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Faculty of Economics and Business

Master Thesis

MSc Business Administration – Entrepreneurship & Management in the Creative Industries

The Process of Artistic Innovation:

A Case Study of Market Orientation and Innovative Capabilities

in the Dutch Dance Theater Industry

Author:

Marieke van Dis

Student Number:

10891099

Submission Date (Final):

20/08/2015

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I.

Statement of Originality

This document is written by student Marieke van Dis who declares to take full responsibility for the contents of this document.

I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.

The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.

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II.

Abstract

This research aims to explain the origination of artistic innovation that happens within a creative production company. This is done by reflecting on the concept of market orientation, to see what external information and the internal distribution thereof influences the development of artistic ideas into an innovative, creative product. Hence the focus of this research is to explore the link between a company's market orientation and its innovative capabilities in the characteristic circumstances of the creative industries, in which largely intangible and aesthetic products are produced.

This qualitative, cross-sectional research design includes multiple cases in the Dutch dance theater industry as sources of evidence to study this phenomenon in its real-life context. As a means of deep data gathering, semi-structured to unstructured interviews were performed with nine cultural producers at multiple levels and disciplines in an organization.

In-depth analysis of data provided the conclusion that the process of artistic innovation originates predominantly from the artistic integrity of an individual in the organization who fulfils the role of artistic initiator in the organizational structure. The more a creative producer relies on this artistic integrity of the creative individuals in the organization, the more it is able to produce radically innovative products rather than incremental product modifications. This effect is strengthened by strong orientations towards collaborative creativity and talent development.

If a company is more considerate of the market such as in maintaining the values of accessibility and recognizability for its new products, the more incrementally innovative and less new to the field their products are. These market considerations are strengthened by the sub-orientations towards the customer, competitive positioning, and municipal pressures.

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III.

Acknowledgement

The writing of this thesis would not have been possible without a number of industry professionals and academic tutors that crossed my path during my Master’s education at the University of Amsterdam.

I would like to express my gratitude to all research participants for being open to sharing their knowledge and visions on the dance theatre field, and allowing me the space and opportunity to explore my subject of interest in their organizations. They have shared their professional passions and struggles that were very inspiring and insightful, also accommodating me with a look behind the scenes and illustrative materials. Their willingness to help me in the data collection process with so much enthusiasm and generosity has been a great help.

Furthermore, I am very appreciative of Dr. Joris Ebbers, who provided me with valuable guidance as my research project supervisor. His constructive suggestions during the development of this thesis were inspiring. His positive manner of steering me in the right direction helped me in the completion of my research.

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IV.

Table of Contents

I. Statement of Originality ... 2

II. Abstract ... 3

III. Acknowledgement ... 4

IV. Table of Contents ... 5

1. Introduction ... 8

1.1. Project Background & Individual Motivation ... 8

1.2. Research Objective ... 9

1.3. Central Focus Question ... 9

1.4. Research Methodology ... 9

1.5. Research Structure ... 9

2. Literature Review ... 11

2.1. Market Orientation ... 11

2.2. Innovation ... 13

2.3. Market Orientation & Innovation ... 14

2.4. New Product Development ... 17

2.5. Innovation in an Artistic Environment ... 19

2.6. Market Orientation, Innovation & Organizational Culture ... 20

2.7. Conclusion ... 21 3. Methodology ... 24 3.1. Research Design ... 24 3.1.1. Methodological Philosophies ... 24 3.1.1.1. Epistemological Considerations ... 24 3.1.1.2. Ontological Considerations ... 25 3.1.2. Research Approach ... 25 3.1.3. Research Strategy ... 26 3.1.4. Research Design ... 27 3.1.5. Research Purpose... 27

3.2. Performed Research Activities ... 28

3.2.1. Sampling Techniques and Selection of Respondents ... 28

3.2.2. Undertaken Research Activities and Response ... 29

3.3. Quality of the Research Findings ... 30

4. Analysis of Research Results ... 33

4.1. Analysis Strategy ... 33

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4.2.1. The Creative Industries ... 33

