreativeofferings,thisdiscoveryprocessmaybenever‐ending.Totheextentthatindividualsareunsureoftheirpreferences,itisnotsurprisingthatproducersofgoodsofexpressivevaluestruggletoanticipatemarketvalue.108

Moreover,inadditiontofacinguncertainty,highcompetitionandextremeimbalancesbetweenthemicroandlargerenterprises,digitalconvergencehasalsomodiPiedthedistributionprocessofCCIproductsandservices.ThebroadeningusageoftheinternetandcontentinterfaceplatformshassigniPicantlychangedthevaluechainanddistributionprocess,enablinga‘democratisation’ofaccesstodistributionandahigherparticipationofproducersandcontentoriginators.109Consequently,thisshapesnewmarketstrategiesandnewbusinessmodelstowhichCCIsmustadapt.Asnotedabove,theinteractionwiththeuserandconsumerismoredirectthaninthephysicalworldandmuchmoredynamicandself‐feeding:

107 ECGreenPaper,(2010),op.cit.,p.7.108 GarbouaLL.,Montmarquette,C.,(1996),‘Amicroeconometricstudyoftheatredemand’,JournalofCulturalEconomics,Vol.20,Number1109UKTechnologyStrategyBoard,(2009),op.cit.,p.18.

“Thepurelylinearbusinessmodelisgivingwaytoamuchmoreinterwovenenvironment,wherecrossfertilisationofstimulusandresponse,datadrivensupplyanddemand,andspeedofcommunicationenableamuchmorerapidevolutionofproductdevelopmentandconsumption”.110

Thisshifthasalsotriggeredanexchangeofcontentandservicesandfacilitatedpeertopeersharing,endangeringlegalprotectionsurroundingthecontent/services.CreativeprocessesarethereforemuchlesslinearandwiththeincreaseinPile‐sharingwithinnetworks,theabilityofproducersordistributorstocontrolandchargeforcontenthasbecomeamajorconcern.Thattherightsholdersandthecreatorsarenotbeingrewardedwiththisbroadenedaccesstocontentisarealchallengetocommercialsuccess.Therearepresentlyimportanttensionsbetweendifferentphilosophiesasaresultofthe‘democratisation’ofcontentandthisisaddressedinsection3.3below.WhatisimportantisthemannerinwhichthishasaffectedthebusinessmodelsofthecompaniesthathavetoadapttothischangingenvironmentandatthesametimebesufPicientlyPlexibletoremainupdatedaboutthenewestchangesandopportunities.ConsideringthespeciPiccharacteristicsoftheCCIswithregardtotheirsizeandcomposition;theirproductcreationprocesses;theirintangibleassetsandhiddeninnovation;theshiftingoutputconsumption;thechangingvaluechainecologies;theshiftingdigitalenvironmentandtheimpactithasonbusinessmodelsandinteractionwithuser;itisclearthattheCCIshavemanycomplexchallengestoface.Theyarealsoworkinginanenvironmentthatisnotalwayspronetorewardingrisktakingbehaviourandthisputsfurthercomplicationsontheirpathstosustainabilityandgrowth.

2.3.FeaturesoftheCCIsectors

DespiteallthesimilaritiesbetweenthedifferentsectorsoftheCCIs,itishelpfultolookateachspeciPicsectoroftheCCIsinordertohighlightthedifferentprocessesthatmightinPluencethesupportofentrepreneurship.Oneofthemostcommonissuesobservedduringthisstudywasthedivisionbetweenthesubsidisedsectorsandthenonsubsidisedones.ThisdivisionisalsoarePlectionofthephilosophiesofeachMemberStatewhenaddressingtheculturalsectorsandopeningupthecreativeeconomy:

“Inmyopinionthereisadifferencebetweenthecreativeandtheclassicalpart.Thecreativeindustriesaremoreentrepreneurialthanthemoreclassicalpart.Thisalsohastodowiththewholesubsidysystem,wherethemoreclassicalpartoftheindustryisbetterabletoreceivefundingfromthegovernment”.(NationalMinistryofCulture,KnowledgeEconomy)

DiscussionabouttheefPiciencyofdifferentsubsidysystemsisbeyondthescopeofthisstudy.However,whentalkingaboutsupportingtheentrepreneurialdimensionofCCIs,therewasagrowingrealisationthatsubsidysystemshaveshapedtheexistingentrepreneurialdimensionofcertainsectors.Accordingtotheinterviewees,heavilysubsidisedsectorstendtobelessdrivenbythecommercialsideofundertakinganentrepreneurialactivity.Thesesectorsareprimarilyseenaswillingtocreateandexperience,ratherthancommercialise,theirproductsandservices:

“Theartist’smodelrarelyworkswiththeattitudeoropinionthatcommercialisationstrengthensthecreativeoutput.MostNineartistsandchoreographersareengagedintheprocessratherthantheoutcome.Oncetheopeningnighthasstartedthey’vealmostlostinterestinit.IthinkyouneedtoNindpeoplewhoareinterestedintheprocessandlookbeyondtheopeningnight“.(HigherEducationInstituteforCCI,KnowledgeEconomy)

Moreover,receivingpublicfundingcanalsoimplyacertaindegreeofpoliticalinPluenceontheproductorservices.Overall,mostrespondentsagreedthatsubsidieswerenecessarytoenabletheexperimentationandthedevelopmentofcertainsectors.However,thesystemwasconsideredinefPicientforenablingsustainablegrowth.Paralleltotheblurringoffrontiersbetweenthedifferentsectors,thissectoraldifferentiationmaygraduallydisappear.

110Ibid.,p.19.

Movingbeyondthisduality,theUKTechnologyStrategyBoardelaboratedamodeloftheCCIsbasedonhowcommercialvaluewascreated.111Themodelisnotintendedtodifferentiateinawaythatdiscriminatesinfavourofaparticularsegmentorgroupofsectors.InsteaditisaimedatshapingpolicytodirectchangesandenhancethedevelopmentofCCIsbytargetingadvice,supportandinvestmenttailoredtothepatternsofactivityandtheirpotentialforgrowthanddevelopment.TheboundariesbetweentheclustersarenotPixedandsomeofthesectorsmaybeinmorethanoneclusterorcrossoverbetweenseveralsectors(forexamplemusicandgames).TheUKTechnologyStrategyBoardmodelstructurestheCCIsalongthreegroups,basedonthephysicalversusdigitalinput,aswellasmanualversustechnology‐aidedoutput(seeAppendix2.9):

Creativeserviceproviders–traditionallynonsubsidised Creativecontentproviders–mostlynonsubsidised Creativeexperiences/originalproviders‐mostlysubsidised

Forthisstudy,thecreativeexperienceandoriginalprovidershavebeenmergedintooneclusterastheyrepresentmostlythecorearts(performingartsandvisualarts).

TypeofCluster Sectors MainCharacteristics

Creativeserviceproviders

Design,architecture,newmedia,advertising

‐ Directinteractionwithuser’sdemand

‐ ExchangeoftimeforIPproducts

‐ HighlyinPluencedbytechnologyanddigitisation

‐ Mostlyproject‐based‐ Mostlyprivateorself‐Pinancing

Creativecontentproviders

TvandRadio,Fashion,Games,Music,Film,Books

‐ ProducersofIPproduct‐ HighlyinPluencedbydigitisation,mostlyfor“creation”anduser‐interaction

‐ Mostlyproject‐based‐ Mixofself‐Pinancedandsubsidisedsectors(audiovisualandgames,books)

‐ Experiencethreatsofpiracyfromdigitalmarketandpeertopeerexchange

CreativeexperienceprovidersCreativeoriginalproviders

Performingarts,visualarts,(music,games)

‐ Noinitialownershipofworkandusuallypayforother’scopyright

‐ Mostlysubsidisedandconcernedbytheculturalvalueoftheirwork

‐ Artsaremostlyoncontractbasis

‐ Digitisationismostlyfordisseminationandascommunicationtools

‐ Usuallyoneoffproductsandservices

111UKTechnologyStrategyBoard,(2009),op.cit.,p.21.

Table3:ClustersintheCCIs(Source:BasedontheclassiNicationoftheUKTechnologyStrategyBoard)

Theuseofsuchclusteringwaslargelyagreeduponbytheparticipantsoftheworkshopsheldduringthestudytovalidatethemethodologyandtheresults.Thisclusteringenablesustoseegeneraltrendsintermsofvaluechains,Pinancialschemesandsubsidisation.Beforedetailingthefeaturesofeachsector,itisinterestingtolookattheoverallturnoverofeachsectorasillustratedinFig.7.belowwhichshowsthatthesectorsthatgeneratedmostturnoverweremainlytheserviceprovidersandcontentproviders.

Figure7:TotalTurnoverperIndustry(Source:Eurokleis2009,statisticalanalysis)

Thelargesttotalturnoversperindustryare:Fashion(247.189.494TH€),Design(157.115.932TH€)andRadio&Television(155.192.531TH€).Theseindustries,mostlythecontentprovidersandcreativeserviceproviders,havebenePitedfromtheriseofthedigitisationofsocietyandtheensuingdigitalmarket.Industriesthatrequiregreatercompetitionandinvestmentintechnologyand/oreconomiesofscale(i.e.Radio&Television,SoftwarePub.&Games,Design,Book&PressandVisualArts)showmoreemployeesin‘largecompanies’(i.e.morethan250workers)asseeninTable2.above.AscanbeseeninFig.6.,theindustriesthatemploymoreworkersare:Fashion(2.230.534),Design(1.428.645),Architecture(762.714)andBook&Press(702.365).Clarifyingthedivisionbetweentheentrepreneurandtheenterprise,theindustriesthathadthelargestnumberofenterprisesinEuropewereFashion(142.212),Design(101.255),Architecture(76.236)andAdvertising(37.244).

Figure8:PercentageofEnterprisesperSector(Source:Eurokleis2009,statisticalanalysis)

Overall,thereisapredominanceofthesectorsthatrequiregreaterinvestmentintechnology,withtheexceptionoffashion(whichisduetotheinclusionoftheretailindustryinthefashionstatistics,seeAppendix2.10).Fromthestudy’sstatistics,fortheindustriesusingmosttechnology(largelycontentandserviceproviders),thetotalturnoverisgeneratedpredominantlybythelargecompanieswhileintheotherindustriestheSMEsplayalargerrole.

2.3.1.Creativeserviceproviders

ThisclusterconsistsofDesign,Architecture,AdvertisingandNewMedia.Creativeserviceenterprisesarebasedaroundearningrevenuesinexchangefordevotingtheirtimeandintellectualproperty(IP)tootherbusinessesandorganisations.Thecreativeactivitiesareembeddedinalandscapeofadministrative,organisationalormanufacturingactivitiesthatformanintegralpartoftheindustries’structure.Thecreativeserviceprovidersareusuallyself‐Pinancedandconsistmostlyofmicro‐SMEs.Thecreativeprocessisheavilysupportedbytechnologyasthecreativeprocessishighlyinvolvedinuser‐interaction,increasinglysowiththeuseofweb‐basedplatforms.

2.3.1.1.Architecture

Architectureismorethananartorarepresentationofaculturalheritagebutformsanessentialpartofourlivesbyshapingourenvironmentandbyprovidingservicesinvolvingdirectinteractionwithourdailylives.InEurope,architecturecontributestothethirdhighestnumberofemployeespersectorintheCCIs,employing762.714workersin2007,or10,7%ofthetotalemploymentofCCIsinEurope.112Thetotalturnoverofthesectoramountsto8.19%ofthetotalturnoveroftheCCIs.Thesector'soverallcompositioninEuropeconsistedin2007of62%micro‐SMEs(1‐3employees)and23%ofsmallSMEs(4‐9employees).Thismeansthat85%ofthearchitectureenterprisesconsistofcompanieswithfewerthan10people.

IntermsofOinance,thesectortypicallyoperateswithprivatePinancingwithoutspeciPicgovernmentalschemes.Publicprocurementandprizesareoftenseenasmoreappropriateforthesectorthansubsidies.ThegeneralprofessionisgovernedbythegeneralregulationsoftheinternalmarketoftheEU(freedomofestablishment,freedomofmovement,publiccontracts).IntheEUCouncilResolutionofJanuary2007,theEUamendeditsdirectivetosupportthearchitecturalsectortoencouragemobilitythrough

112 Allstatisticaldata,unlessotherwiseindicated,comefromthestatisticalstudyundertakenbyEurokleis.

themutualrecognitionofqualiPicationsinarchitectureacrossEurope.113Inthepast,theEUhasalsosupportedthesectorbypromotingtheco‐operationandthenetworkingbetweeninstitutionsdedicatedtoculturalheritageandarchitecture.114

Inadditiontosupportingcollaborationandagreaterfreedomofmovement,theaccesstothemarketisindirectlysupportedthroughlegislativemeans.Indeed,incountrieswhereitisnotmandatorytohirearchitects,architectureispromotedbypointingtotheculturalsigniPicanceofarchitecturaldesignandprogrammesforsubsidisedconsultationbyarchitects.Intheothercountries,supportisinherentwherearchitecturaldesignsaremandatoryfortheconstructionofbuildings.Someorganisations,suchasArchitectuurLokaal,seektoinvolveuserstoensurequalityofservices(seeAppendix1,BestCase7).ICTtoolsarewidelyusedinthesectorfordesign,visualisation,informationexchangeaboutprocesses,andICTiswidelyusedtoincreaseefPiciencyinassemblingandreassembling,aswellasbringingthevariousbranchesofthedisciplinestogether.115WithsuchICTtools,theproductionphasehasshortened,butthesectorisstillverylabourintensive.

2.3.1.2.Advertising

TheEuropeanAssociationofCommunicationAgenciesnames6sectorswhereadvertisingiswidelyused,namely:Television,Newspapers,Magazines,Outdoor,RadioandCinema.116InthemostrecentPiguresprovided(2007),thehealthcareindustryspent€1.3billiononadvertisement,thenon‐alcoholicdrinksindustries€1.5billion,thealcoholicdrinksindustries€1.5billion,thefoodindustries€6billionandtheautomotiveindustries€6billion.117Inthestudy’sstatistics,advertisingisresponsiblefor4.31%ofthetotalrevenueoftheCCIsin2007,andemploys6.53%ofthetotalCCIemployees.Intermsofitscomposition,61%ofthesectorconsistsof13peopleenterprises,while24%oftheCCIshavebetween49employees.Combined,thecompaniesunder10employeesareresponsiblefor28%ofthetotalturnoverforthesector.TheriseofICThasledEASA(EuropeanAdvertisingStandardAgency–seeAppendix1,BestCase8)memberstoreachaconsensusonincludingdigitalmarketingcommunicationsintheremitofadvertisingself‐regulatoryorganisations.Onlineadvertisingspendingperuserhasrisendramaticallyinthelastfouryears,withUKleadingtheway.TheonlineadvertisingmarketintheUKwentfromGBP122peruserin2006toGBP217in2010.France’sonlineadvertisingisnowreaching$135peruser,from$89peruserfouryearsago.AsthestudybytheUKTechnologyStrategyBoardconPirms,70%ofthevalueandgrowthpotentialcomesfromcontentand

ArchitectuurLokaalArchitectuurLokaalinTheNetherlandsisdirectlyapplyinguser/consumer’sparticipationwitharchitecturalpolicyensuringaqualityofservices.ThemainpintheNetherlandsisasectoralprojectforgamesthatadvancesnewtechnologytoSMEsaimingatimprovinglearningsystemsandadvancednewtechnologytoSMEsinordertoadvancethesectoranddevelopknowledgefromappliedresearchwithSMEs.(SeeAppendix1,BestCase7)

EuropeanAdvertisingStandardAllianceEuropeanAdvertisingStandardAllianceisthesinglevoiceonadvertisingselfregulationissuesandadvisesthesectoronsuchissuesandotherssuchasdigitalmarketingcommunications.(SeeAppendix1,BestCase8)

113EuropeanParliamentDirective2006/100/EC,RegulationsbytheECNo1137/2008114Seeforexample”ArchitectureNormande,UneAventureEuropéenne”in2000

115 Sariyildiz,S.,Ozsariyildiz,S.,(1998)“TheFutureofArchitecturalDesignPracticewithinICTDevelopments”,unpublished,http://repository.tudelft.nl116FortheuseofadvertisingintheCinemaandRadiosector,advertisementsalesPiguresarebeinggivenonlyinapartoftheEU(Belgium,France,Germany,Italy,Netherlands,Spain,Sweden,andtheUK).117EuropeanAssociationofCommunicationAgencies,www.eaca.be,viewedMarch2010

advertisingspace.118TheeMarketerestimatesthatadvertiserswillspend$7.5billiontoreachallWesternEuropeans,anincreaseof25%fromlastyear.119

2.3.1.3.Design

“Designisstillaboutinnovatingwithinthesameparametersanddrivenbythesameambition,butappliedtoamuchbroaderspectreofchallenges,wherethedesignerispartofavaluechainwhereinnovation–thatreachesfarbeyondmaterialoutcomes–isaddressedbymulti–disciplinaryteams–intheword’smostinclusivesense.Designcanbeappliedtoanartefactoraspecificsolutiontoaspecificchallenge,butitcanalsobeappliedtoacontext–beitaphysicalspaceorenvironmentoraconfiguration”.120

Graduallydistancingitselffromtheearlierassociationwithaesthetics,designincludes,notexclusively,servicedesign,environmentaldesign,designforall,designforproPit,user‐design,andexperiencedesign.Thesectorisnowunderstoodasanimportantdriverofinnovation.121Withintheworkingdocument‘Designasadriverofusercentredinnovation’,theEUhighlightsdesignasapotentialstrategyforinnovativesolutionandproductthatseekstounderstanduserneeds,aspirationsandabilitiesatalowercostthantraditionalR&Dresearchactivities.122Designisincreasinglyrecognisedasasectorthatcanhavemanycrossoversanduseswithstrongspinoffeffectsonothersectorsandcompaniesoftheeconomy.123Thiswasalsoseeninthenumberofdesignersworkingoutsidethedesignsector,124suggestingtheexternaladdedvalueofdesignforotherindustries.However,designprocessesarenotyetfullyunderstoodasR&Dandareusuallyconsideredfromasoftinnovationperspective.OrganisationssuchasDissenyHubseektostimulatethisunderstandingwithinnon‐CCIsectors(seeAppendix1,BestCase9).Itemergedfromthestatisticalanalysisthatdesignrepresents15.49%ofthetotalrevenueoftheCCIs.Itisthesecondmostimportantamongstthesectors.Intermsofthesector’scomposition,asintheothersectors,thebulkofthecompaniesconsistofmicro‐SMEs:approximately75%ofthedesigncompanieshavefewerthan10workers(45%havingunder4employees,30%between4‐9employees).Companiesunder10employees(75%)aregenerating20%ofthetotalrevenuewhile10–49employeescompanies(20%ofthesector)aregenerating31%ofthetotalrevenueofthesector.Clearly,discrepanciesinsizeandturnovercanbeobserved.Designishighlystructuredincrossdisciplinaryteamsandcrosssectoralcollaborations.125Itworksheavilyinnetworkswithmultidisciplinaryteamsforgreater

DissenyHubDissenyHubBarcelonaprovidesanetworkofdesignersaswellastargetsanaudiencefromdiversesector,stimulatingcollaborationbetweenbusinessesandCCIs.Italsoservesasaresearchandreferencepointandeducationalcentre.(SeeAppendix1,BestCase9)

118UKTechnologyStrategyBoard,(2009),op.cit.,p.8.119Seehttp://www.emarketer.com/Reports/All/Em_euro_ad_jan07.aspx120DanishDesigner,(2010),“Theroleofdesigninthe21stCentury:DanishDesigners’Manifesto”,Copenhagen:DanishDesigner,http://www.danishdesigners.com/media/678.pdf,p.5.121EuropeanCommissionStaffWorkingDocument,(2009a),op.cit.,p.14.122Ibid.,pp.15‐16.123ProInnoGripsGlobalReviewofInnovationIntelligenceandPolicyAudiences,(2005),Designasatoolforinnovation,Mini‐studypreparedfortheEuropeanCommission(DGEnterpriseandIndustry)124EuropeanCommissionStaffWorkingDocument,(2009a),op.cit.,p.27,andalsoinUKDepartmentofIndustryandTrade(DTI)(2005),Creativity,DesignandBusinessPerformance,EconomicsPaperNo15,London:DTI125DanishDesigner,(2010),op.cit.,p.4,http://www.danishdesigners.com/media/678.pdf,p.4;ECStaffWorkingDocument(2009a),op.cit.,p.18.

integrationofmultipleinterests,facilitatingecologiesforopeninnovation.126ThedesignsectorisusuallyselfOinanced,howevercertaincountries,notablytheScandinaviancountriesbutalsoSpain,France,theUKandtheNetherlandshaveestablishedgovernmentalsupporttoincreasetheuseofdesignbycompanies.127DesignishighlyinPluencedbyrecentdevelopmentsinICTforthecreationprocessesbutICTalsofacilitatesthenetworkingandinteractionwithusers.

2.3.1.4.New(Cross)Media

NewMediaisthenewestsubgroupamongthecreativeindustries.IthasemergedasaresultofrapidadvancesinICTaimedatdevelopingtheglobalinformationinfrastructure,givingrisetotheso‐calledInformationSociety.128Newmediaisbothaproduct(software,cartoon,gameetc.)aswellasaservice;acommunicationtoolformarketinganddistributingotherproducts.Thesectorcoversabroadrangeofactivitiesdealingwithdigitaldesign,butmorespeciPicallyservicedesign:itdealswithprocesseslinkedtoservicesbetweenpeopleandtheirenvironment.ThisdePinitionmakestheactivitiesinthissectorinherentlycross‐sectoral.ThesupportingorganisationsgivesupportinthisPieldintheformofinnovationandR&Dprojects.IntermsofICTuse,accordingtothestudy’ssectoralexpertquestionnaires,themostimportantuseofICTtechnologiesforCCISMEsarecommunicationtools(91%)andknowledge/goodsproductiontools(76%).Thesectorhas61%ofcompanieswithfewerthan4employees,butitisresponsiblefor20.12%oftheemploymentintheCCIs.Theturnoveris,however,mostlygeneratedbythebiggerenterprises(80%ofthetotalrevenueisgeneratedbycompanieswith50+employeesoutofwhich48%isgeneratedfromenterpriseswith50‐249employeesconsistingof3.14%ofthesector).ICTaccountsforhalfoftheriseinEUproductivity129andisessentialtobusinesses,publicservicesandtomakingamoderneconomyworkandacrucialcomponentoftheEUrecoveryplan.SucheconomiceffectscanbeseeninseveralMemberStates.130IntermsofOinancialsupport,thesectorisnotsubsidisedbutexternalsupportexists,althoughthepathstoobtainitareoftenfartoocomplexforindividualSMEs.Intermsofgrowthpotential,thecompanieshavefacilitiestostartupduetotheshorttime‐spansofR&DandproductlifecyclesbutthecompanieshavedifPicultyingrowing.Theissueofmarketfragmentationisnotableforthissector.EuropeisveryfragmentedintermsoflanguageandregulationsaboutIPR,informationaccess,etc.ThissystemdiscouragesthecompaniesfromgrowingacrossnationalbordersasitusuallycreatesonlylocallyoperatingSMEs,althoughthemarketisglobal.131TheNewMediaandICTtechnologieshavealsothepotentialtoaffecttheoverallenvironmentforCCIsduetotheincreasingimportanceofdigitisation.

126OpenInnovationwasdePinedastheuseofpurposiveinPlowsandoutPlowsofknowledgetoaccelerateinternalinnovation,andexpandthemarketsforexternaluseofinnovation,respectively.Chesbrough,H.W.,(2003),OpenInnovation:ThenewimperativeforcreatingandproPitingfromtechnology,Boston:HarvardBusinessSchoolPress

127 ECStaffWorkingDocument,(2009a),op.cit.,p.31.128UNCTAD,(2008),op.cit.,p.132.129EuropeanDigitalMediaAssociation(EDiMA),(2009),WhitePaperonPolicyStrategyfortheDevelopmentofNewMediaServices2009‐2014,seehttp://ec.europa.eu/information_society/eeurope/i2010/docs/post_i2010/additional_contributions/edima.pdf130InUK,thedigitalmarketanddigitalcontentisresponsibleforapprox.70%oftheturnoverofthecreativeindustriesintheUK:seeUKTechnologyStrategyBoard,(2009),op.cit.,p.12.131EuropeanDigitalMediaAssociation(EDiMA),(2009),op.cit.,p.2.

Intermsofinnovationpotential,newmediaintroducesnewformsofexpressionandplatforms,suchasuser‐generatedcontent.ItchangesthebackgroundassmallercompaniescancompeteaffordablyinbiggermarketsandadvertisetheirproductsonlinealthoughthecompetitionisPierce.TheEDiMAWhitePaperonICTstandardisationdemonstratesthewillingnesstopayincreasingattentiontonewtechnologiesasadriverofinnovation(seeAppendix1,BestCase10).

2.3.2.Creativecontentproducers

ThisclusterincludesPilm,TV,fashion,games,music,booksandpublishing.CreativecontententerprisesproduceIP,usuallymakinguseoftechnicalprotectionmeasures.Theseenterprisesearnrevenuesthroughavarietyofrelatedbusinessmodelssuchasonlineandofflinesales,advertisingorsubscription.Theseenterprisesinvestcapitalupfrontinordertodevelopcreativeprojectspriortoanyrevenues.Dependingonthesector,thisupfrontinvestmentcanbesubstantial,andasaresulttheinvestmentoftentakesplaceonaproject‐by‐projectbasisratherthaninthecontextofanongoingandsustainablebusiness.Withinthisgroup,aloosebutimportantdistinctioncanbemadebetweenthoseenterprisesthatfocusonthenextindividualcreativeprojectandthosethatarestructuredtodevelopasustainable'productionline'ofcreativeproductsandanincreasingbodyofIPforrenewedexploitation.Intermsofthecreativeprocess,theclusterishighlyinPluencedbydigitalconvergence:theprocessesareusuallyhighlytechnologicallyaided,havinganimportantuser‐interactioncomponentwithinthecreativeprocess,andtheproductsandservicesarealsoincreasinglydigital,withthee‐bookbeinganillustrationofthis.Piracyandpeer‐to‐peerexchangearethreateningthelossofvalueofsomeofthecontentproductandservices.ThecreativecontentproducershavesigniPicantcrossoverswithothersectorsoftheeconomyoutsidetheCCIs,suchasmobilephonenetworkoperators,handsetmanufacturersformusicdistribution,whichhaveconsiderableinPluenceonthebusinessmodelsdeployed.132

2.3.2.1.Film

Filmisthesectorthatreceives,generallyspeaking,strongsupportfromthestateacrossEuropeancountriesthroughvariousmeasures(taxshelter,subsidiesetc).TaxsheltersofvaryingtypesinHungary,Netherlands,Ireland,theUK,Luxembourg,France,SpainandBelgiumaremeanttoencourageinvestmentsandconsiderablyenhancethefundingopportunitiesforPilmproduction.ThesectorisalsohighlysubsidisedinotherEuropeancountries,thoughtherecentPinancialcrisismeansthatthissubsidyislikelytodecrease.

ThespecialprogrammefortheaudiovisualsectorattheEuropeanlevel,MEDIA,133alsotacklestheneedsofthesector.MEDIAco‐Pinancestraininginitiativesforaudiovisualindustryprofessionals,thedevelopmentofproductionprojects,trainingofprofessionals,andgenerallydistributesandpromotesPilmsandaudiovisualoutput(seeAppendix1,BestCases11).Ontopofthis,theEUMediaprogrammewilllaunchattheendof2010aMediaProductionGuaranteeFundthatwillbeaimedatsupportingandfacilitatingtheaccessofpublicaudiovisualcompaniestobankcredits.134

Intermsofthesector’scomposition,thesectorishighlyfragmented.60%ofthe

EDIMAEDIMAistheEUnetworkthataimsatcreatinganopenandlegalframeworkfornewdigitalproductsthroughouttheEUsoastoavoidthelegalbarriersblockingasingleEuropeandigitalmarket.(SeeAppendix1,BestCase10)

MEDIAMEDIAistheEUsupportprogrammefortheaudiovisualsector.Itco‐Pinancesprojects,promotes,trainsPilmprofessionalandsupportthesectortofacethedigitalshift.(SeeAppendix1,BestCase11)

132UKTechnologyStrategyBoard,(2009),op.cit.,p.22.

133 Seehttp://ec.europa.eu/information_society/media/index_en.htm134Seehttp://ec.europa.eu/culture/media/programme/overview/funding/index_en.htm

companieshaveunder4employees(seeFig.2)butthesecompaniesproduceonly12%ofthesectoralturnover.Thecompaniesthathave4‐9employeesrepresent26%ofthesector’senterprisesandtheygenerate16%ofthetotalrevenueofthesector(seeFig.3.).Companiesthathavemorethan50employeesrepresentabitlessthan2%ofthetotalofenterprisesinthesectorbutgenerate49%ofthetotalrevenue.Thetotalturnoverofthesectoris6.10%oftheCCIsturnoveranditholds4.84%oftheemployeesofthetotalCCIs.ThemarketreachedatotalspendingvalueofUSD39billionin2009.Thedigitalmarkethasalsobeenchangingtheperspectiveforthissector.ThereisagrowingemergenceofonlinerentalsubscriptionservicesandaconsequentrapiduptakeofVODandpay‐per‐view(PPV).TheVODmarketjuststartedin2004butwasexpectedtogrowmorethantenfoldfromUSD165millionin2004toUSD1.7billionin2009.135

2003 2004 2005 2006 2007 2008

DigitalScreens

30 55 204 527 897 1529

Digitalsites

27 45 148 358 550 815

Table4:DigitalCinemasitesandscreeninEurope(20032008)(Source:MediaSales)136

AninabilitytosustaingrowthisoneofthemainissuesforthePilmsector.LinkedtothedifPicultytoenterthemarket,thePilmsectorsuffersfromtheinaccessibilityofgrowthPinanceaftertheinitialcompanyset‐up.Indeed,thereportontheevaluationoftheMEDIAprogrammeindicatedthatEUaudiovisualsectorsufferedfromstructuralweaknessessuchasmarketfragmentationandthelowcirculationofEuropeanworksoutsidetheircountryoforigin.137Intermsofvaluechainprocesses,theproductiontimeisgenerallylong,althoughtheproductcanbemultipliedanddistributed.

2.3.2.2.BooksandPublishing

Publishingandprintmediaconstituteanimportantsubgroupofthecreativeindustriesfromboththeculturalandtheeconomicpointofview.Technologically,however,thepublishingandmediaindustriesarefacingnewchallengesduetothegrowingtrendtowardselectronicpublishing.AccordingtotheFederationofEuropeanPublishers(seeAppendix1,BestCase12),thetotalannualsalesrevenueofbookpublishersoftheEUandtheEEAin2008wasapproximately€23.75billion.138Thesectorcomprisesmostlyofenterpriseswith13employees(59%)generating12%ofthetotalturnoverofthesector,whilemostrevenue(72%)isgeneratedbycompanieswith50+employees(2.38%ofthesector).CompetitioninboththephysicalandthedigitalmarketinPluencesthestructureofthesectorbutinitiativessuchasVATreductiongreatlysupportthegrowthofthesector.In25ofthe27MemberStatesoftheEuropeanUnion,printedbooksbenePitfromreducedratesofVAT.Ireland,PolandandtheUnitedKingdomprovideforazeroVATrateforbooks,whilePivemorecountrieshaveextendedreducedratestobooksonallphysicalsupport:France,Spain,Slovenia,NorwayandtheNetherlands.SwedenandIcelandallowreduced

FederationofEuropeanPublishersFEPisEuropeansectoralsupportorganisationforbookpublishersassociationintheEU.ItmainlydealswithlegislativesupportattheEUlevelandadvisesoncopyrightissues.(SeeAppendix1,BestCase12)

135KEA,(2006),op.cit.,p.114.136EuropeanAudiovisualObservatory,(2009a),PressRelease,EmbargoDigitalScreenBasegrows70%in2008,Strasbourg/Milan:seehttp://www.obs.coe.int/about/oea/pr/digital_cinema2008.html

137 EUREVALMediaConsultinggroup,(November2007),FinalreportofMEDIAprogrammePlusandMediaFormation,http://ec.europa.eu/culture/media/programme/docs/overview/evaluation/reports/media%20plus/executive_sum_en.pdf

138 Seehttp://www.fep‐fee.eu

VATforaudiobooks.139AreducedrateofVATforallkindsofelectronicbookscouldassistthesectortosupportthedevelopmentofadigitalmarket.

Theprincipleofcross‐subsidisationisafundamentalanddistinctivecharacteristicofthepublishingsector,140andassuchcontributesgreatlytoculturaldiversityinthesector.FundsfromonemarketcansupportentrantsinnewmarketsandassuchcansupportSMEsintheirsector.Thiscanactasasupportfortheaccesstothemarket.GrowthratesprojectedforthepublishingsectoraresigniPicantlylowerthanforotherculturalindustriesandthisismainlyduetothefactthatpublishingisconsideredasamaturemarket(especiallybookpublishing)andamarketwheretheimpactofICTdevelopmentsmaybelesssigniPicantthanforotherindustrysectors.However,theinPluenceofICTanddigitisationisgreatlyaffectingthesector:spendingonelectronicbookswasexpectedtogrowexponentiallyfromUSD42millionin2004toUSD1.7billionin2009(110%CAGR),whene‐bookswillrepresent3.2%oftotalbookspendinginEurope.Asaconsequence,companieshavetocombineboththeprintedpublishingformataswellasthedigitalone:onepublishingSMEcanbeinanadvancedstateintermsofprintedpublishingbutatanearlystageintermsofe‐publishing.TheentryoftheiPad,theeBookandtheincreasingdigitalmarketwithplayerssuchasGoogleorAmazonareonlysignsofthepotentialofthedigitalmarketaswellasthethreatstothemicro‐SMEsthatdonotpossesssimilaraccesstothisdigitalmarket.Fig.9.belowdemonstratestheincreaseinthewholesaleofelectronicbooksalesinthelasteightyearsintheUnitedStates.TheUSPigureswereusedinthisreportasanindicationaswhatthefuturetrendsfordatafortheEuropeanmarketcouldbeasitistooearlytodrawPigures.

Figure9:USTradeWholesaleElectronicBookSales,20022010(1stquadrimestre)(Source:www.idpf.org)141

Anotherconsequenceoftheriseofthedigitalmarketandthesubsequentriseofpiracyisthatofcopyrightregulations.Astheyareoneofthemainrewardstothesector,IPRregulationsareimportantandtheycontributetothesustainabilityoftheculturaldiversity.CopyrightiscrucialinallowingthepublishingsectortoPlourish;itisthelegalframeworkthatenablesbusinessmodelsinthissector.ManySMEsnotonlylacktechnologicaltraining,butalsosectorspeciPictraining(managementskills,publishingskills,etc.).Currently,sectoralassociationsprovidebasictrainingthatpredominantlyfocusesonproduction.Thesectorworksheavilyincross

139 Seehttp://www.fep‐fee.eu/2.3.html140 CommentsfromEuropeanSectoralOrganisation141Seehttp://www.idpf.org

sectoralnetworks,forexamplewithaudiovisualandmusic.142

2.3.2.3.Games

Inadditiontoopendesigngames,interactiveenvironments,smartmoviegamesandseriousgamesareincreasinglyacknowledgedassuitableforabroaderusewithinsocietyandeconomics.Pedagogicalgamesthatsimulatesurgery;openspaceinteractiveenvironmentsusedforcityplanning;orgamesdevelopedforpeoplewithdisabilitiesareallexamplesoftheriseofmulti‐functionalityinthissector.However,onahigherlevel,thesectorisnotsufPicientlyrecognisedandisnotseparatedfromsoftwareinmoststatistics.Thesectorisalsoonlypartiallyrecognisedasaninnovativenewmediainthecreativecontentsector143.Intermsoftotalrevenue,thegamesectorisresponsiblefor6.47%ofthetotalrevenuegeneratedbytheCCIs.Largedisparitiesexistbetweenthefewnumbersoflargecompanies(0.51%ofcompanieshaveover250employees)thatareresponsiblefor31%ofthetotalrevenue,andthemicro‐SMEs(1‐3employees)consistingin62%oftheenterprisesandthatgenerate5%ofthetotalturnover.Arisingfromthisimbalanceinthemarketposition,accessingthemarketisdifPicultforsmallbusinessesduetothemonopolisationoflargegameplatformsowners.144Thesector'saccesstomarketisalsoinPluencedbytheexternallegislativefactorssuchastheratingsystem.Thereareimportantdifferencesintheestimationsforthedifferentsegmentsofthevideogamesmarket:

· Consolegames:theyareheavilydependentonthenextgenerationofconsolesandthepriceswillfollowthelaunchofnewhardware.Overall,thecompoundannualgrowthshouldincreaseatamoderaterateof6.4%.

