Entrepreneurial theories: a brief overview

Numerous studies and theories have been developed throughout the centuries in attempt to find out what entrepreneurship is about and who the entrepreneurs are. The etymology of the word entrepreneurship derives from French and German language, and means undertaking. There is no agreed definition of this complex phenomenon. I will split the schools of thoughts into several groups:

• Entrepreneur: Risk-taker: Richard Cantillon (1680-1734) was the first author who defined entrepreneurs as those who are ready to risk in order to receive future profit.

• Entrepreneur:  Key Factor for Economic Development: Jean-Baptiste Say (1767-1832) described entrepreneurs as those who transfer economic resources in areas with higher productivity and organize production process by combining diverse factors of production with information and experience.

• Entrepreneur: Innovator and Change-maker: Joseph Shumpeter (1883-1950) defined the entrepreneur as a leader and contributor to the process of “creative destruction”.  

• Entrepreneur: Shaped by Personality Traits and Characteristics: high need for achievement, motivation to excel, strong self-confidence, being optimistic, innovative, creative, imaginative, restless, and proactive.

• Entrepreneur: Shaped by the External Environment: External factors include family background, employment history, education, social networks, culture, prior management experience.

• Entrepreneur: Leader and Manager. As every enterprise grows with the time, the entrepreneur becomes leader and manager at a certain stage of organizational growth and this is why the management skills and competences are very important.

Entrepreneurship in the arts: definition

“Entrepreneurs in the arts utilize creative and innovative artistic ideas and transform them into sustainable business models by seeking and organizing resources beyond their disposal and implementing diverse innovative approaches while undertaking certain amount of risk (not only financial but related to reputation). They sense and utilize external opportunities and trends - not only market oriented one, but also societal, human and cultural one. “ (Source, Varbanova, Lidia (2016) International entrepreneurship in the arts, Routledge)

Entrepreneurs in the arts: types and specificities

• Culturepreneur is a broader term than artpreneur and refers to entrepreneurs in the cultural sector who operate alone or in organisational settings in a broad range of branches in the arts and culture field.

  Artpreneur is an artist who practice arts, but also do all related functions for placing it on the market, such as: fundraising, contacting clients, promotion, financial management and others.

• Creative entrepreneur: refers to entrepreneurs who work in the creative industries branches. These entrepreneurs start and manage business enterprises with creative elements, nonprofit organisations or social enterprises.

• Business entrepreneurs in the arts: founders and owners of business organisations.

• Social entrepreneurs contribute to a social problem and achieve impact on the society by empowering people, groups and communities.

• Community entrepreneur: one who stimulate economic activities within a community and contribute to solving problems in a region or a city by providing employment opportunities at a grass root level.

• Digital entrepreneur in the arts: the one who use the power of the new technologies and online tools to find and exploit an international opportunity, to create a new business, to disseminate information, to sell goods and services online and/or to collaborate with clients and partners.

Innovations: tool for successful external financing

Innovations are important in raising external financing, because they emphasize on differentiation and uniqueness of the new company in the arts. It is important to emphasize that innovations are not only related to technology, but to the social and economic values they create.

Types of innovation

The literature on innovation uses different typology based on criteria such as: the length of innovation, types of changes that occur as a result, the sector in which it develops, the way in which an innovation is born, the driving motives behind an innovation process, and others.

• Breakthrough innovation represents drastic changes in many areas – in a product, service, process, or method of production or distribution. This innovation is risky and require large investments, especially in research and development (R&D).

• Incremental innovation is related to continuous and gradual improvements in an existing product, service, process, or method. It does not change significantly the business model or the way the product is produced or consumed.

• There are other types of innovation based on different criteria, such as:

• Product and process innovations

• Systematic and sporadic innovations

• Business and social innovations

Innovations in the arts have the following aspects:

• Cross-sectoral-crossing over to other sectors (science, technology, social domain, education and others) is something that brings uniqueness in an arts project or organisation

• Inclusive and participatory – helping for using arts as a medium to address social, economic or other needs within the community

• Dual function – related to creative process but also to other organizational areas.

• Collaborative – allow exchange of ideas between individual arts organisations and communities.

• Country-specific - what might be innovative in one country, region, or context may not be innovative in another.

Once when we know what entrepreneurship in the arts is about, who are entrepreneurs in the arts, and why innovation is so important, we will explore in the next lecture the basics of the business models and the sources of eternal financing for start up companies in the arts. Then in the third lecture we will look at the basics of business planning in a crossover, collaborative and strategic mode.