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POLISH JOURNAL OF MANAGEMENT STUDIES
Radomska J., Silva S.
2018
Vol.18 No.2
259
THE BALANCE BETWEEN FORMAL AND INFORMAL
MANAGERIAL PRACTICES – MANAGING AMBIDEXTERITY
IN CREATIVE INDUSTRIES
Radomska J., Silva S.
Abstract: The main aim of the paper is to understand how managers of creative industries
(CI) decide on the use of ambidextrous solutions. Managerial actions of business managers
of CI enable to connect the volatility and variability of the environment with the high level
of creativeness that this requires. As such, it is interesting to study how these managerial
actions are decided is of utmost importance, especially in a volatile and subjective
environmental context as it seems to be the one of CI (Banks et al., 2000). We aim at
investigating the managerial practices that enable to find the balance between the
simultaneous pressure on innovativeness and the effectiveness of the actions taken. We
wanted to know the way managers deal with the paradoxes that can result. We interviewed
managers of 10 companies located in a second tier group of countries, where for
governments, CI are apparently strategic, but where the value they add and the jobs they
can create can still be improved.
Results show that there are two main paradoxes in terms of managerial actions the priority
in relations (external or internal) and the approach to strategy (flexibility or planned
actions). Results also show that in what concerns strategy formality and external priority in
relations there are consistencies in the degree of strategy formalization. However, in what
concerns the practices used in shaping the internal relations, there is no consistency
identified in our sample. Our overall conclusions are that companies are more and more
moving away from the traditional option of informal approach, focused inward to a more
hybrid approach in which formal focus outward is also considered. This confirms the thesis
that ambidexterity is becoming a characteristic of the companies in the CI sector.
Key words: ambidexterity, paradox theory, strategy, relations, CI
DOI: 10.17512/pjms.2018.18.2.21
Received September 03, 2018; Revised November 12, 2018; Accepted November 28, 2018
Introduction
The definitions of CI differ significantly in content, which makes comparability of
all statistics about entities operating in this sector difficult and provides the basis
for considerations that call into question the validity of considering certain types
, 2015). However, in most research, creative industries (CI) is a
business field characterised by the existence of creativity, permanent adjustment
and volatility that sets the ground for investigating the managerial practices.
Moreover, the sector seems to be of strategic importance for the growth of
Prof. Joanna Radomska Prof. Susana Silva,
Corresponding author: joanna.radomska@ue.wroc.pl
ssilva@porto.ucp.pt
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260
economy in different countries. In the paper presented, the perspective of Poland
and Portugal will be explored. According to the European Commission, the level of
revenues in the creative industry in Poland and Portugal is comparable (Poland
6235 mln EUR, Portugal 6358 mln EUR) (European Commission, 2006).
However, CI account for 1.4% of GDP and employment in Portugal, whereas in
Poland we can see that the contribution is higher as for the employment - 1,75% -
but smaller as for the GDP - 1,25%. (Nota Estatistica, 2008).
The creative job creation in Poland is comparable to the Netherlands (873 000
workers) even though it represents a rather small percentage of employment.
Nevertheless it presents a growing trend, even at a smaller pace than, for instance,
in the Netherlands or the UK. For Poland, experts predict a growing tendency and
stronger impact of this business sector on the labour market (Szara and Wojtowicz,
2016). For that reason, there is a growing tendency to emphasize this industry. In
fact, by the development of this sector in the context of the entire economy
) it is regarded as a
relevant and strategic sector for Poland. It is perceived as an important factor
influencing the regional development as well as the sustainable economic growth
(Kasprzak, 2015) and spillover effects. That significance is manifested by the
introduction of programs supporting the managerial trainings and innovative
sources of financing (Ratalewska, 2015).
If we want to compare Poland with another European country in which the sector
has a similar relevance, we can compare it with Portugal. As for Portugal, this
sector has assumed a profitable role, with potential for job creation and as a
privileged arena for the implementation of competencies and skills associated with
creativity. It has been assumed that CI empower professionals that detain
distinguishing abilities (Mateus, 2010). The activities of this sector were
responsible for a growth on exports of almost 40% from 2007 and 2015, which
reinforced the importance of this sector for the economy, namely in the crisis
period. In 2015 the value created in this industry contributed for 4% of Portuguese
GDP (Mateus, 2016). Having stated the relative importance of this sector in the
European economies and considering that governments are more and
more focusing their attention on the strategic role displayed by the sector, we can
also note that within the creative industry, regardless of the countries analysed,
there are significantly more small and medium-sized enterprises (SMEs) than large
enterprises.
