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INTERNATIONALIZATION PROCESS
OF CREATIVE INDUSTRIES: TENDENCIES,
PROBLEMS AND CHALLENGES
Tomas Mitkus
e-mail: tomas.mitkus@vgtu.lt
Vilnius Gediminas Technical University, Lithuania
Abstract. Today creative industries are not only a giant in global economy, but as
well a segment that constantly shows growth, and is a source of innovation. This
did not happen without globalization in XXI century. Analysis shows that although
internationalization process is greatly supported by international and national gov-
ernment-based funding platforms for continued growth of creative industry full gov-
ernment-based support is needed to increase co-production and insourcing.
Key words: creative industries, internationalization, management.
Introduction
It is safe to say that today we know an impressive lot about the creative
industries. Culture and economy scholars have probed into to this concept of
art and business, not to mention, sociology, law, communication and manage-
ment scholars have also taken to study this still not clearly dened concept.
And it will continue to be vaguely dened because there is no clear method to
dene creativity, therefore, to establish a creativity measuring unit system that
would allow successfully lter creative and non-creative economic segments.
Although, ironically, there are quite few easy ways to measure economic value
generated by creative industries.
Discussions about cultural industries usually start from Theodor Adorno
who rst coined the term in 1947 (Adorno, Horkheimer 1979). But only in the
1990s scholars took a closer look at the few creative industries segments and
they have discovered that culture and creative industries are not only import-
ant for creating modern cultural identity, but are also an important contributor
to the economic growth. Today reports on creative industries indicates how
effectively (in compare to other economic sectors) creative industries creates
value, how fast it creates new job places, how successfully this industry’s
products are exported, how well this industry withstands economic recessions
and how intensely this industry provides with innovative solutions (Blair et al.
2001; Hotho, Champion 2011; De Propris 2013; Goede, Louisa 2012; Dauba-
raite, Startiene 2013; DCMS 1998). Starting in the 90s. there had been a boom
in interest in creating national strategies to help develop national „creative
industries” (Pratt 2006).
Forum Scientiae Oeconomia Volume 4 (2016) No. 4
28
This paper examines the evolution of creative industries and explores the lit-
erature on the concept and identity of creative industries and its core segments
to establish analysis framework for identifying relationship between creative
enterprise, internationalization process and its growth. The analysis employs
a pragmatic approach by analyzing Europe lm and animation industries to
determent what tendencies, problems and challenges internationalization pro-
cess produce with the goal of contributing to a more general understanding of
insourcing, outsourcing and co-production.
1. The concept of creative industries
One of the reasons for the popularity of the creative industries as a concept,
and thus inuenced the transformation of cultural industries in the creative
industries, is formed in the 1990s a new provision that we can expect contin-
ued economic benets of culture and art (Girdauskiene 2013). As pointed out
by Garnham (2005), the term “cultural industries” had a rather well-dened
policy framework, which sets out how and why it is worth investing in culture.
Cultural products once identied as economic benet shifted the place and
signicance of the art and culture in the economy, and thus the relationship be-
tween cultural policy and industrial and economic policy. In other words, pol-
icy-makers point of view of the culture shifted from notion of “social support”
for a creative segment to “investment” that brings economic benets (Mitkus
2011; Mitkus, Nedzinskaite-Mitke 2015).
As already mentioned the economic benets of the creative industries have
become the main stimulus to create or adjust the existing national strategies
for cultural products and services sector. However, policy-makers strategies
quickly faced with a major problem – how to clearly dene organic, having
a plurality of segments and constantly changing economy sector, of which a key
part are – creativity, arts and culture – is extremely difcult to measure. Cur-
rently, there are several popular concepts of creative industries. Florida (2002)
describes creative industries1 rstly as a professional social community (or class),
which assigns both artists and scientists. Meanwhile, the European Union sees
creative industries in particular as a number of market segments (EC 2010, 2012).
Howkins (2001) offers creative industries regard as “just another industry.”
The fact that for decades there was no compromise how to clearly dene
the creative industries, leads to another problem, i.e. use of wide and related
terms. Creative industries are often still referred to such terms as “cultural
industries” (Markusen et al. 2008) „creative sector” (Wiesand, Söndermann
2005), „copyright industry“ (Makselis 2007), „content industry“ (Lemly 2011),
„entertainment industries“ (Vogel 1986), „creative economy“ (Markusen et al.
1 Richard Florida describes the term of “creative class”, and not “creative industries”, however his
inclusions of people from science, engineeri ng, architecture, design, arts, music and entertainment
clearly correlate with the concept of creative industr ies.
Internationalization process of creative industries: tendencies, problems...
