Creativity and organisation

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As Entrepreneurship thrives over years all over the world, it occupies a significant position in current economy. The Total Early Stage Entrepreneurial Activity (TEA) index in 2005 shows that the rate among adults of working age is 12.4% in the US, 9.3% in Canada and 6.2% in the UK; meanwhile the prosperity of business incubation to some extent indicates the development of entrepreneurship (OECD 1999). The Organisation for Economic Cooperation and Development once stated (OECD 1998, 12):

Entrepreneurship is central to the functioning of market economies. Entrepreneurs are agents of change and growth in a market economy and they can act to accelerate the generation, dissemination and application of innovative ideas. In doing so, they not only ensure that efficient use is made of resources, but also expand the boundaries of economic activity.

Penrose observes entrepreneurship as 'a slippery concept'. He thinks it quite hard to work into a formal analysis because it is so closely associated with the temperament or personal qualities of individuals (Penrose 1959). This concept becomes especially obvious when it comes to the creative industries, where entrepreneurship is almost ubiquitous owning to the needs of the work. Creative work requires many more creative talents with strong demands of freedom and individualism compared with other industries, and their way of doing things brings impact upon the whole industry without doubt.

The word entrepreneurship derives from the French word entreprendre which means 'to undertake'. From early period, when Marco Polo was trying to establish trade routes to the Far East, entrepreneurship seems to relate with risk and uncertainty, even till today. In the 1700s, French economist Richard Cantillon first introduced the term 'entrepreneur' and developed his theory around it, defining the entrepreneur as a risk taker who "buy at a certain price and sell at an uncertain price, therefore operating at a risk" (Robert and Albert 1982, 17). The definition of an entrepreneur is further refined by many other scholars from different perspectives, but none of them attempts to separate 'risk' from entrepreneurship or overlook 'risk', therefore 'risk' is embedded in entrepreneurship and quite essential in the life-cycle of an entrepreneur. Cultural entrepreneurs, indubitably living with risk, are a group of people who generate revenue from cultural activities by innovative methods (Anheier & Isar 2008). Due to the feature of creative industries, the risks encountered have an overlapping part with other industries; nevertheless, we still need to pay special attention to the unique part of risk assessment and influence for entrepreneurship in the creative industries.

This essay aims at identifying how cultural entrepreneurs in creative industries treat the risk assessment and adjust their project planning and decision making. Compared with 'traditional' business and big culture enterprises, cultural entrepreneurship is quite lax in terms of organization. The whole entrepreneurship has very limited progress when it comes to disciplinary status in a normal science framework (Aldrich and Baker 1997), although many believe that entrepreneurship is on its way to build theory (Wiseman and Skilton 1999). Vague structure of entrepreneurial style makes risk inside entrepreneurship abstract, unpredictable and not typical enough, what is more, creative industries always deals in 'symbolic goods' (Bilton 1999a), thus risk assessment in the creative industries can be quite intangible and vital during the entire process of creative entrepreneurship. By illustrating a case study with some issues happened in a film production company and analysing risks inside this specific case, we can extent our thoughts outwards and see how risk assessment and concern can influence cultural entrepreneurs' decision making process.

Cultural entrepreneurs and the Case

When analysts attempt to define "entrepreneur", they are struggling to find a proper perspective to start. Webster's (1977) way of classify the types of entrepreneurs may somewhat far-fetched because he's trying to make a clear-cut definition of different entrepreneurs whose essence is not rational enough. Howard H. Stevenson (1983) noted entrepreneurship as "a behaviour phenomenon" rather than an economic function or personal characteristics. From this point, I would, in the scale of cultural entrepreneurship, analyse cultural entrepreneurs' risk assessment as their personal behaviour and put it in three main aspects to see how risk assessment influences the decision making process.

Cultural entrepreneurs, like other entrepreneurs, pursue opportunities without focusing on the resources they hold and bear risks from all aspects of his/her business. It means that they can't rely on a hierarchical management waiting for other insiders to share the pressure as a part of their work. It is worth mentioning that cultural entrepreneurs do not equal cultural managers, whose function is to sustain the organizational systems and achieve management task. For many small or medium size cultural businesses, many entrepreneurs take two roles at once in order to better dominate their own business or reduce overheads and their mission is cultural meanwhile economic. Their products are filled with intellectual property and personal tastes, and the life cycle is different or 'abnormal' compared with other concrete products.