· Onlinegames:theywillboomasaconsequenceoftheincreasingspeedofbroadbandconnections.TheaveragespendingononlinegamesincreasedfromUSD505millionin2004toUSD4.2billionin2009(53%CAGR).Onlinegameswillrepresent30%oftotalvideogamesspendingin2009(upfrom7.6%in2004).

· Wirelessgames:theywillalsoexpandfollowingthegrowthof3Gmobilepenetration.Wirelessgamessubscriberswereexpectedtoincreasefrom8.3millionin2004to96millionin2009(63.2%CAGR).ThespendingonwirelessgamesraiseduptoUSD3.7billionin2009(52%CAGR).

· PCgames:theywillcontinuedeclining,asmigrationtootherplatformswillconsolidate.Decreaseisestimatedatacompoundannualrateof3.2%intheyearsleadingupto2009.

AnotherconsequenceoftheriseinICTisthatvaluechainsareshortened,andthisenablesenterprisestoskipmiddle‐menandincreasestheinvolvementofusersintheproductionofagame.However,thesectorsuffersfrompiracyandgameplayisnotyetprotectedfromplagiarismincopyrightlegislation.145

Intermsoffunding,asmostofthecompaniesaremicro‐SMEs,theirtimeismostlygearedtowardscreatingvalueandmaintainingtheirnetworks,leavingverylittletimetoconcentrateonlookingforfundingopportunities.TheyareusuallyselfPinancedbuttheymightreceivegovernmentalsupport,asseeninFrancethroughthetaxshelterorthroughataxreliefforgamedevelopersintheUK.146

142InterviewwithNationalSectoralOrganisation143EuropeanGamesDeveloperFederation,(2009),CommentsfromtheEuropeanGamesDeveloperFederationon“CreativeContentinaEuropeanDigitalSingleMarket:ChallengesfortheFutureARePlectionDocument”fromtheDGINFSOandDGMARKT,Availableonlineat:http://ec.europa.eu/internal_market/consultations/docs/2009/content_online/rePlection_paper%20web_en.pdf

144 EuropeanGamesDeveloperFederation,(2009),op.cit.,p.2.145 EuropeanGamesDeveloperFederation,(2009),op.cit.,p.11.146 Seehttp://biznewz.co.uk/business_news/2010/391/uk‐budget‐2010‐measures‐for‐supporting‐business‐and‐growth

Networksareanimportantsourceofsupportinordertosharetheknowledge,inparticularabouttherapidchangesintheenvironmentintermsoftechnologies(seeforexampleImaginovinFrance,Appendix1,BestCase13).Theincreasingintegrationofmultipleactorssuchasmobileoperators,internetproviders,socialnetworks,onlineshops,onlinerightsaggregatorsandbroadbandtechnologycompanies,raisestheriskofoligopoliesdeveloping.Despitethehighlycollaborativeprocess,thesectorhasdifPicultyorganisingitselfmainlyduetoitssize,novelty,anddiversity.Asaresult,thecapacityforself‐rePlectiononentrepreneurialhabitsislimited,oftenleadingtodifPicultiesinorganisingthesectorinrepresentativeorganisations.

2.3.2.4.Broadcasting(TVandRadio)

AccordingtotheEuropeanAudiovisualObservatory,theEuropeanaudiovisualmarketwasevaluatedatapproximately€120billionin2009.DuetotheriseoftheInternet,thechangeinthesectorwillfurtherincreasethemarketandoffermanypossibilitiesaswellaschallengesforthesector.Thebiggestcompanieshaveamarketpositionthatallowsthemtocontrolsomepartsofthemarket,butthesmalleronesalsoneedtohaveaccesstoplatformsortodevelopVODplatformsandaccessthem.Insomecountries,suchaswiththeDutchMediaHub,thisneedforinteroperabilityisbeingaddressed(seeAppendix1,BestCase14).AccordingtoStrategyAnalytics,theglobalriseofVODisexpectedtogofrom$11,5billionin2010to$17billionin2012.147Undersuchcircumstances,Europewillexperiencegrowthinmulti‐channeltelevision,spurredbydigitalterrestrialTV(DTT)rollout.DTThasalreadybeenlaunchedinseveralEUcountriesandmigrationtodigitalisexpectedtobecompleteacrossallofEuropeby2010‐2012.148Satellitesubscriptionshavebeengrowingfastinrecentyearsbutinthefuturetheirgrowthratewillslowdown,challengedbytheemergenceofDTTandnewdigitalplatformssuchasTVoverDSL(IP‐TV).Lookingatthepotentialevolutionofthesectorintheelectronicmarket,oneofthepre‐conditionsisaccesstohighspeedInternetasthegrowthofVODistypicallydependentonInternetproviders.149Asinothersectors,thebroadcastingsectorisshapedbyPiercecompetition.Intermsofthesector’scontribution,49%ofthecompaniesconsistoflessthan4employees,while33%ofthecompaniesarebetween49employees.ThemicroandsmallSMEstogetherformthebulkofthesector.However,similartoothersectors,thislaterbranchisresponsibleforasmallshare(9%)ofthetotalrevenue.Thestudystatisticsshowthatthesectorasawholeisresponsiblefor15.30%ofthetotalturnoveroftheCCIinEurope,cominginthirdafterfashionanddesign.

2.3.2.5.Music

“Musicisatalentbasedcreationandoneofthecentralcreativeindustries,with

ImaginovImaginovisthegameclusterinFrancewhichisspeciPicallysupportedbytheregionofRhoneAlpes.Ithasattractedseveralbusinessesandhasstimulatedmulti‐disciplinaryprojectsaswelltoboostcommerceintheregion.(SeeAppendix1,BestCase13)

DutchMediaHubDutchMediaHubgathersmultiplepartnerssuchaslocalandregionalauthoritiesaswellasCCIsinthesectorandprovidessupportforcontentproduction,distributionorservicedevelopment.Italsoparticipatesinlegislativelobbyingforstandardisationorinteroperability.(SeeAppendix1,BestCase14)

147 StrategyAnalytics,(2008)quotedinEuropeanAudiovisualObservatory,(2009c),VideoondemandandCatchupTVinEurope,Stockholm:EAO,http://www.obs.coe.int/online_publication/reports/vod_2009.pdf

148 EuropeanAudiovisualObservatoryPressrelease,(2010),Growthofthenumberoftelevisionchannelsandmulti‐channelplatformsinEuropecontinuesdespitethecrisis,http://www.obs.coe.int/about/oea/pr/mavise_end2009.html149EuropeanAudiovisualObservatory,(2009b),ThePublicServiceremitandtheNewMedia,Stockholm:EAO,seehttp://www.obs.coe.int/oea_publ/iris/iris_plus/iplus6_2009.pdf.en

greatculturalandeconomicvalueinallsocieties”.150

ThemusicsectorisavisibleEuropeanculturalproductandlikeothersectorsitcarriesgreatimportanceintermsofsustainingEuropeanculturaldiversity.Manybandsorartistsarestart‐upsbutcannoteasilyreachaninternationalmarket.Thesectorhasaverylargebaseofmicroinitiativeswith88%oftheCCIsbeingunder10people(70%beingmicro‐SMEswithlessthan4employees)confrontedtoafewmajorcompaniescontrollingmostpartofthemarket151.88%ofthecompaniesgenerate30%ofthemusictotalrevenue,whilecompaniesof50+employees,forming2.27%ofthesector,generateapproximately40%.Intermsofinnovationpotential,theindependentsandsmallcompaniesaretheinnovatorsandearlyadopters,discoveringnewtalentandproducingnearly80%ofallnewreleases.152OrganisationssuchasBandpoolsupporttheseactivities(seeAppendix1,BestCase15).Likebroadcasting,Pilm,design,newmediaorarchitecture,digitisationisgreatlyaffectingthemarketofthemusicsector.Europegeneratesoverhalftheworld'smusicpublishingrevenuesandonethirdofglobalrecordingsales,butonly17%oftheworld'sdigitalmarket.Duetoanexpandingdigitalmarket,opportunitiesariseforSMEstoreachawiderpublicbuttheproblemofaccessingthemarketisevenmoreproblematicinthedigitalmarketplace.LargecompaniessuchasGoogleandApplecontrolmostofthedigitalmusiclibrariesandareconsequentlyhinderingtheentrancetothemarketofsmallerindependentlabels.153Moreover,barrierstomarketentryarealsocomplementedbythefragmentationofthecopyrightandIPRrulesinEurope.154Thestudyon“BuildingaDigitalEconomy:TheImportanceofSavingJobsintheEU'sCreativeIndustries”determinedthatin2008someoftheEuropeanUnion’screativeindustries(Pilm,TVseries,recordedmusicandsoftware)experiencedretailrevenuelossesof€10billionandlossesofmorethan185,000jobsduetopiracy,largelydigitalpiracy.155BasedoncurrentprojectionsandassumingnosigniPicantpolicychanges,theEU’screativeindustriescouldexpecttoseecumulativeretailrevenuelossesofasmuchas€240billionby2015,resultingin1.2millionjobslostby2015.Intermsofgrowthpotential,themusicsectorhassomedifPicultysettingupPinancialPlowmodelsandmechanismsthataidinthesustainabilityandgrowthofactivities.SupportforgrowthPinanceisessentialforallowingthedevelopmentofthemiddle‐sizedmusiccompanies.IntermsofPinance,throughouttheEU,classicalmusicisheavilysupportedbysubsidiesfromcentral,regionalandlocalgovernmentsandbyprivatesponsorship.Inmostcountries,thereisalsofurtherPinancialsupportgivenbymusicindustryorganisations(suchasauthorssocieties).Undertheirrules,authorssocietiesarepermittedtospendupto10%oftheirrevenuesfor"socialandculturalpurposes”.156

BandpoolBandpoolisoperatedbythePopAcademyinGermanyactsasacoachingtoolforbands,givingworkshopsaswellasnetworkingopportunitiestoartists.Italsostimulatescrossoverswithbusinessesaswellaswiththepoliticalscenetoincreasetheawarenessofthesector.(SeeAppendix1,BestCase15)

150UNCTAD,(2008),op.cit.,p.119.151InterviewwithEuropeanSectoralOrganisation

152 Seehttp://www.impalamusic.org/info_03_indfact.php,retrievedApril2010153 InterviewwithEuropeanSectoralOrganisation154 Reding,V.,(October2009),SpeechontheDigitalSingleMarket:akeytounlockthepotentialoftheknowledgebaseeconomy,Availableathttp://www.iccwbo.org/bascap/id35360/index.html

155 Availableathttp://www.iccwbo.org/bascap/id35360/index.html156Laing,D.,(1999),“TheEconomicImportanceofmusicintheEuropeanUnion”,Soundscapes,Vol.2,Chap.7,http://www.icce.rug.nl/~soundscapes/DATABASES/MIE/Part1_chapter07.shtml#Noteref51

2.3.2.6.Fashion

Recognisedthroughouttheworld,Europeanfashiongoesfurtherthanitsglitteringimage.Accordingtothestudystatistics,fashion,includingfashionretail,isresponsibleforthebiggestshareonthetotalrevenueofCCIs:247.189.494TH€or24%ofthetotalrevenue.ThesectorhasthehighesttotalpercentageofemployeesintheCCI(thefashionsectoremploys31%asopposedtothepublishingemploying9.84%ofthetotalemploymentforceintheCCIs.)AsseeninTable2,Figs.2.and3.,thecompositionofthesectorissimilartootherCCsector.51%ofthecompaniesconsistoflessthan4employees,andtheyareresponsiblefor9%ofthetotalrevenue.27%ofthecompaniesarebetween4‐10employees.Companiesover50‐249employees(3%)areresponsiblefor50%ofthetotalrevenueofthesector.Largecompaniesoftencontrolaccesstomarket.HoweverthisnumberhastobetreatedcarefullyfromthewaythestatisticsandNACEcodeswereusedandwiththeinclusionofPiguresforfashionretail(seeAppendix2.10).Generallyspeaking,thefashionsectorisnotperseasubsidisedsector.However,somecountriesmayhavecertainfacilitiesfromthegovernmentandsomeencouragement.Intermsofinnovation,thereareattemptstomodernisethesectorinordertotransformitintoademand‐driven,knowledge‐basedandhigh‐techindustry.157OneexampleistheUPTEXclusterwhichpromotesinnovation(seeAppendix1,BestCase16).Theriseofuser‐orientedstrategiescommontoallCCIsectorshashadaneffectontheinnovativedriveofthesector.Advancedtextiles,perceptionofmaterialsthroughthesensesandtheirwiderapplicationfordifferentsectorsisbecomingmoreimportantandallowingfordiversecross‐overswithothersectorssuchastransport(aerospace),health,sport,constructionetc.Thevaluechainiscomposedofthefollowingsteps:materialsproductionandprocessing,productdesign,manufactureofmade‐uparticles,tradinginapparel,footwearandtextileitems,servicingofapparel,footwearandtextileitems.158

2.3.3.Creativeexperience/originalproviders

ThisclusterincludesPerformingArtsandtheVisualArtsaswellaslivemusicorganisersandpromoters.Clearlytheremaybearelationshipherebetweenexperienceprovidersandcontentproducers.Forexample,amusicianmaybeinvolvedinproducingarecording,andthenperformpartsofthisrecordinginfrontofanaudience.Mainissuesforthissectorrelatetoparticipationandconsumeraccess,theadaptationtotechnologicaladvances,themobilityorterritorialityregulations159foundbothinthephysicalaswellasthedigitalworldandtheprotectionofrights‐holders,aswellasthechangeinconsumersandtheshiftinfundingmechanisms.Thesecreativeexperienceprovidersaretypicallysubsidisedandtheyhaveimportantnot‐forproPitobjectives,includingbroadeningaccesstocultureforsocialpurposeandothermultipleobjectives.160Thevalueofthecreationtakesitsmeaningfromtheaudienceandtheirvalueis“realisedasasocialprocess”.161Fig.10.isNESTA’sillustrationofthepresentvaluechainforculturalorganisations.

UPTEXUPTEXisaninnovationclusterthataimsatinnovatingtextileandfashionsectorbyinvolvingresearchinstitutes,highereducationlabs,fashionCCIsandChamberofCommerce.Itprovidesfundingandlegalservicesandinformationexchange.(SeeAppendix1,BestCase16)

157 Seehttp://www.aedt.org/projects.html158 Seehttp://www.skillset.org159Regulationsbasedontheterritory,suchaslabourregulationsorPiscalregulations,haveadirecteffectforartists’mobilityastheyhavetofacethecomplexitiesofmultipleregulatoryframes.160Bakhshi,H.Throsby,D.(June2010),CultureofInnovation:Aneconomicanalysisofinnovationinartsandculturalorganisations,London:NESTA,p.12.161Ibid.,p.13.

Figure10:TheValuechainforculturalinstitutions(Source:NESTAJune2010)162

Thecreativeexperienceprovidersandtheoriginalproducershaveanumberofaspectsincommon.Manyoftheperformingartists(writers,directors,composersetc)aswellasvisualartists(craftspeople,designersandothers)canbeconsideredself‐employedfreelancers.Intheperformingandvisualartsthereareextremedifferencesinincomedistributionsandcreatorsoftenacceptbelowaveragepecuniaryearnings.Thisisexplainedeitherbyrisk‐seekingorapreferenceforcreativeworkoverothertypesofwork.

2.3.3.1.PerformingArts

AccordingtoaEuropeansectoralorganisation,thissectordealsfarmorewithcreativepersonsthanwithenterprises,andtheconceptofentrepreneurshipisfairlynewinthisPield.Thecompositionofthesectorisasfollows:63%oftheperformingartssectorscompaniesconsistofcompaniesunder4people,and22%havebetween4and10people.Intotal,companiesunder10employeesform85%ofthesectorandareresponsiblefor39%oftherevenuegenerationofthesector.Companieswith10‐49employeesrepresent12.5%ofthecompaniesinthesectorandisresponsibleforis31%.Thetotalrevenueofthesectoramountsto1.31%ofthetotalrevenuegeneratedbytheCCIs.Typically,thesectorishighlysubsidisedandthereisusuallyminimalprivatefundingduetothedifPicultyinvaluingtheintangibleassetsbythePinancialintermediariesaswellasduetoproblemofaccesstomixedPinance.Thesubsidiessystemhasbeencriticisedbysomeashinderingtheaccesstocertainprivatefundingsuchassponsorship,fundsorotherstimuli.163Howeverthissystemmayensurethediversityofculturalproducts/servicesthatwouldnototherwisebesupportedbybanksorotherprivateintermediaries.WiththePinancialcrisis,governmentalfundsareundertightenedbudgetingwhichforcesthecreativeexperienceproviderstolookforprivatefundsandotherrevenuesources.164ThesectorworksthroughcrosssectoralnetworkinghavingclosecollaborationwithPilmandthemusicsector.Intermsofmarketaccess,micro‐SMEsinperformingartshavedifPicultiesinreachingagreatermarketandtoturnideasandcreativeinitiativesintoproduction.Theproductlifecycleispeculiartothesectorwithlongdevelopmentstages

162Ibid.,p.12.163EuropeanSectoralOrganisation164Bakhshi,H.Throsby,D.(June2010),op.cit.,p.13.

(2‐3years)andashortdeliveryoftheproduct(suchasone‐offstageperformances).165

Growthislinkedtosustainabilityandislinkedtolong‐termdevelopment.Growthisperceivedasaslowprocesswheremarketsadaptandrecognisecreativepersons(moreorlessover10years).Traininginentrepreneurialskillsismostlyabsentintheperformingarts(businessskillsmanagement,marketsituation)althoughitisseenasessentialforasectorthatworkshistoricallythroughpublicsupport.Thetechnologyofcreativecontentonlineisofgrowingimportanceintheliveperformancesector.Ithelpsdevelopnewformsofperformanceanditfacilitatestheirdissemination,therebyreachinglargergroupsofaudiencesandconsumersthaneverbefore.166Themajoruseoftechnologyforthissectorliesintheadvantageitgivestothedisseminationofproductions,asnewcommunicationtoolswiththeaudienceandaspossibilitiesforthedevelopmentofnewbusinessmodels.IntermsofIPR,theliveperformancesectorprimarilypaysforothers’copyrightbuthasnoinitialownershiptoarightonitsproductions,whereasotherculturalindustriessuchaspublishing,recordingcompanies,evenbroadcasters,haveaninitialownershiponcopyrightorneighboringrights.167Therecognitionoftheexistenceofcreativityandtalentinotherwaysthancopyrightandinusingappropriateculturalandartisticcriteriaisessentialforthesector’srecognitionofitsculturalandcreativeaddedvalue.168Thisrelatestotheneedforrecognitionoftalentassoftinnovationasinothersectorssuchasmusic.IPRisalsochallengedwiththeincreaseduseofonlinecontentandexperiencethatthesectorprovides.Anotherimpedingregulatoryfactor,bothintheonlineandoff‐lineworld,isthatthesectorofperformingartsishighlydependentonlegislationonmobilityandonterritorialagreementsconcerningthemobilityofartists(withissuessuchasdoubletaxation).Thishampersthemobilityofartistsandproductions,andmakesweb‐streamingofperformancesacrossbordersdifPicult,highlylimitingthesector’sabilitytoenternewmarketopportunities.

2.3.3.2.VisualArts

Aswithothersectors,thevisualartsarehighlyfragmented.60%ofthesectorconsistsof13peopleenterprisesand21%ofthecompanieshavebetween49employees.81%ofthecompaniesarethusunder10employeesandtheyareresponsiblefor5%ofthetotalturnover,whilecompaniesof50+employeesareresponsiblefor89%ofthetotalsector’srevenueandrepresentapproximately1%ofthesector.Overall,thesectorcontributesto9.71%ofthetotalturnoveroftheCCIs.Themaincharacteristicofthemarketforvisualartsisthefocusontheexclusivityandoriginalityofanartwork.169Inthissense,therightstotheartworkareessentialfortheartiststoberewarded.MorespeciPically,theresalerightordroitdesuiteisthemostimportantcopyrightforauthorsofPineart.VisualandPineartsartistsdependprimarilyonthesaleoftheiroriginalworkandthus,ontheresaleright.Withoutthelatter,theartistwillnotbenePitfromensuingincreaseofvalueoftheirworks.Unlikewritersandcomposerswhohavearegularincomefromroyaltiesthatareduewhenevertheirworksareperformedorpublished,artistsdependontheoriginalworkandtheensuingvaluegainedovertime.

165EuropeanSectoralOrganisationInterview166Pearle,(January2010),CreativeContentinaEuropeanDigitalSingleMarket:rePlectionsdocumentofDGINFSOandDGMARKT,p.2.167Pearle,(January2010),op.cit.,p.3.168Towse,R.,(2004),op.cit.,p.15.169UNCTAD,(2008),op.cit.,p.122.

Eventhoughvisualartsareusuallyrepresentedastheleasttechnologicallyaidedandrequiringlessdigitalinput,thesectorisincreasinglyinPluencedbytechnologicaladvancesanddigitisation.Theimportanceofphotography,andmorespeciPicallydigitalphotography,isagoodexample.Privatedigitalcopyingisalsothreateningtherightsholders.Forsecondaryusesoftheartwork,thereisnomonitoringandtrackingsystematthemomenttocontrolandrewardtheuseoftheartwork.RemunerationschemesarenotappliedtothesameextentasDigitalRightsManagement.170InitiativessuchasOnlineArtseektoclosethisgap(seeAppendix1,BestCase17).Havinglookedateachsectorinturn,onecanclearlyseethestrikingsimilaritiesinthehighfragmentationbetweenthemicroSMEsandthelargerenterprises,aswellastheincreasingimpactofdigitisation.

2.4.Crosscountryanalysisofregulatoryframeworks

EuropeanMemberStateshaveverydifferentsocio‐economicandculturalbackgroundsandculturalexpressions.SomewillhavespeciPicprogrammesandmeasuresforcertainsectorsoftheCCIs,whileotherMemberStateswillconsiderCCIsjustasanyothereconomicsector.Intheexpertquestionnaire,itemergedthatIPRandtaxregulationswerethemostimportantregulatorymeasures(seeTable5.below)forCCIs.

Question:“SelectthethreemostimportantregulatorymeasuresthatCCISMEsface”:

Item Percent%

IntellectualPropertyRegulation 73.91%

TaxRegulation 60.87%

BusinessStartupRegulation 56.52%

Labourregulations 47.83%

SocialWelfareRegulation 30.43%

AntitrustLaws 8.70%

BankruptcyLaws 4.35%

Other 17.4%

Table5:MostimportantregulatorymeasuresfacedbyCCIs(Source:Eurokleis2009,PanEuropeanExpertQuestionnaire)

ToexaminetheregulatoryclimatesurroundingCCIsinEurope,aninventoryoftheenvironmentalfactorswasprepared,inparticularontheregulatoryissueswhichinPluencethedevelopmentofSMEs.TheseincludedPiscalmeasures,labourstatus,socialsecurity,directmeasuressuchasgovernmentalCCIprogrammes,thewaycreativityandCCIarevaluedaswellasinnovationandculturalpolicies.TheanalysisoftheenvironmentalfactorsforCCIswasnotexhaustivebutprovidesaframeworktounderstandthedifferentapproachestowardsCCIs.Followingthis,acountrybycountryanalysisonthedifferentculturalpolicies,SMEandinnovationpolicies,aclusteringofcountrieswasproposed.Onthebasisoftheresearchonenvironmentalfactors,someconsiderationscanbemade.

OnlineArtOnlineArtistheOne‐stop‐shopforworldwidelicensesonworksofPineartforuseontheWorldWideWeb‐beitcommercialornon‐commercial.OnlineArtensuresthatauthorsarerewardedwhentheirworksareexploitedbyothers.Itisacollectingsocietycreatedbyvisualartistsornon‐for‐proPitorganisations.(SeeAppendix1,BestCase17)

170EuropeanVisualArtists,seehttp://www.evartists.org

ThePirstsetofconsiderationsrelatestothewaycultureandcreativityisvaluedasadriverofinnovation,andhowMemberStatesarerespondingtoEUCouncil´srecommendationstowardsrecognisingthestatusofcreativityandcultureassectorsoftheeconomy,inparticularbyimplementingmeasuresinsupportofCCentrepreneurshipandSMEs.HavingconsideredtheMemberStates’culturalandinnovationpolicies,itemergedthatthespeciOiccountry’sapproachestoCCIsfollowedthatcountry’sinnovationreadinessandeconomicperformance.Inotherwords,thosecountriesthatarealreadyperformingwellininnovationandhavesolideconomiccapabilitiesshowareadinesstoorganiseandinvestinspeciPicpoliciesforCCIsandCCISMEsinparticular.ItisimportanttounderlinethatthosecountriesthathavesystematicmeasuresforCCIsareonlyasubsetofthebestinnovationperformers.PositivesignstowardsspeciPicrecognitionofCCIsasdriversofinnovationarealsocomingfromcountriesthatarestilllaggingbehindintermsofinnovationperformance,mostlythenewmemberStates.ThisispossiblyduetofactthattheyarestillengagedinaprocessofpromotinggrowththatissubstantiallybasedonfavourablePiscalpoliciesforenterprises.Culture,economicstructure,innovationreadinessanddemographicfactorsdePinethelevelandproPileofentrepreneurialactivityforeachcountryandthereforetheproPileofCCindustry.OnthebasisoftheresearchandbasedontheEuropeInnovationscoreboardof2008,thereisnotahomogeneous,butratherahybridEuropeanmodelofinnovation.Thisisamodelthatcombinesstewardshipandentrepreneurship;experienceandinnovation;socialcohesionandrewardsforrisk‐taking.Thoughallthesetraitsarepresent,theyarenotequallydistributedacrossthecontinent.Eachcountry,ormacroregion,presentsitselfwithspeciPiccharacteristicsthatrespondtothetraditionalgeo‐economicproPile.ThesecondsetofconsiderationsrelatestothefactthatdifferentinnovationperformancesandCCIs’recognitionarenotonlyduetodifferentinnovationpoliciesframework,butalsoduetodifferentapproachestoenforcinginnovation.Certainapproachesrespondtothenecessityeithertomaintain(andpossiblytoimprove)competitiveness,whileothersaimatprovidingthenationaleconomywithcompetitivetechnologicalandorganisationalinfrastructures.Therefore,innovationpoliciesincertaincountriesaremoreorientedtowardsaddressinghumanfactorsandengageinrecognisingcreativityasdriverofinnovation(usuallyinthericherandmoreinnovativecountries).Inothercountriesinnovationpoliciesandmeasuresarefocusedontechnologyandproduction,anapproachmorecommoninthe‘catchingup’nations.Thethirdaspectoftheconsiderations,whichderivesdirectlyfromtheaboveobservations,rePlectshowcountrieshaveorganisedthemselvestorespondtoboththechallengesandopportunitiesshapedbytheCCIs.Here,thesetofcountriesthatareproposingacombinedapproach,thatisaprogrammeshapedthroughacollaborationbetweenseveralMinistriesacknowledgingthesocial,economicandculturalaspectofCCIs,representasmallsubsetofthecountries.ToestablishanationalclusteringthatissigniPicantwithcrossnationalcommonpatternsofpractice,eachindividualnationalproPilewasconsideredandclassiPiedaccordingtothelevelofevolutionwithregardstoglobaleconomicparadigms.SuchaclassiPicationallowsustoframeCCIswithinthebroadpictureofnationaleconomicandsocialperformanceandmatchitagainstitsactualcapacitytodiscloseitspotentialwithinthedynamicsofglobalcompetition.Overall,itseemsthatthereareonlyafewcountriesthathavefullyengagedinrecognisingCCIsasdriversofgrowthandinnovationinEurope.AlthoughtherecommendationsmadebytheEUCouncilconclusion171highlighttheneedtochannelnationalandEuropeanPinancialresourcestowardsnewaimsthataremoreattunedtofosteringartistictalents,andrecognisetheparticularroleofculturalandcreativeSMEsasdriversofgrowthandinnovationinEurope,thenumberofcountriesfollowingtheserecommendationsisnotexcessive172.

171EuropeanCouncil,(May2009),Conclusionsfor“CultureasaCatalystforCreativity”,2941stEducation,YouthandCulture,Councilmeeting172Austria,Finland,Denmark,Belgium,Estonia,Latvia,France,theNetherlands,SpainandtheUKarecountriesthatimplementspeciPicmeasuresinsupporttoCreativeandCulturalindustries

Overall,themostgeneralapproachtosupportingCreativeandCulturalentrepreneurshipistaxdeductionandfavourablePiscalpolicies.InEurope,CCISMEsarelargelytreatedlikeallotherSMEsandthereforesubjecttotheprioritiesandstrategiessetbyinnovationpoliciesasoutlinedabove.

2.4.1.Countryclustering

InTable6below,threebroadclustersofcountriesareidentiPied,whichpresentsometraitssuggestiveofspeciPiceconomicpatterns.

Cluster Characteristics

KnowledgeEconomy ‐ Reliantonknowledgebasedproductsandservices

‐ SoundenforcementofIPR‐ Supportentrepreneurshipandinnovation

‐ CCIsspeciPicprogrammes‐ Innovative

TraditionalEconomy Structurallystrong ‐ SoundandstronguseofknowledgebasedproductsandservicesbutnosigniPicantrewardforculturalandcreativeentrepreneurshipandrisktaking

‐ StateaidstillsigniPicantlypresent‐ GovernmentsupportonstrategicsectorCCIsareappreciated

TraditionalEconomy

StructurallyWeak ‐ StrengthsintraditionalsectorsandSMEclusters

‐ Belowaverageinnovationmeasuresandstrategies

‐ CCIsacknowledgedbutnocoordinatedstrategies

EmergingEconomies Virtuous ‐ GoodinnovationperformanceandsometimesinceptivephaseforcoordinatedactionforCCIs

‐ LackofrobustinvestmentinR&Dandinfrastructure

EmergingEconomies

LaggingBehind ‐ Startedcatchingupprocesstobecompetitive

‐ RecognitionofCCIsbutnostrategiesimplemented

Table6:Clusteringbycountrycharacteristics(Source:K2M2010)

2.4.1.1.Knowledgeeconomies

Theseareeconomies,whichcanalreadybeconsideredstructurallyreliantonknowledgebasedproductsandservices.Allaspectsofthesystem(education,productionandregulations)havealreadymadethetransitionfromtraditionaleconomytoknowledge‐basedeconomy.AllthesecountriesrelyonsoundenforcementofIPR,agoodbalancebetweenPlexibilityandsocialprotection,goodinfrastructuresandsupportforentrepreneurshipandinnovation.Governmentshavealreadyputinplaceco‐ordinatedandsynergisticmeasurestosupporttheeconomyingeneralandCCIsinparticular.These

economiesarealsopredisposedtoacceptacertainlevelofuncertaintyandnewmodelsofproductionandconsumption.Thosecountriesthatalreadyhaveaconsolidatedinnovationpotentialtendtoinvestinthosesectorsandprocessesthatwillenablethemtomaintaincompetitiveedgeandfurthershifttowardsafullrealisationofaknowledgeeconomy.Inparticulartheytendtoinvestineducationandhumanresources,butalsotopromoteknowledgetransferbetweenacademicinstitutionsandcommercialorganisations,especiallySMEs.Arelevantroleinthisregardisplayedbyincubatorsanduniversityspin‐offs,whicharesupportedbypoliciesaimedatnetworkingandsynergisticcollaborationsaswellasadministrativesimpliPication.Bywayofillustration,FinlandadoptedacombinedgovernmentalstrategybetweentheMinistryofEducationandtheMinistryofEconomics.ThemeasuresdevelopedintheStrategyforentrepreneurshipintheCreativeIndustriessectorfor2015173aresummarisedin15measuresin4areas174andisco‐ordinatedbytheAcademyforCreativeIndustries.TheMinistryofEducationproducedtheStrategyforCulturalPolicy2020withtheactionplanof2007‐2013(publicationofMinistryofEducation2009:12).175ThisdocumenthighlightstheimportanceofcultureandcreativityintheFinnishsocietyaswellasunderlinesthecontributionintheeconomy.Thefollowingitemswillbeontheagendafor2010:

• SectorspeciPicdocumentssuchasnewprogrammesincludeamuseumpolicyprogramme,acopyrightpolicydocument,andanarchitectureandculturalenvironmentprogrammetobepreparedinco‐operationwiththeMinistryoftheEnvironment

• Reframetheframeworkactonthedevelopmentofculturetoclarifythelegislation

• ConsolidatethefundingandPinancingsystembyalsointegratingwaysinwhichtheprivatefundingandsponsorshipcouldbeencouraged

• Consolidatetheknowledgeeconomy,bymonitoringandimplementingintegratedpolicies,sectorspeciPiccallingforabetterinteractionbetweenMinistriesandlocalactors

Moreover,apartfromcertainPiscalleveragesandreductionsonCCI’sfeesandincomeandtaxdeductionsforcompaniesinvestinginCCIs,theFinnishgovernmentintroducedspeciPicsectoralprogramme(forsectorssuchasTheatre,Music,VisualArts,AudiovisualandTourism)providingadviceformarketing,servicedevelopmentaswellasitoffersmentoringsupport.TheGovernmentalsoemphasisededucationandtrainingforCCIsasoneoftheprioritythroughtheprogramme“CreativeFinland”.SimilarcombinedapproachescanbefoundinDenmark.Since2007,thecountryestablishedtheCentreforCultureandExperienceEconomythatisfundedbothbytheMinistryofCultureandtheMinistryofTradeandBusinessAffairs.Thecentreactsasalinkbetweentheculturalandthebusinesssectorsinordertobuildamorecompetitiveeconomy.ThecentredoesnotaimatdirectlysupportingCCIsbutratheratmakingtheconnectionsbetweentheCCIsectorandtheothersectorsoftheeconomy,andinsodoingsupportingthegrowthofthecreativeeconomy.

2.4.1.2.Traditionaleconomies

Theseareeconomiesthatarestillheavilyreliantontraditionalproductive,economicandsocialparadigms.Theyeitherhavenotcompletedthetransitiontotheknowledgeeconomy,orarestillintheprocessofcompletingsuchatransition.TraditionalEconomiescanbefurtherclassiPiedas:

173FinlandMinistryofTradeandIndustry,(2007),DevelopmentStrategyforentrepreneurshipintheCreativeindustriessectorfor2015,http://ec.europa.eu/culture/our‐policy‐development/doc/Pi_devpmt_strategy_entrepr_crea_industries2015.pdf174Developmentofoperatingenvironment,;Growthandinternationalization;Productdevelopment(includingthefundfordemosandprototypes);andReinforcementofexpertise(includingadegreeinentrepreneurship).

175 Seehttp://www.minedu.Pi/export/sites/default/OPM/Julkaisut/2009/liitteet/opm45.pdf?lang=en

StructurallyStrong:Thesenationsrelyonsolidstructuralfundamentalsacrossallobservedfactors,butcannotbeconsideredknowledgeeconomiesastheyfailtorewardculturalandcreativeentrepreneurshipandrisk‐takingattitudes.Educationalsystemsarefeltasinadequatetopreparetoembraceentrepreneurshipandfaceglobalcompetition.Inthesecountries,thePinancialsupporttoCCIsappearstobemostlystateaidsandgrantsratherthanprivateinvestments.ThesocialsecuritysystemprivilegessecurityoverPlexibilityandthisisalsorePlectedonproductionandconsumptionpatterns.Governmentstendtosupporttheestablishedstrategicsectorssuchasautomobile,asawaytomaintaintraditionalcompetitiveadvantage.CCIsareappreciatedandculturalandcreativeentrepreneurscanbenePitfromsomespeciPicmeasures,butthesearenotnecessarilyseeninacombinedapproachbetweenMinistries.