29
2008), „orange economy“ (Restrepo 2013) and etc. But each of these terms
has a slightly different denition, and automatically introduces an even greater
confusion in the concept of creative industries. It is necessary to point out that
quite lively usage of so many different terms is a conscious phenomenon. This
is because different term brings slightly different key emphasis to the deni-
tion. Also the national and international institutions need to adjust concepts to
their policy making and business purposes. How a slightly different emphasis
can be used to strengthen one’s position can perfectly be illustrated by present-
ing the concepts of creative industries by ve different organizations (Table 1).
Table 1. Denitions of creative industries
Source Denition
UNESCO
(2016)
Term ‘creative industries’ encompasses a broader range of activities (then cultur-
al industries) which include the cultural industries plus all cultural or artistic pro-
duction, whether live or produced as an individual unit. The creative industries
are those in which the product or service contains a substant ial element of artistic
or creative endeavour and include activities such as architecture and adver tising.
UNCTAD
(2008)
Creative industr ies are at the crossroa ds of the ar ts, cult ure, business and tech-
nology. In other words, they comprise the cycle of creation, production and dis-
tribution of goods and services that use intellectual capital as their primary input.
WIPO (2006)
Copyright-based i ndustries: activities or industr ies where copyright plays an
identi able role. Core copyright industries: industries that are wholly engaged in
creation, production and manufacture, performance, broadcast, com munication
and exhibition, or distribution and sales of works and other protected subject
matter.
DCMS (1998) The creative which have their origin in individual creativity, skill and talent and
which have a potential for wealth and job creat ion through the generation and
exploitation of intellectual property
EC (2012) Creative industr ies comprise activities related to the creation, production and/
or distribution of creative goods and services as well as with the integrat ion of
creative elements into wider processes and ot her sectors.
Thus, one can easily see how a slightly different interpretation of the term
can create political and economic benets of the entity that employs the term. It
is therefore not surprising that WIPO aggressive shifting emphasis on intellec-
tual property (and protection of it), while for the DCMS the most important ele-
ment of creative industry’s is the ability to create jobs and nancial well-being.
The possibility to organically change denition of creative industries for po-
litical purposes in developing strategies for creative industries is precisely why
term is so popular at the local and international institutions. And that brings to
an interesting paradox – the concept of creative industries beyond academics
and clerks in governmental apparatus is extremely uninteresting and vague.
However, as the creative industries input in creating economic value became
apparent, most policy-makers ought to respond to this phenomenon, although
to this day the concept and the object is not always the same thought as re-
searchers and the government or the corporate world.
Forum Scientiae Oeconomia Volume 4 (2016) No. 4
30
2. Identity of creative industries
In order to understand the evolution of concept of creative industries we
need to start at the UK government’s Department for Culture, Media and Sport
that produced the rst Cultural Industries Mapping Document in 1998 (DCMS
1998). This document is widely recognized as it had played a groundbreaking
role in developing the concept of creative industries, and the majority of au-
thors considered this as a rst attempt and a catalyst seeking to systematically
list all creative industries segments (Hartley 2005; Pratt 2005; O’Connor 2007;
Hesmondhalgh 2012).
This document later became the starting point for most publications and
authors tried to improve this list of segments. Some of them (Hawkins 2007;
Levickaite, Reimeris 2011) seek to split the list as far as possible (e.g. lm, tele-
vision, documentary, video advertising, animation, pornography, distribution,
rental, lm distribution and so should be considered as separate and indepen-
dent segments). Other authors (Higgs et al. 2008) try to compress the creative
industries segments as much as possible (e.g. Architecture, Visual Arts and
Design is one segment, Software, Computer Games and Electronic Publishing
is another single segment, etc.). Hesmondhalgh (2012) even questioned whether
cultural tourism (museums, historical exhibitions, etc.) and sports have a place
in the creative industries.
Therefore, in 2000s, the main debate between the creative industries poli-
cy-makers shifted from “what is the denition of creative industries” to “what
is the core of creative industries”. Also, “what clearly should remain outside of
the denition of creative industries”. This question is quite important because
the enterprises of creative industries today can expect not only nancial sup-
port for their activities from the government, but also the help by improving the
tax and legal environment.
In terms of the creative industries politicians and scholars are often forget
one important aspect – creative industries consist of very different industries
that often have very little in common, have really different problems and needs.
This circumstance extremely complicates the work of government organiza-
tions that are willing to create universal strategy for the overall development
of creative industries in the country, or, in other words, to create a universal
“vitamins” recipe, which would successfully stimulate all segments of the cre-
ative industries. And while development strategy prepared by governments re-
ally allows one to create better conditions for creative organizations that today
are in competition in a global scale, however, universal “vitamins” method,
of course, it is the least effective for those segments that do not have formed
a strong representation or lobbying organizations.