Star Overseas co., Ltd is a movie production company established in 1996. Its founder Stephen Chow Sing-Chi is a Hong Kong comedian, who is the most well-known in Chinese comedy movie industry from early 1990s. His peaking time in his career as an actor in China is quite similar to the status of Jim Carrey in American comedy movies. Unfortunately Stephen Chow's company has never got the same reputation as his personal achievement to the whole Chinese comedy industry. In August 2005, amateur actress Huang Sheng Yi requested to terminate the agreement with Star Overseas; later, more noted actors and actresses such as Chen Guo Kun, Lin Zi Cong decided to quit the company; In 2009, Wei Da Shen, the spokesman of the company publicly announced his decision of leaving the company, left only few people in the management now.

As a top-tier comedian, Stephen got much support at the beginning of establishing his company. He is so strict and exigent that approximately the company can only produce one movie every two or three years. Due to his speed of movie production, actors and actresses who can afford the high penalty decide to breach the contract; those who can't have to stay (some even take part-time job to sustain their life). The main source of income for Stephen is from real estate business under the help of his girlfriend, which implies that he treats his film company as a life-style business. The lack of managerial mechanism makes his company an empty shell. Even though almost every film he produces and stars can still be a blockbuster, people go to the cinema for Stephen's personal charisma rather than the content or other stars.

From this case, we notice that besides the inherent risks of cultural products and other external competition risks, cultural entrepreneur sometimes is a main 'risk-creator', and their personality and goal of business greatly connect with the appearance of risk. Li Hui, an actress who signed an eight-year contract with Star Overseas but only got one-minute chance to be shown in Stephen's movie, once said "Stephen is more like an artist rather than a businessman", reflecting the reality that cultural entrepreneurs always keep away from the mundane business life, while their specific business risks and solutions follow.

Risk Evaluation & Decision Making

Risk assessment usually bases on the existing models and tries to identify the recognized threats and hazards into a more quantitative and qualitative way. The reason why I focus more on downside risk - hazards and uncertainties, than upside risk, i.e. opportunities to win, is that businessman burdens risk for success and development, or at least for remaining the same, rather than pursuing failure. It is clear that the opportunities to win attract the businessman, but the way to prevent uncertainties remains pretty hard. Downside risk assessment, though more or less pessimistic, can help people theoretically avert 'head-on confrontation' and analyse other chances of loss with logical hypothesis and reasoning.

For cultural products, inherent risk is the first step to consider. "In the creative industries, commodities are valued primarily not for their material function but for their symbolic content" (Bilton 1999a), which implies that symbolic content is the soul of cultural products. This increases the risk because to some extent the cost and the function are irrelevant with the sale price. The problem is that symbolic content is always intangible (which could hardly put in a quantitative and qualitative way) and functions different towards individuals, and sometimes it takes years to prove that it meets the consumers taste, such as Vincent Van Gogh's painting and Beethoven's "Symphony destiny", etc. In a sense, the production can be very risky when input is totally divorced from output, and this output is tightly connected with individual outlook and value system. Big companies would avoid the inherent risk by devoting themselves into distribution. When it comes to cultural entrepreneurs who live in uncertainty, it seems more contributory to think how to smash up the two main strategies that Björkegren (1996) points out - "the commercial business strategy" and "the cultural business strategy" (Björkegren 1996), where the former one "concentrates on controlling the supply with a limited amount of arts products on the market" (Björkegren 1996 p.44), and the later one is farsighted enough to build a long-term portfolio approach to make a balance between blockbuster and failure. These two strategies, aiming at bringing down the risk through lifting the production price to block new entrants and practicing a common business advice "don't put all your eggs in one basket", require sufficient budget and time, which are big-company favoured and probably the Achilles' heel of cultural entrepreneurs. It also offers us a way of risk finding - generally small companies can predict their risk through the big companies' advantages, and vice versa.

Cultural entrepreneurs, though not fully restricted by, should think of the resources they own. They demand high efficiency with low cost to achieve their goal. Some may argue that not all the cultural entrepreneurs would prefer to take risk and grow their business, and Schumpeter notes that it is the capitalist rather than the entrepreneur to bear the risk. We have to admit that many entrepreneurs, not only in the creative industries, drive their business as a hobby or life-style, or they are just "working for succession" and "are not growing the business for an exit route" (Management Today 2004), but as long as the whole market is moving forward, even 'standing still' means moving with the tide, and the reality forces them to take care of stakeholders' money otherwise they will lose the support.

