Cultural entrepreneurship

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Preliminary Version - for the published version of this paper -see:
SUWALA, L. (2015): Cultural entrepreneurship. In: F. F. Wherry, J. B. Schor (Eds.):
Encyclopedia of Economics and Society. Los Angeles: Sage, pp. 513-515.
http://dx.doi.org/10.4135/9781452206905.n202
Cultural Entrepreneurship
Cultural Entrepreneurship (also referred to as culturepreneurship or art entrepreneurship)
characterizes a sphere of activities with subject to constant change between once unconnected
fields of the arts, the cultural and business sector. This ambivalence ideally demands for a
visionary personality willing to take risks with alertness to revenue-generating arbitrage that is
capable to master, mediate, and interpret a complex and contradictory process from the creation
of novel cultural ideas, methods, or artefacts through their social acceptance and usability as
cultural innovations up to, first and foremost, exploiting their commercial potential as cultural
goods and services. This transfer and conversion capacity requires a lifestyle of permanent
reinvention, positive self-esteem and unconventional solutions embedded in a creative and open-
minded context (or environment).
The personality or ‚species’ of cultural entrepreneurs encompasses pioneer spirit, is risk-taking
and almost plainly obsessed to accomplish objectives of self-fulfillment, independence and
propensity. It unifies the features of entrepreneurs according to Schumpeter. Moreover,
successful cultural entrepreneurs need to invent themselves and stand out in the crowd, prioritize
ideas over data, balance between isolation and socializing, learn endlessly and, most importantly,
have fun in order to realize a creative ‘flow’ of ideas. Despite their passion and commitment in
terms of the artistic content, the main task is to convert and polish raw artifacts and ideas into
valuable cultural products or services by convicting artists, curators and patrons, acquiring
necessary funds and collecting donations as well as forecast market trends and consumer tastes
through prudency, courage and faith. What distinguishes cultural entrepreneurs, from artists,
performers or curators, is their focus on abilities to valorize novel cultural ideas, methods or
artifacts, often originating from third parties (e.g. these same artists, performers, and
practitioners) on the one hand. A certain degree of meaningful novelty, however, must be
assured, a pure duplication (e.g. mass copying of CDs is the domain of cultural managers) or
arbitrage-based value creation (e.g. buy at lower and selling at higher prices, art dealers) is not
sufficient on the other hand (see table 1).
The process of cultural entrepreneurship is multifaceted and paradoxical. It needs to balance
between the creative, functional and productive component of cultural entrepreneurship with an
emphasis on the latter (see table 1). The creative component encompasses stages of preparation,
incubation and illumination (or the ‘light bulb’ moment) characterized by considerable
uncertainty, which after verification for meaningful novelty (in other worlds the cultural
entrepreneur has to become aware that s/he created something new) ultimately leads to the
initiation or interpretation of the novel cultural idea, method or artifact. The functional
component aggregates stages of realization, communication, and application where the cultural
idea/methods/ artifacts is ‘validated’ or tested, or evaluated by a group of experts, a broader
audience or the whole public for its usefulness. Eventually, the productive component follows
with a market launch, a mass replication and diffusion, where finally the market forces
themselves select if the cultural idea/ method/ artifact generates economic rents or not. Besides
the initiation, interpretation or application, it is the very nature of exploitation of cultural content
by transforming ideas into marketable goods and services, which excels successful cultural
entrepreneurs.