Literature Review
The main aim of the paper is to investigate the managerial actions that enable to
connect the volatility and variability of the environment described with the high
level of creativeness that is required. Therefore it is necessary to investigate the
managerial practices that enables to find the balance between the simultaneous
pressure on innovativeness and effectiveness of the actions taken and in that way
manage the paradoxes that could be identified. As stated by Smith and Lewis
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(2011)
simultaneously
mainly to describe the simultaneous pressure on exploitation and exploration
(Gibson and Birkinshaw, 2004), the paradox theory (Poole and Van de Ven, 1989)
could be used as a theoretical perspective describing the approach to strategy (de
Witt and Mayer, 2005). The argument for choosing that approach comes from the
statement that
(de Witt and Mayer, 2005), which
means that the managerial actions and decisions are a result of converse priorities.
In the creative industry those tensions are extremely important as the organizations
operating in that industry aim at converting the intellectual and social capital into
economic capital measured by the final economic outcome (Chen et al., 2013).
That variety of the capital involved makes the environment more complex and
volatile (Townley et al., 2009), while the diverse and fast changing knowledge
flows influence its variability (Jeffcutt and Pratt, 2002).
The paradox lenses are the perspective applied to understand the concept of
ambidexterity (Papachroni et al., 2015) that is defined as
complex and adaptive system t
(Nosella et al., 2012). That capability seems to be important especially in the CI,
where the companies are forced to cope with conflicting priorities. On the one
hand, the growth of that sector contributes to building knowledge capacity of the
economy and on the other hand it creates economic growth for the country, as well
as other industries. The specification of the CI is the result of the development of
an innovative, knowledge-based economy, evolving on the basis of intangible
resources with a measurable financial value (dos Santos-Duisenberg, 2015). On the
other hand, such a change of competitive advantage, based on intangible resources
has become a source of building creative potential and an impulse to support its
development (Wuwei, 2011). It is however necessary to ensure coherence between
the qualitative, original effect of creative work and its quantitative, measurable,
economic aspects, and so it is necessary to integrate the pressure to develop
creativity with the pressure for economic performance (Jones et al., 2004).
Therefore, companies operating in the creative sector are subject to managerial
pressure to ensure consistency between creativity and economic efficiency (Jones
et al., 2012), which is considered one of the manifestations of the aforementioned
duality (Wu and Wu, 2016).
Internal vs. external relations
The first paradox identified - priority in relations - concerns the type of relations
that are crucial for operating in the creative industry. On the one hand, the
managers are forced to find solutions to reduce the tension that could be observed
inside the company where the employees are forced to generate new ideas and to
be committed to delivering standardised processes (Knight and Harvey, 2015). On
the other hand, managers must find the balance between competition and
coopetition which means that focusing on the external relations also seems to be
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important. Therefore, external relations become a strategic priority as important as
financial objectives and its implementation requires the integration of many actions
(Fillis, 2002). According to Potts and Cunningham (2008), this is the basis for
redefining the creative sector in terms of social network markets.
Flexibility vs. planned actions
The second paradox concerns the approach to strategy whether the development
concept requires more flexibility or rather planning processes and methods used. It
is worth mentioning that many authors pay attention to the influence of uncertainty
on the ability to run a creative industry business, pointing to its specificity (Hirsch,
2000) and its unique character (Lampel et al., 2000). Because of that, the
flexibility, improvisation and an opportunity-seeking approach become more
important (Winkel et al., 2013). On the one hand, because the knowledge is the key
resource, it is necessary to undertake non-standard activities that go beyond
established paradigms and to constantly search for new ideas (Ismail, 2016), which
may mean ad hoc activities (de Klerk, 2015). On the other hand, these activities are
embedded in organisations whose activity is based on repetitive processes and
schemes with certain limitations, including those of resource nature (Hotho and
Champion, 2011). That is strongly connected with the population of industries,
where micro and small enterprises predominate (Hartley et al., 2013). It could be
observed that prioritising one process (flexibility and choosing the perspective of
emerging strategy) over the other (planned actions and standard planning process)
creates clashing tensions for managers.