Forexample,inAustriathereisawidearrayofpolicyinstrumentssupportingstart‐upsatbothnationalandregionallevels,rangingfromfundingtoconsultancy,withafocusthathasshiftedfromsupportingsingleenterprisestoestablishingnetworksandusingsynergiesbetweenpublicinstitutions,enterprisesandeducation.Noteworthyaretheinitiativesaimedatprovidingcomprehensivesupporttoentrepreneurship.OneexampleisDeparturewhichpromotesknowledgeexchange(seeAppendix1,BestCase18)Theimpulseprogramme'Creativeeconomy'isaninitiativethatofferstraining,education,Pinancialsupportandawarenessprogrammes.Thematically,theprogrammeissplitupintodesign,multimediaandmusic.IntellectualpropertyrightsarestronglyenforcedinAustria.ComparingAustria’sEISscoretotheEUaverage,showsthatthecountryperformswellatknowledgecreationandintellectualproperty,whichrePlectstheratherhighR&Dexpendituresaswellastheuseofthelegalsystemtoprotectinnovation.InFrance,thegovernmenthaslongrecognisedtheimportanceofCCIsandtheroleofCCISMEs.OntopofthesubsidiesprovidedbyregionalandlocalauthoritiesforthedevelopmentofCCIs,theMinistryofCultureandtheMinistryofEconomyandFinancecreatedtheIFCIC(SeeAppendix1,bestcase19),aPinancialinstrumenttofacilitateaccesstoPinanceforCCIs.Intermsofsocialsecurity,CCentrepreneurshavetherighttopensionsupportbutnottounemploymentbenePitinthePirstyear.Thismeansthatthestart‐upconditionsarelow.However,afterhavingdoneacertainamountofwork,CCentrepreneurshavetherighttosocialsecuritybenePits.Forfreelancers,theunemploymentbenePitsareavailablefromthesecondyear.TherearespeciPicpensionschemesfortheartistsaswell.Francesubsidisesculturalorganisationsandoffersgrantsandscholarshipsforculturalprojectsanddirectsupporttotheartists.InSpain,ICOprovidesagoodexampleofhowsupportcanbegivenforSMEstointernationalise(seeAppendix1,BestCase20).AnothersuccessfulexampleofsupporttoCCIsinthestructurallystrongtraditionaleconomiescanbefoundinBelgium’ssectorspeciPictaxshelterforthePilmsector176.ThemechanismallowsacompanyprovidingPinancialbackingforaudiovisualproductionstobenePitfromexemptionofanyretainedtaxableproPitsworthupto150%ofthesums

DepartureDepartureisamunicipalorganisationthataimsatPinanciallysupportingCCIsinterestedingrowingbyemphasisingknowledgeexchangeandco‐operationbetweenCCIsandbusinessesandprovidinganextensivenetworkaswellasresearchresources.(SeeAppendix1,BestCase18)

IFCICIFCICisastate‐supportedinstitutionaimedatfacilitatingbankPinancingfortheCCIs.ItguaranteesthebankloaninvestedinCCIsaswellasactingasamarketanalystandCCconsultanttothebanks.(SeeAppendix1,BestCase19)

ICOICOisapubliccreditinstitutionthatPinancesCCIsservingPinancialneedsthattheprivatesectordoesnotcover.ItalsosupportstheinternationalisationofSpanishcompanies.(SeeAppendix1,BestCase20)

176Seehttp://www.locationPlanders.be

actuallypaid.Theupperlimitoninvestmentis50%ofacompany’sretainedproPits,uptoaceilingof€500,000.Thisway,thelegislatorensureslimitedPinancialrisksfortheinvestorswhilesupportingaspeciPicsectoroftheCCIs.TheBelgiumMinistryofFinanceestimatesthatfrom2003to2008thesystemchannelledover€220millionintoPilmsandotheraudiovisualworks,providingmorethan€60millionin2008alone.

StructurallyWeak:ThesecountriespresentsomestrengthintraditionalsectorsandSMEclusters,butshowaverageorbelowaverageperformanceinenforcingstructuralinnovationmeasuresandstrategies.CCIs,evenwhenacknowledged,appearnottobeaddressedcoherentlyandsystematicallywithoutspeciPicco‐ordinatedactionsbetweennational,localandacademicauthorities.CCentrepreneurscanrelyonthealreadyestablishedmeasurestargetingSMEs,butcanalsosufferfromtheinefPicienciesofeconomicandsocialsystems.

Forexample,inSpain,CCIsarenowgettingrecognition inthenational statisticsandareincorporated in the plan for the Government (2008‐2012) through the creation of aDirectorateGeneralforCulturalIndustriesandPolicieswhichintroducesseveralmeasuressuchas:

• Thelaunchofanewlineofcreditfortheculturalindustries,incollaborationwiththeOfPicialCreditInstitute(ICO–SeeAppendix1,BestCase20),withsubsidisedratestosupportthecreationofnewbusinesses

• AcombinedapproachtobedesignedbytheMinistryofCulture,MinistryofForeignAffairsandMinistryofEconomyandFinance

• AidstosubsidisethecostofguaranteesthatCCIsneedinordertoaccessexternalfunding

• Capitalgrantstopromotethemodernisation,innovationandtechnologicaladaptationofCCISand

• ReimbursableaidstoPinancetheimprovementofmanagerialcapacitiesthroughtrainingandinternationalisationofculturalcompanies

Aspartofthesocialsecuritysystem,theCCIandfreelancersdonothavespeciPicprovisionsandhavethesamerightsandobligationsofSMEsingeneral,althoughtherearespeciPicbenePitsforlow‐incomeartists.Intermsofpensionschemes,thereisaspeciPicearlyretirementfordancers.Inadditiontothis,copyrightsocietieshavetosetupawelfareandsupportservicesystemforauthors,performingartistsandculturalworkers.Thissystemhastobefundedby20%fromtheIPRrevenues.

2.4.1.3.Emergingeconomies

Theseeconomieshaveundertakensubstantialeffortstobecomeknowledge‐basedeconomies.TheyarealmostentirelyfocusedonprovidingthemselveswithefPicientinfrastructuresandcatchingupintermsofinnovationandR&D.Byandlarge,theyallperformwellintermsofeducation,Plexibilityandfavourabletaxationregimesforentrepreneurs.EmergingEconomiescanalsobefurtherclassiPiedas:

Virtuous:Someofthesecountriesperformaswell,ifnotbetterthansomeofthetraditionaleconomiesintermsofinnovationperformancesandmeasures.ThemostvirtuoushavealreadyspeciPicmeasuresforCCIsandco‐ordinatedactionsbetweeninstitutions,buttheseeffortsremainmoretheoreticalthanpractical,asthelackofrobustR&Dexploitationandinfrastructureforinnovationishinderingdevelopment.

Bywayofexample,EstoniaisthecountrywiththehighestrateofimprovementininnovationofanycountryinEuropeasaresultofstrongimprovementsinbusinessR&DexpendituresandNon‐R&Dinnovationexpenditures177.InEstonia,theword“culturalandcreativeindustries”cametotheforefrontin2004,andin2006,theMinistryofCulturesetupanewDepartmentofDevelopment.TheStateofferssomeSocialSecurityprovisionsforCCIs:theEstonianGovernmentintroducedunemploymentforartistswithdifPicultiesin

177EuropeanInnovationScoreboard,(Jan2009),EuropeanInnovationScoreboard2008:Comparativeanalysisofinnovationperformance,ProInnoMetrics

earningtheirincome,althoughtherearenospeciPicpensionsupplementforartistsintheculturalandcreativesector.

LaggingBehind:Thesecountrieshavejuststartedthecatchingupprocessofgeneratingtheconditionswherebytheycanbecompetitive.

Thesenationalclustersmustnotbeseenaswalledgardens.Therearecontinentaltraitsthatarepresentinallcountriesandeachcountrypresentsacombinationofallthesecharacteristics.PointsofexcellencecanbeidentiPiedineachcountry,andtheoutlinedproPilescannotunequivocallyidentifyeachcountryofthecluster,butshouldratherbeintendedasasumofthetraitsandtrendsexpressedbyeachindividualcountry.Thepresentedclusteringshouldallowforconsiderationstoemergeandopennewperspectivesforfurtherresearch.Moreover,theseclustersdonotintegratethedifferentregionalandmunicipalinitiativesthatsometimesdonotcorrespondtothebiggernationalprogrammes.Table7.belowgivesanoverviewonthemostimportantregionsforculturalandcreativeemploymentclusterswhichdonotnecessarilymatchtheclustering.

Table7:Europe’stopregionsforCCIemploymentclusters.178(Source:EuropeanClusterObservatory)179

Moreover,therangeofemploymentdoesnotequalanevengrowthrateontheregionalbasis,assomeoftheregionsexperiencingthehighestgrowthintheCCIsdonotequatetobigregionsbutmoresmallandmiddle‐sizedregions.AregionalperspectiveonCCIsand

178LQisanindicatorofCCIemploymentrelativetothetotalemploymentoftheregion,whereLQ>1indicatesanover‐representationofCCIemployment179EuropeanClusterObservatory,(March2010),PrioritySectorReport:CulturalandCreativeIndustries,Stockholm:EuropeanClusterObservatory,p.5.

CCIpolicyisthusneeded,as“regionalisedpatternsofgrowthandchangeseemtobeastrongfeatureoftheculturalandcreativeindustries.”180ThisisalsorePlectedinthedifferentregionalconcentrationofCCIbysector(seeAppendix2.11).

2.5.Supportingculturalandcreativeentrepreneurship

2.5.1.Entrepreneuriallifecycleframework

InordertobestsupporttheCCIs,asimplelifecycleframework(Fig.11.)wasdevelopedforthisstudyaimingatprovidingpointersforblendingnewmodelsofcollaborativeandcompetitiveadvantageforCCISMEs.InviewofthecharacteristicsnotedearlierandthedifPicultyinPindingpathstogrowth,theframeworksoughttodeterminethepointswheredifferenttypesofsupportmightbemosteffectivelyemployedatthedifferentlevelsandphasesoftheentrepreneurialactivity,andinthisway,toexaminehowthemosteffectivepathstogrowthforCCISMEscanbeembeddedwithinInnovation,SME,EntrepreneurshipandCulturalPolicies.Theframeworkintroducedaseparationbetweensupportingtheentrepreneurandsupportingtheenterprise.Often,bothentitiesareconfusedinpolicyandliteratureandthisleadstoanunderestimationofthecomplexdifferentinteractionsentailedineachone.Theentrepreneurisapersonwithcertainmotivationsandneeds,whileanenterpriseisnot.Adistinctionbetweenthetwomeansthatsupportforboththeindividualandtheenterprisecanbedesignedandimplementedwithappropriatepolicyinitiatives.Howcanwebestsupportthepersonsothattheycandeveloptheircreativetalentthatcaninturnbeadriverfortheirentrepreneurialdevelopmentandforthedevelopmentoftheireconomicactivity?

Suppor&ngtheEntrepreneurialLifecycleSuppor&ngtheEntrepreneurialLifecycleSuppor&ngtheEntrepreneurialLifecycleSuppor&ngtheEntrepreneurialLifecycleSuppor&ngtheEntrepreneurialLifecycleSuppor&ngtheEntrepreneurialLifecycle

Phase1Preparingthe

ground

Phase2Start‐Up

Phase3Build‐Up

Phase4Build‐OutPhase4Build‐Out

Phase5Connec&ng

EntrepreneursupportEntrepreneursupportEntrepreneursupportEntrepreneursupportEntrepreneursupportEntrepreneursupport

EnterprisesupportEnterprisesupportEnterprisesupportEnterprisesupportEnterprisesupport

MunicipalsupportMunicipalsupportMunicipalsupport

RegionalsupportRegionalsupportRegionalsupportRegionalsupportRegionalsupportRegionalsupport

Na&onalsupportNa&onalsupportNa&onalsupportNa&onalsupportNa&onalsupport

SectoralsupportSectoralsupportSectoralsupportSectoralsupportSectoralsupport

EuropeansupportEuropeansupport

Figure11:SimplelifecycleframeworkforsupportingtheCCentrepreneurandenterprise

Thisseparationbetweentheenterpriseandtheentrepreneurwasconsideredusefulformostoftherespondentsasthepathtobecominganentrepreneurisblendedwiththegrowthoftheenterprise,whiletheyaretwodistinctunitsthatbothneedsupport.Thisseparationwasalsousefulforpolicymakersasitmadeexplicitthepossiblewaystobridgebetweenthecreativepersonsandthebusinessandenterprise,andclariPiedbetweentheadvantagesanddisadvantagesinthetypesofsupport.Inviewofsupportingentrepreneurshipintheculturalandcreativesectors,mostoftherespondentsagreedthatthesupporttotheentrepreneurwasmostlyneededintheOirst

180EuropeanClusterObservatory,(March2010),op.cit.,p.12.

phasesofthelifecycle;whilefromphase3ontophase5,theenterprisewasthemaintargetforthesupport.Therespondentsagreedthattherecouldbesomeoverlapandinter‐combinationofsupportinsomeofthelifecyclefortheentrepreneurandtheenterprise.

2.5.2.Phases

OnecanidentifyPivephaseswithintheentrepreneuriallifecycle:PhaseOne:Preparingtheground

Inthisphase,theinitialunderstandingoflearningandpreparingfortheentrepreneurialpracticetakesplace.Oftenthisisdoneduringtheprofessionalandeducationtraining,whencreativepeopleprepareforaprofessionalexistenceaftergraduation.PhaseTwo:StartUp

Inthisphase,thePirstintegrationofpracticalexperienceandintegrationoflearningandentrepreneurialpracticetakesplace.Thereisacombinationofnovelexperiencesandadaptablebehaviourneededinordertogettheenterprisestarted.PhaseThree:BuildUp

Inthebuild‐upphase,theinitialenterprisemovestoitsPirstlevelofstable,sustainableexistence.Thenoveltyofthebeginningischangedintoadaptablebehaviour,basedonpracticalcriteriaandusability.Extrastrengtheningofcompetenciestotransform‘discovery’into‘exploitation’iscrucialinthisphase.PhaseFour:BuildOut

Inthisphase,theenterpriseismaturingintoamorestable,structuralexistence.Itisdeepeningitsstructuralsustainabilityandimprovingitsmarketposition.PhaseFive:Connectingnetworks

ThelastphaseidentiPiedisdealingwithmaturegrowthwithinastronglynetworkedenvironment.SustainablepathstoacontinuousenterprisegrowthhavebeenidentiPiedandimplemented.

Thissimpleframeworkwasintendedtoprovideindications,ratherthanstaticrecommendations,forsupportinggrowthofCCIsthroughanincreasedunderstandingofthemultiplecomponentsatstakebydividingtheprocessesandthelayersofexistinglevelsofsupport,andmakingadifferencebetweenthepersonandtheorganisation.Theapprenticeentrepreneurswillmostlyneedsupportasindividualsinordertobeabletotryouttheirentrepreneurialactivityinanorganisedway.Thedistinctionalsoimplicitlyallowsonetointegratethedifferentmotivationsoftheentrepreneur:whattypeofentrepreneurorenterprisetheywanttodevelop,asthesupportisnotsolelyorientedtowardsgrowingtheorganisation.

2.5.2.1.Linearity,motivationandgrowth

Thelinearityandthetop‐downapproachadoptedinthisframework,althoughindicativeofaprocess,doesnotofcoursecorrespondtothedynamismandrealityoftheculturalandcreativesector.Beinghighlyheterogeneous,severalpathsforsuccessfulCCIgrowthorsustainableexistencecanbeimagined,representingforexampleaconcentricframework.However,forthepurposeofclarity,thedifferentcomponentswereplacedinalinearframework,althoughtheidealshapewouldbeathreedimensionalformwithoverlappinglayerswhichmightalsoincludedesignphases(novelty,adaptability,usability,replicabilityandscalability)andtechnologyimplementationphases(create,catalyse,connect).Indeed,theterm‘entrepreneuriallifecycle’canonlypartiallyrePlectthewaysinwhichCCISMEsareconstantlyadaptingtotheirenvironmentandemergingdemands:

“Inthecreativeindustriesyouhavedevelopmentstypicallyrunninginparallel.Whileacompanyisstartingupandgrowing,itnotonlylearnsinternallyorexpandsitshorizonorseesnewthingsbyexperienceinternally,butalsoexternally.Atthesametimethey’reonasteeplearningcurveasfarastheir

professionalentrepreneuriallifeisconcernedandtheygrowinsizeandbusinesstypically.Youhaveanumberofthingsgoingparallel”.(CCNationalSupport,Structurallystrongtraditionaleconomies)

Lookingatthelinearityofthisapproach,onecriticismoftheframeworkwastheunderlyingassumptionoftheCCIentrepreneur’sdesiretogrow.However,asexplainedearlier,aCCIentrepreneuroftencombinesboththecultural‐creativedriveandtheeconomic‐entrepreneurialdrive.AccordingtoHubertetal,bycombiningbothacultural/creativeandanentrepreneurialpositioning,onecanPindfourdifferentapproachesinthepersonalorientationoftheCCentrepreneur181asillustratedinTable8.below.Culturalandcreativeentrepreneurspositionthemselvesinfourdifferentsetsofideals:entrepreneurialsuccess,professionalachievement,artcreationandpursuingaprofessionalcareer.ThesefourpersonalpreferentialmotivationscanbeidentiPied,baseduponPivedimensions:personalaspirations,identiPicationfocus,thedivisionbetweenworkandpersonallife,typeofoccupation(employer,manager,freelancer),thedifferentindustries,andadditionaltypicalcharacteristics.

Mainmo&va&on: Entrepreneurial

success

Professional

achievement

Artcrea&on Professionalcareer

Domina&ng

occupa&onal

aspira&on

Successfirst,than

autonomy

Balancebetween

success,autonomy

andsecurity

Autonomyand

Ar8s8cRecogni8on,

Aesthe8cCriteria

Security.Reciprocity.

Affilia8onof

autonomyand

success

Domina&ng

iden&fica&onfocus

Personalenterprise ProfessionalStatus

moreimportantthan

occupa8onstatus

ArtCommuni8es,the

ArtScene

Employee

Workandlive Professionalac8vi8es

inthecentre;private

ac8vi8esmarginal

Professionalac8vi8es

moreimportantthan

privatelife,but

dependingonactual

topics

aspartofpersonal

choices.Refusalto

makedis8nc8on

betweenprofessional

andprivatelife

equallyimportant.

Separa8onof

Professionaland

Privateac8vi8es

Typeofoccupa&on Employer,manager Freelancer,

Employee,Rarely

Employer

Freelancer.Rarely

employeeor

employer

Employeeor

Freelancer

Industriesand

profession

Allsectors,inthe

Crea8veEconomy

absent

Technical

professions,

Architecture,Sound

technician,Camera

man,etc

Artprofessions.

Design,Film,

Architecture,Visual

IT,Adver8sing,Sales

Professions

Addi&onaltypical

characteris&cs

Predominantlymen Mostlypersonswith

longprofessional

experience

Separa8onof‘bread‐

earningac8vi8es’and

ar8s8cdrive

Majorityofyoung

people

Table8:Personalmotivationinentrepreneurship(Source:Eichmann,Hetal,2007)182

DependingontheCCIentrepreneur’spersonalmotivations,anysupportwillhavetobeadaptedsothat,forexample,localsupportwillbeavailableforaCCentrepreneurwhoismoredrivenbythecultural/creativecontentofitsproducts/services,whiletheEUandregionallevelscouldbemoresupportiveofCCIswishingtointernationalisetheirmarket.

181Ibid.

182 EichmannH.,Flecker,J.Reidl,S.,(2007),EsistjaeinefreiesGewerbe.‘ArbeiteninderWienerKreativwirtschaft,Vienna:FORBA–Forschungs‐undBeratungsstelleArbeitswelt

ManyrespondentshighlightedtheneedtodifferentiatebetweenthesubsidisedandnonsubsidisedsectorsoftheCCIs.Thedifferentsectorcharacteristicshavebeenelaboratedaboveinsection2.3.TheframeworkdealswithCCIsingeneral,thoughthecharacteristicspreviouslystatedshouldbetakenintoaccountaccordingtothegeneralstructureofthesector.

2.5.3.ApproachestosupportingentrepreneurshipinCCI

Thehorizontallayersoftheframeworkrepresentthedifferentlevelsofsupportasthemultiplepoliciesforeachlevelmaynotnecessarilybeknownorvisibletooneanother.Thereisindeedoftenalackofclaritybetweenthedifferentlayersofsupport,makingthesupportmorecomplexforeachtargetgroup.Thetypeofsupportprovidedmay,forexample,beacombinationofmunicipaltaxbreaksandfundsaswellaslargerECfundedprojectsornationalsectoralfunds.ThisisoftenverydifPicultfortheCCIentrepreneurtounderstand.Moreover,thereisamisunderstandingonbothsides:Pinancialintermediariesandfundingagenciesusuallyhaverigidandrisk‐freeproceduresthatarealmostincompatiblewithCCIsthatare,asnoted,basedontherewardoftheirintangibleassets.Ontheotherhand,CCIsmayhaveacertainmistrusttowardsthoseprogrammesforfearofbeingovertakenbycommercialinterestsandtheymaynotnecessarilylookforthefundingandsupport,eitheroutofstubbornnessorlackofinformationorcompetenciestodealwiththeprocedures.Duetothecombinedrequirementofentrepreneurialactivityandthecultural/creativeone,theCCIentrepreneurmaylackthetime,andmaybeunwillingtolookforinformationamongstthemultitudeofsupportprovided.ThereisthusamismatchbetweentherealneedsoftheCCentrepreneurandthesupportprovided.ThenecessitytobringbothsidescloserbymakingthesupportmoretargetedtotheneedsoftheCCentrepreneurisessential.ThereisadebatebetweentheneedtotargetthesupporttoCCIsortomainstreamCCIswithinexistingschemes.ThequestionofincludingthespeciPicitiesofCCIs(intangibleassets,size,productionprocesses)withinexistingdePinitionsmayhelptobroadenthetypeofsupportthattheCCIscanget.Forexample,openingthedePinitionofinnovationtosoftinnovation,tointangibleassets,bringingtalentscoutingaspartofR&D,mayincreasethepossibilitiesofsupportandfundingintheseareas.However,lookingattheexistingsupportintheChamberofCommerceorinsimilarunit,theCCIsdonottakeadvantageofthesupportavailable,comparedtowhenthereisaspeciPictargetedsupport.ForexampleinBelgium,CultuurInvestisainvestmentfundforCCIsandtheyaremorewellknownthantheotherprogrammesreachingallSMEs.TheCCIsdonotknowordonotdealwiththeseoverallstructuressuchasBusinessSMEsCentresforlackofknowledge,stubbornness,distrustandlackoftime.

“WehavelargearrayofsupportprogrammefortheSMEsingeneral,butmanyoftheCCIsdon’tapplyfortheseprogrammes,ordon’thaveaccesstoordon’tNindtheaccesstothoseprogrammesthatareforallSMEs.Thesesupportsareforthemomenttheleasteffective.AndyoucanseeadifferencebetweentheusebyCCIsofthe“generalSMEs”supportandtheonesthataretailormadetotheneedsoftheCCIs”.(RegionalCulturalMinistry,StructurallyStrongTraditionalEconomy)

ThispushesfortheelaborationoftargetedpoliciesfortheCCIs,inordertoovercomesuchdisparityinsupportprovision.MoredemandledprogrammesandprogrammesthatOitthespeciOicitiesoftheCCIsneedtobeelaborated.ThedifferentlayersofsupportprovisionwillbefurtherelaboratedinthefollowingchaptersaccordingtothevariedissuesfacedbyCCIenterprises.

2.6.Concludingremarks

HavingconsideredthecharacteristicsoftheCCIs,thesectoralcharacteristicsandthefactorsthatshapethecontextsurroundingtheCCIs(determinantsandenvironmentalfactors),thischapterhasdescribedthegeneralframeworkusedinordertobetterunderstandthetargetedissuesthatneedfurtherattentionforpolicymakerstodevelopsupportingschemesforentrepreneurshipthatPittheneedsofCCIs.InadditiontotheHKU(2010),TheEntrepreneurialDimensionoftheCulturalandCreativeIndustries 54

factorsalreadyoutlinedinthischapter,itisworthreiteratingthecorecompetenciesneededwithintheentrepreneuriallifecycle:

1.VisiondevelopmentTooperateinacomplex,highturbulenceenvironmentinthecreativeeconomy,andtorealiseastrategicpositionforthelongrun,itisnecessarythatculturalandcreativeentrepreneursareabletodevelopavisionontheirowncreativeOirm.Mostoftheentrepreneurshaveaone‐yearscopeontheirculturalandcreativebusiness.Forasustainablegrowthanddevelopmentreasonsitwouldbeadvisabletocreateamorelongitudinalperspective.2.Marketpositioning

Withineachphase,marketpositionsarecrucialfortheexistenceofculturalandcreativeOirms.Inthebeginningonecanstartoffbyapositioningbasedononeproductorservice,andintheperiodafterthepioneeringphasetherewillcomeadifferentiationwithavarietyofproduct‐marketcombinationsinthematuringstage.Thiscore‐competence–scanningone'smarketposition–isneededinallphasesoftheentrepreneurialdevelopment.3.Returnoncreativitycompetencies

AccesstoPinanceandtheskillstodealwiththePinancialsideofCCISMEsisagenericproblem.183FromsimpletocomplexPinancialsupport,theculturalandcreativeentrepreneurisresponsibleforhisorherownbusinessmodelandthePinancialsources:bankloans,guaranteedloansbygovernmentalornon‐proPitagencies,crowd‐sourcing,grantsandsubsidies.Businessmodelsarefocusedmainlyoncomponentsofvaluepropositions,relationshipswithvisitorsandclients,thecoststructureandincome/proPit.184Duetotheinvolvementofculturalvalues,businessmodellingbasedonCCIsisanessentialpartofthecompetencies.4.Communicationskills

Culturalandcreativeentrepreneurscommunicatewithcolleagues,visitors,clients,experts,Pinanciers,governmentalrepresentatives,grantofPicersandtrainers.TooptimisethequalityoftheircommunicationwithinastrongnormativePield–ofcrucialimportancewithintheCCIs‐theseentrepreneurshavetohavegoodcommunicationskills,bothoralandwritten,applicablewithinacontextofdiversity.

5.NetworkingandteamworkNetworkingisalmosta‘secondnature’withintheCCIs.Formanycreativepeoplenetworkingbeginsduringtheireducationandtakesonamoreprofessionalstructureintheworkplace.Networking(onapersonal,functionalandmulti‐layeredinteractionlevels)isaqualitythatformstheraison‐d'etreofacreativePirm.TeamworkisaqualitythatisstronglyconnectedwiththeCCIs.Coreissuesintheculturalexistencearetheroleoftheleadership‐Pigure,teamdevelopmentwithinprojectsandprojectresponsibilities.185

Thenextchapterlooksatthe‘determinantsofculturalandcreativeentrepreneurship’,basedonthesixthemesofdeterminantsofentrepreneurshipelaboratedabovebutadaptedtoencompasstheneedsoftheCCIs.ThesethemesareaccesstoPinance,accesstomarket,regulatorymeasuresfocusingonIPR,entrepreneurshiptrainingandeducation,accesstoinnovation(R&D)andcollaborationandclusters.

183 Hagoort,G&KuiperG:ReturnonCreativity:insearchforaformula.In:HagoortG&Kooyman,R(Ed):CreativeIndustries;ColourfulFabricinmultipledimensions.Utrecht2009

184 Osterwalder,Alexander:OnBusinessModelInnovation.Asretrieved12April2010fromhttp://alexosterwalder.com185 Maarse,D.,(2009),“ProjectBasedLearning:thetemperatureofourbathwater”inHagoortG.andKooyman,R.,(Ed.),(2009),CreativeIndustries,ColourfulFabricinMultipleDimensions,Utrecht:HogeschoolvoordeKunstenUtrecht

Chapter3:MainThematicOutcomes

ItisclearthatCCIshavespeciPiccharacteristicsthatneedtobetakenintoaccountwhenlookingatculturalandcreativeentrepreneurship.Moreover,CCIsdonotworkinclosedenvironments;rathertheyarestronglyinPluencedbytheirregionalandnationalenvironments,aswellasthechangesduetodigitalconvergence.Havinglookedatthedeterminantsofentrepreneurship,thissectionexaminesthekeythemesthatdirectlyinPluencethedevelopmentofentrepreneurshipinCCIsinEurope.ThesekeythematicoutcomesfromthestudyprovideananalysisandoverviewoftheareaandformthebasisfortherecommendationsinChapter4.FromtheinterviewsconductedforthisstudyacrossEurope,oneofthegeneralPindingsthatquicklyemergedwastheoverridingneedtogathermoreconsistentdataregardingCCIsonaEuropeanlevel.NationalstatisticsarenothomogenisedandthismeansthatanycomparisonisPlawed.AtEuropeanlevel,Eurostat,thestatisticalofPiceoftheEuropeanUnion,iscurrentlyworkingwithagroupofMemberStatesonanupdateoftheframeworkforculturalstatisticssetupin2000aswellasondePiningthescopeofCCIs.Atamoremodestlevel,theCreativeGrowthprojectisagoodexampleofanefforttorebalancethisbutitremainslimitedtocertaincities.186Thischapterwilllookatthemainthemesthatemergedfromtheresearchundertakencorrespondingtothedeterminantsofentrepreneurship,namely:accesstoPinance,accesstomarket,IPR,educationandtraining,innovationandconnectivecollaborationandclustering.

3.1AccesstoOinance

“ThekeyissueisnottheavailabilityofNinanceorbusinessdevelopmentservices;ratheritistheaccessandusemadeofthisfundingandsupportbycreativebusinesses.SpeciNically,itisthelowpropensityandabilityofmanycreativebusinessestomakefulluseoftheavailableNinance,adviceandexpertisethatinhibitsincreasedproductivityandgrowthinthecreativeindustries”.187

PerhapsthegreatestobstaclefacedbyentrepreneursandenterprisesintheCCIsishowtolocatethefundstoPinancetheirendeavours.Inthestudy’sonlinesurvey,accesstoOinancewasdeemedby33.8%oftherespondentstobethemostimportantbusinessrelatedchallengewhenstartingacompany.ThisobservationwasconPirmedbythesectoralexpertswho,whenaskedaboutthemostimportanttransversalissuesfacedintheirownsectors,prioritisedaccesstoPinance(37.9%).Indeed,manystudiesonentrepreneurshiphighlightcapitalasoneofthemostcriticalfactorsforsuccess.188TheperceivedlackofPinancefortheCCIswasfurtherexacerbatedbytheeffectoftherecentPinancialcrisis,fromwhich39%oftheCCIsexpectedadecreasefrom5to10%intheirturnover,asopposedto18%believinginastableturnover(‐or+2.5%)ascanbeseeninFig.12.below.ArecentsurveybySICAconOirmedthistrendasalsoaffectingpublicfundsforculturalactivities.Forexample,Portugal’sculturalsectorisheavilyunderpressureastheMinistryofCultureisevenconsideringcuttingfundsoninternationalrepresentationandthemanyprojectsfundedfrombankloansarenolongeravailable.Latviaisthecountrythathasexperiencedthemostcutsinitsnationalgovernmentbudgetwithadecreaseof67%inthePilmsector’sbudgetand40%intheartsandliteraturesector.‘Precursors’inthecreativeeconomyarenotsparedeither,withSwedenshiftingitsfundingtoregionalgovernment,leadingtoadisparitybetweensmallerandbiggercities.TheUKhaswitnessedseverecutsfortheArtsCouncil(20millionEuros)thatwillbemaintainedsince

186Seehttp://www.creative‐growth.eu187 DCMS/CreativeEconomyProgramme(2006),BusinessSupportandAccesstoFinanceGroup,London:DepartmentofCulture,MediaandSport188ECGreenPaper,(2003),op.cit.,p.18.

fundsforculturearemostlyreservedfortheOlympicsin2012.189

Question:Whatwastheeffectoftherecentcrisisonyourturnoverfor2009?

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Figure12:EffectoftherecentOinancialcrisison2009turnover(Source:Eurokleis2010,onlinesurvey)

CapitalandaccesstoPinanceplayanimportantroleduringallphasesoftheentrepreneuriallifecycleandcandirectlyaffecthowwellabusinessperforms.Indeed,inthestudy’sonlinesurvey,52.2%oftheCCIshighlightedthestartingupphaseasthemostimportantphaseforPinancialsupport.Fromtheonlinesurvey(Fig.13.),56%oftheCCIs(78%ofwhichconsistedofproOitorganisations)reliedonselfOinanceastheirmainOinancialsource,asopposedto20%whichweremainlysupportedthroughpublicgrants.

Question:InthelastNinancialyear(2008),whichwasthemostimportantNinancingsource?

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Figure13:MostimportantOinancesource20072008(Source:Eurokleis2010onlinesurvey)

ItisalsoclearthatCCISMEshaveashorttermspanforOinancialplanning.Theonlinequestionnairerevealedthat22%oftheCCIshadnoPinancialandeconomicplanningwhile53%hadaoneyearforecast,ascanbeseeninFig.14.Only4%hadaOinancialforecastofupto5years.Moreover,comingbacktothecharacteristicsofoutsourcingmechanismsandthenecessitytocombinetheadministrativetaskswiththecreativeprocess,theonlinesurveyshowed

189 SICA,DutchCenterforInternationalCulturalActivities,(June2010),TheEconomicCrisisandtheProspectsforArtsandCultureinEurope,p.4.

that75%ofthesecompanieselaboratedtheforecastthemselvesasopposedto20%thatusedaprofessionalconsultancyservice.Question:DoesyourorganisationmakeanyNinancialandeconomicplanning(budgetandupdated

businessplan)?

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Figure14:FinancialandEconomicplanning(Budgetandbusinessplan)forCCIs(Source:Eurokleis2010,onlinesurvey)

3.1.1.SizerelatedconstraintsforOinance

InviewoftheEUSmallBusinessActof2008,smallandmedium sizedenterprisesandfreelancersplayacentralroleintheEuropeaneconomy,especiallyintheirroleasinnovators.190However,theexistenceofanequitygap–theinabilityofsmallPirmstoaccessthePinancetheyneedtogrow–hasbeenalong‐termchallengeforgovernmentsandisamajorconsiderationinEurope’sstrategyforitsinnovativefuture.191Successiveadministrationshaveacknowledgedtheimportanceoftheventurecapitalindustryandimplementedvariousinitiativesinsupportofearly‐stageventurecapitalinvestment,includingseedandstart‐upfunding,tosupportSMEs,andespeciallyCCISMEs.192

OnecharacteristicthatsetsaparttheCCIsand,inmanywaysimpedestheiraccesstoPinance,isthedependencyonintangibleassets.Thecreativeentrepreneurtraditionallycombinestangibleinformationandcommunicationtechnologywithintangibleinformationproducts:culturalqualitiesand‘mediacontent’.However,intangibleassetssuchasnovelty,softinnovation,copyrightandcreativityareoftennotreOlectedinaccounts,althoughthisisslowlychanging.193FinancialinstitutionssuchasbanksoftenfailtosufOicientlyrecognisetheireconomicvalue.194Fig.15.belowillustratesthemainobstaclesforCCIstoaccessPinance,wheretheshareofriskaversionfromPinancialinstitutionsandthedifPicultyingettinggrantsaccountsforapproximately30%oftheresponses.Forthisreason,aloansupportingCCIactivitiesisconsideredriskyandisnotalwaysendorsed.WhileguaranteefundssuchasthoseelaboratedintheNetherlands(KunstenZaken)orinFlanders(CultuurInvest),facilitatetheattractionofsuchfunds,thereremainsastrongneedforgreaterknowledgeexchangebetweentheOinancialsectorandstakeholdersintheCCIs,assectoralexpertshaveindicated.

190EuropeanCouncilConclusions,(December2008),ThinkSmallFirst‐ASmallBusinessActforEurope,doc16788/08191EuropeanCouncilConclusions,(May2010),ConclusionsonCreatinganInnovativeEurope,3016thCompetitivenessCouncilMeeting,26thMay2010192Higgs,P.andCunningham,S.,(2007)Australia’sCreativeEconomy:MappingMethodologies.TechnicalReport.’Brisbane:CentreofExcellenceinCreativeIndustriesandInnovation.193OECDisdevelopinganinnovationstrategytoprovidepolicymakerswithtoolstoimprovetheirowninnovationstrategiesbasedonnewinnovationmeasurementswhichwouldtakeintoconsiderationsoftinnovationandisalsoexpectedtointegratethevalueofuser‐innovation.SeeNationalEndowmentforScience,TechnologyandtheArts,(April2010a),MeasuringuserinnovationintheUK‐Theimportanceofproductcreationbyusers,London:NESTA194EuropeanCommissionGreenPaper,(2003),op.cit.,p.12.