(insert table 1 here)
The context (or environment) in which cultural entrepreneurs conduct their work influences
their personalities and processes. This environment also determines what is recognized as
creative, useful or valuable on the cultural marketplace. Thus, though cultural entrepreneurs may
feel creative, the context may not confirm this belief, and it is the context that ultimately settles
the matter. Social relationships, permanent exchange and face-to-face contacts with artists,
cultural intermediaries and curators next to accurate observation of consumers’ trends, tastes and
lifestyles form an essential link here. Moreover, the cultural entrepreneur should not merely be
considered as a lonely individual pursuing a personal vision, but also as a social agent embedded
in cultural communities, because this is the only way that his/her cultural work is recognizable by
others. Spatial and cognitive proximity to cultural districts, milieus or neighborhoods – in other
words agglomerations of cultural activities – enhance each entrepreneur’s ability to observe,
assess, and learn from the success and failures of others. Unsurprisingly, residents of the local
area will establish a significant proportion of emergent entrepreneurs in an agglomeration. A
critical role should be therefore given to collective work in creative and cultural laboratories,
rehearsal rooms or temporary projects – no matter if as freelancers, in micro-, small and middle
enterprises or in corporate conglomerates.
Challenges and bottlenecks
Although there are skilled cultural individuals spanning their activities across the range of all
three components of cultural entrepreneurship (see table 1) in very rare cases, the majority of
artists and cultural practitioners attach great significance to cultural integrity, creative originality
and is awkward with the label ‘entrepreneur’. This fact stems from the antagonism between a so-
called ‘high culture’ (e.g. the arts – with no commercial interest – once predominately exercised
by the elites, as art for the art’s sake) and ‘low culture’ (e.g. popular or peoples’ culture – with a
commercial background to make a living or to entertain the masses). This distinction emerged in
the 18th century and lead to a clash of binaries like elite vs. mass, art vs. entertainment, ideal vs.
commercial, intrinsic vs. instrumental, citizen vs. consumer, critical vs. passive, public vs. market
or finally culture vs. economics – the opposite of the very essence of cultural entrepreneurship.
For a long time, this attitude resulted in an absence of recognition from economists and
politicians, and traditional lack of support from society (although this is changing). Missing
funding opportunities and peculiar characteristics of cultural goods and services, namely:
uncertain demand, unlimited variety, difficult to calculate inputs or requirement of diverse skills
complicated valorization of cultural content on markets.
Times, however, are changing. The liberalization of cultural markets, more disposable income
and leisure time, and digital exhibition as well as distribution mechanisms led to an integration
and convergence of culture and the economy under slogans of the aestheticization of the
economy or the commodification of culture. The latter created new cultural markets. Nowadays,
an increasing number of artists, performers and cultural practitioners but also fashion designers,
interior decorators, or owners of trendy restaurants are willing to acquire uninitiated expertise
(e.g. general management skills) in order to avoid freelance and part-time engagements (e.g. taxi
driver, bartender) besides the core of their occupation. The freedom to manage their own time
and abilities compensates for the unpredictable nature of their working environment, and
irregularity of their income. For instance, advances in social media (e.g. sound cloud, pinterest) to
communicate (e.g. social networks, instant messengers), to disseminate (e.g. Weblogs, Webinars)
or to share information (e.g. picture sharing, vlogs, podcasts) about cultural goods and services
allows for durable rents, greater knowledge and transparency as well as for novel financing
schemes like crowdsourcing.

Nevertheless, precarious working conditions, high business risks and dependence on multiple
jobs remain on the agenda of cultural entrepreneurs. These problems arise from the fact that only
few cultural entrepreneurs rise to stable financial conditions or fame and glory. The so-called
‘winner-takes-it-all-model’ describes this income structure, which is comparable to a pyramid
where only few are able to make a living from their core businesses.
Examples of those cultural entrepreneurs who were able either to convince artists with their
visions or had the ideas that fitted into the zeitgeist or consumers’ needs were or are: Richard
Wagner (revolutionized the production of opera through theatre design, conducting and
dramaturgy), Andy Warhol (created pop art within the visual arts movement), Richard Branson
(transformed recording business among others) or Madonna (developed a new dimension of self-
merchandizing with a variety a products in fashion, design, music, film or gyms).
Table 1 Range of activities of different cultural stakeholders
Further Readings
Caves, R. E. (2000) Creative Industries: Contracts between Art and Commerce. Boston: Harvard
University Press.
DiMaggio, P. J. (1982): Cultural Entrepreneurship in Nineteenth-Century Boston: the Creation of
an Organizational Base for High Culture in America. Media, Culture and Society, 4(1), 33-50.
Klamer, A. (2011): Cultural Entrepreneurship. The Review of Austrian Economics 24 (2), 141-156.
Leadbeater, C. and K. Oakley (1999): The Independents: Britain's new Cultural Entrepreneurs. London:
Demos.
Suwala, L. (2014) Kreativität, Kultur und Raum: ein wirtschaftsgeographischer Beitrag am Beispiel des
kulturellen Kreativitätsprozesses. Wiesbaden: Springer.
social type
instances
focal characteristics
components
Artist
writer, painter,
composer
novel (initiating
cultural ideas,
methods, artifacts)
creative component
of cultural entre-
preneurship
Performer
dancer, actor,
musician
novel (interpreting
cultural ideas,
methods, artifacts)
Cultural
practitioners
art teacher,
cultural operators,
cultural sector
workers, curators
useful (transfer,
application and
publicity of cultural
ideas, methods,
artifacts)
functional
component of
cultural entre-
preneurship
Cultural
businessmen
cultural entrepre-
neurs, cultural
managers, art
dealers
valuable (valorization
of cultural ideas,
methods, artifacts)
productive
component of
cultural entre-
preneurship