The approaches described above are plotted in a outline that summarizes the
various alternative ways of consider managerial practices in CI (see Figure 1).
Figure 1. Theoretical approaches explaining the paradoxes in creative industry
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Based on the literature reviewed, it could be observed that the intellectual capital
which is the basis of creative potential possessed, comes from the employees and
therefore, supporting the internal relations seems to be the priority. Secondly,
because of the high volatility and variability of environment, creative companies
are perceiving flexibility as their core capability and therefore, rather informal
managerial practices are executed. Furthermore, as time constrains seem to be
impacting the actions of managers operating in this area that have to cope with
volatility in their environment on an everyday basis, planning activities are
normally hindered and considered only when time is not affected to dealing with
everyday situations.
Methodology
To describe and explore the research problem, a real-life context, a descriptive
approach is used. The appropriateness of this research method for the present work
is supported by Yin (2003). As confirmed by Parry et al., (2014), case study using
semi-structured interviewing and document analysis provide the details about the
context and specific factors that are considered in decision making process. As
the research aims to investigate the managerial practice, the study of particular
companies is appropriate. The empirical basis for this investigation is provided by
case studies of 5 Portuguese and 5 Polish firms that operate in the creative industry.
The companies were located in Porto and in
case study is an empirical enquiry used to investigate a contemporary phenomenon
within its real-life context when the boundaries between it and the context are not
clearly evident and multiple sources of evidence can be used. We followed this
approach by selecting cases that fulfilled the following conditions: (1) the firm
should be registered in Portugal or Poland and owned by Portuguese- or Polish-
based interests; (2) the firms should belong to different sectors the creative
industry, and be of different sizes.
Structured interviews were conducted with the executives of each firm. These
interviews allow interviewers to
(Adams et al., 2005), which is important in exploratory
studies such as this one. In all the cases, the interviewee was one of the founders
and currently a chairman of the firm. All interviews on average lasted an hour. The
interviews were recorded and later transcribed for content analysis. The two initial
categories considered were formal and informal managerial practices. The
interview transcription ensured the consistency of analysis. Reliability was ensured
concerning the constructs extracted.
Data Analysis
Market research and information gathering
None of the interviewees has a formal research method or any kind of structured
plan to gather information, research the market or the competition. All of the
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answers showed that the research process is done informally, when the need arises
or they simply gather information while working. There were three types of
information sources consistently pointed out: online/internet, trade fairs or
specialty seminars/shows and clients. All of the interviewees considered their
clients inputs as some sort of information research or market understanding and for
some this is the only kind of information that is gathered, this can be seen by the
It is not usual to gather exhaustively that kind of
information, only at specific times and informally, whether by talking with people
The same way is
searching online, or when talking with a client or even when a cooperation
situation arises and two competitors work together. There is no formal process in
any of the companies. In some cases there is coopetition instead of competition,
which means that the companies informally know about the competito
Planning Process
The majority of the interviewees revealed that there is no plan or process. The work
project is generally different and the scope of the job dictates the plan to follow at
that moment. In a minority of the cases analysed, every week there were scheduled
meetings but, even in those cases, the work was customer oriented. Some
companies perceived the process of budgeting as a way of formal planning, but
statement (respondent PL4) We plan the overall budget but we don't stick to that
plan very strictly
one that stood out was the attractiveness of the job. Because of the importance of
the work portfolio in creative companies when presenting themselves to new
customers, some of them mentioned this attribute. It may be observed that strategy
execution is generally measured through three simple indicators: revenue, project
budget and number of clients. Each of the interviewed companies uses one or
several of these three indicators. Even when there are teams within the
organizations, the interviewed companies
organizational goals that were pursued, and the projects were made with the sole
success. There are no individual goals.