Question:WhatisthemainobstacleforyourorganisationtoaccessNinance?

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Figure15:MainobstaclesforCCIstoaccessOinance(Source:Eurokleis2010,onlinesurvey)

3.1.2.Subsidyversusmarketcompanies

Asseenalready,theCCIscanbebroadlydividedintotwocategories:thosethataremorecommerciallyorientedandthosethatarepubliclyfunded.WhilethisdistinctionisidentiPied,therealityisoftennotasexplicitbecause“ThepublicandtheprivatesectorsareintegratedviatheCCIthroughsponsorshipanddonations,aswellaseffectivecross‐subsidies”.195Inanycase,themaindifferencesillustratethewaysinwhichbusinessesarePinanciallysupported.WhilecommercialbusinesseswithintheCCIsaresubjecttovariationsinconsumerdemand,SMEsthatarepubliclyfunded,conversely,willoftenbesteeredbytheconstantlyshiftingprioritiesofpublicresources.ThetypesofPinancialsupportmadeavailabletoCCISMEscorrespondtothedivisionmadebetweentheculturalandthecreativesectors.Manyculturalservices,aspartoftheCCIs,arealsopublicservicesandaresupportedassuch.Taxationmeasures,inparticular,playanimportantrolefortheseactivities.Thoughpolicymakersincreasinglyturntheirattentiontonewmethodsoffunding,suchaspublic‐privatepartnerships,culturalservicescontinuetobeprimarilyfundedbytheState.196Theseservices,suchasactivitiesintheperformingartsandtheaudiovisualsectorsaremorereadilygrantedfundingfromnationalgovernmentswhilethecreativeindustries,suchasdesignandgaming,areexpectedtobemorecommercialinnature,receivingfundingthroughentrepreneurialactivitiesandprivateequityPinanceratherthansubsidies.ThiscontrastwasstronglyconPirmedbyrespondentsfromtheMinistriesofCultureinstructurallystrongandtraditionaleconomiesinthestudyresearch.AnadditionaldistinctionshouldbemadebetweendifferentEuropeancountries.Inmosttraditionalandknowledgeeconomies,theperformingartsbenePitfromgovernmentgrantsorsubsidies.Inemergingorstructurallyweakeconomies,however,thefundsavailableare,bycomparison,verylimitedastheyarehamperedbyaproductdevelopmentfocusasexpertshaveindicated.Whilesubsidiesfromthepublicsectormayassistinthestart‐upandfundingofSMEs,theyareoftenmoreaccessibletotheculturalsectors(e.g.theperformingarts)thantotheCCIsasawhole.Inaddition,responsesfromexpertssuggestthatpublicinitiativesseemunabletomeettheexpectationsandneedsofCCentrepreneursbecausetheyarecomplicatedtounderstandandoftendetachedfromtheterritoryinwhichthecompanyoperates.Expertsfrequentlyexpressedcautionatrelyingonsubsidiessystemsandbroughtup

195 Pratt,A.C.,(2009),“Thecreativeandculturaleconomyandtherecession”,Geoforum,Volume40,pp.495–496.196KEA,(2009),op.cit.,p.6.

issuessuchasSMEsustainability,Pinancialself‐sufPiciencyaswellaspoliticalinPluenceonculturalproductsandservices.Nonetheless,mostmembersoftheCCIshaveinsomewaybeenhelpedtodeveloptheirfranchisethroughpublicsupportandinvestment.Amongrespondents,supportfrompublicgrantsisstronglyexpected.Bearinginmindtheshort‐term,project‐basedcharacteristicsofmanyCCIs,grantscanbestrategicallyorganisedtomaximisetheircreativeandculturalimpact,andencouragestrongspillovereffectsandconnectivitybetweenthecore,thecreativeindustriesandthewidereconomy.Indeed,thoughmanyentrepreneursrelyonprivatefunds,themajorityofrespondentsconsideredpublicgrantstobethebesttooltoincreaseOinancialopportunities.

TheneedformorepublicfundingfromEUfundingprogrammesornationalMinistriesofFinancewashighlighted(e.g.forworkspaces).Alternatively,anewEuropeanfundspeciOictoCCISMEswassuggestedasanothertypeofOinancialsupport.

3.1.3.TypesofOinancialsupport

WhilemanysimilartypesofsupportareofferedthroughoutEurope,thelevelatwhichtheyareofferedandthesectorstowhichtheyaremadeavailablemaydifferconsiderably.Asdiscussedabove,themostimportantOinancingsourceisundoubtedlyselfOinancing.Publicgrants,bankloansandprivategrantshavearesidualrole,whiletheotherssourcesaremarginal.

3.1.3.1.AccesstodebtOinancing

Thesupplyofdebtcapitalviamoretraditionalcreditmarketsisvitaltoallentrepreneurialactivity.WithoutalargeandefPicientcreditmarkettosupplyPirmswithefPicientdebtcapital,someentrepreneurswillfaceaPinancialbarriermakingitimpossibletoseizeopportunities.Ingeneral,debtPinancingcoversbankloanschemesandinsuranceschemes.Theyare,inprinciple,easiertosecurebecausethesePinancialsourcesareavailabletoallentrepreneurs.However,theregularOinancialinstitutionsofferlittledevelopmentassistanceorexpertisewithregardstotheCCIs.197Inaddition,thenatureofCCIsmakesithardertoaccessPinance:businesses’assetsareoftenintangiblewithcopyrightdifPiculttoprotectfornewproductsanddesigns;returnsareuncertain;andproductinnovationdoesnoteasilytranslateintoformalbusinessstructures.Inordertodeveloptheircompany,amidtolongtermloancanprovidesecuredinvestmentwhichismoreadaptedtotheusuallonginvestmentcyclethatcharacterisestheCCIs.198

Furthermore,duetothePinancialrecession,manybankshavebecomemorerisk‐averseand,asaresult,areincreasinglylesslikelytosupportbusinessesintheCCIsduetotheirhighriskqualities.InFig.16.,thethreemostimportantinstrumentstoincreasePinancialopportunitieswereseenaspublicgrants,anincreaseinself‐Pinancingandbankloans.Thereturnoninvestmentisconsideredlowandriskyforinvestors.Accordingly,PindingsfromtheonlinesurveyindicatethatthegreatestobstaclefororganisationstoaccessPinancewasriskaversionfromPinancialinstitutions,followedbydifPicultyinobtaininggrants(seeFig.15.above).Thus,abankloanguaranteeforinnovativeSMEsandCCIscouldhelpinprovidingmoretargetedsupport.AsbankguaranteesdonotsufPicientlytargetCCIs,specialisedPinancialintermediariesforCCIscouldmediatebetweenthemandthebanks.TheexamplesofCultuurInvest,KunstenZakenandIFCIC(seeAppendix1)are

CultuurInvestCultuurInvestisanindependentinvestmentfundco‐PinancedbytheregionofFlandersalongwithsevenstrategicpartners.Thefundisaimedatentrepreneursintheculturalindustries,whohaveproductsorserviceswithaculturalcontent,creationandmarketing.Itisprimarilyshorttermloans.(SeeAppendix1,BestCase21)

197 Karra,N.,(2008),TheUKDesignerFashionEconomy,London:NESTA198KEA,(May2010),op.cit.,p.30.

highlyregardedinthiscase.Question:WhatisthemostadequatetooltoincreaseNinancialopportunities

foryourcompany?

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3.1.3.2.AccesstoVentureCapital

VenturecapitalisanimportantsourceoffundingforpotentialhighgrowthventuresthatrequiresigniPicantcapitalfordevelopment,growthandexpansion.TheEurope2020StrategyrecognisestheirbenePitforstart‐upcompaniesandinnovativecompanies.199

InarecentstudybyKEAonthePinancialopportunitiestofundCCIs,itwasfoundthateventhoughtherearefewventurecapitalfundscomparedtotheUS,therearestill62speciPicequityPinanceschemesacrossEuropewhicharepartlydedicatedtoCCIs,mostofthem(approximatelyhalf)arededicatedtoaudiovisualbusinessessectorslinkedtotheICTsector.200

InvestmentintheCCIoftenneedstobelongertermthanotherventurecapitalinvestments.Typicallyinvestorswantareturnontheirinvestmentinaslittleasthreeyears.DespiteitshighproPile,investmentintheCCIscantakemuchlongertobecomeproPitable.Forthemicro,smallandevenmediumsizedbusinessesitisexceptionallydifOiculttoattractstrategicinvestment.However,thereareexamplesofsuccessfulequityfundssuchasWallimage,aBelgianinvestmentfundtotheaudiovisualsectorthatco‐PinancedPilmprojectsfor€30millionandgeneratedabout€100millionrevenueinWallonianandBrusselsregions.201

Ontheotherhand,manycreativeentrepreneursaregenerallynervousaboutpartnershipswithinvestors,fearinglossofcontroloftheircompany,andarereluctanttoshareproOitsinreturn.

Inordertoenlargethedomesticsupplyofventurecapital,governmentscaneithertakeinitiativestodevelopnationalventurefundsorimproveventuremarketregulationtogrowexistingventuremarkets.Theformerincludesdirectinvestmentsandthelatterincludesrelaxinglegislation,makingitmoreattractive(orsimplypossible)forentities,suchaspensionandinsurancefunds,tomakeventureinvestments.

199EuropeanCommissionCommunication,(March2010b),op.cit.,p.20.200KEA,(May2010b),PromotingInvestmentintheCulturalandCreativeSector:FinancingNeeds,TrendsandOpportunities,ReportpreparedforECCEInnovation‐NantesMetropole,p.37.201“TapisRougeCannoispourlessystemesbelgesd’aidesaucinéma”,L’Echo,11May2010

3.1.3.3.Intermediarybodies

Intermediarybodies(suchasKunstenZakenintheNetherlands,orCultuurInvest(Appendix1,BestCases27and21)),providealternativesourcesofPinancialsupportthroughventurecapital,microcreditschemesforstartupSMEsandculturalandcreativeentrepreneurs,andbyfacilitatingloanguaranteesthatminimiserisk.TheIFCIC(Appendix1,BestCase19)isacreditinstituteinFrancethatmakesiteasierforcompanieswithintheCCIstoobtainbankPinancing.TheIFCICprovidesloanguaranteestoSMEsthatcovermostoftheirneedsatallstagesoftheirdevelopment.

3.1.3.4.BusinessAngels

Businessangelsaretypicallywealthyindividualswhomakedirectequityinvestmentsintheseedstageofcompanies,andtheytendtoprovidemoremanagerialandbusinessadvicethroughtheirgreaterpersonalinvolvementthaninstitutionalinvestors.Themotivesforbusinessangelstoinvestinnew,riskyideasandprojectsarevaried:fromexpectationsofbigproPits,asenseofsocialresponsibility,helpingyoungentrepreneurstosetuptheircompanies,toinvestmentsimplyforthereasonsoffunandpleasure.202

Governmentsinmanycountriestrytocultivatebusinessangelsbyorganisingnetworksandgivingspecialinvestmenttaxincentives.SeveralcountrieshavealsotriedtoimproveinformationOlowsbetweenangelsandpotentialentrepreneursthatotherwisetendtobeinformal.203Forexample,theDutchgovernmentplannedinitsrecentpolicyprogrammetoextendtheBusinessAngelsProgrammetoincludeCCIs,204asCCIsstillmakerelativelylittleuseofsuchBusinessAngelsystems.

3.1.3.5.Taxationincentives

ApartfromAustria,Finland,theNetherlands,SpainandtheUK,whichimplementspeciPicmeasurestosupportCCIs(althoughdePinitionsarenotalwayshomogeneousfordifferentpolicyframeworks),themostgeneralapproachestosupportingculturalandcreativeentrepreneurshiparetaxdeductionandfavourableOiscalpolicies.Taxincentivescaneitherenhanceorimpaircompetitivenessandthecreationofaprosperousentrepreneurialenvironment,dependingonthelevelandtypeofincentive.Theoveralltaxburden,whichconsistsofalltaxes,directandindirect,andcompulsorysocialcontributions,canbeusedasaninstrumentfortheCCIs.205ExpertsatdifferentlevelsfrequentlybroughtuptheissueoftaxcreditsandPiscalexemptions.Togetherwithbankloanguarantees,taxexemptionswereconsideredbyEuropeanexpertstobethebestwaytoprovidePinancialsupport.WhenaskedaboutthemostrelevantwaytoaccessPinanceforCCISMEs,taxexemptionsforCCIswereselectedasthemostimportantinitiativesbysectoralexperts(38%),followedbyaCCISMEfriendlygrowthloan(27%),asillustratedinFig.17.Mostofthe‘other’alternatives(7.4%)suggestedtheimplementationofamulti‐layeredapproachencompassingfriendlygrowthloans,taxexemption,guaranteefacilities,riskcapital,andVATreduction.Someonlyunderlinedtheneedtohavealoanorbankguarantee.Ontheotherhand,forgeneralEuropeanexperts,seedOinancingwasconsideredthemostrelevantwaytosupportCCISMEs(22%)aswellasanincreaseinpublicgrants.OneofthemostfrequentlyusedinstrumentstostimulatetheCCIsisthecreationofspeciPictaxregimesforculturalandcreativeentrepreneurs.TheECrecentlyconsideredtheimplementationofalowVATratetolabourintensivecreativeservicesandproducts,includingartheritage,music,pressonline,worksofart,admissiontoshows,

202Ramadani,V.,(2008),BusinessAngels;whotheyreallyare,SouthEastEuropeanUniversityofTetovo,Macedonia203KEA,(May2010b),op.cit.,p.43.204NetherlandsMinistryofCultureandMinistryofEconomics(2009),CreativeValue‐CultureandEconomypolicyPaper,TheHague:MinistryofCultureandMinistryEconomics,p.46.

205 TheEChasconsideredtheimplementationofalowVatRatetocreativeservicesandproducts,includingallartistsandtheroyaltiesduetothem.EuropeanCommission,(2008),ConsultationPaperofReviewofExistinglegislationonVATReducedrates,http://ec.europa.eu/taxation_customs/resources/documents/common/consultations/tax/vat_rates_public_consultation_document_en.pdf

theatres,circuses,concerts,museums,etc.206Theargumentissimple:demandcanbeboostedforanyproductbyloweringVATrates.Themotivationcanbetomakeculturalgoodsmorewidelyavailableforlow‐incomehouseholdsortostimulatetheconsumptionofgoodswithpositiveincentives.Examplesoftheformerwouldbebooks,musicandculturalevents.

Question:SelectthemostrelevantinitiativetoaccessNinanceforCCISMEs

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Figure17:MostrelevantinitiativetoaccessOinanceforCCISMEs(Source:Eurokleis2010,Sectoralexpertquestionnaire)

Fig.18.belowshowsthemostimportantkindsofPinancialinitiativesthatcouldbestbeusedforassistingCCISMEs.

Question:Selectthethreemostimportantsourcesofexternalcapitalinyoursector

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Figure18:MostimportantkindofOinancialinitiativesbestassistingCCISMEs(Source:Eurokleis2009,SectoralExpertquestionnaire)

3.1.3.6.PublicPrivatePartnerships

ThediverseanddynamicnatureofCCISMEsmeansthatthequestionofaccesstoPinance

206ECConsultationPaperofReviewofExistinglegislationonVATReducedrates,(2008),seehttp://ec.europa.eu/taxation_customs/resources/documents/common/consultations/tax/vat_rates_public_consultation_document_en.pdf

dependsonnumerousfactors.MultipleandblendedformsofPinancialsupportareneededdependingonthegivensectorandphaseofaspeciPicprojectatwhichanSMEPindsitself.TheCouncilConclusionsofMay2010onCreatinganInnovativeEuropestressedtheneedtoincludepublicprivatepartnershipstoPinancemoreeffectivebankinglinesforResearch,DevelopmentandInnovationinvolvingactorssuchastheEuropeanInvestmentBank.207TheexpertintervieweesofthisstudysimilarlystressedthepotentialoftheseactorstotapintotheCCIs.

3.1.2.Phases

TheimportanceofaccesstoPinancevariesgreatlybetweenSMEsandmaybeofgreaterneedduringthebeginningorlaterstagesofgrowth.Accordingtorespondents(Fig.19.)anoverwhelmingmajority,bothfromthesurveyandqualitativeinterviews,indicatethesigniPicanceofPinancialsupportparticularlyinphasestwoandthreeofthelifecyclemodel.Theamountandtypeoffunding,however,differsbetweenphases.Forinstance,startupcosts(e.g.registrationscosts)willbegreatestinphasetwo.Therefore,loweringthestartupandregistrationcosts,therebydiminishingthePinancialthresholdstostart,willpositivelyinPluencethenumberofstartersinthesector.Similarly,providinginnovationfundsduringphasethree,whentheyareofgreateruseandvalue,canbettertargetinnovation.ThedivisionbetweensupportingtheentrepreneurandtheenterprisebecomesapparentwhenregardingPinancialsupport.Thetransitionfromaone‐personenterprisetoamulti‐personenterprisegreatlyaffectsthetypeandamountofPinancesrequired,particularlyifadditionalworkersareemployed.Similarly,theefPiciencyofpublicfundschangesbetweenthesetwolevels,withdirectsubsidiesbeingveryefPicientatthebeginningtosupporttheentrepreneur,butlesssoattheenterpriselevel.

Question:AtwhatstageoftheentrepreneuriallifecycleisNinancialsupportmostneeded?

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Figure19:MostimportantphaseforOinancialsupport(Source:Eurokleis2010,onlinesurvey)

SinceaccesstoPinanceisimportantduringtheearlyphasesoftheentrepreneuriallifecycle,knowledgeandinformationonthetypesofOinancialsupportavailableisofcorrespondingsigniPicance.TherearemanytypesofexistingPinancialsupportavailable,suchasmulti‐sectoralsupportschemes.However,CCIsgenerallydonotaccessthemduetotheirlackofknowledgeaboutfundsthatarenotspeciPicallytargetedatCCIs.208Culturalandcreativeentrepreneursneedtobeawareof,andcomfortablewith,Pinancialoptions.Ontheotherhand,toomuchfundingduringtheearlyphasescanalsoinhibitgrowth.Asseveralexpertsexpressed,toomuchfundingcanmakeentrepreneursrisk‐averseandstopthembringingtheirideastothemarket.

207EuropeanCouncilConclusions,(May2010),op.cit.,p.3.208 KEA,(2010),op.cit.,p.26.

Duringthelaterstagesofthecycle,namelyduringphasefourandPive,thereareadditionalobstaclestoovercome.ForgrowthorientedSMEsparticularly,speciOicstructuralOinanceandworkingcapitalareneededinordertoexpandgrowthandaccesstothemarket(buildout).Financialsupportmustbeaccessibleduringallphasesoftheentrepreneuriallifecycle,butthetypesofsupportmustconcurwiththeevolvingneedsofeachphase.

3.1.3.Levels

Financialsupportprovidedatlocal,regionalandnationallevelswereclearlyemphasisedbythesurvey’srespondentsasmostadequateforsupportingCCIs.AsseeninFig.20.below,32%ofrespondentsconsideredtheregionallevelofauthorityasmostsuitableforsupportingaccesstoOinance,followedbythenationallevel(29%)andthelocal/citylevel(22%).TheEUlevelwasdeemedtobelessadequatefordirectsupporttotheCCIsmainlyduetothebureaucracyandcomplexityinvolvedintheprocedures.

Question:WhatlevelofauthorityismostsuitableforsupportingaccesstoNinanceforyourorganisation?

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Figure20:MostSuitableAuthoritytosupportaccesstoOinance(Source:Eurokleis2010,onlinesurvey)

APirmunderstandingoftheparticularcharacteristicsandneedsoftheCCIswasconsideredcrucialtoprovidingthecorrectfundingmechanisms.Forthisreason,theregion,asanintermediarylevelproviderofOinancialsupport,isoftenpreferred,accordingtorespondents.Regionalinstrumentswerereportedlyabetteroptiontoadequatelyimplementfunding.Assuch,theyactasaOiltertofocussupport.Hence,theregionallevelispreferredduetoitspotentialtobridgethegapbetweenthelocalandnationallevel.Additionally,Oinancesofferedandinvestedattheregionallevelallowforthedevelopmentofaculturalidentitywithintheregion.Atregionalandlocallevels,andoftenincollaborationwiththenationalgovernment,capitalinjectionisattainablethroughinvestmentfunds.OnesuchfundisAdvantageCreativeFund(seeAppendix1,BestCase22)intheUnitedKingdom,dedicatedtoinvestingintheCCIs.StudyPindingsindicatethatthenationallevelisconsideredmostadequateregardingthecreationofaconduciveOiscalenvironment.AlsoimportantatthislevelistheapproveddeOinitionofCCIs,whichwilldirectlyaffectwhichPinancialinstrumentsaremadeavailableandtowhom.AtEUandnationallevels,initiativesaremainlytargetedatinnovationandpromotinginvestmentininnovation.AttheEUlevel,theSeventhFrameworkProgramme(FP7)209wasputinplacetostrengthenthescientiPicandtechnologicalcompetenceofEuropean

AdvantageCreativeFundAdvantageCreativeFundisanexampleofaventurecapitaldedicatedtoCCIsaimedatPinancingCCIsthroughouttheWestMidlandsregionintheUK.

(SeeAppendix1,BestCase22)

209Seehttp://cordis.europa.eu/fp7/

industryandthusincreasecompetitiveness.Itaimstoincreaseco‐operation,notablythrough15%ofthebudgettargetedatthereinforcementofSMEsparticipationinresearchprojects,aswellassupportingthedevelopmentofaknowledgeeconomy.DespitethisfocusonSMEs,theprojectsstilllargelyaddresstechnologicalandscientiOicperformance,notputtingforwardmorespacefortheinnovativerolesoftheCCIsthroughnontechnologicalinnovationandserviceinnovation.TheneedforfundsforinnovationandresearchforCCIswereclearlyexpressedintheonlinesurvey,with84.6%ofrespondentsagreeingthattherewasaneedforstrongersupportinresearchandinnovationfortheCCIs.AdditionalinitiativestargetingtheearlystagePinancingofSMEsincludetheCohesionFundandJEREMIE(structuralfundsallocatedforSMEs,2007‐2013).WhiletheimportanceofSMEsfortheEuropeaneconomyhasbeenrecognisedintheSmallBusinessAct,CCIsremainunder‐representedinEUinitiatives.AlthoughattheEUlevelfundshavebeendevelopedthrough,forexample,theEUInvestmentBank,suchinvestmentsarecommissionedtospeciPicintermediariesatthenationallevel,suchasbanksandinvestmentcompaniesthatmaynothaveexpertiseintheCCIsandthereforemaynotprovidethemwithloans.Additionally,thebureaucracyinvolvedinobtainingEUfundingwasconsideredabarrier,bothintermsoftimeandmoney:manyCCISMEssimplydonothavetheresourcestoapplyforthistypeoffunding.Inanycase,accesstoPinancecanbestimulatedattheEUlevel.AsCCISMEsareoftenconsideredtooriskyforbankloans,theEuropeanCommissionandtheEuropeanInvestmentBankhavejoinedforcestosetuptheRiskSharingFinanceFacilitytoprovideriskcapitalandventurecapitalforinnovativerisktakers.210

EUCohesionandStructuralFundscouldfunctionaspartoftheresourcesallocatedtoCCIsataEuropeanlevelifindividualMemberStatescreatespeciPicsupportprogrammeswithintheStructuralFunds,ascanalreadybeobservedincertaincountries.Itisimportanttorememberthatfundingmechanismsarenotalwayslimitedtoonelevel,butmayoverlapbetweenlevels.Forinstance,fundsthatareofferedlocallymayinfactbemanagedatthenationallevelorcomefromEUStructuralFunds.Thesourceandextentoffundingdependsgreatlyonthetargetsandscaleofaproject,idea,orbusiness.Whilethefundsthemselvesarerequired,expertsalsoraisedtheissueofondemandsupportthroughmentorshipandcoachingintheareaofPinances.EntrepreneursmayoftenbeunawareoftheirOinancialoptionsandthesourcesofOinancialsupportthattheycouldapproach,whetherthroughpublicfunds,venturecapitalorbankloans.211ThelackofinformationonavailablePinancialsources,andthetimeandeffortneededtoacquiretheinformation,isanadditionalcostrequiredofSMEsintheCCIsinordertosucceed.

AstheneedforPinancescannotalwaysbeanticipated,Oinancialsupportavailableondemandcanbestimulatedthroughregionalandlocallevels.Culturalandcreativeentrepreneurswillthenhavethepossibilityofprocuringfundsfromviableandapproachablesourceswithintheirnetwork.AgoodillustrationistheworkofCreateBerlin(seeAppendix1,bestCase23).

3.2.Accesstomarket

Accordingtosectoralexperts,themostimportantknowledgefactorsinPluencinganorganisation’sgrowthwerelinkedtoinformationaboutmarketopportunities.TherespondentsnotedthatdifPicultyinidentifyingnewmarkets(19%)andthelackof

CREATEBerlinCREATEBERLINbringstogetherenergiesandideasandprovidescreativetalentswithopportunitiestorealisetheirvisionsbystronglybelievingintheimportanceofthecreativeindustriesinthecity’seconomicdevelopment.(SeeAppendix1,BestCase23)

210Seehttp://www.eib.org/products/loans/special/rsff/index.htm

211 Expertinterviewsandbestcases

knowledgeofexternalmarkets(15%)212weretwoofthemostimportantknowledgefactorsobstructinganorganisation’sgrowth(Fig.21.).

Question:selectthethreemostimportantknowledgefactorsobstructinganorganisation’sgrowth

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Figure21:MostimportantknowledgefactorimpedingCCIs(Source:Eurokleis2009,Sectoralexperts)

Themarketsforculturalandcreativeproductsandservicesareoftencharacterisedbyunpredictabledemandconditions.Entrepreneurshavetotakeheterogeneous,changingtastesintoaccount.Inaddition,creativeproductsservefunctionsthatoftenescape‘objective’,quantitativemeasurement.Asnotedabove,theuncertaintyofdemandisfurtherstrengthenedbytheintangiblenatureoftheproductsandservicesaswellasthefactthattheyareoftenproject‐based.Thispropertymeansthatatvirtuallynostageintheproductionsequencecantheproject’soutcomebepredictedwithanydegreeofassurance:sleepersinexplicablyturnintosmashhits,andsure‐PiresuccessesPlop.ThepositionoftheCCentrepreneurhastobetakenintoaccountinthisgeneralcontext.Formicro‐SMEs,thequestionnairerevealedthatthemainbarrierstoenterthemarketareingreatpartduetotheexclusiveagreementswithkeydistributors(37%)andaccesstoknowledgeonmarketopportunities.Thepresenceoflargeandmultiplecompetitorswasalsoacomplementaryimpedingfactor.LinkingthisobservationwiththefactthatmanycountriesandtheEUarepromotingmicro‐SMEsascontributorsfortherevitalisationoftheeconomy,213onecanonlystresstheimportanceofaccesstomarketandknowledgeaskeytoenablingmicroenterprisestoOlourishandencourageinnovation.

ThelackofknowledgeaboutmarketopportunitiescanimpedetheCCIstobenePitfromtheseopportunities.AccordingtoNESTA,knowledgesourcing,especiallyinternationalsourcesaswellashavinganetwork,isessentialtounderstandtheglobalmarket.214

GovernmentscouldencourageandprovideSMEswithappropriatesupporttoenablethemtoaccessknowledgeinorderforthemtobetteraccessopportunitiesonthemarket.WithexistingsupportinincubatorsandothersupportsuchasseedPinance,startingupaCCISMEsisnotthehardestpart:buildingupandgainingamarketpositionismoredifPicult.

212 ExpertQuestionnaire213Seeforexample,EuropeanCouncilConclusions,(December2008),ThinkSmallFirst‐ASmallBusinessActforEurope,doc16788/08;Raffoetal.(2000),“Teachingandlearningentrepreneurshipformicroandsmallbusinessesintheculturalindustriessector”,EducationandTraining,Vol.42,No6,p.356.214NESTA,(May2010c),SourcingKnowledgeforinnovation:theinternationaldimension,London:NESTA,p.6.

Thedecreaseoftradebarriersandtheintegrationofworldmarketshavemadeitpossibleforalltypesofcompanies,includingnewones,toexploitglobalopportunities.Theglobalisationprocessesencourageanexternalisationstrategyinthesamewayasitconfrontstwooppositeextremes:themicro‐SMEsandthelargecorporation.Thehighcompetition,theholdonthemarketbyafewlargecorporationsandthelimitedknowledgeaboutexternalopportunitiesformtheenvironmentthatconfrontstheCCentrepreneuratthestartoftheiractivityandthroughouttheentrepreneuriallifecycle.

3.2.1.The‘MissingMiddle’:AsymmetryandSizeRelatedConstraintsintheMarket

Asnotedearlier(2.2.4),themaincharacteristicofthecreativeeconomyis,inorganisationalterms,its‘missingmiddle’.ThisreferstothefactthatthereisapredominanceofasmallnumberofverylargePirmsworkinginternationally,counterbalancedbyaverylargenumberofessentiallylocal,microenterprises.Thereisverylittleclassicalverticalintegrationofthekindmostcommonlyassociatedwithtrans‐nationalPirmsinothersectors.Instead,thereisastronghorizontalandverticalintegrationofpartsofthecreativeeconomy.Thisdoesnotextendtothemicroenterprisesandindividualcreativeentrepreneurs.215TheprevalenceofSMEsinthecreativesectorhighlightstheneedforpolicymakerstoaddresssizerelatedconstraintsinthemarket.216Theabsenceofmediumsizedenterprisesincreasestheimpactofthemarketgapbetweenthemicro‐SMEsandthebigmajorsincertainsectors.Generallyspeaking,thebiggerenterprisesowntheorganisationalandknowledgeskillsneededtodealwithregulatoryfactors;theymakeastrongeruseofthesupportforIPR;andtheyhavelong‐establishedinfrastructuresforundertakingresearch,designanddevelopmentactivitieswhicheasetheirentryandpositiononthemarket.Ontheotherhand,micro‐SMEstendnottohaveaccesstotheseadvantagesandhavelimitedknowledgeaboutmarketopportunities.Theasymmetryinthemarketpositionbetweenthetwoextremesisstriking.EnablingaccesstothemarketforstartingCCIsand,atthesametime,workingonpotentialpathstogrowthandsustainabilityforCCIsisapreconditionforculturaldiversityinEurope.ThiscanenablegreatercompetitionbetweenfastgrowingCCIs,althoughnotalloftheCCIswanttogrowandextendtheirmarket.

Alternativesupportmechanismssuchasa‘solidarityscheme’wereadvancedbyIMPALA,which,usingtheanalogyoftransferfeesfromfootball,aimedatreducingtheimbalancesbetweentheshareofthemarketbetweenbigandsmallercompanies.Thisschemeproposedthatsmallcompanies,suchassmallmusicproductionsthathadsignedartistswholateronmadeabreakthroughandcontractedoutwithlargerproductioncompanies,receiveaOinancialcompensationrewardfromthesebiggercompanies.217

Mostrespondentsduringtheexpertinterviews,aswellasbytheEuropeanPlatformandtheOMCExpertWorkingGrouponCCIs,highlightedthegeneralimportanceofmappingoutthelandscapeofeachCCIsectorineachcountry.218CertaincountriessuchasSweden,Austria,theUnitedKingdom,Germany,FinlandandtheNetherlands,havestartedexaminingandmappingthesectorstoobtainrawdatatoestablishareaswheretheindustryisinneedofsupporttoquantifythecurrentandfutureeconomicbeneOitsoftheCCIs.

3.2.2.TheDigitalMarket

Themovetowardsdigitalconvergencehasdrasticallyexpandedthemeansofproducing,circulating,distributingandexchangingculturalexpressioninalldomains.Inturn,therangeofhuman,materialandtechnicalresourcesineachoftheartisticPieldsisincreasing,

215UNCTAD,(2008),op.cit.,p.62.216EuropeanCommissionGreenPaper,(April2010),op.cit.,p.7.217Impala(www.impala.be)andinterviewwithsectoralorganisation218PlatformonthePotentialofCreativeandCulturalIndustries,(2009),FinalRecommendationsofthePlatformonthePotentialofCreativeandCulturalIndustries

contributingsigniPicantlytoincomeandemployment219.ThetransitionfromtraditionalmeanstonewmediaisnottheonlychallengeforCCIs,asthestructureofthemarkethasalteredsigniOicantly.Newdevelopmentsrepresentnewmarketopportunitiesforproducersofcontent,andgenerateimportantgrowthprospectsfortheculturalandcreativesector.Noticinganincreaseintheparticipationofpeopleintheartsthroughelectronicanddigitalmediademonstratesthepotentialthatdigitalmediacanofferintermsofnewmarketopportunities220.NewtechnologymultipliesanddiversiOiesthechannelsthroughwhichculturalworksreachthepublic.AtPirstthereisanincrementaleffect,followedbyepisodesof‘cannibalisation’betweenoldandnewchannels.Yetattheend,thereisagreaterchoicefortheconsumeramongstthedifferentwaysofaccessingculture,whichresultsinincreasedculturalconsumption.Inthisradicallychangingenvironment,akeychallengeistoPindappropriatenewbusinessmodels.TheoverallconsequencesofICToncultureareindeedambivalent.Ontheonehand,andashighlightedabove,technologyopensupnewopportunitiesforcreatorstoproduceanddistributetheirworkstoawiderpublic,independentlyofphysicalandgeographicalconstraints,potentiallyincreasingchoiceandaccessibilityforall.OntheotherhandICTdisruptstraditionalcontent.Whilenewmodelsstruggletoemerge,theriskisthatculturalcontentmaybeconsideredasanyothercommoditytradedinthevirtualworldandmaybedevalued.DigitalmediacanpotentiallyenableSMEstoaffordablycompeteinbiggermarketsbyallowingforexample,smallercompaniestoadvertisetheirproductsonline,byincreasingtheircompetitivenessthroughagreaterusageofuser‐generatedcontentorbyaccessinginternationalnetworks.TheseemingdemocratisationofmarketopportunitiesontheInternetandtheenhancedroleoftheuserinshapingtheproductsandserviceshasfundamentallyalteredbusinessmodelsincertainsectors,suchasinthemediaindustry.However,Europeiscurrentlyfailingtotakefulladvantageofthedigitalmarketandnewtechnologies.ThedigitalmarketremainsfragmentedandregulationshinderthefulldevelopmentofaSingleDigitalMarketinEurope.Recentinitiativesareimportantsignsofchangingopportunities.221TheAgendaforaDigitalEurope,aPlagshipinitiativeintheEurope2020strategy,aimsatcorrectingtheseimbalancesandistryingtoadapttothesechangesinordertodevelopaSingleDigitalMarket222,increasingtheinteroperabilityandtheconvergenceofstandards,aswellasincreasingthesupportfornetworks.TheEUfundedEDiMAproject(EuropeanDigitalMediaAssociation)isanallianceofnewmediacompaniesthataimsatcreatinganopenandlegalframeworkforPan‐EuropeanE‐commerceandenablinggreaterconsumerchoiceindiversityandenhancedcompetitivenessthroughouttheEU.ItaddresseslegalbarriersblockingasingleEuropeanDigitalMarket.Forexample,EDiMAaimsatincreasingtheco‐ordinationofpolicyformationbyestablishinganewEuropeanParliamentgrouponthenewmediasectortoensureabetterPitwithregardstothecopyrightlicensingregimeforthedigitalage.223Moreover,itprovidesnewmediaplatformsinordertoimproveconsumerconPidenceandprovidesonlineservicestoimprovetheuseofmediaandE‐commerceinEurope.Theex‐CommissionerforInformationSocietyandMedia,VivianeReding,acknowledgedsimilarneedsincompletingaSingleDigitalMarket224,seeingthepotentialthatthedigitalworldhastooffer.