One of the most interesting solutions to solve the problem of dening the
core segments of creative industries was reached by the Australian government.
Internationalization process of creative industries: tendencies, problems...
31
After conducting an in-depth research Australian government identied the
segments of creative industries which are the strongest in the country (Valuing
Australia’s Creative Industries 2013). After identifying that music and perform-
ing arts, lm television and radio, advertising and marketing, software and
interactive content, writing publishing and printing media, architecture, design
and visual arts segments of creative industries are the most valuable for Aus-
tralia, the government began to develop the strategy to improve the develop-
ment of national creative sector. The industries overview issued every couple
of years allows the government to monitor which government instruments were
used the most effectively to contribute in promoting the creative economy.
To sum up, the concept of the creative industries is mostly important to in-
ternational and national organizations in order to help develop creative econo-
my sector, or, at the very least, to defend it better against the challenges posed
by globalization. To professionals working in creative industries the concept of
creative industries is not clear or important because, for example, theater, video
games and movie industries have more things that separate them than unite. The
artists identify themselves primarily with the industry (segment) of theirs pro-
fession rather than with the general phenomenon of creative industries. Te r m of
creative industries is perfectly suited to identify how an activity that combines
entrepreneurial spirit and creativity makes a signicant contribution to the econ-
omy. However, to create strategies that would insure systematic growth of differ-
ent segments of creative industries each segment has to be assessed separately.
3. Internationalization process of creative industries
Today developed economies with well-established creative industries show
strong participation in global markets of creative products. By contrast, the
creative economy in the developing world has not been able to realize its full
potential (UNCTD 2008). The survival of creative enterprises in competitive
global or even local market is highly depending on successful internationaliza-
tion. XXI century belongs to those who understand globalization and its effects
to the market. Globalization is usually described as a process beyond that of
internationalization when the systematic relations between countries that affect
the seamless global cultural, economic, and, to a certain extent, the political
system or network formation (Lorenzen 2007; Held et al. 1999; Friedman 2000;
Stiglitz 2002; Amin, Cohendet 2004). Globalization process in creative indus-
tries is highly visible in a few aspects, namely, globalization of (1) involvement
in creative idea development; (2) creative product or service consumption; (3)
creative project production; (4) organization of creative project and (5) distribu-
tion. Digitalization revolution2 did wonders for segments of creative industries
that could distribute products or services in digital form. But digitalization
2 The ter m of ‘digital revolution’ means the change from mechanical a nd analogue electronic techno-
logy to digital electronics.
Forum Scientiae Oeconomia Volume 4 (2016) No. 4
32
as well was a platform to create tools for effective communication, therefore,
allowing to access a pool of talents that can be even continents away from the
core team. In fact international outsourcing for economic or creative merit in
creative industries is very common practise. Arguably the most famous Amer-
ican TV family “The Simpsons” for decades is produced in South Korean ani-
mation studio (CD 2005); cult TV series “X-les” about two FBI agents looking
for the truth for the rst ve seasons were lmed in Vancouver, Canada (Lowry
1995); world-class game developer “Sega Games Co.” have a network of stu-
dios across the UK, US and Canada (SEGA 2016); internationally successful
Disney movie “Guardians of the Galaxy” (2014) was lmed in London based
studios (Siegel 2013) and this list of examples from all segments of creative in-
dustries can go on. But internationalization of creative enterprises also reveals
the fact that globalization and digitization processes today have created a vast
and competitive global market in which local creative industries are obliged to
undertake necessary reforms if they want to compete successfully. Otherwise,
creative industries in developing world will not be able to attract investments
and also lose their talent (employees). Simply stated one cannot provide just
highly quality creative product or service for competitive price in local market,
because competition today is global.
Today there are two main aspects that greatly infuse internationalization pro-
cess of creative industries: (1) creative enterprises in developed economies looking
for economically sound outsourcing possibilities; and (2) national and internation-
al funds that is available only for internationally co-produced creative projects.
The rst aspect at this point is greatly researched and documented. Many segments
of creative industries outsource expensive and less creative elements of the proj-
ect to countries that can generally provide competitive price. For example global
lm industry still is greatly affected by “Hollywood great migration” or simply
“runaway productions” to foreign locations with tax incentives (McDonald 2014;
Lorenzen 2007; Yoon, Malecki 2009). And as Yoon and Malecki (2009) point out,
today for animation projects the preferred vehicle is co-production, and global an-
imation industry is experiencing a new wave of runaway production – toward lo-
cations where local co-production funding is available. Kanzler’s (2008) research
on performance of European co-productions compared to 100% national European
lms, both inside and outside their national markets clearly reveled that not only
on average European co-productions get released on more European markets and
generate higher admissions than their entirely national counterparts. As well, Ken-
zler came to conclusion that co-productions enable producers to raise nancing for
larger budgets, therefore higher production values; helps to access international
broadcasters and distributers; have a cross-border appeal and to a certain degree,
co-productions will generate higher admissions by being released on more than
twice as many markets as entirely national productions.