Capturing feedback and motivate or foster creativity
All the business owners revealed there is some sort of capturing of feedback,
whether when in meeting or informally. Some was captured in formal meeting,
scheduled at the end of a project or weekly, and some was captured in meeting
developed when necessary. All the interviewees referred that feedback was often
captured as a way of improving or even assessing morale or other type of
information. However, in regards to the motivation aspect, the answers provided
showed a clear distinction between Portuguese and Polish companies. The
Portuguese companies mentioned a variety of informal motivation policies such as
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providing a flexible working time, informal working environment, having no work
process and working as a team. The Polish companies mentioned bonuses and
financial rewards after every project as a procedure used to motivate and foster
creativity. The most mentioned process was the creative process itself. Although
the companies are based in accounting and financial procedures that are formal and
are inevitable, they consider the creative process the key business process that
originates meaningful work. For that reason they pay attention to the aspect of
fostering the creativity.
Flexibility
The majority of the interviewees mentioned the great flexibility they have in their
approach to the market, mainly tackling opportunities as they arise. Some referred
focusing in goals, deadlines and even some strategic orientation but, nevertheless,
the existing plans are fluid and easily changeable when the market or the clients
Our company was a start-up
with people who had no economic education. Our industry is very dynamic and
rapidly changing. We have to change our approach very quickly and that's why we
are trying to have more formalized decisions. But as our employees are mainly
millennials, they are allergic to plans. Our plans evolve, we are setting the budgets
and expenditures but we are not thinking about the ways of achieving them. There
is sometimes the information that forces us to change our initial plan
External relations
The external relations with partners are seen as crucial, very important and very
valuable by most of the interviewed companies. They mention that the
collaborative work is regular because a lot of projects demand the involvement of
several complementary companies with complementary skillsets. Another factor
pointed out is that external relationships are important as a way of lead generation,
which was c Relations are the basis of our
It could be
pointed out that partnerships in the CI are recurring and a large part of the jobs are
concluded through partnerships between different companies, sometimes
competitors with different skillsets. When preparing and defining objectives,
budget and type of service for a client, the companies evaluate possible
work as we can see in the
Many projects are joined within the
Therefore, having close relationships with partner companies can facilitate the
planning process and definition of objectives.
Internal relations and supporting the team creativity
The majority of the companies practice the involvement of the team in the creative
development. When the companies are smaller (<10 employees), all the members
Every time we
. However,
when the companies are larger, there is a chosen group of 5-10 people participate in
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the crea The
concept of development is discussed every month between the owner of the
company and important employees (5-
There were basically two factors mentioned: atmosphere and informal activities.
Atmosphere is regarded as a way to support creativity, and so, maintaining close
internal relationships is used to accomplish it. Activities such as team building and
informal team meetings or team meals are also ways to foster creativity and
innovation. It is manifested by the usage of informal tools, as can be verified in the
We also have the whiteboard where
employees can show their mood (by choosing the type of sticker) but also show the
timeline of the proj
Discussion
From the data analysed we were able to draw some findings that allow us to
conclude that the external relations are crucial to maintain the competitive
advantage in the creative industry and that although there is a high level of
flexibility, the companies are more and more also relying on some formal tools
(budgets or project-working) to plan their activities.
1) Degree of formality in strategy formulating and executing
Among the interviewed companies, there is a low degree of formality. However,
we were able to observe that among managers of CI companies, the work is
generally conducted by project and the process is normally customer-oriented.
Although when planning is considered, the approach is usually informal, there are
formal tools used. Those tools (mainly budgets and projects) aim at focusing on
-term perspective. When we
refer to the strategy effectiveness measurement it is usually conducted at least
annually and is done considering at least one indicator. Although it is a very basic
form of measurement, it is formal. Moreover, when discussing the strategy, the
capturing of feedback is done consistently, in a formal setting (meetings) but with
an informal approach (asking for opinions). All these findings support the idea
strategic management process in organizations from the creative industry. The
research findings allow to conclude that using formal practices while perceiving
flexibility as the core characteristic of competitive advantage, enables to resolve
the paradox.
2) Priorities in relations (external and internal)
Our research allowed to conclude that the existing external relationships have
influence in the decision-making process in the sense that the available network of
partner companies can limit or expand the work possibilities in terms of existing
combined skillsets. In the case of external relations with partner companies and
other stakeholders as the press, this also is another aspect considered crucial for the
business. On one hand, partner companies are important because of a network
effect that leads to referrals and lead generation. On the other hand, having good
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relations with partner companies can facilitate some projects because companies in
the creative industry often work together in cooperation.