In regard to Björkegren's two strategies, cultural entrepreneurs should find some new ways to compete with big companies. Stephen Chow's method is to fully exploit his personal brand-influence, which seems not typical or sustainable, but quite efficient if he can guarantee the popularity of the cultural products. This kind of phenomenon is common in the field of fashion design. And from this perspective, we can also understand why many designers start to build their own brands after they become famous under the help of the big companies they once worked for, when personal fame can be a weapon to resist risk. Cultural entrepreneurs tend to compete by exploiting some ready-made influences to save their time of building and promoting the 'brand'. This kind of strategy bases on personal reputation, which subconsciously adds up the risk of the whole business since everything is built upon the individual, posing him/her into a sensitive position, where even a rumour could destroy (or save) the company. From the list of advertisements Stephen Chou were featured in, it is not hard to find that only big brands like McDonald's, Fuji TV station have the opportunity to work with him. Money is not the biggest issue to explain his choices because these years, some small or medium companies in mainland China tend to invite big stars (even international superstars) at all cost to attract public attention. Stephen once told the amateur actors in a company meeting that "it is better to lose money than to lose face" and in fact he was trying to prevent uncertain brands increasing the risk of his core competence - personal reputation. In this concern, risk is much more controllable and can be managed by personal willingness.

"Innovation" runs through the entrepreneurship as a core force for existence while copying exactly what the big organizations are like might increase the entrepreneurs' pressure towards resources and organizational structure. For those cultural entrepreneurs who are more innovative and want to try something extremely new, they arrive at a place called niche market. It is apparent that at the time of product emergence, cultural entrepreneurs will not take the risk seriously because they know the risk will not grow until they draw the market's attention. Though their market influence, compared with Hollywood, is too small to notice, they can "dominate that (niche) market segment with no clear competition, and they can and do influence both price and quantity sold" (Burns 2007). But I would say that the risk assessment at the beginning is definitely important to this group of cultural entrepreneurs. Stephen Chow himself worked with 20th Century Fox as the producer of "Dragonball Evolution" (2009), where he cannily entered into a niche market in Asia since very few Asian stars would have the chance to cooperate with Hollywood movies. He did so first to enhance his personal brand in Asia where it is a great honour for stars to work with Hollywood, then to test the mainstreaming market in Western countries to see if his company has the chance to develop in a new market. As far as the Chinese movie market is concerned, "Dragonball Evolution" is a great failure even though for the first two days, the box office got £2,000,000; the following are criticism from his fans and the Asian movie industry insiders, especially Hongkong movie critics showing their disappointment towards Stephen's new trial. When cultural entrepreneurs start something new, even if their personality makes them so adventurous, they have to keep in mind that differentiation from the competition doesn't mean they own a strong anti-risk ability and niche market can be somewhere that big companies have ever thought of but give up for some reasons.

Owing to the features of entrepreneur's behaviour and the need of entrepreneurial task, it is very difficult to establish a wholesome organization or structure as big organizational companies, which requires long-term working experience and sufficient funds investment. Cultural entrepreneurs, like entrepreneurs in other industries, have a strong tendency and need to choose non-administrative management since hierarchical structure brings barrier in communication and opinion sharing. Innovation is crucial for entrepreneurship. But it does not mean that in big cultural companies, creativity and innovation are negligible. For them, public praise and adequate funds make it possible to earn a stable cooperation with their partners; secondly, their formidable production teams guarantee the quality of the cultural products - even if the products are commonplace, Björkegren's commercial business strategy will perfectly work for them and push the products to a higher position. Differently, entrepreneurs have only innovation and opportunity in hand are not strong enough to compete with the outside world. It is worth mentioning that although big company has a comparatively administrative internal organization; its creative department is in effect quite similar to a cultural entrepreneurial group. Even if the department is routinized by organizational culture (Stevenson 1983) and higher authority, its inside is still flat and informal, which provide a breeding ground for idea generation. Entrepreneur's company doesn't always have a R&D department, but it doesn't mean that entrepreneurs take risk to chase the opportunity blindly. Their project judgment and decision of risk-taking is based upon personal recognition and understanding of the whole industry and context, sometimes even only instinct. All these aggravate the subjectivity of decision making and because this process lacks convincing data and theory analysis, it is sure to cause more doubts or even objection in a flat environment without administrative pressure and restrictions.