219UKTechnologyStrategyBoard,(2009),op.cit.,p.12.220USNationalEndowmentfortheArts,(2010),Audience20:HowTechnologyInPluencesArtsParticipation,Washington:USNationalEndowmentfortheArts,p.10.Thisreportfoundthat53%USadultsparticipateintheartsthroughelectronicanddigitalmediathroughTV,radio,cv/dvd,computerandinternettoviewartperformance,artworks,museums.AthirdoftheUSadultsparticipatein‘benchmark’artsactivitiessuchasjazz,classicalmusic,operaandallformsofdance,throughelectronicmedia.Foreverytypeofartsperformance,adultsweremorelikelytovieworlistenthroughelectronicmediathanattendliveperformances.221ECCommunication,(2010b),op.cit.,p.3.222ECCommunication,(May2010a),DigitalAgendaforEurope,COM(2010)245223EuropeanDigitalMediaAssociation(EDiMA),(2009),op.cit.224Reding,V.,(October2009),SpeechontheDigitalSingleMarket:akeytounlockthepotentialoftheknowledgebaseeconomy,Availableathttp://www.iccwbo.org/bascap/id35360/index.html

3.2.3.Typesofsupporttomarketaccess

ConsciousoftheinnovativepotentialofCCISMEs,theEUCouncilconclusionsofMay2010acknowledgetheneedtosupport‘culture‐basedcreativity’SMEsintheiraccesstomarketasawaytoencourageinnovation.225Publicprocurement,LeadMarketInitiative,standardisation,althoughhighlypromising,remainuntappedresourcesforinnovationandfortheencouragementtoaccessthemarket.226TheEuropeanplatformonthepotentialofculturalandcreativeindustrieshasemphasisedtheimportanceofcreatinganenvironmentthatfostersthecreationanddevelopmentofculturalSMEs.TheystatethattheseshouldbegrantedspeciPicsupportandbenePitfrompositivediscriminationmeasures.ThePlatformnotedthat:

“Marketaccessmustbeensuredforallculturalandcreativeactorsregardlessoftheirsizetoguaranteepluralismandarealeconomyofdiversityandtheinternationalpromotionandexchangeshouldbedeveloped(...)thepresenceofartistsandculturalprofessionalsinkeyinternationalmarketsmustbemaintainedthroughtheestablishmentofspeciNicschemesandthefacilitationofexchangewiththirdcountries.”227

IntermsofsupportforCCISMEstobenePitfromtheEuropeandigitalsinglemarket,mostrespondentspointedattheneedforOinancialsupporttofacethedigitalshift(34%)andsecondly,theneedfortheharmonisationofaccessconditions(31%)(Table9.below).The'other'typesofSMEsupporttoentertheEuropeansingledigitalmarketweretargetingthecapacitybuildingonaccesspossibilitiesandknowledgesupport.

Question:HowdoyouthinkCCISMEsshouldbesupportedtobeneNitfromtheEuropeanDigitalSingleMarket?

Item Percent%

NospeciPicsupport 3.45%

Harmonizationofaccessconditions

31.03%

LegalSupport 20.69%

FinancialSupport 34.48%

Other 10.35%

Capacitybuildingonaccesspossibilities

Don'tknow 3.45%

Knowledgesupport 3.45%

Table9:CCISMEssupportforthedigitalmarket(Source:Eurokleis2009,Sectoralexperts)

AlthoughdirectmeasuresforsupportingaccesstomarketforCCIsarenotyetinplaceattheEUlevel,theEUhascertainexistingprojectsthatshowsignsofpossibleextensionofsupporttoCCIs.Forexample,theLeadMarketInitiativelaunchedbytheEUin2008wassettoidentifythenewneedsandnewmarketforinnovativeproductsorservices.Fornow,thisinitiativeistargetedtowards6LMIs,228whichareneitherservicenornontechnologicalinnovationoriented.However,extendingaLMItoCCproductandservicesandtargetingCCISMEs,couldbeawaytosupportaccesstomarketforCCIs.Similarly,in

225EuropeanCouncil,(May2010),op.cit.,p.2.226EuropeanCouncil,(May2010),op.cit.,p.2.227PlatformonthePotentialofCreativeandCulturalIndustries,(2009),FinalRecommendationsofthePlatformonthePotentialofCreativeandCulturalIndustries,op.cit.,p.4.;andOMCExpertWorkingGrouponmaximisingthepotentialofculturalandcreativeindustries,inparticularthatofSMEs,(2010),FinalReport,op.cit.,pp.6‐11.

228 ECWorkingDocument,(September2009c),LeadMarketInitiativesforEurope:MidTermprogressreport,SEC(2009)1198:bio‐basedproducts,eHealth,sustainableconstruction,protectivetextiles,recyclingandrenewableenergy

thecommunicationAssessingCommunityInnovationPoliciesintheperiod2005‐2009,theEUsuggestedthatpublicprocurementbepartofinnovationpolicyasitcanhelpfosterthemarketuptakeofinnovativeproducts.229PublicProcurementprocedurescouldbeusedtoincreasethedemandforspeciPicinnovativeproductsandservicescomingfromCCIsandinsodoingcanencouragetheaccesstomarketforinnovativeCCISMEs.TheEUCouncilrecommendedinitsConclusionsinMay2010thatthepublicprocurementbudgetisincreasedanddevotedtoinnovativeproducts,processesandservices230.ThisshowsthepotentialtoextendexistinginitiativestosupportCCIsintheiraccesstomarket.StandardisationalsostimulatesthemarketforinnovativeproductsbysettingupaplayingPieldforinnovators,accompanyingtheemergenceofnewmarketsandfacilitatingthespreadoftechnology.However,initscommunicationin2008,theEUacknowledgedthelimitednumberofstandardsforservices(mainlyduetotheheterogeneousnatureofservices).TheexampleofQuebec’spositivemeasurestoensuremarketaccesstoCCIsisillustrativeofthesuccessthatspeciPicmeasuresforCCISMEscanhavetoaccessthemarketandpromotetheCCIs.231

3.2.3.1.Phasesofmarketaccess

Withregardstotheentrepreneuriallifecycle,amajorityofexpertsinterviewedstatedthataccesstomarketisparamountinphase2and3ofthelifecycle,asFig.22.demonstrates.Indeed,45%oftherespondentsfoundthatsupporttoaccessthemarketwasmostneededinthestartupphaseofthelifecycle.Inthebuildupandbuildoutphasesoftheentrepreneuriallifecycle,entrepreneursneedtodoseveralthingssimultaneously:createstructuralsustainabilitybybuildingstrongnetworks;developamethodologicalwayofstayingcreativetosucceed;haveafuture‐orientedgrowthplantoexportintonewmarketsandbrandingforgrowth;bescalableandreplicable.

Question:Inwhichphaseofthelifecycledoyouseethemostneedtosupportaccesstomarket?

!"# $!"# %!"# &!"# '!"# (!"#

)*+,-#(.#/011-2314#

)*+,-#'.#56789#06:#

)*+,-#$.#);-<+;714#:*-#4;0619#

)*+,-#&.#56789=6<#

)*+,-#%.#>:+;:=6<#

Figure22:Preferredphaseinthelifecycleforsupporttoaccessthemarket(Source:Eurokleis2010,onlinesurvey)

Somerespondentshighlightedtheneedtofocusonthelatterstagesofthelifecycleformarketsupportinparalleltoaccessinginternationalmarkets.However,withtheglobalisationofmarkets,suchstrategiesarenowmorefocusedontheearlierstages.CCI

229 USNationalEndowmentfortheArts,(2010),AssessingCommunityInnovationPoliciesintheperiod2005‐2009,SEC(2009)1194230EuropeanCouncilConclusions,(26thMay2010),op.cit.,p.4.231PlatformonthePotentialofCreativeandCulturalIndustries,(2009),FinalRecommendationsofthePlatformonthePotentialofCreativeandCulturalIndustries

Pirmsareconfrontedfromphaseonewithstronginternationalcompetition.Europe’sregulatoryenvironmentisinthiscasenothelpful.Withregardtoforeignmarkets,respondentsfoundthatthesupporttoaccesscrossbordermarketswasmostneededinthebuildupandbuildoutphasesofthelifecycle,oncetheCCIshaveacquiredsomeregularclientsandcanlookatotheropportunities.(seeFig.23.).ThebestcaseexampleofFinproisausefulillustrationofthis(SeeAppendix1,BestCase24).Question:Inwhichphaseofthelifecycledoyouseethemostneedtosupportforcrossbordergrowth

andcrossbordermarkets?

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)*+,-#%.#)/-0+/123#4*-#3/5627#

)*+,-#&.#84+/4960#

)*+,-#$.#:522-;<23#

)*+,-#'.#=61>7960#

)*+,-#(.#=61>7#564#

Figure23:Mostappropriatephaseforcrossbordermarketsupport(Source:Eurokleis2010,onlinesurvey)

3.2.3.2.Levelsofsupport

Nationalandregionallevelswereclearlyemphasisedintheonlinesurveyforsupportingaccesstothemarket(seeFig.24.below).31.5%oftherespondentsindicatedthatthenationallevelwasmostsuitedtorespondtotheneedsoftheCCISMEsintermsofthemarketwhile26%foundthattheregionallevelwasmostappropriate.ResultsfromqualitativeinterviewssuggestedthatspeciOicandtailormadeinformationonaregionallevelisessentialforenhancingthemobilityofartists.

TheroleofthenationalgovernmentcanbetoprovidesigniPicantencouragementfortheCCIstoexporttheirproductandservices,asseenintheQuebecexample,orbyagreeingondoubletaxationschemes.TheEuropeanlevelwasalsoemphasisedbytheintervieweesforfacilitatingaccesstobothphysicalanddigitalmarketsandensuringpan‐Europeanaccess.Expertsemphasisedthataholisticapproachforthecreationofpolicywasnecessary.

FINPROFinprodealswithFinnishcompaniesatdifferentstagesofinternationalisationandaimsatguaranteeingthatFinnishcompaniesandespeciallyCCISMEsaccessaninternationalmarket.Italsogivesopportunitiestonetwork.(SeeAppendix1,BestCase24)

Question:Atwhatlevelshouldthissupportfornewmarketopportunitiesforyourorganisationbeprovided?

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()*+,#

-+.)/,01#/,2034506/37055/.406/3#

1+8+1#

93)+,306/301#1+8+1#:/;)54<+#)*+#=>?#

@/.017A4)B#1+8+1#

=;,/C+03#@+8+1#

D+24/301#@+8+1#

E06/301#@+8+1#

Figure24:Mostappropriatelevelforsupportingaccesstomarket(Source:Eurokleis2010,onlinesurvey)

3.3.IPRinstrumentsandCCISMEs

CCISMEsoftenhavelimitedknowledgeoftheuseofintellectualproperty(IP)andrightsmanagement.232However,theseformalandinformalrightsconstituteanimportantsourceforcreativecompanies,andareafairrewardingforcreativity.Fromouronlinesurvey,52%ofSMEsdidnotreceiveIPRadvicebeforethestartoftheirentrepreneurialactivity,asopposedto40%whodid.Ofthosethatdidreceiveadvice,thiswasmostlyatanationallevel(38.5%)orfromtheirsectoralorganisation(20.5%)and11%attheEuropeanlevel.Intheexpertquestionnaire,theimportanceofIPRregulationswasseenasthesecondmostimportantregulatoryissue(21%)aftertaxregulation(29%)ascanbeseenintheFig.25.below.

Question:SelectthethreemostimportantregulatoryissuesfacedbySMEsinyoursector

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Figure25:MostimportantregulatoryissuesfacedbyCCISMEs(Source:Eurokleis2009,Sectoralexpertquestionnaire)

SomeoftheCCIshaveplacedcertainhopesontechnologiestoregulateandprotectcontentwithtechnologicalprotectionmeasuressuchasdigitalrightsmanagement(DRMs).However,suchtechnologieshavesofarnotpreventedpeer‐to‐peerpiracyand

232 KEA,(February2010a),BusinessInnovationSupportServicesforCreativeIndustries,ShortstudypreparedfortheEuropeanCommission(DGEntrepriseandIndustry),http://www.keanet.eu/report/BISScreativeindustries.pdf.March5,2010,p.7.

remaincontroversialforconsumer‐friendliness.233Thereremainsatensionbetweenaccessandexploitation.

3.3.1.AccessversusExploitation

Existingtensionsovercontentprotectionandopenaccessphilosophiesareoftenseenintermsofaccessversusexploitation.WhilethePirstapproachwillhighlighttheimportanceofIntellectualPropertyRightsasatoolthatcanrewardintangibleassetsandensurecontrolofcontentandhowIPisused,theotherapproachwillfavourfreeaccesstocontenttouseforthedevelopmentofnewservicesorproducts.Withthedigitalmarket,theexploitationofcontenthasbecomehardertocontrolandpiracyandpeer‐to‐peerexchangehavefedthedevelopmentofa‘get‐it‐for‐free’culturewhichmaypreventcreatorsfromexploitingtheircreation.234TheillegaldistributionofcopieserodesthepossibilityofproducerstobenePitandthusreducestheincentivetoinvestinthecreationofnewworks.Rightsholdershighlighttheneedtolegallycircumventthisdevelopmentthroughlawsandservicesinordertocurbtheillegitimatereuseofsomebodyelse’swork.DRMsrepresentatechnologythatcanpreventthefreeaccessofsomeofthecontentonlineandenableCCISMEstoberewardedfortheircreation.However,suchtechnologyhasnotreducedpiracyasillegalPilesharingmayberesponsibleforapproximately96%ofaudiovisualdownloadsavailableonstreamingorbittorrentnetworks.235

Ontheotherside,somehavehighlightedtheneedtoeasetheprotectionofcreativecontentandarepushingtoallowgreateraccessibilitytocopyrightedcontentinordertobeabletoshareandaccessfreelyexistingcontentasawaytounlockthepotentialadvantagesthatthiscanoffer.Therightsoftheconsumerstoshareonlinecontentarethuspromotedbythisstrandofthought.However,thetwostrandsofthoughtarenotsoclearlydistinctanddichotomous.Copyrightprotectsinvestmentintheartists’workandallowsnewcreation,andthereforeallowsaccesstothework,althoughitdoesnotallowfreeandillegitimatereuseofthework.Thisdebaterevolvesaroundhowtocombinelegalexceptionsandexclusiverights,therightsandinterestsofconsumers,aswellastherewardofcreators.Moreover,asseeninChapter2,increasingdigitisationmodiPiestheshapeofthecreative‘valuechain’tothatofacycleofcreationthatbypassesmiddlemen.Thelinkbetweenrightsholdersandtheconsumersshortens,increasingthecontactbetweenconsumersandcreators,increasingthepotentialofplatformsforfreeexchange.TheexampleofYouTubeisanillustrationoftheincreasingaccessibilityofonlinecontentandtheevolvingissueofIPindigitalenvironments.ThediscussionandfuturepoliciestosupportthedevelopmentofCCIswillhavetotakeintoaccountthechangingIPenvironmentandchangingbusinessmodels,whilekeepinginmindtheimportanceofIPRasanincentiveforCCentrepreneursandasarewardfortheiroutput.Moreover,asmanyCCISMEsdonotpresentlymakeuseofIPR,thequestionarisesofhowbesttoencourageCCentrepreneurstorealiseandmakeuseofIPRastoolsintheirentrepreneurialactivity.Indeed,theissueofIPmanagementfortheCCIsisacentraldeterminanttotheirentrepreneurialdriveasitgivestheCCIentrepreneurtheopportunitytoberewardedandcanactasanenablerfortheiractivity.

3.3.2.FormsofIPRanddifferentuse

Inlinewiththedebateonaccessandexploitation,thetypesofIPRmustbedifferentiatedtounderstandtheirusebyCCISMES.FormalIPRmechanismsincludethefollowing:designprotection,236trademarks,patents,utilitymodelsandcopyright.

233CabreraBlazquez,F.J,(2007),“DigitalRightsManagements’systems(DRMs):RecentdevelopmentsinEurope”,EuropeanAudiovisualObservatory,seehttp://www.obs.coe.int/oea_publ/iris/iris_plus/iplus1_2007.pdf.en234Ibid.,p.2235UKTechnologyStrategyBoard,(2009),op.cit.,p.23.236AnewregisteredCommunityDesignRighthasbeenrecentlyintroduced.

InformalIPRvariesinitsnatureandpurposebutarealsoimportantforSMEs.237Themostimportantinformalprotectionmethodsare:secrecy,restrictedaccesstoinformation,databaseandnetworkprotection,conPidentiality,technicalprotection,divisionofdutiesandsubcontracting,circulationofstaffbetweentasks,loyaltybuildingamongpersonnel,clientrelationshipmanagement,membershipofprofessionalorganisations,andpublishing.238TheCreativeDepotisagoodexampleoftacklingissuesrelatedtoinformalIPR(seeAppendix1,BestCase25).Intheonlinequestionnaire,ahighpercentageofrespondents(33%)didnotuseanyspeciOicinstrumentofprotection.AsshowninFig.26.below,forthoserespondentsprotectingtheircreativeinput,copyrightisbyfar(89.66%)themostcommonlyusedinstrument.InformalIPRintheformofconPidentialityagreementswereusedby62%ofrespondentsresortingtoprotectingmeasures,asagainst21%forpatenting.Creativecommonsandopenaccesssystemscountedfor38%oftheinstrumentstoprotectcreativeoutputswhiletrademarkswereusedby35%.ThesePindingscoincidewiththeresultsofaNESTAsurveyontheuserinnovationintheUK.Inthestudyonsoftinnovationandontheroleofuserinnovation,239theyobservedthatintheUK,59%oftheuserinnovatorCCIsdidnotprotecttheirinnovationandsharedthemfreelywithothercompanieswithonly20%receivingroyaltiesascompensation.Question:Whatisthemostcommonlyusedinstrumentfortheprotectionofcreativeoutputs(IPR)for

yourorganisation?

Items Percentage

Patent 20.69%

RegistrationofDesign 34.48%

Trademarks 34.48%

Copyright 89.66%

ConPidentiality 62.07%

OpenAccessLicensing(eg:CreativeCommon) 37.93%

Other 20.7%

Figure26:MostcommonlyusedinstrumentsfortheprotectionofcreativeoutputsinCCIs

(Source:Eurokleis2009,SectoralQuestionnaire)

TherelativelylowuseofprotectionmeasuresdemonstratestheneedtoincreaseawarenessontheuseofIPRregimesandfacilitatesaccesstoIPRforCCISMEs.

KnowledgeintensivebusinesseshaveadoptedavarietyofformalandinformalmethodstodecreasethemisuseorlossofIP.Bothmethodscanbeseenascomplementaryinsteadof

CreativeDepotCreativeDepotisanelectronicservicethatprovidessecureregistrationofauthorshipofcreativeworkings.Theconceptscaneitherberevealedorhidden.Itisatooltosecureandproveone’spropertyinanareainaninformalway.(SeeAppendix1,BestCase25)

237ProINNOEurope,(2007),AMemorandumonRemovingBarriersforabetteruseofIPRbySMEs,ReportfortheEuropeanCommission,(DGforEnterprisesandIndustry)andIPRExpertGroup238Ibid.,pp.17‐23.239NationalEndowmentforScience,TechnologyandtheArts,(April2010a),MeasuringuserinnovationintheUK‐Theimportanceofproductcreationbyusers,London:NESTA

competitivewaystomanageandprotectIP.Thisreiteratestheneedtounderstandthesystematicuseofbothinformalandformalmethods.240

3.3.3.ExistingEuropeanInitiatives

IntheEuropeancontext,nationalterritoriallawstendtopredominate.Intermsofprotection,mostattentionhasbeenpaidtopatentsfortechnologicaladvancementwhilemanycompaniesarebasedonnon‐technologicalinnovationthatisperceivedasincreasinglyimportantforEurope241.TheneedtoreducethecostofpatentsandtomovetowardsasingleEUpatentsystemwasmadeclearbyindustryitselftoencourageinnovation.242InviewoftheCommunicationonAssessingCommunityInnovationPoliciesinthePeriod20052009,243theEUalsoacknowledgedthemisOitincurrentIPRregulationsforsoftinnovation.ThedecreaseinthecostoftheEUwidetrademark(40%lower),whichisoneofthemostusedformaltoolstoprotectCCIscreativeoutputsaftercopyright,244wasintendedtoprovideincentivesfornon‐technologicalinnovation.245ApartfromtryingtohaveaCommunitypatent,otherinitiativesweresuggestedattheEUlevelasawaytohelpprotectcontent.A‘ProtectedDesignationofOrigin’,similartotheonesseenincollectivepropertyrights,wassuggestedasawaytohelpreducethenumberofunauthorisedcopies.TherecentEUDigitalAgenda246alsohighlightstheneedtohomogenisetherightsmanagementsystemsthatSMEshavetoimplementinordertoprotecttheircreationsindifferentcountries.247Thisdocumentnoted“ConsumerscanbuyCDsineveryshopbutareoftenunabletobuymusicfromonlineplatformsacrosstheEUbecauserightsarelicensedonanationalbasis.”Theex‐CommissionerforInformationSocietyandMedia,VivianneReding,suggestedaEuropean‐wide,consumer‐friendlylicensingsystemtoovercomethefragmentationofthesystemandtocomeupwithnewIPRmodelsandsomeofthisworkiscurrentlyundertakenbytheOfPicefortheHarmonisationoftheInternalMarketandtheEuropeanPatentOrganisation.Initslatestcommunication,theECsuggestedtheneedforimprovedprocessesofgovernanceandtransparencyofcollectiverightsmanagementinordertoenableafairaccesstocontent,balancingbetweentheinterestsofrightsholdersandthegeneralaccesstocontentandknowledge.248

3.3.4.LevelsandPhasesofsupportforIPR

ThewayinwhichIPservicesareprovidedtotheCCIscanhaveahugeimpactontheoutcomeandtheuseofsuchservicesbytheCCIs249.InaProInnoStudyonIPR,thekeysuccessfactorsforIPusagewereissuessuchastheavailabilityofsufPicientlyqualiPiedstaffinthecompany,thelevelofintegrationofIPservices,andthelevelofnetworkingwithotherservices.250ReceivingwrongorinappropriateadviceonIPRforSMEs,forexamplepatentingwhenitisnotadvisablecouldalsobedetrimentaltothem.Inthisregard,theavailabilityofIPRadvicetoculturalandcreativeentrepreneursiscritical

240ProINNOEurope,(2007),op.cit.,p.24.241ArgeCreativwirtschaftAustria,(2010),ExecutiveSummaryoftheThirdAustrianReportonCreativeIndustriesinInnovation,Vienna:ArgeCreativwirtschaft,Austria,http://www.creativwirtschaft.at/document/KWB_Kurzfassung_EN_web.pdf

242 IPREG,(2007),MemorandumonRemovingBarriersforabetteruseofIPRbySMEs,ReportfortheDGforenterprisesandindustryandIPRExpertGroup243ECCommunication,(April2009a),op.cit.,p.11.244ECCommunication,(September2009c),ReviewingCommunityInnovationPolicyinaChangingWorld,COM(2009)442

245 Ibid.,p.11.246ECCommunication,(May2010a),op.cit.,p.8.247Ibid.,p.15.248Ibid.,p.8.249Ibid.,p.34.

250 Ibid.,p.30‐33.

andthemomentwhenitisgivenisimportant.AbusinessmodelthatintegratesIPaspartoftheenterpriselifecyclewasseenasimportant.251

Inthisregard,thenumberofoverlappinginnovationsupportschemesatbothnationalandEuropeanlevelscomplicatethepictureaspresentedtoSMEs.Asrecentlynoted,“NotonlydoMemberStatesoftenhaveseveralfundingschemesandavarietyofcompetingsourcesofadvice,theEUprovidesitsownschemesandsources(RelayCentres,IPRHelpdesk)andseveralfundingregimes.”252Theresultsfromtheonlinequestionnaireshowedthatinmostcases,theOirstphasesofthelifecycleweremostcrucialforadviceonIPRforCCISMEs(seeFig.27.).

Question:InwhichphaseofthelifecycledoyouseeaneedforIPRadvice?

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)*+,-#$.#/011-2314#

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)*+,-#'.#56789;6<#

)*+,-#&.#=:+>:;6<#

)*+,-#%.#)>-<+>714#:*-#4>0619#

Figure27:BestphasefortheprovisionofIPRadvice(Source:Eurokleis2010,onlinesurvey)

Thenational(39%)andthesectoral(20.5%)levelswereconsideredmostsuitableforprovidingIPRadvicefortherespondents.Only20%intotalusedlocalandregionalinstitutionsforsimilaradvice.DespitethefactthatmostoftheexpertintervieweeshighlightedthevitalrolethatEuropecouldplayinshapingaharmonisedlegalcontextforIPR,veryfewrespondents(7%)receiveddirectadviceataEuropeanlevel.Inordertoincreasethenumberofinnovativeplatforms,andtobeabletocompetewithcountrieswithmuchlowercostofpatentssuchasJapanandtheUS,253theDigitalAgenda254highlightedtheavailabilityofawideandattractiveonlinelegalofferforshapingtheregulatoryenvironment.255

Overall,theintervieweesnotedthatclearadviceandqualiPiedstaffbeavailabletocaterfortheneedsofCCIstoeffectivelyuseIPRasanenablerfortheirentrepreneurialactivity.BoththeregulatoryandthehumanresourceenvironmentshouldbeimprovedtomakeIPRadvicemoretransparentandlesstimeconsuming.OwnItintheUKisanexampleofafreeIPRadvicecentreforSMEsspecialisedintheCCIs(seeAppendix1,BestCase26).SupportondemandforIPRadviceinordertobetterrespondtothechangingneedsoftheCCIsthroughouttheirlifecyclewascitedasaessentialtopromotetheiruseasanenablerforentrepreneurialandcreativeactivities.

OWNITOwnitisaUKfreeintellectualpropertyadviceforcreativebusinesses.Itaimstoprovidecreativeentrepreneurswithaccessible,specialisedknowledgeIPsystemsaswellasitoffersworkshop,networkingandcoachingandonetooneadvises.(SeeAppendix1,BestCase26)

251Ibid.,p.14.252Foord,J.(2008),“Strategiesforcreativeindustries:aninternationalreview”,CreativeIndustriesJournal,Volume1,Number2.,p.96.253ProINNOEurope,(2007),op.cit.,p.33254ECCommunication,(May2010a),DigitalAgendaforEurope,COM(2010)245255Ibid.,p.8

3.4.Entrepreneurshipeducation,skillsandtraining

ItisclearfromthestudythatthereisagenerallackofentrepreneurialskillswithinallsectorsoftheCCIs.Limitedbusinessskillswerecitedasthesecondmostimportantbusiness‐relatedchallengeafterlackofPinancewhenstartingacompany(seeFig.28.below).

Question:Whichwasthemostimportantbusinessrelatedchallengewhenstartingyourcompany?

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:42;#*-#F/4/20#

Figure28:Mostimportantbusinessrelatedchallengewhenstartingacompany(Source:Eurokleis2010,onlinesurvey)

IntheOECD’sentrepreneurshipframework,the‘cultureofentrepreneurship’isincludedasadeterminantofentrepreneurship,beinginPluentialindevelopingaconduciveenvironmentforfosteringentrepreneurialactivity.256Despiteitsimportance,thereisstillinsufOicientintegrationofentrepreneurshipeducationingeneralcurriculaandinartseducation.257

Thereisstillrelativelylittledataontheoutcomesandimpactoftherecentincreaseingeneralentrepreneurshipandeducationprogrammes.258Fosteringthetakeupofentrepreneurialskillsbyculturalandcreativeentrepreneursmayalsorequirenon‐traditionaleducationalprogrammes.ThenarrowmodelofentrepreneurshipfocusingsolelyoncommercialsuccessdoesnotseemtocorrespondtotheCCIs,forwhomcriticalcreativeandculturalachievementsareoftenmoreimportant.259However,stimulatingthedevelopmentandimplementationofentrepreneurialskillsisneededintermsofentrepreneurialdevelopment,marketorientation,returnoncreativity,communicationskills,networkdevelopment,andteambuildingwithintheentrepreneuriallifecycle.AspeciOicskillsetrangingfrombasicbusinessplanningskillstopresentation(e.g.pitchinganidea)andmanagementskillsarecrucialfortheculturalandcreativeentrepreneurstoadvertisetheirproductsandservices.Fromtheexpertquestionnaires,marketentryisdirectlyinhibitedbyknowledgeobstructingfactorssuchasthelackofbusinessskills(asdiscussedaboveinsection3.2.).Expertsalsohighlightedthelackofbusinessskillsasthemostimportantentrybarrier.Indeed,forfreelancers,theexpertrespondentscited,Pirst,thelackofentrepreneurialskills(41%)andthenthelackofknowledge(22.7%).Ontheotherhand,forpanEuropeanexperts,lackofbusinessadvice

256OECD(2009),EvaluationofProgrammesConcerningEducationforEntrepreneurship,reportbytheOECDWorkingPartyonSMEsandEntrepreneurship,Paris:OECDp.9.257DCMS(2006),DevelopingEntrepreneurshipfortheCreativeIndustries‐TheRoleofHigherandFurtherEducationLondon:DepartmentofCulture,MediaandSport258OECD(2009),op.cit.,p.9.

259 TheHigherEducationAcademyArtDesignMediaSubjectCentreandNESTA,(2007),op.cit.,pp.13‐14.

andofnetworks(60%)accountforthemostimportantknowledgefactorsobstructingCCISMEsgrowth.260

Regardingtheintegrationofentrepreneurshipwithintheeducationalsystem(seeFig.29.below),69%oftherespondentsintheonlinequestionnairedisagreedwiththestatementthatentrepreneurshipwassufOicientlyaddressedintheeducationalsystem,while26%agreed.261

Question:Educationandtrainingisoftenthepreferredinstrumenttofosteracultureofentrepreneurship.DoyouagreethatentrepreneurshipissufNicientlyaddressedintheeducational

system?

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)*+,-./0#1.+22#

3,-4*#5-,6#

)*+,-./0#3781.+22#

9.+22#

3781.+22#

Figure29:AgreementonsufOicientintegrationofentrepreneurshipineducationalsystem

(Source:Eurokleis2010,onlinesurvey)

ThissuggestsalackofentrepreneurialeducationalprogrammesPittingtheneedsoftheCCIsector.Paralleltothepossibletensionsbetweenthe‘entrepreneurial’andthe‘creative’sideofaCCentrepreneur,thecombinationofentrepreneurialskillswithartisticandcreativeeducationisnotyetwellintegrated.Severaltypesofeducationalschemesaretryingtobringthetwoaspectstogethertofosterentrepreneurialskills.

3.4.1.Problemsincurrenteducationalandtrainingsystems

ThemanagementofculturalandcreativeenterprisesrequiresspeciPicskillsfromboththeentrepreneurialandtheartisticorculturalperspectives.TheCCentrepreneursareresponsiblefortheirownbusinessmodelsandPinancialresources.TheCCentrepreneurhastounderstandbusinessmodelsthatarefocusedmainlyoncomponentsofvaluepropositions,relationshipswithvisitorsandclients,coststructuresandvaluechains.Professionalinstitutesofhighereducation,artschools,theatreschools,conservatories,culturalandmediastudiesoftendonotaddresstheentrepreneurialaspectsoftheCCIs.

Ontheotherhand,professionalandintermediateentrepreneurialsupportinstitutionsoftenlacktheculturalafPinityandprofessionalknowledgethatisneededtosupportCCentrepreneurs,althoughgoodexamplessuchasKunstenZakendoexist(seeAppendix1,BestCase27).Despiterecentinitiativesaimedatenhancingentrepreneurshipeducationforart,designandmediastudents,includingprojectsthatpromotecollaborationwiththeculturalandcreativeindustries,thereislittleindicationonwhetherthesehavebeeneffective.262

260 ExpertQuestionnaire261 Onlinesurvey262 TheHigherEducationAcademyArtDesignMediaSubjectCentreandNESTA,(2007),op.cit.,p.56.

Additionally,receivingaprofessionaldegreeintheArtsdoesnotprovideautomaticaccesstoemployment.Fineart,music,dramaanddesigncoursesareheavilyoversubscribed,standardsaredemandingand,withmostcoursesrequiringahugeamountoftimeinrehearsalorstudio,theworkloadishuge.Itisunsurprisingthatentrepreneurialskillsarenotacquiredduringthisperiodofeducationasthemajorityoftimeisdevotedtodevelopingother,morespeciOic,professionalskills.

Nonetheless,resultsfromtheonlinequestionnaireindicatethatmostentrepreneursconsiderthemselvessufOicientlyskilledatthemomentofbusinessstartup.However,theseskillsarenotnecessarilyderivedfromtheformaleducationsystem.AsseeninTable10below,36%ofCCentrepreneursgaintheirentrepreneurialandbusinessskillsatthegraduate/postgraduatelevelwhile61%gaintheseskillsthroughonsiteexperienceandinternships.

Inotherwords,formaleducationsystemsdonotnecessarilyprovidetheproperentrepreneurialandbusinesstoolsforindividualsintheCCIs.IntegratingcreativityandentrepreneurshipwithinexistingeducationalcurriculaisanimportantwaytosupportCCISMEs263andnotsufPicientlyrecognisedatthemoment.

3.4.2.Informalversusformaleducationandtraining

ThedifferencebetweenformalandinformalentrepreneurshipeducationisarecurringdiscussionforCCIs.Accordingtosomeoftherespondents,supporttodevelopentrepreneurialskillsshouldcomeasearlyaspossible,inphaseoneoftheentrepreneuriallifecycle,andevenearlierintheeducationsysteminordertoaddressthedesirabilityofbeinganentrepreneur.Followingthestart‐upofanSME,itisinterestingtonotethat76%ofOinancialandeconomicplanningisdonebytheCCIentrepreneurthemselves.WhilesomemayhavetheexperiencetodealwithPinancialbudgetingandplanning,manymaysimplybeavoidingadditionalcosts.Itis,therefore,importantthatattheindividuallevel,CCentrepreneursarecomfortableandcapableofmanagingtheirPinances,asthiswilldirectlyaffecttheirbusinessgrowthandpotential.

Question:Howdo/didyougainentrepreneurshipskills?