Internationalization process of creative industries: tendencies, problems...
33
The second aspect that greatly infuse internationalization process of cre-
ative industries is funding platforms like Creative Europe (TV, lms, anima-
tions, documentaries, video games, ne art events and etc.), Euroimages (for
lms, animations and documentaries only), World Cinema Fund (for lms and
documentaries only) etc. The reason why national and international funding
platforms for creative projects stimulate internationalization process is because
the most of them have requirement for applicants to submit projects with at
least two co-producers from different member states of the fund. Or, at very
least, creative projects are given better evaluation if it is submitted by co-pro-
ducers from different countries. And for creative team to be able to secure
a
lump sum that comes without any creative requirements to alter the projects
vision is a great stimulation to look for foreign co-producers. Not to mention that
most European countries provides nonrefundable support to creative projects.
And it is important to point out that international funding platforms to sup-
port co-production in creative industries today have a very important positive
spill-over effect3. And this effect was reached by a set of requirements for fund-
ing applicants. For example Creative Europe application requires from appli-
cants to answer questions like:
– describe the nancing strategy envisaged to nance the development
of the submitted project;
– describe the planned distribution strategy at national and European/
international level and if you have already entered;
– describe your intended marketing strategy (national and internatio-
nal): what media, what marketing tools (online and ofine), what ca-
lendar? What is your main target audience and why?
Questions like these are forcing creative projects managers, event those that
are mostly orientated to a creative execution, rather than commercially orien-
tated to adapt the rules of modern global market. It is hard to stress enough how
important, even for artisan style creators in Europe is to understand how global
animation market works, to be able fully realize its artistic potential.
And to generalize internationalization process of creative industries – today
development of national creative industries without strategically supporting in-
ternationalization process of selected segment it is simply the slowest way to
die for the industry. But there have to be cooperation between creative industry
segments and government policy-makers. These two elements will not create
a much needed synergy to reach full potential of creative industries if they are
not in synchronization. And that, in extend, means that creative enterprises (its
managers) have to implement strategy for internationalization from the very
beginning, of course if one is planning to grow. Internationalization in creative
3 “Spill-over effect” is the process by which an activity in one area has a subsequent broader impact
on places, society or the economy through the overow of concepts, ideas, skills, knowledge and dif-
ferent ty pes of capital.
Forum Scientiae Oeconomia Volume 4 (2016) No. 4
34
industries makes local creative enterprises adapt and use innovations faster,
creates new and better payed jobs, co-production helps to reach new markets
easer, funding platforms for co-productions provided non-refundable invest-
ment that helps to create better (bigger in scope) creative project. It is safe to
say, that internationalization in creative industries is here to stay.
Conclusions
Quantitative indicators show that culture and creative industries is one of
the fastest growing European economic sectors, and have not yet reached its
full potential. To unlock this potential, especially in developing countries, pol-
icy-makers have to take all necessary measures to fully reform and separate
culture industries from creative industries starting from conceptual level and
ending with practical political applications. Government-level support is es-
sential to segments of local creative industries that they could compete in the
global market.
Internationalization process being one of the best stimuli to increase cre-
ative enterprise competiveness also faces a set of new challenges. Based on
literature review and data analysis these tendencies, problems and challenges
were revealed:
– the interpretation and denition of the creative industries term will
continue to be vague. The concept itself is mostly used by academic
and government bodies in order to help develop creative economy
sector;
– while people working in creative industries do not associate them-
selves with concept of creative industries, but rst and most with
the segment that they are working in (like lm, animation or video
games industries and so on);
– developed countries use internationalization for economic merits
and/or to access larger (and mostly cheaper) talent pools.
– therefore internationalization process (co-production and insourcing)
in creative industries is highly supported by national and internatio-
nal funding platforms.
– today creative enterprises compete in a global market, therefore, seg-
ments of creative industries from developing countries have to provi-
de services or product that is to a global industry standard, but in the
same time, for a competitive price.
– national government body in charge of developing creative industries
have to analyse each segment independently and determent with such
a plan of action which is the best for the local industry and helps to
increase co-production, insourcing and prevents outsourcing.
Internationalization process of creative industries: tendencies, problems...
35
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