Here, we notice that some more risks appear inside the entrepreneur's company. First, the investors such as capitalists and banks who prefer to make decision through report forms and other facts will hesitate about the entrepreneurial decision-making and their hesitation increase the risk of entrepreneur's fund chain crisis. This point is the biggest issue for entrepreneurs to care about because without the fund, they could even lose the chance to realize their goal. They don't pay too much attention towards taking risk of losing money, but the prerequisite is that they've got the money for project development. From this perspective, entrepreneurs would probably compromise to satisfy the requirements from the investors. That's also why many cultural companies, especially small-scale film companies, accept to use the actors appointed by their investors in regardless of anything else. Second, the internal problem will shaken the foundation of the business. This risk is mainly caused by the dissatisfaction of employees working for entrepreneurs. Start your own business needs huge courage and confidence, and these requirements limit those mild and conservative people to enter the field of entrepreneurship. In another word, the general character of entrepreneurs is "aggressive" and they incline to control than to be controlled. This kind of character can easily make people feel bored of being controlled all the time and the psychological phenomenon of reactance is thus produced, no matter what decision the entrepreneur makes. Negative reaction around the entrepreneurs not only isolates the "leader" but also exerts pressure upon them, which may influence decision making in an irrational way. This, in the creative industries, creates some more risks in the future. For many fields like music, film and TV production, the working group is only a temporary one with many self-employed individuals. They don't have much loyalty towards this "one-off" group and they can work in their own way as long as it doesn't branch the contract. Cultural products, to some extent, are impossible to get a standard quality control system, leaving the creative working group more space to work on their own. If entrepreneur's decision contradicts theirs, they can easily convert the sentiment into the intangible content hopefully without being noticed by the decision-maker.

Other significant risks should also be taken into consideration such as health risk, education background risk and even gender risk, etc. For health risk, entrepreneurship is a physically and mentally rigorous activity (Schaper and Volery 2004, p.39) and in the cultural industries, there's sometimes no fixed working hours and the intensity of work depends on release date or other feasible reasons. An entrepreneur who's running an advertisement agency said that they might work till 4 am brainstorming for a creative idea just because they don't want to interrupt their "inspirational feeling", and smoking, as long as the creative team in advertising is still "male-dominated"(Bilton 2007 p.33), is their panacea to fight against physical and mental fatigue. Health risk raises their whole business risk because many cultural entrepreneurs reply on their own cultural products such as entrepreneurial designers, film directors, etc. Even if the entrepreneur is only in charge of finding opportunities for other creative artists, the loose structure of the company indicates if this person leaves, then almost the whole business stops.

For the education background risk, I'm not going to discuss if their education is high or qualified enough to support their business establishment and development. My concern is about whether arts and management are compatible. Especially for people who work in creative industry for personal driven reasons rather than commercial driven, they run their own business under the premise that they love or used to be engaged in cultural industries. They tend to challenge the tradition, be more innovative and "egoist", while management requires people to be rational, objective and farsighted. To some extent, cultural entrepreneur's thinking model contradicts with their business task and identity, and they need to be both artistic and merchantlike. It implies a risk in running the business where leadership uncertainty makes the foundation not stable enough. Many cultural entrepreneurs, in order to avoid failure in business concern, prefer to ask help from an incubator company or hire an experienced consultant, showing that they find their creative thinking model to some extent unfits for the business management.


In this essay, I try to find where risks lie in cultural entrepreneurship and how they influence the entrepreneurs' decision making process. Risk can be anywhere and even some seemingly trivial aspects should take into concern.

After all, risk assessment is only a way of trying to identify the future uncertainties, and we can't say that the failure of business is fully caused by unsuccessful risk assessment and risk management. The more the variables are, the riskier this field is. Just like what Mintzberg (1985) notes, both internal and external business environments should be relatively stable if people try to set up a viable business strategy. I would put cultural entrepreneurs in the very middle of this net who bear risk from general business variables, entrepreneurial free-style variables, cultural product's unpredictable variables and cultural market's irregular variables. Risk assessment in cultural entrepreneurship can be insignificant because too many subjective variables, both from the entrepreneurs and the customers, are contained. Moreover, there're very few "industry-recognized" theories or classic business model in this field, where the 'science framework' is destroyed by the mass of subjective variables.

For cultural entrepreneurs, can we change our mind to open up instead of generalizing inwards? Is the trend of entrepreneurship training trying to standardize this active irregular market into a science framework? We have to admit that many business model analysis and theories development bring us great benefit in reality, but is this way viable for cultural entrepreneurship whose core task is to deal with intangible (and almost unmeasurable) products mainly based on their entrepreneurial style without a concrete internal organizational structure? As long as we could get access to its essence vaguely and the area is still developing, too many definitions and classifications contribute more to restrain. Let's say art creativity originates mainly from inborn characteristics, and arts training assists the artists to better express their inner inspiration. Similarly, cultural entrepreneurs need to make a combination of their impulse towards arts and business, which is not something about academic study but a way to express their personal style or even ambitions. As regard to risk assessment, cultural entrepreneurs can take it as a way of thinking, making adjustment for project planning under their own principles, and be innovative to open up our mind of the whole industry.


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