Item %

Throughpersonalnetworks 62.1

Throughinternshipsorhandsonlearningorlearningbydoing 61.2

Throughgraduateandpostgraduateeduca8oninentrepreneurialandbusinessskills 36.6

Throughlifelonglearningini8a8veandtrainingcourses 30.2

Throughbasictraininginprojectcoordina8on,teambuildingandpeer‐to‐peernetworking

Throughvoca8onaltraininginproductandservicedevelopment 15.1

Throughadvancetraininginmanagement 12.5

KunstenZakenKunstenZakenprovidessupportinordertomakethetransitionfromart‐studenttocreativeworkermoreeffective.TheyalsoaimtoenhancethepaletteofpossibilitiesforthecreativeworkersbytryingtoPinddifferentmodelsinwhichtheycantradetheirintellectualvaluetoregularbusinesses.(SeeAppendix1,BestCase27)

263 ExpertQuestionnaire

Item %

Throughprivatebusinesscourses 12.1

Throughbasictraininginfinancialandbusinessmodeling 9.5

ThroughcentersthatsupportSMEsandentrepreneurship 7.8

Throughentrepreneurshiptrainingprogramsattheregionallevel 4.7

Throughentrepreneurshiptrainingprogramsatthena8onallevel 3.9

Thoughentrepreneurshiptrainingprogramsatthelocal/municipallevel 2.6

Table10:Waysofacquiringentrepreneurialskills(Eurokleis2010,onlinesurvey)

Infact,thetwomostrelevantdeterminantstoacquireentrepreneurialskillsarepracticalexperiencesandtheCCentrepreneur’spersonalrelationships.Graduateandpostgraduateeducationtakesthirdplace(36.6%)whilepublictrainingcourseswerealmostirrelevant(atnational(4,7%),regional(3.9%)andlocallevels(2.6%)).ForCCISMEs,businessskillsareneededtosuccessfullymakealiving,attractinvestorsandpotentiallyexpandtheirbusiness.ManySMEs,simplyput,‘...lacktheskillsneededtodevelopabusinessproposaltoastagewhereitisreadytoattractexternalinvestors’.264Creativegraduatesneedtogainawarenessofthetransferabilityoftheirskills(i.e.toothersectors)iftheyhaveaninterestinbusinessentrepreneurship,265possiblythroughinitiativessuchasDemolainFinland(seeAppendix1,BestCase28).TherecentECGreenPaperonthepotentialofCCIsstressestheneedtobettermatchtheskillsneedsofCCIsbyallowingforcontinuoustraininginitiativesaswellpromotingthemobilityofartists.266LifeLongLearningmechanismscanbeprovidedforsuchcontinuouslearningschemesandcouldbedeployedondemandbytheentrepreneur.Astheacquisitionofsuchskillsoccursthroughbothformalandinformalmeans,theneedtoincreasethenetworksandinterconnectionbetweenbusinesses,SMEs,educationandvocationalinstitutionsisrecognisedasparticularlyrelevant.267Asawayofexample,theUK’sHigherEducationInnovationFund(HEIF)hasbeenusedasatooltoguidehighereducationinstitutionstowardsforminggreaterlinkswithindustryandthewidercommunity.TheHelsinkiSchoolofCreativeEntrepreneurshipinFinlandisacollaborative

DEMOLADemolaprojectispartofaprojectinCreativeTampere,theCityofTampere'sbusinessdevelopmentpolicyprogramme,(2006‐2011),whichaimstofacilitatenewbusiness,services,innovativenessandcreativitybylinkingeducationandbusiness.Itmakestheco‐operationbetweencompaniesanduniversitiescloser.Itteamsupstudentofdifferentbackgrounds:technical,economical,artordesigntomakethemworktogether.(SeeAppendix1,BestCase28)

HelsinkiSCEHelsinkiSchoolofCreativeEntrepreneurshipisacollaborativeinitiativethatstimulatestheentrepreneurshipofitsstudentsbyintegratingthreeschools(art‐design,businessandtechnology)tooneprogramme,stimulatingcross‐disciplinaryprojectstoenhancetheiractivelearningfromeachother.(SeeAppendix1,BestCase29)

264 Hutton,W.(2007),Stayingahead:theeconomicperformanceoftheUK’screativeindustries,London:DCMS,p.157.265 KEA,(2009),op.cit.,p.112.266EuropeanCommissionGreenPaper,(April2010),op.cit.,p.10.267TheHigherEducationAcademyArtDesignMediaSubjectCentreandNESTA,(2007),op.cit.,p.102;EuropeanCommissionGreenPaper,(2010),op.cit.,p.11.

initiativethataimsatstimulatingentrepreneurialeducationthroughitsnetworkofstakeholders(seeAppendix1,BestCase29).However,whilesuchprogrammeswouldappeartobeapositivestepinencouraginggreaternumbersofentrepreneurs,therealityisthattheyonlyattractandbenePitthoseforwhomentrepreneurshipisalreadyaninterest.268Conversely,someexpertsclaimthatcompetencebuildingandskillsinentrepreneurshipareirrelevant.Againstthelackofevaluationofeducationalentrepreneurshipprogrammes,269somesuggestredirectingthepresenteducationalmicroefforts‐suchasascoursesinbusinessskills270‐aimedatstimulatingentrepreneurship,toprioritisereformsinregulatorymeasures,suchascompetitionpolicy,taxandbenePitsregimes.271Insteadoffocusingontrainingfutureentrepreneursorgivingthemcoursesinbusinessmanagement,theadvocatesofthisapproacharguethatitismoreeffectiveinthelongruntosupportentrepreneurshipforSMEsthroughmacroeconomicmeasures.Thistensionbetweenthemicroandthemacro‘interventionist’initiativesispresentlyrePlectedinCCIsupportprogrammeswhichtiltthebalancetowardsintermediaryandcomplementarysolutionsthatcombine‘learningbydoing’and‘peertopeer’coaching.Indeed,ratherthanfocusingoneducationcurricula,acomplementaryalternativetosupportsustainabilityandgrowth(whichcouldalsodissipatethetensionbetweenthe‘growth‐orientedCCentrepreneur’andthe‘creation‐orientedCCentrepreneur’),couldbetobolstertheconnectionsbetweentheCCentrepreneursandindividualsexperiencedinbusiness.272

3.4.3.Entrepreneurshipeducationinachangingdigitalenvironment

IncreasingdigitisationhasledtonewchallengesforCCIssuchasdealingwithshiftingwaysoflearningandworkingandunderstandingthedifferencesinhowCCIsandeducationalinstitutionsreacttothisfastchangingclimate.Withtherapidgrowthininformationconsumptioncomplexity,thereexistsaneedtobridgethegapbetweengenerationsofconsumersofdigitalinformation.Youngergenerationsaregrowingupwithfargreaterunderstandingofinformationcomplexitywithoutalwaysrequiringalinkfromthesedigitalobjectstoexisting,real‐worldcounterparts.Fortheyoungergeneration,thedigitalobjectsthemselvesarethereal‐worldcounterparts.Fortheoldergeneration,however,theexplicitlinkbetweenphysicalobjectsandthedigitalrepositoriesofobjectsremainsvital.Fortheoldergenerations,thephysicalobjectsremainthemetaphorsappliedtobuildanunderstandingofthemeaningofthatparticularobject.Thisisnotnecessarilythecaseforthosewhoare‘borndigital’.

ManyeducationalinstitutionsarealreadyunabletorespondadequatelytothesechangingstudentproPiles.Youngpeoplearedevelopingnewformsofliteracy.Theyfrequentlyco‐operate,functionwellinnetworks,quicklypickupsocialcodes,participateingaming(andlearnandadheretotheaccompanyingrules)andarevery(socially)involved.TheyareextremelycapableofdigestingdiscontinuousinformationOlowsandhaveapro‐activewayoflearning.Problemsthereforeoccurwiththemorelineartransferofknowledgefoundinmanyexistinglearningandtrainingenvironments.Oneusefulapproachtoovercomingsuchtensionscanbefoundintheideaof“T‐shapedpersons”.273Thesearepeoplewho,bynature,enduptakingapositionbetweendifferentdisciplinesandwhoseethemergerofthesetwoormoredisciplinesasawholeandnotasindividual,separateandunrelatedentities.TheseTshapedpersonsautomaticallycometofulOiltheroleofmediatorbetweenthevariousdisciplines.Theyexperience

268TheHigherEducationAcademyArtDesignMediaSubjectCentreandNESTA,(2007),op.cit.,p.42.269OECD(2009),op.cit.,p.9.270Inthiscontext,micropoliciesconsistofprogrammessuchasworkshopsinbusinessskillsorcoursesinbusinessforcreativeentrepreneurs.MacropoliciesinthiscontextareunderstoodasmeasuresonPiscalregulations(e.g.startupregistrationcostsandsocialsecurity).271Storey,D.J.,(2008),“EntrepreneurshipandSMEPolicy”,WorldEntrepreneurshipForum2008

272 ExpertinterviewsandBestCases273Kelley,T.andLittman,J.,(2005),Thetenfacesofinnovation:IDEO’sStrategiesforDefeatingtheDevil’sAdvocateandDrivingCreativityThroughoutyourOrganisation,NewYork:DoubleDay

theassignmentfromthevariousdisciplinesbuttheyarepeoplewhoengagewiththedisciplinesasanacademicallyschooledmediatormight.ThereforetheT‐shapedpersonwillbeabletoenterintoa(working)relationshipwiththesedisciplineswithadegreeofintimacyand,basedonthis,theycanintuitivelycomeupwithresearchanddesignsolutions.T‐shapedpersonsspecifysystemsonthebasisofconnections(bridges)betweenentitiesinsteadofbasedonseparateentities.Theythereforehaveamuchbroaderperceptionandamuchmore“Pluid”wayofthinking.Theyenablecompaniesandinstitutionstoestablishconnectionsbasedonnaturalcommonalities.Becauseoftheintimatebondtheycanforgewithbothindividualdisciplinesandthebiggerwhole,theycancoupletheinnerworldofthesedisciplinestotheirouterworldtransparently.Throughthistransparentconnectionthevariousdisciplinescancommunicatemoreinformallyandanunderstandingemergesofhowthisconnectionisworkingandcankeeponworking.Inthisway,creativitycannotonlybeexaminedbyobservinghowpeopledealwithlimitations.Creativitycanalsobeexaminedbyobservinghowpeopledealwithinformalopenness.T‐shapedpersonsareabletooperateindifferentsettingsandtheywillbeabletotransformtheirworkenvironmentfromonetypeintotheother:fromlimitationto(controllable)openness.Thesearelikelytobetheculturalandcreativeentrepreneursofthefuture.InviewofprovidingsupporttoCCI’sentrepreneurialskillsacquisition,itisimportanttohaveinmindtheconsiderationsofthischangingclimateandthechangingneedsofborndigitalpeople.

3.4.4.Matchingversustraining

Matchingthesupplyofskillsandthedemandsofthelabourmarketisavaluablecomplement,orevenalternative,toeducationandskillsacquisitionfortheCCIs.Supportcanbegivenbymatchingindividualswithabusinessbackgroundwithcreativeindividuals,thusachievingmultidisciplinarycrossovers.Theemphasis,then,isonbridgingthegapbetweenthecreativeandbusinesssectorbyraisingawareness,communicationandsettingupmatchmakingprogrammes.Co‐operationbetweenformaleducationinstitutionsintheartsandexistingbusinessesiscriticalinordertoachievethis.Innovationcentreswithinauniversityorcreativebusinessincubators,oftenlinkedtoartschoolsoruniversities,haveprovedsuccessfulinclosingthegapbyenablingstudentsinasupportiveenvironment.274

FacilitatingtheexchangeofknowledgewithintheCCIsbetweenexperiencedandinexperiencedCCIsisanothertypeofmatchingworthconsideration.Peertopeerexchangewithinanetworkmayprovidecrucialinformationontheresourcesavailableandnecessarytotransitionfromonephasetoanother.Whilepeertopeerexchangeor‘peercoaching’275appliesparticularlytotheearlystagesoftheSMElifecycle,itisalsoapplicablethroughoutthegrowthofabusinessasinformationandtechnologyconstantlyundergoeschange.

3.4.5.Supportondemand:mentorshipprogrammers,advicecentresandlearningloops

Regardingtheacquisitionofentrepreneurialeducationandskills,itisclearthatonesizeclearlydoesnotOitall.Ratherthantryingtoproduceaformulaforafairlycomplicatedanddynamicprocess,supportshouldbeofferedondemand,speciOictothephaseofdevelopmentandtheexpressedneedsoftheCCISMEinquestion.

Inordertoprovidesupportondemand,respondentshighlightedacombinationofstrategies.Whilewell‐dePinedandneeds‐speciPictrainingandlifelonglearning

274 KEA,(February2010a),BusinessInnovationSupportServicesforCreativeIndustries,ShortstudypreparedfortheEuropeanCommission,(DGEnterpriseandIndustry),http://www.keanet.eu/report/BISScreativeindustries.pdf.March5,2010.

275 ECGreenPaper,(2010),op.cit.:Inthedocument,peercoachingistheupgradingofskillsandprocessesthroughtheexchangebetweenpeersfacingthesamechallenges,asawaytolearnfromothers'mistakesorsuccesses,Ninetuneone'sprojectsthankstoexperiencedtutors,explorenewtechnologiesorexpandone'scontactbase.

programmesareextremelyvaluable,theycanbecombinedwithmentoring,tailor‐madetotheCCISMEs.AdvicecentreswerealsoidentiPiedasessentialassetstoadevelopingbusinessintheCCIs.TheCompetitivenessandInnovationProgramme,anEUPinancialframeworkputinplacetoincreaseaccesstoPinanceandbusinessadviceforinnovativeSMEs,isonesuchinitiative.276However,despitebeingtargetedatSMEsandtryingtoputthefocusonentrepreneurship,thelackofspeciOictailoredadvicecentresforCCISMEsisgenerallylackinginEUinitiatives.MostoftherespondentsagreedontheneedforacentralpointwheretheycouldgetspeciOicadviceforCCIs,alongsidetailoredadviceonsectorspeciOicpolicies.

DifferentbestpracticesinCCISMEentrepreneurshipsupportweresuggested,especiallyinvolvinginitiativesfocusingoncustomisedinteraction:onetoonecoachingandconsulting,microcredit,bottomupmethodsfordevelopinglocationsusedsolelybyendusers,277peertopeerconsultationsandOlexiblebusinessincubators.

Inordertoimproveprofessionaltraining,respondentsmentionedPirstlythedevelopmentofregionalcentresforCCISMEsforappliedresearchandexchangeofpractices(82.5%)andthenthesettingupofmentoringschemesandEuropeanmobilitygrants(both61%).OnebestcasepracticeimplementingmanyoftheabovelistedcharacteristicsisFirstport,anorganisationservingCCISMEsandotherentrepreneurs(seeAppendix1,BestCase30).

3.4.6.Phases

Astheacquisitionofentrepreneurialandbusinessskillsissaidtobebestintroducedintheeducationalsystem,beforetheCCIentrepreneurcreatesabusinessandasearlyassecondaryschool,someoftheintervieweessuggestedthattherewasaneedtointroduceanotherphaseintheentrepreneuriallifecycle:phasezero.Severalrespondentsexpressedtheimportanceofthisperiod,whichoccurspriortothecreationandpursuitofanidea.Naturallythetransitionfrom‘professionaltrainingintoprofessionalpractice’alsoprovestobeachallengingstage.278ThedevelopmentofapprenticeshipsinCCISMEsiscurrentlyusedinsomecountriesbutapprenticeshipiseasierintraditionalindustriesashiringsomeonecanalsobeaconsiderablyheavyloadformicro‐SMEsalreadyundertimeandresourcesconstraints.Toaddressthisproblem,programmessuchastheNordicCreativeKnowledgeExchangeProgrammeortheUKCreativeApprenticeshipProgramme(seeAppendix1,BestCase31),linkindustries,educationandbusinessclusterstogetherbyprovidingavitalnetworkofinformationandopportunities.279IntheOirstphase,themostadequatesupportforacquiringentrepreneurialpracticeswasdeemedtobeonsiteexperienceorinternshipfor33%oftherespondents(seeFig.30.below).

FIRSTPORTFirstportservesnewandemergingsocialentrepreneursthroughface‐to‐facesupportandadviceaswellassetstheculturalandcreativeentrepreneurwithastrongnetworkandtrainingsessions.(SeeAppendix1,BestCase30)

CreativeApprenticeshipCreativeApprenticeshipisaUKprogrammethataimsatbridgingthelackofskillsfromstudentsintheCCIsectorsbyofferingtheopportunitytolearnon‐the‐jobandgivingyoungpeopleastartintheCCIsectors.(SeeAppendix1,BestCase31)

276 Seehttp://ec.europa.eu/cip/277Lookingattheimportanceoffeedbackloopsinthedesignprocessandproductionofaproductandservice,differentsecuredlocations,suchasrestrictedonlineplatforms,canbedevelopedtoenablegreaterinteraction

278 ECGreenPaper,(2010),op.cit.279Seehttp://www.ccskills.org.uk/Apprenticeships/CreativeApprenticeships/tabid/82/Default.aspx

Question:WhattypeofsupportinacquiringentrepreneurialpracticesismostusefulduringtheNirstphase?

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Figure30:Mostusefulsupportforacquiringentrepreneurialpracticesinthestartupphase(Source:Eurokleis2010,onlinesurvey)

Itisinthisphasethatacademiaandentrepreneurshiparebestcombined.Atthelocallevel,ChambersofCommercetackleaspectsofeducationalsupportandprovidecoursesforstartingbusinessesandcapacitybuildingforyoungentrepreneurswhoareinphasesoneandtwo.AtanationallevelthefocusliesmainlyonhowtoprepareeducationalinstitutionstomeettheneedsofculturalandcreativeentrepreneursandfutureSMEs.Duringphasetwo,supportneedstobeveryPlexibleandeasilyaccessible.CCentrepreneurshavetobecomefamiliarwithtermsandregulationsthatmayhelpthemintheirbusiness.TheyhavetofeelcomfortablewithdebtPinanceandwithIPRmanagement.TheymustdevelopcompetenciesandredePinetheirbusinesstowardsgrowthwiththeaimofeasingthetransitionintothenextphase.Additionally,elementsrelatedtotrainingwerealsomentionedduringthisphaseoftheentrepreneuriallifecycle.Thenascententrepreneurexperiencesaverysteeplearningcurve,especiallyifphaseonehasbeentooshortorbypassed.Phasetwoisaperiodoftrialanderror,duringwhichculturalandcreativeentrepreneursmustrelyonmentorsandadditionaltrainingorcoachingthatmightbeavailable.Accordingtorespondentsofthequestionnaire,aspeciOicprogrammeforimprovingOinancialandtechnologicalskillsisneeded(49%oftherespondentsagreedthatitwasneededand37%agreedthatitwasverymuchneeded).Thistypeofprogrammewasparticularlyneededduringphases1and2(seeFig.31.).

Question:.Inwhichphasesofthelifecyclewouldthisprogrammebemostuseful?(youcanchoosemorethanonephase)

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Figure31:MostappropriatephaseforspeciOictrainingintechnologyandOinancialskills(Source:Eurokleis2010,onlinesurvey)

Similarly,Lifelonglearning(LLL)programmes,thatsupportstartingandgrowingcompaniesbyprovidingpersonalandmanagementskills,aswellasriskmanagement,alsooccurattheentrepreneurorenterpriselevelandareusuallypreferredinthestartuporthebuildupphase.(seeFig.32.)Question:LifeLongLearning(LLL)programmesprovidingpersonalandmanagementskills,aswellasriskmanagement,cansupportstartingandgrowingcompanies.Inwhichphaseofthelifecycleare

theseprogrammesmostuseful?

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Fromphasethree,issuessuchasthescalabilityandgrowthofabusinesscomeintoplay.ItisduringthisphasethatSMEsmustconsiderwhetherornottheywanttobescalable,whichmayleadtodifferingpathstogrowth.ThesustainabilityoftheSMEthusbecomesanimportantcomponentinthisphaseandthephasestofollow.Morefocusedsupportinbusinessskillsarecitedasimportantskillsatthisstage.On‐demandsupportsuchascoachingisexplicitlymentionedfromthispoint.InphasesfourandOive,Pinancingandmarket‐relatedissuesbecomemoreimportantandthesupportshouldfocusonorganisingthecreativeprocess,andmanagingpeopleandresources.

Additionalemphasisisgiventotheimportanceofnetworksandpeertopeerknowledgeexchange.Inthesetwolastphases,Plexibilitygiveswaytoanecessaryrigidity(e.g.distinctorganisationalroles,manyprojects,projectmanagement,resourcemanagement)andthiscanbedifOicultforCCIsiftheshiftinscaleandchangeoffocusandstructurescoincideswithalackofsupportandguidance.Fromthispointon,SMEscontinuetorequiresupport;however,thetypeandamountofsupportneededdiffersandon‐demandadviceandcoachingneedstobespeciPicandadvanced.

3.4.7.Levels

Skills,educationandtrainingcanbeprovidedatdifferentlevels.Duetothefastchangingenvironmentinwhichtheywork,regulartrainingindevelopingsectorspeciOicskillsisimportant.84%oftherespondentsthoughtthatthedevelopmentofadviceandsupportcentresspeciPicallyforCCIsisneededorverymuchneeded,asillustratedinFig.33.below.RegionalcentresforCCISMEswerealsosuggestedforimprovingprofessionaltraining(seeFig.34).

Question:DoyouseeaneedforthedevelopmentofadviceandsupportcentresspeciNicallyforthecreativeandculturalindustries?

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Figure33:NeedfordevelopmentofadviceandsupportcentresforCCIs(Source:Eurokleis2010,onlinesurvey)

Question:Atwhichlevelwouldthesesupportcentresbebestplaced?

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Figure34:PreferredlevelfordevelopingadviceandsupportcentresforCCIs(Source:Eurokleis2010,onlinesurvey)

Attheentrepreneurlevel,skillsandknowledgearegainedinvariousways,asseeninTable11.above.Evenduringtheeducationalphases,personalinitiativesandparticipationinextracurricularactivitiesandexperiencesbeyondthoseacquiredthroughformalprogrammeshaveproventoplayamajorroleinthedevelopmentofstudents’andgraduates’entrepreneurialcapacity.280

Duringthisphase,thecompetenciesoftheindividualmustcontinuetodevelop,suchasintheareasofinnovationandR&D,butalsointheorganisationandmanagementofanenterprise.Theprocessremainsverymuchatanindividuallevel,inpartduetothelargenumbersofmicro‐SMEs.Atthislevel,thetraining,skillsandadvicethatweredescribedfortheentrepreneurlevelwillalsoapply.Thecontinuityinlearningandskillsdevelopment,or‘lifelonglearning’(LLL),isdeemedessentialtosustainEurope’sinnovationasresearchshowstheinPluenceLLLhasonthecreativeandinnovativepotentialofindividuals,groups,organisationsandcountries.281Therefore,LLLhasbecomeacornerstoneoftheEU’slearning

280 TheHigherEducationAcademyArtDesignMediaSubjectCentreandNESTA,(2007),op.cit.,pp.94‐101.281 Dohmen,M.(2009),ThefutureofcontinuingeducationinEurope,Bonn:GermanFederalMinistryofEducationandResearch,Bonn,Germany

strategy,althoughthepotentialofLLLhasyettobefullyembraced.282TheEuropean,regionalandnationallevelsmayeachplayanimportantroleinexecutingLLLprogrammes,thoughthemajorityofrespondentsbelievethattheresponsibilityshouldlieattheEuropeanlevel(29%),283asinFig.35.below.

Question:AtwhatleveldoyouseethistypeofLLLprogrammemostusefulforyourcompany?

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Figure35:PreferredlevelforLLLstrategies(Source:Eurokleis2010,onlinesurvey)

Atthelocallevel,themunicipalitymayprovideentrepreneurialtrainingtoentrepreneurs.However,accordingtorespondents,trainingandadviceisoftennottailoredtotheCCIsandisthereforenotsuitable.Localpolicymayhaveanarrowviewofentrepreneurship,tendingtofocusoncommercialentrepreneurshipmeasuredthroughlevelsofbusinessstart‐up.284ThisisduetoalackofunderstandingoftheCCIsbylocalgovernmentsorbylocalgeneralSMEssupportcentresthatmaynotpossessinformationontheCCIsector.However,trainingatthislevelisbenePicialinthattheCCentrepreneursthatparticipatecandirectlycontributetotheirlocalenvironment.Thus,theremaybegreaterimpactinlesstimethroughlocaltrainingandadvicecentres.TheroleoftheregionallevelwasstronglyhighlightedbytheintervieweesregardingthecompetenciesofentrepreneursintheCCIs,onegoodexamplebeingArgeCreativWirtschaft(SeeAppendix1,BestCase32).RegionsareoftenclosetodevelopmentsintheCCIs,andoffertraining,coaching,LLLprogrammes,andtheorganisationof‘learningloops’andthiscanbeefPicientlysupportedattheregionallevelalongsideotherservicessuchasconsulting,advisingandbusinessmodelling.32%ofrespondentsbelievethatadvicesupportcentresshouldbeplacedattheregionallevel,while22%chosethenationallevel(seeFig.35.above).Inadditiontotheserviceslistedabove,theregionplaysanimportantintermediarysupportrole,linkingthelocallevelwiththenationallevel.Overall,asystemforadviceandsupportorientedtotheCCIsisstronglyrequiredinparticularatregionalandlocallevels.Accordingtorespondents,thenationallevelalsohasanimportantroletoplayintermsofeducationandskillsfortheCCIs.Itisseenasusefultoestablishcollaborativeplatforms,

ArgeCreativWirtschaftArgeCreativWirtschaftisacompetencecentreforcreativeentrepreneursandindividuals.Itactsinentrepreneurialskills(trainingandsupportinnetworking),representationofinterestsandinformationandawarenessraising.Itactsasaknowledgehubfortheinterestsofthecreativeindustries.(SeeAppendix1,BestCase32)

282 KEA,(2009),op.cit.,p.119.283 Onlinesurvey284TheHigherEducationAcademyArtDesignMediaSubjectCentreandNESTA,(2007)op.cit.,p.25.

advicecentresandtofosterlinksbetweenCCIsandresearchanddevelopment.Additionally,supportcaninterveneinformaleducationcurriculadevelopmentasitisusuallyanationalcompetenceandnotregionalone.Forinstance,intheNetherlands,therequirementstobecomeaprofessionalarchitectareestablishedatanationallevel.Ontheotherhand,atthenationallevel,thelocalcontextmaybeoverlookedandtheneedsofCCentrepreneursandmicro‐SMEsarenotalwaysproperlyidentiPiedoraddressed.Therefore,thenationalandregionallevelsneedtobelinkedsothattheregionallevelcanbeanambassadorforpoliciesmadeatthenationallevel,andthenationallevelinturncanbenePitfromtheunderstandingthattheregionshaveontheneedsofindividualsintheCCIs.TheEUlevelisprimarilyresponsibleforthestructuralmeasuresrequiredbytheCCIsregardingtheregulatoryenvironment.TheseincludeenforcingandcorrectlyevaluatingIPR,andproactivelyofferingdirectsupportinthePieldoftrainingandformalnetworking.Facilitatingincreasedexchangebetweengroupsofprofessionals,suchaspolicymakers,innovationsupportexperts,andcreativeclustermanagerswouldimprovethewealthofexpertiseonworkingpracticesandprogrammesintheCCIs.285TheEUlevelisnotthelevelofauthoritybestsuitedfordeliveringservices.Rather,atthislevel,culturalexchangeandthePlowofideasbetweenMemberStatesonentrepreneurialeducationalprogrammescanbemoreeffective.ThedifOicultiesofCCentrepreneursandmicroSMEsmayalsovarygreatlydependingonthesectorwithintheCCIs.Forinstance,contrarytothegamingsector,wherethedifPicultieswithinthesectorlieintheareaofknowledgesharing,entrepreneurialskillsandcommunicationwithsupportingorganisations;themusicsectorPindsitsdifPicultiessettingupPinancialPlowmodelsandmechanismsthataidinthesustainabilityandgrowthoftheactivitiescarriedoutbySMEs.However,whiletheneedsmayvarygreatlybetweensectorsoftheCCIs,essentialgeneraltrainingonentrepreneurialskills,alongsidesectorspeciOictraining,iscrucial.Essentialtraining,fromwritingbusinessplanstorelatingproductideastoamarketsituation,isrequiredtoremaininformedandtorePlectonnewdevelopments.ThisisparticularlytrueforthoseSMEsthatnotonlylacktechnologicaltraining,butalsosector‐speciPictraining.Currently,thesectoralassociationsmayonlyprovidesomebasictrainingthoughmorespecialisedknowledgeisnecessary.SectoralsupportforCCIs’entrepreneurialskillswasmostlyperceivedtobethroughexchangeofbestpractices(97%)andconsultations(76%)togatherforexample,informationonCCIpoliciesandeffectiveness.

3.5.Accesstoinnovation

TheEurope2020StrategyhighlightstheneedtostrengthentheroleofknowledgeandinnovationasdriversofgrowthforEurope’sfuturechallenges.286TheInnovationUnion,oneofthePlagshipinitiativesannouncedinEurope2020,recognisestheroleofcreativityintheinnovationprocess,andunderlinesthat"thecreativityanddiversityofourpeopleandthestrengthofEuropeancreativeindustriesofferhugepotentialfornewgrowthandjobsthroughinnovation,especiallyforSMEs".287TheseprioritiesplacedthespotlightonCCIs,acknowledgingtheroleofthecreativetalentworkforceandentrepreneurshipasessentialfortacklingthesechallenges.288InnovationnowalsoencompassesnotonlyscientiPicinnovationbutalsohiddeninnovation,suchasinnovativeprocesseshiddenfromclassicalinnovationmeasures;289softinnovation;290ordesignprocessesasdriversofusercentredinnovation.291ThisisanindicationofthewillingnesstounlockthepotentialrolethattheCCIscouldhaveinfurtherenablinginnovationinEurope.

285 KEA,(2010a),op.cit.286ECCommunication,(March2010b),op.cit.,p.9.287ECCommunication,(October2010),op.cit.,p.7.288Ibid.,p.9.289Miles,I.andGreen,L.(2008),HiddenInnovationintheCreativeIndustries,London:NESTA290Stoneman,P.(2009),SoftInnovation:Towardsamorecompletepictureofinnovativechange,London:NESTA.291ECStaffWorkingdocument,(2009a),op.cit.,

TheThirdAustrianReportonCulturalandCreativeIndustriessuggestedthattheCCIsaremoreinnovativethantheaveragesectorintheeconomy.In2008,asurveyundertakenwithmorethantwothousandAustrianCCIenterprisesshowedthat46%oforganisationsintheculturalandcreativeindustriessupportedcustomersoutsideoftheirsectoringeneratinginnovation.292

However,inordertofullytapintotheinnovativepotentialoftheCCIsandincreasetheir(indirect)impactonothersectorsoftheeconomy,itisessentialtofacilitatetheiraccesstoinnovativeprocessesandtools.Strengtheningthelinksbetweenacademia,knowledgeinstitutes,CCIsandbusinessesinothersectorscanbeonepromptingfactorthatsupportCCIs’accesstoinnovativetrajectories.Iftheyaretoprosperfromthis,theCCIsmusthavethestrategicabilitytounderstandtheimpactofnewtechnologyandthepracticalabilitytoexploitit.293

Atthesametime,rapidcommunicationanddigitalconvergencerepresentafundamentalopportunityforinnovationforCCIs.Theopportunitiesforresortingtouser‐drivencreationthroughinteractivenetworks,includingfeedbackloopsintheproductionprocessesaswellasusingtheinternetforinnovativemethodstoapproachaudiences,arekeystoenablinggreaterinnovationwithintheCCIs.Innovationpoliciesmustthereforeaddressthesekeydrivers,bothtechnologicalandnon‐technological,andallowforOlexibleapproachesthatcorrespondtotheneedsofCCIs.Thus,thepositioningoftheCCIsistwofold.CCIscanthemselvesbedriversofcreativityandinnovationandrecognisedasanessentialpartofcreativityinsocialandtechnologicalinnovationprocesses,294whilesupportforinnovationisneededtofurtherthecreativepotentialoftheCCIsandisessentialinmaintainingtheircompetitiveness.Theimportanceofinnovationwasalsorecognisedintheonlinequestionnaireas74%oftherespondentshighlightedtheneedforinvestmentininnovationforCCISMEswhiletheneedforstrongersupportinR&Dwasalsoperceivedasnecessaryby85%oftherespondents.

3.5.1.Dynamicinnovationlandscape

InnovationistraditionallyviewedandmeasuredfromthetechnologicalandscientiPicperspective.ThismakesitdifPiculttoincludethemoreintangibleandcreativenatureofinnovationtheCCIshavetooffer.Eventhoughinnovationisnowacceptedasencompassingmorethanjusttechnology,295itisstillhardtopredictwhethertheseinnovativeprocesseswillsucceedinthemarket.Theconceptofsoftinnovation,rePlectingchangesofalargelyaestheticnature,296canbebothnon‐functional(aesthetics)aswellasfunctional.AccordingtoNESTA,softinnovationislargelyfoundinthecreativesector,eventhoughthenon‐creativesectorholdsalsosomesoftinnovationpotential.297TheactuallackofmeasuringindicesthattakeintoaccountsoftinnovationalongsidetechnicalandscientiOicinnovationaccountsforoneofthemajordifOicultiesintermsofrecognitionfortheCCIs.298

Newmeasures,suchasthosebeingresearchedbyNESTA299orbytheEuropeanInnovationScoreboard,300attempttobridgethisgap.TheNetherlandsandCanadahavealsostartedtodosobyincorporatinguser‐innovationwithininnovationmeasurement.301Apartfrom

292ArgeCreativwirtschaftAustria,(2010),op.cit.,p.11.293DCMS(DepartmentforCulture,MediaandSport),(2008),CreativeBritain‐NewTalentsfortheNewEconomy,London:DepartmentofCulture,MediaandSport294OpenMethodofCoordinationfortheCulturalandCreativeIndustriesinEurope,(2009)Preliminaryreport,p.18.295ECCommunication,(September2009c),op.cit.,p.8.296Stoneham,P,(2008),op.cit.,p.18.297Stoneham,P,(2008),op.cit.,p.18.298InterviewEuropeanSectoralOrganisation299Seehttp://www.nesta.org.uk/innovation_index300Seehttp://www.proinno‐europe.eu/index.cfm?fuseaction=page.display&topicID=275&parentID=51#301NESTA,(April2010a),op.cit.,p.11.

aestheticchanges,innovativeprocesses,neworganisationalmodelsornewbusinessmodelshavealsobeguntoberecognisedasinnovationunderthenamehiddeninnovation.302ThelatterisdifPiculttodisentanglefromroutineworkof‘problemsolving’byanorganisationandisnotnecessarilyrecordedintheorganisation’sinnovationpracticesandthusisnotPlaggedasinnovation.Thismakesithardtobackupwithappropriatepolicy.Softinnovationandthesubsequentprocessesofhiddeninnovationare,however,essentialwhendealingwithserviceinnovation.TheinPluencethatsuchinnovativeprocessescanhaveonanorganisation’sefPiciency,managementproceduresortheinteractionwiththecustomerscanbeconsiderable.TheEUEPISISINNO‐Net303andtheEUKnowledgeIntensiveServiceInnovationPlatformarepoliciesandinstrumentstosupportserviceinnovationandareillustrativeoftherecognitionofsuchinnovativeprocessesatthedecision‐makinglevel.Moreover,theconceptofopeninnovation,dePinedas‘theuseofpurposiveinPlowsandoutPlowsofknowledgetoaccelerateinternalinnovation,andexpandthemarketsforexternaluseofinnovation,’304blendsthemultipleinnovationprocessesoforganisationstoadvancenewmethodstoachieveacommongoal.ThiscanbeillustrativeoftheimpactthatCCIscanoffertootherorganisationsasanindirectspin‐offeffectofcreativityasadriverofinnovationinotherorganisations.Oneexampleamongmanyis‘TheWalk’.ThiswasacollaborationbetweenavisualartistproducingahumansculpturewithatextileenterpriseandwasaimedatstimulatingthePlexibilityoftheenterpriseemployees.Itaimedtoteachthemtothinkinamorefuture‐orientedwayinordertoanticipatetheever‐changingmarketwithaviewtomodifyingorganisationalprocesses.305However,theappreciationofsoftinnovationorothertypesofnon‐technologicalinnovationisnotfullyhomogenisedacrossgovernmentorisnotyettranslatedintopolicyactions.CountrieshavedifferentwaysoftacklinginnovationthataffectsthegeneralcontextforCCIs.AcountryintheknowledgeeconomiesclusterrecognisesthebenePitofsoftinnovationforbusinessandwillhavespeciPicprogrammesaimedatsupportingCCIs.TheUKforexampleencouragestheuptakeofinnovationvouchersthatcould‘nudge’Pirmstowardsanincreasinguseofinnovationservices.306OtherinitiativessuchastheKnowledgeTransferNetwork(seeAppendix1,BestCase33)fromtheUKTechnologyStrategyBoardarealsoillustrativeofthesupporttheygivetoenhanceinnovationintheCCIs.However,notonlydoCCIsneedtoberecognisedasdriversofinnovation,inallthesensesmentionedabove,buttheyalsoneedtobeappropriatelysupportedininnovativeprocessestotapintotheirfullinnovativepotential.TheEUhasinvested147billionEuros(2007‐2013)tostimulateR&DandICT,butsuchinnovationpolicylargelyignoresthevalueofculturebasedcreativity.ItisestimatedthattheEUwillspendlessthan3billionEuros(2007‐2013)onculture‐basedcreativity.307OpensourceandcollaborativeplatformdevelopmentsthathavearisenfromdigitalandtechnologicaldevelopmentopenupopportunitiesfortheCCIstorespondtonewdemands.Thisallowsforlow‐costcreativeexperimentationthatcanbetestedandreshapedbythepro‐sumer,allowingforamorelevelplayingPieldforinnovationtry‐outs.308Allowingsuchcreativetry‐outsisessentialintriggeringinnovation.AstudybyNESTAfoundthat25%ofuserinnovatorPirmshavesharedtheirprocesswithequipmentsuppliers(20%didreceiveroyaltiesascompensationfortheirsharing).309

302Green,L,(Dec2008),HiddenInnovationinCreativeIndustries,NESTA‐Videogameinnovationworkshop,ManchesterBusinessSchool303Seehttp://www.proinno‐europe.eu/episis304Chesbrough,H.W,((2003),op.cit.305Seehttp://www.arteconomy.be/htm/getpageEN.asp?i=3306Potts,J.,Morrison,K.,(April2009b),NudgingInnovation,London:NESTA307KEA,(2006),op.cit.,p.139.308UKTechnologyStrategyBoard,(2009),op.cit.,p.26.309NationalEndowmentforScience,TechnologyandtheArts,(April2010a),MeasuringuserinnovationintheUK‐Theimportanceofproductcreationbyusers,London:NESTA,p.8.