Our main findings showed that although the internal networks are important and
supported by formal and informal practices, the main priority is given to external
ones, which means focusing outward. That conclusion is consistent with the view
presented by Dempster (2006). The perspective presented on Figure 2 seems to
enable more coherent analysis of the issues discussed, with companies moving
more and more from right down corner into a upper situation focusing outward.
Figure 2. Approaches explaining the paradoxes in creative industry
The basic assumption derived from the literature review on the conflicting
priorities in creative industry, considered that the informal approach focused
inward would be the most common approach among companies operating in the
creative industry. However, after analysing the case studies presented, it could be
concluded that companies operating in the creative industry in the two countries
analysed, despite minor geographically justified differences among their attitudes
and behaviours towards planning, use three (instead of four) approaches explaining
the paradoxes defined. This consubstantiates an ambidextrous characteristic of
firms in this business sector. Conversely to basic assumption, in the case of
approach focused outward, it could be observed that the managerial practices are
concentrated on blending the formal and informal approach to strategy, while
giving the priority to creating and maintaining the external relations, which is the
expression of ambidexterity. As presented by many research studies, there are
companies that successfully manage the paradoxes by using the ambidextrous
approach (Andriopoulos and Levis, 2009). Our research confirms that results and
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shows that in the case of external relations, in the companies operating in creative
industry sector managers are using ambidextrous solutions to find the balance
between formal plans and unplanned responses to the changes observed.
Conclusions
The main contribution of that research is the approach where we showed that
ambidextrous managerial practice is important in CI due to existence of certain
paradoxes, which were also identified. Our results confirm the argument presented
by Heavey et al., (2015) who stated that the extensiveness of social networks inside
and outside the company, increases the dual knowledge flow and are beneficial for
dealing with ambidexterity paradoxes. Moreover, it could be mentioned, that there
is a loop between the managerial practice and ambidexterity, with mutual
relationship revealed over time. The main managerial finding that could be stated
here is the overlap of roles which is the result of certain paradoxes identified. The
manager should be both creative and focused on effectiveness, therefore the
individual ambidexterity with the co-existence of formal and informal approach
focused outward is recommended.
The major limitation of this study is the small number of case studies, which should
be increased in future studies to guarantee reliability (a rather difficult process
considering the sensitive information needed). It would also be useful to observe,
from a financial point of view, the performance results in companies presenting the
approaches described to compare the results achieved. Other paradoxes could also
be investigated (i.e. evolutionary or revolutionary strategic change approach), as
well as more focused research perspective where only a particular type of activity
would be analysed.
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RÓWNOWAŻNOŚĆ POMIĘDZY FORMALNYMI I NIEFORMALNYMI
PRAKTYKAMI ZARZĄDZANIA – WSZECHSTRONNE ZARZĄDZANIE
W BRANŻACH KREATYWNYCH
Streszczenie
.
-
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Słowa kluczowe: wszechstronny, teoria paradoksu, strategia, relacje, CI.
形式和非正式管理实践之间的平衡 - 在创意产业中管理不确定性
摘要：本文的主要目的是了解创意产业管理者（CI）如何决定使用灵巧解决方案。
CI业务经理的管理行为能够将环境的波动性和可变性与这种高要求的创造性联系起
来。因此，研究如何决定这些管理行为是至关重要的，尤其是在动态和主观环境背景
下，因为它似乎是CI（Banks等人，2000）。我们的目标是调查管理实践，以便在创新的
同时压力和所采取行动的有效性之间找到平衡。我们想知道管理者处理可能产生的悖
论的方式。我们采访了位于第二级国家集团的10家公司的经理，对于政府而言，CI显
然具有战略意义，但他们增加的价值和他们可以创造的工作仍然可以得到改善。结果
表明，在管理行为方面存在两个主要矛盾关系中的优先级（外部或内部）和战略方法（
灵活性或计划行动）。结果还表明，在战略形式和关系中的外部优先权方面，战略形式
化程度存在一致性。但是，在形成内部关系所使用的实践中，我们的样本中没有确定
一致性。我们的总体结论是，公司越来越偏离传统的非正式方法选择，将注意力集中
在一种更加混合的方法上，在这种方法中，外向的正式关注也被考虑在内。这证实了
这样一个论点，即双重性正在成为CI行业公司的一个特征。
关键词：双元性，悖论理论，策略，关系，CI。