CCIs,andespeciallythedesignsector,useuserorientedstrategies.310Designcanactasapotentialinstrumentforinnovativesolutionsandproductsthatseektounderstanduserneeds,aspirationsandabilitiesatalowercostthantraditionalR&Dactivities.311TheroleofCCISMEsinmaintainingcloserinteractionwiththeuserandconsumerisinPluentialintheircapacitytoinnovatenewprocessesandservices.Thischangingdynamicbetweenaudienceandcontentcreator,especiallywiththeriseofdigitalcontent,allowsforthepersonalisationandco‐creationofservicesandproducts.Thisalsoallowsforgreaterknowledgeexchangeandcanhaveaconsiderableeffectonthebusinessmodelsofculturalandcreativeindustries.“User‐innovatorsarePirmsorindividualconsumersthatexpecttobenePitfromusinganovelproductoraservicetheydevelop”.312Culturalandcreativeentrepreneursarewellawareofthispotential.EnablingsuchexploratoryenvironmentstoemergeisthereforevitalforunlockingthepotentialofCCIstoinnovateandfosteraspinoffeffectontheothersectors.Inthiscontext,interoperabilityisimportantasitcanalsoensuregreateraccesstonewplatformsforCCISMEsandassuchcanincreasethelevelofcross‐sectoralandmulti‐disciplinarycollaborationthatcanenhanceopeninnovationatalowercostacrossborders.CCIsareconstantlyinnovatingintheirproductsorservicesandinthestudy’sonlinequestionnaire,itemergedthatthemostimportantreasonstoinnovateareusuallyimprovementoriented(35%)oruser‐oriented(29%)(seeFig.36.below).

Question:Whatistheaimofyourorganisationwheninnovating?

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Figure36:AimofCCIswheninnovating(Source:Eurokleis2010,onlinesurvey)

Inthisregard,designisincreasinglyseenasaparticularstrengthforEuropeandasourceofcompetitiveadvantage.TheEUCommunicationonDesignasadriverofuser‐centredinnovationshowedthatnon‐technologyR&DwasascompetitiveastechnologyR&DandcouldbeseenasasolutionforlowtechnologySMEstoincreasetheircompetitiveness.313ThiswasconPirmedintheresultsoftheopenconsultationondesignasuser‐centredinnovationtobeintegratedinthefutureinnovationpolicy.314However,oneofthegreatestbarriersisthelackofawarenessofpolicymakersandSMEsthemselvesoftheeconomicandinnovativepotentialofdesign.315

310ECWorkingdocument,(April2009a),op.cit.,p.17.

311 Ibid.,p.12.312NationalEndowmentforScience,TechnologyandtheArts,(April2010a),MeasuringuserinnovationintheUK‐Theimportanceofproductcreationbyusers,London:NESTA,p.9.

313 ECStaffWorkingPaper,(April2009),op.cit.,p.12.314 ECStaffWorkingPaper,(April2009),op.cit.,Cunningham,P.N,(2008),NationalandRegionalPoliciesforDesign,CreativityandUser‐drivenInnovation,Thematicreport,EuropeanTrendChartonInnovationPolicy

315 EC,(October2009),Resultsoftheopenconsultationondesignasadriverofuser‐centeredinnovation,http://ec.europa.eu/enterprise/policies/innovation/Piles/results_design_consultation_en.pdf

Ontopoflackingawarenessoftheinnovativepotentialofdesign,CCIsalsofaceinnovationconstraintsandchallengesinunderstandingnewemerginglifestylesandmanagingtheroleoftheuser/consumer(seeFig.37.below).Greaterinteractionwiththecustomerthrough,forexample,digitalinteractiveplatformscouldsupportCCentrepreneurs.AccordingtotheresearchinstituteCreatiwirtschaft,certainotherconstraints,suchaslackoftime(20%),lackoffundingsources(18%)andmissingcustomerapproval(14%)arealsoinnovationconstraints.316

Question:Please,selectthethreemostimportantchallengesininnovationthatyoursectorfaces

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Figure37:Mostimportantchallengesintermsofinnovation(Source:(Eurokleis2009,sectoralexpertquestionnaire)

3.5.2.PromotinginnovationforCCIs:targetedorblendedsupportforinnovation

ThereisarecognisedneedtosupportinnovationandaccesstoinnovationfortheCCIsinordertoenhancetheirexistinginnovativeprocessesandincreasetheirefPiciencyaswellasspill‐overstoothersectorsoftheeconomy.

3.5.2.1.BroadeninginnovationdeOinitions

InordertosupportinnovationtakeupbyCCIs,Pirstofall,theinnovativepotentialofCCIshavetoberecognised.OpeningupthedePinitionofinnovationtoincludeCCIoutputsandprocessescontributestosupportingCCIinnovativepractices.Recognising,forexample,talentbasedresearch(suchastalentscouting)oruser‐innovationaspartofCCIsinnovationcanalsoenableaccesstofundingfromexistinginnovationfunds.Twomainideasemergedfromtheexpertinterviews.Firstly,thereisaneedtorecognisecreativityandsoftinnovationaspartofinnovation.Insodoing,theopportunityforCCIstoapplyforinnovationfundingcanbeopened,althoughspeciPictargetedsupportforinnovationmightbenecessaryandcomplementaryinordertoincreasetheuseoftheseprogrammesbyCCIs.Therespondentsfromtheexpertquestionnaireagreedorfullyagreed(70%)onthefactthatinnovationpolicyneededasectorspeciOicapproach,perhapsasaPirststep.Secondly,innovationfundsusuallygotothemostinstitutionalisedsectorandinnovationpoliciesaremostlydirectedatR&DandscientiOicsectors.RecognisingthepotentialofCCIsasproducersofknowledgeandsoftinnovatorscanunlocksomeofthesefunds.

3.5.2.2.Accesstoknowledge

Knowledge,competenceandrelatedintangibleshaveemergedaskeydriversofcompetitiveadvantageindevelopedcountries.OneoftheprioritiesnotedbytheUKTechnologyStrategyBoard’sreportonCreativeIndustriestofosterinnovation,isdevelopingtheskills,knowledgesharingandthecross‐exchangeofexperienceandknowledgebetweenthedifferentsectorsoftheCCIs.317CCIsrelyonknowledgetobreak

316Seehttp://www.creativwirtschaft.at317UKTechnologyStrategyBoard,(2009),op.cit.

throughinnovativeservicesorproductsortokeepupdatedaboutnewpractices,marketsandtechnologies.KnowledgeexchangecanactasacatalyserfortheCCIs’toreachbiggeropportunitiesandcloserinteractionwithusers.InastudybyNESTA,itwasshownthatinnovationwascloselyassociatedwithaccessingknowledge(53%),especiallyinternationalsourcesofknowledge.318AccessingexternalknowledgeisakeyfactorforaPirm’scompetitiveness.319Lookingattheimportantuseofmulti‐platformsforinnovation,theUKStrategyTechnologicalBoardunderlinedtheneedtopromoteknowledgesharingandstimulatenewskillsandcrossmediacollaborationinordertopromoteopeninnovationprocessesanddevelopnewbrands,products,services.320Asthedifferencesbetweensectorsbecomemoreblurred,thismeansthatcrossmediaknowledgetransfercantakeplaceinaneasiermanner.TheexistinginitiativefundedbytheUKTechnologyBoardCreativeIndustries,KnowledgeTransferNetworkBeacons,demonstratestheimportanceaccordedtotransferofknowledgeandillustratesthetypeofsupporttoinnovationbyincreasingknowledgePlowandexchange(seeAppendix1,BestCase33).321Inthiscase,knowledgesharingacrossbordersanddifferentusesofIPinordertoenableSMEstotakeadvantageoftheOlowofinformationwerestrongsuggestionsfromtheexpertquestionnaire.Fig.38.belowdemonstratesthatCCISMEsfoundinformationandknowledgethroughpeer‐to‐peerexchangeofknowledge(24%),co‐operationwithothersectoralorganisation(19%)oropeninformationsources(18%)mostrelevant.ProgrammesthatfostertheexchangeofpracticesbetweenCCIsandpeertopeerlearninghavebeenseenashavinggreatpotentialtofosterknowledgeexchangeandinnovativepractices.

Question:SelectthethreemostrelevantsourcesofknowledgeforCCISMEs

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Figure38:MostrelevantsourcesofknowledgeforCCISMES(Source:Eurokleis2009,SectoralExpertquestionnaire)

KnowledgeTransferNetworkKnowledgeTransferNetworkforCCIistheUKnationalnetworksinCCIwhichbringstogetherpeoplefrombusinesses,universities,research,Pinanceandtechnologyorganisationstostimulateinnovationthroughknowledgetransfer.(SeeAppendix1,BestCase33)

318NESTA,(2010c),op.cit.,p.3.319NESTA,(May2010),op.cit.,p.7.320UKTechnologyStrategyBoard,(2009),op.cit.,p.11.321ProspectforCIKTN,“UnlockingKnowledgeTransfer:Report1/3Baselines”,CIKTNBeaconProject,seehttp://creativeindustriesktn.org/beacons

Althoughmostknowledgeaboutresearchandinnovationinitiativesmostlycomesfromtheinternet,theimportanceofnetworks,bothprofessionalandpersonal,isfarfrominsigniPicant(seeFig.39.below).Theinternetcanalsobethemediumforonlineplatformsofexchangeandaccountsforanimportantsourceofknowledge.Socialmediatoolsandopensourcesoftwareareallelementsthatencourageinnovativepracticesthroughtheexchangeofinformationorthroughcollaborativecontentcreationprocesses.322Theneedtoincreasedigitalliteracytomakeuseofdigitalopportunitiesisessentialtopromoteinnovation,throughmethodssuchasuserparticipation.DifferentStateinitiativeshavebeenestablishedwiththeaimofincreasingthetakeupofinnovationwiththeuseofthedigitalmedia.TheexamplesofSEEintheUKandIBBTinFlanders,Belgium,areillustrative(seeAppendix1,BestCases34and35).TheplaceofcustomersandemployeesasasourceofknowledgeforresearchandinnovationinitiativesisnotyetfullyexploitedascanbeseenfromFig.39.Increasingdigitalliteracycanimprovethetakeupofthepotentialthatthedigitalworldhastooffer.Question:Howdoyouacquireknowledgeaboutresearchandinnovationinitiativesandprogrammes

relatedtoyourbusiness?

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Figure39:Waystoacquireknowledgeaboutresearchandinnovationinitiatives(Source:Eurokleis2010,onlinesurvey)

3.5.2.3.Accesstonetworks

Asnotedearlier,networkscanserveasasourceofinnovationthroughtheexchangeofbestpractices.Thecross‐exchangeofknowledge,ideas,practicesbetweenvariousactorssuchasacademia,businessandCCIscanenhanceinnovationpotential.323Moreover,networkscanserveasreliablesourceofinformation.TheneedtoaccessknowledgeiscloselylinkedtoaccessingspeciPicinformationoutofthevastamountofinformationavailable.However,theamountofinformationavailableisdisproportionatetothetimeCCISMEshavetoacquirethisknowledge.Filteringtheinformationthroughnetworks,andespeciallythroughinformaleventssuchas‘peersand

SEESEE–SharingExperienceEurope–Policy,Innovation&Designisanetworkofelevenorganizations’sharingknowledgeandexperienceinordertodevelopnewthinking,disseminategoodpracticesandinPluencelocal,regionalandnationalpoliciesfordesignandinnovationintheircountries.(SeeAppendix1,BestCase34)

IBBTIBBTisanindependentresearchinstitutecreatedbytheFlemishgovernmenttomotivateICTinnovationbyintegratingdemand‐drivenapproaches.Itplacesgreatemphasisonengaginginmulti‐disciplinaryresearchstudiesandisspeciallyfocusedonnewmedia.(SeeAppendix1,BestCase35)

322UKTechnologyStrategyBoard,(2009),op.cit.,p.24.323ECGreenPaper,(April2010),op.cit.,p.11.

beers’isessentialforCCISMEstoexchangevaluableknowledgeandinformation,324ascanbeseeninFig.39.above.(Networkingandcollaborationareexploredingreaterdetailinsection3.6below).

3.5.2.4.RecognisingCCISMEsasproducersofknowledge

CCISMEsarenotsufPicientlyappreciatedinproducingnewknowledgeandadaptingspeciOicknowledgetransferprocesses.Ontheotherhand,giventheirinherentstability,largercompaniesanduniversitiestendtohavewell‐establishedlinkswithresearchsupportandfundingopportunitiesandarerecognisedasproducersofknowledge.Giventheirlargerpremises,professionalstaff,technicalresourcesandbreadthofskills(includingdedicatedlegal,HRandPinancialexperts),theytendtosettheresearchagendawhileCCISMEshavelittlesayandreceivelittlerecognitionoftheresearchoutcomesoftheirownprocesses.However,formostCCISMEs,theroleofuniversitiesissomewhatlimitedinprovidingknowledge,thoughgoodexampleslikeTuliinFinlanddoexist(seeAppendix1,BestCase36).Ontheotherhand,communitiesofpractice–professionalassociationsandmoreinformalgroups–areconsideredanextremelyimportantsourceofnewideas.Fosteringacultureofinnovationthroughnon‐technologicaldriverssuchasentrepreneurshipdevelopmentrequiresmoreattentionbeingpaidtotheskillsgappresentbetweenlargeorganisationsandCCISMEs.MorerecognitionfortheroleoftheAppliedResearchsectorinhelpingtoassessCCISMEsoutputintermsofknowledgeproductionshouldbeconsidered.ToenableSMEstolocatesustainablepathstogrowth,theymustbeabletotapintospeciPicskillsmore‐or‐lessastheyarerequired,oron‐demand.WhileseveralECprogrammeshavesoughttobetteraddresstheneedsofSMEsandincludeSMEsinresearchprogrammes,theseSMEsarethemselvesoftenunawareoftheirappliedresearchneedsandareunablecoherentlytoexpressthem.Amediatingintermediarylevelisclearlyrequiredtonegotiatebetweentheeducationalandtrainingperspectiveandtheeconomicperspective.Suchalayercouldbeprovidedonaregionalbasistosupportsmallscale,practiceorientedbusinessinnovation.Inthisrespect,theRegionalAttentionandActionforKnowledgeCirculation(RAAK)programmeintheNetherlandsofferssomepointers.RAAKbringstogetherUniversitiesofAppliedScienceandSMEsonaregionalbasisandarecentevaluationhasshownthatalargenumberofSMEsparticipateinRAAKarenotautomaticallyinvolvedininnovationprocesses.325ForSMEsintheCCIs,suchanapproachwouldhavetheaddedadvantageofstrengtheningtheappliedresearchbackboneofcreativeclustersandinsodoingincreaseknowledgeexchange.WithintheCCIs,innovativefundingapproaches,whichengagemoredirectlywithinnovative,bottom‐up,small‐scalecreativenetworks,arelikelytobecriticaltofosteringfuturetransformationalresearchintheCCIs.Combinedwithtrendsindigitalconvergence,theseinnovativefundingapproacheslooklikelytosupersedetraditionalapproaches(see3.6belowandDigiDemo,Appendix1,BestCase37)).Producingknowledgeisnotthesolecompetenceofacademiaorresearch

TULITuliisFinnishnation‐wideprogramthatturnsresearchresultsintobusinessinnovations.Theyfundriskyideasintoproductorservicesaswellasprovidesinformationonpatent,legalaspectsandmarketanalysesforCCIs.(SeeAppendix1,BestCase36)

DigiDemoDigiDemoisaFinnishgovernmentalprojectthathasasthemaingoaltosupportthedevelopmentofculturallyrelevantdigitalcreativecontent,whichenablescompaniestoallocateresourcestodevelopmentwork.DigiDemosubsidieshavebeenimportantforpreproductionphasedevelopmentprojects,forwhichverylittleotherfundingisavailable.(SeeAppendix1,BestCase37)

324CIKTN,(2010)ProspectforCIKTN,“UnlockingKnowledgeTransfer:report1/3baselines”,CIKTNBeaconProject#9,seehttp://creativeindustriesktn.org/beacons,p.9.325StichtingInnovatieAlliantie,(2008),RAAKBeleidsevaluatie2005‐2008.Seehttp://www.innovatie‐alliantie.nl/?id=579

institutesbutcanalsobefoundwithinCCISMEsprocessesandnetworks.Recognisingthisenablespolicymakerstoopenupbroadercollaborativeschemesfortheexchangeofinnovativepractices.

3.5.2.5.Investingininnovation

Fromtheexpertquestionnaire,public‐privatepartnershipwasthemostrelevantmeasurestofosterinnovationprojects.Indeed,26%oftherespondentsagreedwiththisstatement(seeFig.40.below).PrivateinvestmentsininnovativeCCIs,suchasaventurecapitalorbusinessangelframeworks,areregardedasbenePicialforfosteringCCIinnovation.PrivateinvestmentscanprovideacertainPlexibilityandallowforexperimentationthatisvitalforCCIinnovativeprocesses.

Question:Selectthethreemostimportantmeasuresforthepromotionofinnovation

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Figure40:Mostimportantmeasuresforthepromotionofinnovation(Source:Eurokleis2009,PanEuropeanexpertquestionnaire)

Intermsofpublicinitiatives,publicprocurementisregardedasanuntappedmechanismstofosterinnovation326andmarketaccesstoCCIs,asdescribedinsection3.1aboveInnovationvouchersarealsoseenasanotherpublicorsemipublicfundingschemethatcouldfosterinnovation.NESTAandKEAarecurrentlyundertakinglongitudinalresearchtoquantifythesuccessofthiscurrentapproachusedintheirpilotprojectinManchester.327Thesevouchersareusedtoencouragebusinessestohirecreativestotriggerinnovativemechanismsintheirbusinessas‘soft’innovationmaynotyetbeavailableintheirvaluechain.Thiscanhelpincreasetheinnovationcapacityofthenon‐creativebusinessesandthecross‐sectoraldimension.328InnovationvoucherscanalsobeprovidedforCCIsasawaytoincreasetheirinvestmentoninnovation.

3.5.3.Phasesofsupport

CCIsareconstantlyinnovatingandadaptingtheirproductsandservices,increasingthediversityoftheproductsandservicesavailable,aswellasadaptingtotheenvironmentandtodemandsoftheuser/consumers.However,intermsofbusinessstrategy,itemergedfromtheonlinesurvey(seeFig.41.below)thatinnovationsupportisconsideredmost

326NationalEndowmentforScience,TechnologyandtheArts,(May2010b),ResearchReport:Opportunitiesforinnovationthroughlocalgovernmentprocurement‐AcasestudyofGreaterManchester,London:NESTA,p.16.327InterviewNESTA328InterviewwithEuropeanThinkTank

importantduringthebuild‐upphaseoftheCCIs.HavingacquiredaninitialPirstlevelofstable,sustainableexistence,thenoveltyofthebeginningischangedintoadaptablebehaviour,basedonpracticalcriteriaandusability.InnovationsupportcanstrengthentheCCIstotransform‘discovery’into‘exploitation’.

Question:Inwhichphaseofthelifecycleisinnovationsupportmostimportantforyourcompany?

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)*+,-#&.#=8+58>96#

)*+,-#'.#;97<:>96#

Figure41:MostimportantphaseforinnovationsupportforCCISMEs(Source:Eurokleis2010,onlinesurvey)

Accordingtosomerespondents,thisphasecorrespondstothemomentwhenCCISMEsarefacedwiththechoiceofgrowingand/orsustainingthemselvesatthesamelevel.Innovatinginservices,productsorstrategicdevelopmentatthisstagecanenabletheCCItoremaincompetitiveandnovel,aswellasenablingittodiscovernewopportunitiesforgrowthpotential.

3.5.4.Levelsofsupport

Intermsoflevelsofsupport,respondentsfromtheonlinesurveyindicatedaslightpreferenceforinnovationsupportcomingfromthenationallevel,withregionalandEuropeanlevelfollowingcloselybehind(seeFig.42.below).

Question:AtwhatlevelsdoyouseeaneedforfurtherstimulationininnovationforCCISMEs?

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()*+,)-#-./.-#

012+3.),#-./.-#

4.56+,)-#-./.-#

7.89+2)-#+25),6:)*+,;)::+86)*+,#-./.-#

<+8)-;869=#-./.-#

>9?.2#

Figure42:PreferredLevelsforinnovationinvestmentsforCCISMEs(Source:Eurokleis2010,onlinesurvey)

Nationalservicesforinnovationsuchasinnovationvouchersoradvicecentresandknowledgenetworks,canprovideimportantopportunitiesforothersectorstoengagewithCCIsorcanfosterCCIstoengageininnovation,increasingtheinnovativepotentialoutputsofCCIs.Regionalsupportcanrepresenttheintermediatelevel,linkingknowledgenetworks,CCISMEs,appliedresearchcentresandotherbusinesses.AsCCISMEsarenotnecessarily

awareoftheirownneedsintermsofappliedresearchorinnovation,theregionallevelcanoffersmall‐scaleandpractice‐orientedclustersthatofferagreatopportunitytoexchangeknowledgeandatthesametimeincreaselearningprocessesforSMEs.CCISMEsmustbeabletorequireinnovationsupportmoreorlesson‐demand.Asfarastheregionsareconcerned,structuralfundscanbeusedtofundinnovative,small‐scalecreativenetworksthatwillhavesigniPicantimpactoninnovativeoutputsfromCCIsandonothersectors.TriangulationandincreasingthelevelofexchangebetweenresearchinstitutesacademicandCCISMEsisthuscrucialforenablinggreatercollaborationandfosteringnewideasandinnovativeprocesses.Intheonlinesurvey,itemergedthatnationalandregionallevelswereseenasmostadequatelevelstostimulatepartnerships.(seeFig.43.below).Question:Atwhichleveldoyouseeaneedinstimulatingpartnershipbetweenprivatebusiness,public

institutionsandCCISMEs?

!"# $"# %!"# %$"# &!"# &$"# '!"#

()*+,#

-+.)/,01#/,2034506/37

055/.406/3#1+8+1#

9/.017.4):#1+8+1#

;06/301#

<=,/>+03#

?+24/301#

Figure43:Preferredleveltostimulatepartnershipbetweenprivatebusiness,publicinstitutionsandCCISMEs

DespitethenumberofcurrentinnovationprogrammesattheEuropeanlevel,thecomplexityoftheproceduresinvolvedmeanstheyarenotnecessarilyadequateforsmallenterprisessuchasCCISMESthatmayhavelimitedresourcesintime,moneyandknowledge.However,asnotedearlier,openingupthedePinitionofinnovationcanopenupopportunitiesforinnovationfundingfortheCCIs.

3.6.Clustersandcollaboration

Inordertoincreasethecapacitytoexperiment,toinnovate,togrowassuccessfulCCentrepreneurswiththerightskillsandsourcesofPinance,thereisaneedtofosterconduciveenvironmentswhereCCIswillprosperwithacertainsecurity,freedomtoexperimentandwithaccesstotherightinformationandknowledge.Inthisregard,collaborationandnetworkingisakeyenablertostrengthenCCIs.

3.6.1.Collaborationandnetworks

Asseenintheprevioussection,networkingwasseenasanessentialaspectforCCIstoaccessandexchangebestpractices,exchangeknowledgeortohaveasupportingschemeforcollectiveinitiatives:networksarethusseenasenablersofinnovation.Intheexpertquestionnaire,52%oftherespondentsnotedthatnetworkingopportunitiesweremostrelevantforsupportingthegrowthofCCISMEs.Asnoted,CCISMEshavetocombinemultipletaskssuchasproducingcreativeoutput,administrativetasksandgatheringimportantinformationinordertokeepupdatedandsotostaycompetitive.Thisrequiresaconsiderableamountoftime.AsaNESTAstudydemonstrated,smallPirmstendtobedisadvantagedintermsofsourcingknowledgeandtheyusenetworkstoovercome“imperfectionsinthemarketofknowledge”astheconOigurationofanetworkinaOirmatanearlystagewillinOluencethecompany’sperformance.329AccordingtoNESTA,47%oftheirstudy’srespondentsfoundthatthis

329NESTA,(May2010c),op.cit.,p.8.

wassigniPicantlyhelpfulfortheirinnovationpotential.330CollaborationandnetworksarethusessentialforCCISMEstosurvive.Inthestudy’sonlinequestionnaire,itwasseenthathalfoftherespondentssometimescollaboratedwithotherenterprisesinthesamesector,andsimilarresultswerefoundforcollaborationwithothersectors(seeFig.44.andFig.45.below).

Question:Doesyourenterprisecooperatewithotherenterprisesinthesamesector?

!"# $!"# %!"# &!"# '!"# (!"#

)*+,-+,.#

23456.#

7*8#6,8#

7,9,:#

;*1<8#=1*4#

Figure44:Cooperationwithotherenterprisesinthesamesector(Source:Eurokleis2010,onlinesurvey)

Question:Doesyourenterprisecooperatewithotherenterprisesindifferentsectors?

!"# $!"# %!"# &!"# '!"# (!"# )!"#

*+,-.#/,+0#

12324#

1+.#52.#

670859#

<+=2>=29#

Figure45:Cooperationwithenterprisesinadifferentsector(Source:Eurokleis2010,onlinesurvey)

Thesenetworksaremostlyinformal(53%)althoughformalcollaborationisalsoimportant(40%)accordingtotheonlinesurvey.

3.6.1.1.Networktypes

ResearchhasindicatedthatclustersaresupportivetoCCIs.Forexample,theThirdAustrianReportonCreativeIndustrieshas,amongotherthings,examinedresearchonnetworkformationsintheCCIs(Fig.46.).Theyfoundthatcreativeindustriesaredynamic,yetnotenoughembeddedinnetworks.InAustria,60%ofthecreativeentrepreneurseitherhadnonetworks(singles),orhadshortrelationshipsthatwereproject‐driven,hierarchical,andhighlyinnovativewithahighriskofburnout(spotmarkets).331

330NESTA,(May2010c),op.cit.,p.10.331ArgeCreativwirtschaftAustria,(2010),op.cit.,p.33

Figure46:Typeofnetwork(Source:NetworksintheCreativeIndustriesFAS2010retrievedfromCreativwirtschaft332

TheAustrianstudyrecommendsfourdifferentareaswhereonecouldbuildnetworksintheCCIsinordertointegrateresourcesbest.Theseare:

withincreativeindustriesthemselvesbutalsoinothersub‐sectors withinthevaluechainbutoutsidecreativeindustries outsidethevaluechainandoutsidethecreativeindustries internationallyviaexport

CollaborationandnetworkscanenableCCISMEstoenterapoolofinformationPlowsthatallowthecompanytotakeadvantageofsuchinteraction.Notonlycannetworkingallowagreaterexchangeofinformationandiskeyinenablinginnovativeprocesses,butworkinginacollaborativemanneralsoimpliesexchangingpracticalinformationthatmightservethecompany,especiallythestartupthatneedsguidanceinadministrative,Oinancialandinnovationmeasures.PlacingCCISMEstogethercanenablethemtonotonlybenePitfromeachother’sresources,butalsopooltheireffortsforworkingspace,foraccountingservicesandotherrequiredsupportforentrepreneurship.333

Cross‐sectoralnetworks(betweenCCIsandoutsidetheCCIsector)canalsoenableinnovativepractices,aswasdiscussedearlierintheframeworkofopeninnovation(section3.5.1),aswellprovidingvisibilityoftheCCIsectortoothersectors,asillustratedintheexampleofInserralves(seeAppendix1,BestCase38).

3.6.1.2.Recreatinggrowththroughcollaborativeprocessesandusingsocialmedia

SocialmediacanbeusedeffectivelytoincreasecollaborationbetweenCCIs,nationallyandinternationally,withinsimilarsectorsandacrosssectorsasseenintheprevioussection.TheuseoftheInternethasbeenincreasinglybenePicialintermsofconnectingpeopleandengagingentrepreneurstoshowcasetheirproductsandPindaplacewhereinformationisaccurate,up‐to‐dateandreadilyavailable.Thedigitalshiftisresponsibleforemergent

InserralvesInserralvesIncubatorisaregionalPortugueseprojectsupportingentrepreneurialinitiativesinthecreativeindustries.Thisincubatoraimsatbridgingthewellknowngapsbetweencreativepeopleandartists,andthebusinessworld,byprovidingadequateenvironmentandconditions.(SeeAppendix1,BestCase38)

332ArgeCreativwirtschaftAustria,(2010),op.cit.,p.3.333ArgeCreativwirtschaftAustria,(2010),op.cit.,p.3.

innovativeprocessesintheCCIsandassuchhasfosteredtheemergenceofculturalandcreativeentrepreneursbygivingtheopportunitytoaccessvaluableinformationandnetworkingopportunities.TheexampleofthesiteMashable334intheUKgivesconcreteinformationforCCIstocollectandexchangeinformationonsocialanddigitalmedia,givingaboosttotheirentrepreneurialactivitiesatthesametime.ThereisnowaconPlationofproducerandconsumer.Asseenintheprevioussection,thesectorsareadaptingtheirprocessestointegratethesechanges.However,CCIs'concernsarenotnecessarilyunderstoodbyacademiaandotherdisciplinesastheirprocesses,suchascreativedesignprocesses,aresometimesnotexplicitandarebasedonappliedmethods.TherehasbeenablendingoftraditionalconcernsbetweenacademiaandCCIswherethelatterarenowalsoproducingknowledgeandexperience.Knowledgecanleadtoexperiencebutinthecaseofcreativeprocesses,experiencealsoleadstonewknowledge.

CCIsarehighlydynamicinadaptingtothechangesduetothemultiplicityofknowledgeresources.Throughtheiradaptationtothischangingenvironment,CCIsmergethecreationof‘experience’withtheactofproducingknowledge.Byadaptingtheirworkingprocesses,designingnewservicesandproductsinadaptationtotheenvironment,CCIsdevelopandproduceinstruments,suchascreativedesigntools,thatcanbeintuitivelyusedbydesignerswhileatthesametimecanprovideforwell‐structureddataforobservers.Theuseofcollaborativeprocessesfoundinmulti‐disciplinaryenvironmentswhereCCIs,academiaandprivatesectorsworkwithinadynamicframeworkwhereproductsandprocessescanbeconstantlyevaluatedandcanbenePitfromsupport(researchaswellasPinancial)fromtheentitiespartoftheframework,isclearlytobeencouraged.ThiscanenabletheCCIentrepreneurtobenePitfromtrainingandlearningprocessesaspartoftheinteractionwiththeotherstakeholders,aswellasfromexternalknowledgethatiscrucialforinnovation.335AssociatingventurecapitalstrategieswithsuchcollaborativeprocessescansecureareturnoninvestmentforthefundersaswellassecuringfundsfortheCCISMEsandentrepreneurs.Theideaofclustersandincubatorsistoprovideemergentlocationstoallowforsuchconvergencebetweendifferentstakeholdersallowingthecreativeprocessesaswellasstrengtheningentrepreneurialopportunities.AgoodillustrationistheDutchgameGarden(seeAppendix1,BestCase39).

3.6.1.3.ClusteringStrategies

Incubatorsandclustersarewaystofacilitatethenetworkingandcollaborationofseveralbusinesses.AsstatedintheGreenPaper,theinteractionbetweenprivatesector,CCISMEsandhighereducationalinstitutionsmustbeencouragedtoallowforcrossoverlearningprocessesandexperimentation.336

Mostoftheintervieweesagreedthatcollaborativeclustersneedtobeencouragedastheyenablepeoplewithdifferentsetsofskillstoworktogetherandcreatenewideas.Regardinggrowth,CCISMEsneedtoexpandtheirnetworkswithintheirsectorandacrosssectors;especiallyifsuchnetworkscanbemorehelpfulthantrainingprogrammes.TheimportanceoflearningprocessesinsuchcollaborativeenvironmentsisespeciallyappealingforCCISMEs.IntheECCommunication‘TowardsWorld‐ClassClustersintheEuropeanUnion:ImplementingaBroad‐BasedinnovationStrategy’,theplaceofSMEsinclusterswasencouragedforthePlexibleandinnovativepotentialaswellasbeingbenePicialforthe

DutchGameGardenDutchGameGardenhasthevisionofinspiring,innovating,stimulatingandconnectingtheDutchgameIndustryintheNetherlandsand,ifpossible,internationally.Theirapproachtonetworkingaimsatmaintainingformalrelationshipsininformalwayandtheirmethodsarehighlycross‐sectoral.(SeeAppendix1,BestCase39)

334Seehttp://mashable.com335NESTA,(May2010),op.cit.,p.8.336ECGreenPaper,(April2010),op.cit.,p.9.

internationalisationoftheSMEsandencouragingentrepreneurshipbyprovidingbetterframeworkconditions.337

TheEUhasbeenplacingseriouseffortsinpromotingclustersinEuropeasawaytosupportinnovationandentrepreneurship.ThenewStateaidFrameworkforResearch,DevelopmentandInnovationshouldhelpMemberStatestotargettheirexistingsupportbudgettopromoteinnovativeclusters,highlightingtheneedtoformafunctioninginternalmarketforenhancingco‐operation.338TheEuropeanINNOVAinitiativeundertheCIP(CompetitionandInnovationProgramme)focusesontheuseofjointdevelopmentprogrammesthatlinkclustersbygivingthembusinesssupportservices.339EuropecouldalsostimulateclusterstoworktogetherandtoplaceconsiderablevisibilityontheEuropeanClusterssothattheycangainaninternationalreputation.TheforthcominginitiativeoftheEuropeanCreativeIndustriesAlliance(ECIA)promotedbytheEuropeanCommissionandwhichwasannouncedintheAmsterdamDeclarationinFebruary2010,340goesalongthesamelineoffocusingontakingbetteradvantageoftheinnovativepotentialofthecreativeindustrieswithotherindustrieswithaviewtofacilitatingbroadercreativityandinnovation.

However,therewasanoverallagreementthatnetworksshouldoccurorganicallyandfromthebottomupratherthanbeingimposedonthedifferentCCIsectors.Thisisalsoinlinewiththeconceptof"smartspecialisation"asdevelopedintherecentECCommunication"RegionalPolicycontributingtosmartgrowthinEurope2020".341OnecanartiPiciallycreateclustersviainvestingininfrastructureandtargetingaregiongeographically.Theproliferationofdesignatedcreativeplacesinrecentyearsistestimonytopolicypractitioners’beliefthatregardlessoflocalconditionstheycanalsomobilisecreativityandtransformtheireconomiesandcommunities(suchasCreativeToronto,CreativeShefPield,CreativeNewYorkandCreateBerlin).342AgoodexampleistheCITIESnetwork(seeAppendix1,BestCase40).ThisisanEUledinitiativeencouragingmunicipalnetworkstofosterpoliciesinsupportofCCIs.However,themodelinonecitymaynotworkelsewhere,andtheregionaleffortstoreviveacitymaybecounteracted.Theadoptionofaclusterapproachaimsateasingtheinteractionbetweenexistingandpotentialenterprises,possibleculturalconsumptionandincreasesthepotentialoftriangulationasstatedintheGreenPaper.Anexampleofwheretheseelementshavebeensuccessfulcanbeseeninplaceswherehighereducationispresentincreativebusinessincubators.Highereducationcanbeseenintheformofuniversity,vocationalandtechnicaltraininghubs,educationandtrainingfacilities,R&D,incubation/start‐upcompanies,andconsumereducationintastesandtrends.Innovationwascloselyrelatedto

CITIESCitiesisaPanEuropeannetworkthataimstoimproveregionalandlocalpoliciesthroughinterregionalco‐operation,addressingthepromotionandsupportofcreativeandculturalindustries.ItprovidesnetworkthroughoutEuropeandstimulatestheexchangeofpractice(SeeAppendix1,BestCase40)

337EuropeanCommissionCommunication,(November2008),op.cit.,p.4.338Ibid.,p.3.339Seehttp://www.europe‐innova.eu/web/guest;jsessionid=776648982F47989589C95603D715A0DF340AmsterdamDeclaration,(March2010),seehttp://85.92.129.90/~workshop/341ECCommunication"RegionalPolicycontributingtosmartgrowthinEurope2020",(October2010),‐COM(2010)553342Foord,J.,(2008),op.cit.

R&Dhighereducationindustryhubs.ThecaseoftheBaden‐WürttembergFilmAcademyinGermanyistellingofhowthelocationofahigherinstitutioncanattractbusiness(suchasmediabusiness,visualeffects,digitalpost‐productionbusinesses)aroundasectoralclusterandattractworldvisibility.343ThestudentsthentaketheopportunitytotakePirststepsinsupportiveenvironment.344 InFrance,CapDigitalprovidessuchanotherapproachforParis(seeAppendix1,BestCase41).ThisapproachisnotyetvisibleinallofEurope.Althoughsomevirtuousemergingeconomycountrieshavebeenabletosuccessfullyestablishcreativeincubators,someothercountries'systemisstillbasedonhighlycentralisedsystemswhichmayimpedetheestablishmentofregionalclusters345.TheexpertquestionnairecitedtheweakpublicOinancialsupport(85%)asthemainbarriersfortheemergenceofaworldclassclusterinEurope,aswellasadifPicultaccesstoprivatefunding(77.8%).SomecitedanexcessofofPicialregulationsandthelackofaninternationalshow‐caseasbeingbarriersfortheemergenceofaglobalclusterinEurope.Asasolutiontothis,mostrespondentscitedtheneedtocreateconditionsforgrowthofSMEsandfreelancers(70%)inordertopromotetheemergenceofworldrenownclustersinEuropeaswellascreateconditionsforself‐organisinginnovation(60%)andincreasethecohesionbetweenthedifferentlevelofauthoritiesintheEU(47%).Collaborativeclustersoperatewellataprojectlevel,buttheyneedtobeabletorepresentthemselvesatapoliticallevelaswell,inthelongterm,inordertobeabletovoicetheirconcerns.

3.6.2.Phasesforsupportingnetworksandclusterstowardsentrepreneurship

Theuseofnetworksisoneofthepre‐requisiteswhenstartingaculturalandcreativeentrepreneurialactivity.Creativeclustershavesocialaswellasenterpriseobjectives‐goalsofinclusion,culturaldevelopment,aswellasenterprisegrowth.

Question:Wheredidyougetadviceandsupportwhenstartingyourcompanyintheculturalandcreativesector?

Item %

Throughpersonalnetworks 68.1

Throughmysectoralorganisa8on/associa8on 17.7

Attheregionallevel 17.2

Atthemunicipallevel 14.7

Atthena8onallevel 11.2

AttheEuropeanlevel 4.7

Table11:WaystogetadviceandsupportwhenstartingaCCIcompany(Source:Eurokleis2010,onlinesurvey)

Theentrepreneurneedstobewellsurroundedandtheideaofanincubator,offeringaccesstoknowledge,Oinanceandresearchaswellastothemarketfromthe

CAPDIGITALCapDigitalisaFrenchbusinessclusterfordigitalcontentandservicesintheParisianregion.CapDigitalprovidesmemberswithessentialinformation,networks,andresources.Theseincludeongoingcompetitiveintelligence,training,partnerships,fundingsolutions,andprojectreviews.(SeeAppendix1,BestCase41)

343InterviewwithEuropeanSectoralExpert,http://www.Pilmakademie.de344KEA,(Feb2010a),op.cit.,p.11.345InterviewwithNationalMinistryofCultureandEducationinlaggingbehindemergingeconomy

network,canbesupportivefromtheverybeginning.Targetingnetworkingactivitiesinthebeginningoftheactivitycancontributetotheentrepreneur’slearningprocess.Asmostoftheinformationandsupportaregivenwithinpersonalnetworks,promotingspeciPicadviceforculturalandcreativeentrepreneursandmatchingthemwithotherbusinessescancontributetostrengtheningtheirposition.Intheonlinequestionnaire,suchtypesofadvicecentresspeciPictoCCIswereregardedashighlyneeded(85%)(seeFig.47.below).Question:DoyouseeaneedforthedevelopmentofadviceandsupportcentresspeciNicallyforthe

creativeandculturalindustries?

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*++,+,#

-+./#0123#4++,+,#

*56#0123#4++,+,#

*56#4++,+,#76#788#

*5#59:4:54#

Figure47:NeedfordevelopmentofadviceandsupportcentrespeciOicforCCI(Source:Eurokleis2010,onlinesurvey)

Intermsofclusters,onestrikingresultwasthattheyremainlargelyunknowntotheCCIs.Indeed,20%donotknowoftheseinitiativeswhileaquarteroftheonlinesurveyrespondentsworkinacreativeclusterinitiative/incubator.47%oftherespondentssawaneedtodevelopsuchcollaborativebusinessenvironmentinitiatives(seeFig.48.).Question:Doesyourenterpriseworkwithinacollaborativebusinessenvironmentsuchasacreative

clusterinitiativeoranincubator?

!"# $"# %!"# %$"# &!"# &$"# '!"#

()*)+#,)-+.#/0#

(/1#2)1#

Figure48:Useofcollaborativebusinessenvironment(clusterorincubator)withinCCIs(Source:Eurokleis2010,onlinesurvey)

AlthoughCCIentrepreneursneedanexistingnetworkofrelationtostartuptheircompany,itemergedfromthestudythatCCIssawcollaborativebusinessenvironmentsuchasaclusterasmostusefulinthelaterstageofthelifecycle(seeFig.49).Fromtheinterviews,thephasesoftheentrepreneurialcyclethatneededmostattentionwereboththestarting‐upaswellasinthebuild‐upandbuild‐outphaseswheretheCCIenterpriseisHKU(2010),TheEntrepreneurialDimensionoftheCulturalandCreativeIndustries 105

startingtopickupclientsandwheretheclustercanserveasafacilitationtoaccessabroadermarket.

Question:Inwhichphaseofthelifecycleisthiscollaborativebusinessenvironmentmostuseful?

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)*+,-#%.#)/-0+/123#4*-#3/5627#

)*+,-#$.#8522-9:23#

)*+,-#&.#;4+/4<60#

)*+,-#(.#=61>7#564#

)*+,-#'.#=61>7<60#

Figure49:Preferredphaseforcollaborativebusinessenvironment(Source:Eurokleis2010,onlinesurvey)

Asnoted,clustersandnetworkscanfosterpoolingofresourcesofthedifferentcompaniesandcanalsosupportsmallsizedCCISMEstobenePitfromtheseresourcesthatcouldnotnecessarilyhavebeenavailableinanon‐collaborativeenvironment.Inthiscase,clusteringCCISMEswithotherlargerorganisationscanserveasawinwinsolution,forCCISMEScanactasrisktakerswhilealsobenePitingfromthesupportoflargerorganisationstoenterthemarket.TheECCommunication‘TowardsWorld‐ClassClustersintheEuropeanUnion:ImplementingaBroad‐BasedinnovationStrategy’describedtherecentprogressmadeinthisareaastheEUrecognisedtheimportanceofSMEsandencouragedthefacilitationofSMEsincross‐sectoralclusters.346Theuseofcross‐sectoralplatformsbetweenCCIsandothersectorsoftheeconomywaslargelysupportedbytheonlinesurvey’srespondents(seeFig.50.below).

Question:DoyouseetheneedforincreasedopportunitiesforcrosssectoralSMEcooperation?

!"# $!"# %!"# &!"# '!"# (!"# )!"#

*+,#-./0-1#2,#211#

*+,#3/45#-./0-1#

*+#+6787+8#

9/45#-./0-1#

:./0-1#

Figure50:NeedforcrosssectoralSMEcooperation(Source:Eurokleis2010,onlinesurvey)

3.6.3.Levelsofsupport

Differentlevelsofsupportexistintermsofdevelopingaconduciveenvironmentaswellasadvancingpersonalandprofessionalnetworksthatcanboosttheentrepreneurialactivity.

346ECCommunication,(November2008),TowardsWorld‐ClassClustersintheEuropeanUnion:ImplementingaBroad‐BasedinnovationStrategy,SEC(2008)2637

SeveralcitieshaveadvertisedthemselvesascreativeinordertoattractmoreCCIs.Theymaketheenvironmentmoreattractivetootheremployersandcanattractsubstantialtourismaswellasnewculturalinitiatives.347

However,intermsofprovidingthemostappropriatetypeofsupportforcollaborativeprocesses,mostoftherespondentsintheonlinesurveyhighlightedtheregionallevelaswellastheEuropeanandnationalonesasmostappropriate(seeFig.51.below).

Question:Atwhatlevelwouldyouseethedevelopmentofcollaborativebusinessenvironmentinitiativehappening?

!"# $"# %!"# %$"# &!"# &$"# '!"#

()*+,#

-+.)/,01#/,2034506/37

055/.406/3#1+8+1#

9/.017.4):#1+8+1#

;06/301#

<=,/>+03#

?+24/301#

Figure51:Preferredlevelfordevelopingcollaborativebusinessenvironmentinitiatives(Source:Eurokleis2010,onlinesurvey)

TheregionallevelcanactasanintermediarybetweenthenationalandtheEuropeanlevelfosteringmatchingCCIswithotherbusinessesaswellasfacilitatingclusteringataregionallevel.

CertainrespondentshighlightedtheroleofclusterswithintheregionasasufPicientwaytosupportCCIs.ThisemphasisontheroleoftheregionswasalsosupportedbytheAmsterdamdeclarationthat‘invitedtheregionstopromoteafavourableeco‐system’fortheCCISMEs.348Similarly,theregionisalsoseenasatooltoreachouttootherregionsinordertoincreasecross‐regionalinitiativesoflinkingupnetworks.84%oftheonlinesurvey’srespondentsagreedforanincreaseincross‐regionalco‐operationasawaytosupportthegrowthofCCISMEs(seeFig.52).Question:Doyouseetheneedforincreasedopportunitiesforcrossregionalcooperationtohelpthe

growthofCCISMEs?

!"# $!"# %!"# &!"# '!"# (!"# )!"#

*+,-./#

0,12#.+,-./#

34#4567647#

348#9,12#.+,-./#

348#.+,-./#:8#://#

347InterviewconductedwithaMinistryofCulturefromaKnowledgeEconomy348AmsterdamDeclaration,(2010),seehttp://85.92.129.90/~workshop/

Figure52:NeedforanincreaseincrossregionalcooperationtoimprovegrowthofCCISMEs

TheStructuralFundsareinthiswayasourceoffundingthatcanbespeciPicallyusedtosupportCCIsthroughthesettingupofnetworksorcollaborativeplatforms.However,thegeneralframeworkcanbeinitiatedbythenationalgovernmentorattheEuropeanlevel.ThenationalsupportcantakeadvantageofitsmoredistantpositioningfromCCIstosteerandco‐ordinatedifferentbusinessclusters.Theexpertquestionnairesrevealedthat70%oftherespondentscitedtheneedtocreateconditionsforthegrowthofSMEsandfreelancersinordertopromotetheemergenceofworldclassclustersandinsodoing,toincreasetheconditionsforselforganisinginnovationandtopromoteentrepreneurship.Asthenationallevelisusuallycompetentintermsofregulatorymeasures,thenationallevelcanactastheindirectsupporttoclusterdevelopment.SupportingnetworksandclustersattheEUlevelwasalsounderlined.TheimportanceofaEUcollaborativelevelhasalreadybeenmentioned(seesection3.6.1importanceofclustersandcollaboration).ThewishoftherespondentsintheinterviewswasclearlystatingthattheEuropeanlevelcouldhelpasageneralfacilitatorandasanoveralllinktoallregionalclusters/networks,enablingaEuropeanintegrationoftheCCsupportalsoinviewofstrengtheningtheEuropeancreativeeconomy.Theimportanceofbottom‐upapproaches,basedonamorelocallevel,isnotunderminedwhenunderliningtheaddedusefulnessofaEuropeanvisionbutrathercomplementsit.TheEuropeanlevelcanfacilitatedialogueandopennetworkstobiggermarketsoflocalinitiatives.Inthisregard,theEuropeanvisionactsasafacilitatorforCCIandCCclustertogrow.Intermsofsectoralsupport,therearemanywhoPindasectoralapproachusefulintermsoftailor‐madesupportsystemsandinformationwhichcanbedifferentforthoseworkingforexampleintheartsversusmorecommercialsectorssuchasPilmordesign.

3.7.Concludingremarks

Inthischapterthesix‘determinantsofentrepreneurship’speciPictoCCIsandwhichencompasstheoverallsurroundingenvironmentfortheentrepreneurialactivityoftheculturalandcreativeindustrieswereconsidered.TheseissueswereexaminedfromtheperspectiveoftheentrepreneuriallifecycletoassessthebestwaystoenablemoreconduciveenvironmentsthatcanprovideasustainableexistenceorrealisticpathtogrowthforCCIenterprises,especiallySMEs.Morethanjustseparateissues,thesesixdeterminantsaretobeseeninsystemsthatareinherenttonationalcontextsandwhichalreadyhavespeciPicculturaltraditionsthatwillshapethedirectionofthesupport,acknowledgingthevalueofCCIsandsupportingtheirneeds.Moreover,theissueshavetobeconsideredintheirtotality;actiononasinglepointwilladvancetheneedsofCCIsbuttheoverallconduciveenvironmentwillonlybecreatedthroughtheintegrationofamulti‐layeredapproach.Thefollowingchapterofferssomerecommendationsonhowthismightbeachieved.

ChapterFour:Recommendations

4.1.Transversalrecommendations

TherecentEurope2020StrategyreportfromtheEuropeanCommissionlaiddowntheprioritiesforenablingacompetitiveandinnovativeEuropeandplacedconsiderableimportanceontheneedtouseEurope’screativityandinnovationtotackletomorrow’schallenges.Thecontributionofculturalandcreativeindustries(CCIs)tothisStrategyhasbeenreiteratedbytheGreenPaper"UnlockingthepotentialofCCIs"andbynumerousstudies.349ThePlagshipinitiativesannouncedinthisStrategy,especiallythoseconcerningtheInnovationUnion,aDigitalAgendaandanIndustrialPolicyfortheGlobalisationEraandSMEs,areofparticularrelevanceforCCIs.TherecentCommunication"RegionalPolicycontributingtosmartgrowth"highlightsthepotentialofCCIsforregionalandlocaldevelopment.TheeffortsthathavebeenunderwayinindividualMemberStatesalsoillustratetheseattemptstocatalysesupportforCCIs.CulturalandcreativeentrepreneursarecentraltoEurope’screativepotentialfordrivinginnovativeprocessesintoreality.‘Culture‐basedcreativity’hasthepotentialtohavepositivecross‐overeffectsinthewidereconomyandsocietyingeneral.Thiscreativitycanactasadriverofnon‐technologicalinnovationiftherightenablersareputinplacetodevelopaconduciveenvironmentfortheentrepreneurialactivityoftheCCIs.Creatingsuitableenvironmentsinwhichindividualscanmakeuseoftheircreativepotentialbysupportingtheirentrepreneurialskillscanfosternon‐technologicalinnovation,aswellasenrichEuropeanculturaldiversity.RecognisingtheentrepreneurialdimensionofCCIsasadriverofnon‐technologicalinnovationandrecognisingthevalueoftheirintangibleassetsarePirststepstoshapethisenvironment.Severalgeneralrecommendationscanbedrawn:

1.InorderbettertotargettherequirementsofCCIs,moredataandstatisticsareneededfortheculturalandcreativeindustries,andespeciallyforeachindividualsector.BasedonthecurrentmultipledatagatheringprocessesontheCCIs,thiscouldbeco‐ordinatedattheEuropeanlevelanddataconcerningCCIscentralisedanddisseminatedatdifferentpolicylevelstohelpconstructamatrixofpolicyoptionsthatcanbeconsideredinlinewiththeprioritiesofpolicymakersinMemberStates.

2.AsseenfromcountriesthathaveadvancedsupportmechanismsforCCIsanddeliverstronginnovationresults,thecoordinationofseveralMinistriesforthepolicyformulationofCCIsupportmechanismscanservetotargettheeffortsandenablegreatercoherence.AstheCCIsarecross‐disciplinaryandaddressbothculturalandeconomicfactors,thecollaborationbetweenMinistries,especiallytheMinistryofCultureandtheMinistryofEconomicAffairs,shouldbeencouragedandcoordinationandcoherenceofmultilayeredpoliciesshouldbereinforcedtoachieveefOicientsupportingschemes.Similarly,supportprovidedbyPinancial(andnon‐Pinancial)intermediariesshouldbebetterco‐ordinatedforanincreasedefPiciencyinsupportprovision.

CCISMEshavedifferentneedsatdifferenttimesandoperateinacontextthatrequiresseverallevelsofdecisionmaking.Supportingtheseenterprisesrequiresamulti‐layeredapproachwhereinnovationsupportcaninturnbecomplementedwithPinancialandmarketsupport.GreaterrecognitionofthecharacteristicsofCCIsindifferentpoliciesandatdifferentlevelscansupportsuchmulti‐layeredapproaches.Thisrequirespolicy‐makerstoconsiderthedifferentstagesoftheentrepreneuriallifecycleandtheassociatedneedsoftheCCIs,particularlymicro‐SMEs.Asthesemicro‐SMEshavefewresourcestolookthroughmultiplesourcesofinformation,theyneedtobeabletohavespeciPicsupport

349Seeinparticular,KEA(2006),TheEconomyofCultureinEurope,KEAEuropeanAffairs,BrusselsandKEA(2009),KEA,(2009),TheImpactofCultureonCreativity,KEAEuropeanAffairs,Brussels;UKTechnologyStrategyBoard,(2009),DrivingInnovation:CreativeIndustriesTechnologyStrategy2009‐2012,London:UKTechnologyStrategy

whenrequired.Supportondemandshouldthereforebepreferredtogeneralapproaches.

3.Stimulationpoliciesareneeded,atregional,nationalandEuropeanlevels,inorderfullytoaddressthespeciPicrequirementsoftheCCIs.AlllevelsofpolicygovernanceshouldplayaroleinacknowledgingthecontributionofCCIstotheneweconomyandinensuringalevelplayingPieldfortheCCIs.Ingeneral:

3a)NationalbodiesshapetheregulatoryframeworkinwhichCCIswork.TaxationremainsoneofthemostimportantregulatoryfactorsforCCIs‐especiallymicro‐SMEs‐toencouragetheirentryintothemarket.TaxexemptionsforCCIproductsorservicescouldencouragetheproductionanddistributionofCCIproductsandservicesandstimulategrowthacrossmanysectors.Similarly,themobilityofartistscouldbeencouragedbyfacilitatingtheregulatoryproceduresforcrossborderinitiatives.Agreementonissuessuchasdoubletaxationbetweencountriescanhelpculturalandcreativeentrepreneursandpromotetheirmobility.3b)RegionsareclosertoCCIneedsandcanrespondtotheirneedsratherquickly.AsCCIsprefertohavecloseinteractionandsupportondemand,regionscouldactasintermediariesbetweentheCCIsandotherpolicylevelssuchasthenationalortheEuropean.Regionscanencourageregionalclustersandsectoralnetworkstobeplatformsofinnovation,encouragingCCISMEstobeintegratedwithinclusters.RegionscanuseexistingStructuralFundstotargetCCIsfunding.

3c)TheEUshouldencourageexistingandfutureframeworkprogrammesforResearchandTechnologicalDevelopment(FP7,FP8)ortheCompetitivenessandInnovationProgramme(CIP),aswellastheCohesionPolicy,tobemoretargetedtowardsCCIsinteraliabyincludingnontechnologicalinnovationprojectsandincorporatingCCISMES(andnotonlythoseintheICTsector).Itshouldalsoincreasethevisibilityofongoingactivitiesatregionalandnationallevelsandencouragegreaternetworking.

InordertosupporttheCCIsmoreconcretely,severalrecommendationscanbemadeinviewofthethematicoutcomesfromthestudy,suchassupportingCCIsbylocatingPinance,accessingthemarket,supportingentrepreneurshiptrainingintheCCIs,supportingtheinnovativepotentialofCCIsandenablingaconduciveenvironmentforCCIstoPlourish.

4.2.AccessingOinance

LackofPinanceisarecurrentissueforCCIsandespeciallyformicro‐SMEs.ProvisionofPinanceshouldrespondtothedifferentphasesoftheentrepreneuriallifecycleaccordingtotheneedsoftheCCISMEs,providingforPinancialpossibilitiesinthestartupphase;providingrisk(debt)Pinancinginordertotriggerexperimentationandinnovation;offeringgrowthPinancethroughbankloanguaranteesinordertopromotecorporatefundingratherthanfundingonaproject‐basis;andprovidingventurecapitalfundstoenablegrowth.Inthisrespect,existingprogrammescanbetargetedatCCIs.TheuseofregionstochannelthefundsandtheuseofPinancialintermediariesthatareawareofthecharacteristicsofCCISMEsareessentialissuesintargetingsupportfortheCCIs.AttheEuropeanlevel:

4.Thelargefundingschemesforsupportinginnovationaretoocomplex(toobureaucratic,toocostlyandtimeconsuming)forCCIs.AttheEUlevel,thefundingschemesshouldbemadelesscomplexsoastoallowCCISMEstoapplymoreeasily.Existingprogrammes(FP7,CIP)shouldbestronglytargetedatCCISMEs.5.TheMEDIAprogrammegivesspeciPicsupporttoaparticularsectorinthedifferentstagesofthe‘valuechain’.SimilarsupportopportunitiesshouldbedevelopedforothersectorsoftheCCIsatcrucialpointsintheirrespectivevaluechains.6.AttheEUlevel,theEIBandEIFfunds,thatalsopromoteinnovation,couldbeusedtofundCCIsdebtOinancingorventurecapitalfordevelopmentofnon

technologicalinnovation.Theycouldalsobacknationalorregionalinitiativesaimedatdevelopingguaranteesschemes.Inthisregard,dueattentionshouldbepaidtotheexampleoftheguaranteefundfortheaudiovisualsectorsoontobeintroducedintheMEDIAprogrammefordigitalisationofcinema.7.IncoordinationwiththeMemberStates,itisrecommendedthattheEUconsiderthecreationorstrengtheningoflowerVATrateandothertaxincentivesforbothonlineandoff‐linelabourintensivecreativeservicesandproducts.

Atthenationallevel:8.TheregulatoryframeworkisimportantinboostingtheentrepreneurialactivityofCCIs.GrantingOiscalreductionsorincentivestoinvestorsintheCCIscanenablegreaterinvestment.Taxshelterssuchastheonesfoundintheaudiovisualsectorinsomecountriesorinthevideogameindustryinothers,cansubstantiallyhelpunlockfundsandinvestmentforthesector.9.NationalStatesareencouragedtoconsidertaxsheltermeasuresforothersectorsandsupportthedevelopmentofVentureCapitalFunds(suchaspublicventurecapitalfunds),theinvestmentofBusinessAngelsinCCIsandmicrocreditstofundCCIs.Similarly,speciPicmeasuressuchasguaranteedbankloanscouldstimulatePinancialsupportstructures.

Attheregionallevel:10.TheinvestmentoftheEuropeanStructuralFundsinCCIsshouldbeencouraged,withspecialsupporttoregionalnetworkinginitiativesandplatformsforCCIs.

4.3.Accessingthemarket

Themarketsforculturalandcreativeproductsandservicesareoftencharacterisedbyunpredictabledemandconditions.Entrepreneurshavetotakeheterogeneous,changingtastesintoaccount.Inaddition,creativeproductsservefunctionsthatoftenescape‘objective’,quantitativemeasurement.AttheEuropeanlevel:

11.TheEUshouldpromotetheopportunitiesforCCIstoaccessthemarketbyusingpublicprocurementmeasuresthatholduntappedpotentialtosupportinnovation.Publicprocurementrequestscouldbetargetedatinnovativenontechnologicalprocesses,productsandservicesforwhichCCIs,andespeciallymicroSMES,couldapply.

12.TheLeadMarketInitiative(LMI)launchedbytheEUin2008wassettoidentifynewneedsandnewmarketsforinnovativeproductsorservices.ThiscanhelptargetfuturedemandandthusofferanexperimentalplayingPieldforinnovators.Inordertotargetsocietalneeds,theEUshouldconsideropeningupLMItonontechnologicalinnovationandinnovationinservicestotapintoCCIs’innovativepotential.

13.AccessingthemarketremainsdifPicultforCCISMEs,especiallywhereafewlargecompaniesdominatethemarket.TheEUshouldconsideradaptingcompetitionpolicytoCCIs’characteristicsinordertoavoidexcessivemarketconcentration.Thiscouldensurethatallculturalplayershaveaminimumaccesstoalldistributionchannels,includingontheonlinemarket,inordertoofferrealculturaldiversityandchoiceforconsumers.

Atthenationallevel:14.NationalpolicymakersandOinancialintermediariesshouldbetrainedtounderstandtheinnovativeentrepreneurialpotentialoftheCCIsandshouldbeencouragedtousepublicprocurementforCCIstopromotenon‐technologicalinnovation.

15.TheNationalandRegionallevelsshouldpromoteCCIs’visibilityatanationalandinternationallevelinordertoencouragetheiraccesstonewgeographicalmarkets.

Attheregionallevel:16.CCIsandespeciallymicroSMEsoftendonothavesufOicientinformationonmarketopportunitiesintheirregionandmorespeciPicallyacrossregionsandincross‐bordermarkets.RegionsshouldpromotethedisseminationofinformationaboutcrosssectoralandcrossbordermarketopportunitiestoCCIsthrougharegionalnetwork.Regionscanactasplatformfortheexchangeofbestpracticesonbothtechnologicalandnon‐technologicalissues.17.RegionscouldencourageaminimumaccesstothemarketbysettingupplatformswhereCCISMEscouldshowcasetheirproducts/servicesandassuchpromotethevisibilityoftheCCIsintheirregion.

4.4.Bridgingtheentrepreneurialskillsgap

ThereisagenerallackofentrepreneurialskillswithinallsectorsoftheCCIs.Despitetheimportanceofthetopic,thereisstillalackofintegrationofentrepreneurshipeducationincurriculaineducation,andparticularlyinartseducation.AttheEuropeanlevel:

18.Withabudgetof€7billionfor2007‐2013,theLifeLongLearningProgrammeistheEU’smainfundingprogrammeforeducationandtrainingprojectsandactivities.Itissuggestedthattheprogrammeprioritisethedevelopmentofcreativityandsupportforentrepreneurshiptrainingincludinginthecreativesector.SpecialfocusonincreasingtrainingindigitalskillscouldenableCCIstokeepupdatedaboutthelatestchangesintechnology,therebyimprovingthepotentialforinnovation.ThereshouldalsobeanincreasedefforttopromotesoftskillssuchascreativeorinterculturalskillsthroughstrongerpartnershipsbetweeneducationinstitutionsandCCIs.

19.TheEUcouldhelptobetterunderstandandmapthecurrentandfutureskills’needsofCCIsthroughthevariousinitiativescarriedoutinthisregardatnationallevel.

Atthenationallevel:20.Students'skillsandqualiPicationsoftendonotmatchtheneedsoftheCCIs.Inordertomatchtheeducationalsystemwiththedemandsofindustry,programmesofapprenticeshipforCCIsshouldbepromotedatthenationallevel.EuropeanSocialFundscouldbeusedtohelpstrengthenemploymentinCCIsby,forexample,channellingthefundsintocreativeapprenticeshipsinordertoeasethetransitionfromeducationtoemploymentbypromoting‘onthejob’learning.ICTskillstrainingshouldbeincludedorstrengthenedinthecurriculumofartsinstitutionsinordertofostertheinnovativepotentialofCCIsandhelpthemfurtherexploittheopportunitiesofferedbythedigitalshift.21.Thelinkbetweeneducation,publicinstitutionsandprivatebusinessisneededtobridgethegapsbetweenthethreesoastosupportarealtriangulationandcommunicationbetweentheneedsandtheopportunitiesfortheCCIs.FindingsshowedthatmostoftheCCISMEsacquireentrepreneurialskillsthroughnetworksandinformal'onthego'experiences.Itisrecommendedthatthenationallevelencouragecrossoversandmultidisciplinaryprojectsbetweenbusinesspeopleandcreativepeoplethrougheducationinstitutionsandcrossdisciplinaryclusters.

Attheregionallevel:

22.UniversitiesofAppliedScience(UAS)couldplayavaluableroleinlinkingregionalactivitiestootherEuropeanregionsandnetworksofCCIs.CCIsarealsoproducersofknowledgethroughappliedresearchprocesses.LinkingcollaborativeworkbetweenknowledgeinstitutionsandlocalSMEscouldactasa

complementarycatalysttoinnovativecapacitiesintheregion.FurtherlinkingCCIentitiesandappliedresearchinstitutionswouldalsocontributetotheprofessionalskillsupgradingofSMEsintheregionregardingprofessionallyorientedinnovation,entrepreneurship,creativityandresearchcompetencies.23.Matchingcreativeentrepreneursandbusinessindividualscanfacilitateentrepreneurshipandtheprofessionalupgradingofskillsthroughmutuallearning.ThesecoachingsystemscanenablebetterintegrationofentrepreneurialskillswithinCCIs.Itisrecommendedthatpeertopeernetworksbeencouragedattheregionalleveltoincreasepeerlearningandcross‐disciplinarysupportnetworks.

4.5.Developingentrepreneurshipasnontechnologicaldriverofinnovation

InordertostimulatetheinnovationpotentialofCCIs,anddevelopentrepreneurshipasanon‐technologicaldriverofinnovation,thefollowingspeciPicrecommendationsaremade.AttheEuropeanlevel:

24.ConsiderationshouldbegiventothewideningofthedeOinitionofinnovationintheupcomingreviewofinnovationandresearchpolicytoencompassallformsofinnovation,bothfromthepublicandprivatesector,includingprocessesofsoftandhiddeninnovationandrecogniseR&DinsomeoftheprocessestypicaloftheCCIs,suchasdesignprocessesortalentscouting.Thisshouldfostermoremulti‐disciplinaryandmulti‐sectoralinitiativesforCCIs.25.TheEUshouldimproveSMEs’accesstocopyrightinstrumentsandfacilitateeasieruseofIPinstrumentsforSMEs.ThedigitalenvironmenthasbroughtsomechallengesintermsofIPRinthedigitalworld.CreativesolutionsthatrewardtherightsholdersbutensureOlexibilityandeasierapplicabilityshouldbesoughtattheEuropeanlevel.

Atthenationallevel:26.Theuseofalternativeoptionssuchasinnovationvoucherscouldbepromotedbyregionalandnationalgovernments.Innovationvouchersshouldencourageotherbusinesstocollaboratewithculturalandcreativeentrepreneurs.TheycouldalsobeaimedatfosteringinnovationwithinCCIs.

Attheregionallevel:27.ToencourageregionstoincreasecrosscollaborationandknowledgetransferbetweentheCCIs,researchinstitutesandprivatesectorinordertoresearchsolutionsthatincreaseinnovationinCCIsbutalsotopositivelyinPluencethewidereconomyandsociety.28.ToencourageregionstoworkwithintermediariesinordertolinkCCIs,inparticularCCISMEs,withotherbusinessessoastofosterinnovativeplatformsandprocessestoemerge.SupportingclusterslinkingbothCCIsandotherbusinessescouldsupportinnovativepracticesaswellastheintegrationofCCISME.

4.6.Supportinguseofdigitalisation

CCIsfacenewopportunitiesaswellaschallengeswiththe‘digitalshift’andtheyneedtobeadequatelysupportedtotakeadvantageofthem.InordertoenabletheCCIstotakefulladvantage,thefollowingrecommendationsaremade:AttheEuropeanlevel:

29.UnlockingspecialfundstopromotetheuseofdigitaltechnologiesintheCCIs,suchasundertakenthroughtheMEDIAprogrammefortheaudiovisualsector.

Atthenationallevel:30.SpecialfundsshouldbeallocatedtoCCIs,especiallySMEs,toensuregreatermedialiteracyandtakeupofdigitaltoolswithintheirenterprises.Member

States’individualfundinginitiativesaimedatpromotingtheuseofdigitaltechnologiesshouldbepromoted.31.SupportingCCIsandinparticularSMEstoadapttothedigitalshiftbyproposingnewonlineservicespromotingauthor’srightsandneighbouringrights.

Oneofthekeyoutcomesofthisstudyistherealisationthatculturalandcreativeentrepreneursrelyheavilyontheuseofnetworkswithinhighlyinnovativeandriskorientedenvironments.However,thelackofaccesstoPinance,tomarketandthelackofknowledgeofspeciPicskillscanhindertheirdevelopment,makingitdifPicultforculturalandcreativeentrepreneurstofullyembracetheopportunitiesofferedbythedigitalshiftandforcingthemintocomplexprocedureswhentheyarealreadyunderpressureduetotheirsmallsize.ThisshapestheneedforCCISMEstolookforcollaborativesolutionsintermsoforganisation,businesssupportorproduction.DevelopinganentrepreneurialactivityinthiscontextrequiresacertaindegreeofPlexibility,riskorientedsolutionsandcrossdisciplinaryskillsthatcanalsoprovideanon‐technologicalinnovationdriverfortherestoftheeconomy.InordertosupporttheCCIs,collaborationandnetworksneedtobesupported.

Theserecommendationsshouldbetakenintoconsiderationinthecontextofthefollow‐upoftheGreenPaper‘UnlockingthepotentialofCCIs’inordertoimplementsomeoftheserecommendationswhendevelopingthefuturepolicyinsupportoftheculturalandcreativesectorinEurope.

Appendix

Thefollowingappendixareavailableintwoseparatedocuments:

Appendix1

BestCases

Appendix2

1. Prepilotinterviewschedule2. OnlineExpertQuestionnaire3. ExpertInterview:Listofinterviewees4. ExpertInterviewquestionschedule5. OnlineSurveyquestionnaire6. WorkshopIListofParticipants7. WorkshopIIListofParticipants8. ProcurementTypeandInnovationEffect9. GraphofSectorClusters10. NACEcodes11. RegionalConcentrationofCCIbysector

Aboutus

UtrechtSchooloftheArts

UtrechtSchooloftheArts(HKU)wasestablishedin1987,followingamergerbetweentheAcademievoorFinearten,theUtrechtConservatory,theAcademievoorExpressiedoorWoordenGebaar,theNederlandsKerkinstituutandtheNederlandseBeiaardschool.In1989,anewfacultywasaddedtotheHKU,theFacultyofArt,Media&Technology.In2009,HKUhadaround3500studentsandoffersahighlyvariedprogrammeofpre‐training,BachelorandMastersprogrammesandpostacademicprogrammesandcoursesatoneofthelargesttraininginstitutesforcultureandtheartsintheNetherlandsandEurope.HKUofferseducationalprogrammesintheareaofautonomousfinearts,design,music,theatre,artandtechnology,artandeconomics,andartandeducation.Forthisstudy,twofacultiescollaboratedintheresearch:

FacultyofArtandEconomics:preparesstudentsformanagementpositionsinthecreativeindustry

FacultyofArt,Media&Technology:trainsstudentstodesignanddevelopvirtualproducts

TheHKUhasastrongpositionwithinEuropewhenitcomestotrainingyoungprofessionalsinthecreativeindustry,asseeninthehighrankinginBusinessWeekly(Feb2007)inalistoftheworld’smostinfluentialdesignschools.Contact:PierreMersch:pierre.mersch@kmt.hku.nl

K2MLtd:fromknowledgetomarket

K2Misaprivateconsultingfirmwithhighmarketandbusinessresearchorientationthatfocusesondevelopingandusingmethodsofknowledgeintegrationandknowledgetransfer.Itsinterdisciplinaryteamofhighlyspecialisedresearchersandbusinessanalystssupportsorganisationstodevelopinnovationstrategies,validatemarketsandassestheireconomicfeasibility,performbenchmarkingandderivebestpracticeswiththeaimtoincreasethelevelofeffectivenessofclient’svaluecreatingprocesses.Theprimaryfieldsofactivityareintheareasofinnovationmanagementanddigitalcontentexploitation.Contact:GeorgeIoannidis:gi@k2mark.com

EurokleisS.r.l.

EurokleisisaSMEspecializedineconomic,financialandstrategicconsultancyandstudieswiththemainfocusonInformation&CommunicationTechnologies.Eurokleispartnerscombinetheiracademicbackgroundwithnumerousyearsofexperienceinvarioussectorsandofferintegratedserviceswhichcoverallthedifferentaspectsinvolved.Moreover,Eurokleispartnershaveworkedforanumberofinternationalcompanies,localauthoritiesandprivateorganisationsaswellaswiththeEuropeanCommission.ContactFrancescoBellini:Francesco.Bellini@eurokleis.com

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