4.2.2. The Artistic Product ... 34

4.2.3. The Dutch Dance Theater Industry ... 34

4.2.4. Organizational Structure ... 36

4.3. Artistic Innovation ... 38

4.3.1. Artistic Innovation in the Dutch Dance Theater Industry ... 38

4.4. The New Product Development Process ... 41

4.4.1. The First Innovation Stage: Artistic Ideation/Integrity ... 41

4.4.2. The Second Innovation Stage: Team Formation ... 43

4.4.3. Market Consideration Stage ... 44

4.5. Market Orientation in the Artistic Innovation Process ... 45

4.5.1. Product Orientation: Artistic Integrity ... 45

4.5.2. Customer Orientation: Market Considerations ... 46

4.5.3. Competitor Orientation: Competitive Positioning Awareness ... 49

4.5.4. Collaborative Orientation: Collaborative Creativity ... 50

4.5.5. Municipal Orientation: Governmental Goals & Pressures ... 55

4.5.6. Learning Orientation: Talent Development ... 57

4.6. Market Orientation & Artistic Innovation Capabilities ... 59

4.6.1. Artistic Integrity & Innovation ... 59

4.6.2. Market Consideration & Innovation ... 59

4.6.3. Competitive Positioning Awareness & Innovation ... 62

4.6.4. Collaborative Creativity & Innovation ... 62

4.6.5. Municipal Pressures & Innovation ... 63

4.6.6. Talent Development & Innovation ... 63

5. Discussion ... 65

5.1. Interpretation of Findings ... 65

5.1.1. The Process ... 65

5.1.2. Market Orientation ... 66

5.1.3. Radical & Incremental Innovation ... 68

5.2. Limitations ... 69

5.3. Implications & Further Research Requirements ... 70

6. Conclusion ... 73

I. Interview Guide ... 74

II. Coding Scheme ... 77

III. Overview of Respondents ... 82

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7 V. Bibliography or Indicative Literature List ... 85

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1. Introduction

This research originally commenced with a fascination for the creative industries and its constant renewal in artistic expression. In this first introducing section, it is made clear where this interest came from, and what trends and observations led to the initiation of this research and the questions it aims to answer.

1.1.

Project Background & Individual Motivation

The cultural industries are blessed and cursed with the need to constantly innovate: every product needs to be different from the last, classics are continuously renewed and reinvented, and the audience's tastes are ever changing and unpredictable. These characteristics of the cultural industries (Peltoniemi, 2015) are bound to have an effect on the underlying process of innovation that takes place in cultural production organizations. When constantly wondering what the audience would want, as there are no clear predictions, what

information and insights does a cultural producer need to base new product development decisions on?

In the process of looking for the origin of innovation, the concept of market orientation has surfaced. A firm that is oriented towards what happens externally in the market, is able to generate knowledge on the consumer and the competitive environment. The knowledge and understanding taken from this market outlook, is subsequently applied in the process of new product development, enabling innovation (e.g. Kohli & Jaworski, 1990; Narver and Slater, 1990; Slater and Narver, 1995; Narver & Slater, 2000). However, when it comes to artistic innovation the link between a strong market orientation and an innovative product outcome is ambiguous and unclear (Voss & Voss, 2000). Artistic products markets are less reliant on customer's preferences, for reasons such as that innovation is based on aesthetic and intangible products made for customers who may not be able to articulate their preferences, making them reliant on the expertise of the cultural producers themselves to inform them and introduce them to new innovations. Thus, chances are that a market orientation takes on a whole different meaning when it comes to artistic innovation in the cultural industries context. This is what sparked the researcher to explore this inconclusive corner of market orientation and innovation research.

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1.2.

Research Objective

This research aims to gain insights into the process of artistic innovation, which is presumably intertwined with a company's market orientation. Therefore the concept of market orientation is explored to see whether it can be applied to or adjusted to fit the extraordinary context of innovation in a cultural market. This calls for a qualitative research design to map out the artistic innovation process and its variable influences on a company's artistic innovation capabilities along the way.

1.3.

Central Focus Question

The central research question can therefore be formulated as follows;

How does the market orientation of a firm influence its capabilities for artistic innovation?

1.4.

Research Methodology

This study takes on a qualitative research approach with the goal to inductively develop grounded theory from rich data. Various cases are included, making the study of this phenomenon in its real-life context cross-sectional, using multiple companies and individuals as sources for evidence. From data an overview of concepts will be given depicting how they are linked in the perception of cultural producers according to their social reality. Thus, the data is approached in the subjective context of its social construction such as language, shared meanings and instruments (Bryman & Bell, 2011).

As a means of deep data gathering, semi-structured to unstructured interviews were performed with cultural producers at multiple levels and disciplines in an organization. In total, 7 dance companies out of a population of 20 were willing and able to cooperate, which provided the research with interview data from 9 professionals in the field. In these interviews the respondents' view on the market orientation-artistic innovation relationship were explored, to facilitate the exploratory discussion in this study.

1.5.

Research Structure

This study is built up as follows from this current Chapter 1.) Introduction. First, Chapter 2.) Literature Review explores the main concepts on which the research is based, mainly highlighting the effect of market orientation on innovative capabilities as well as what is known so far in the literature on the new product development process. This leads to the formulation of a research objective and research questions. These

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10 research questions facilitate a guideline for analysis in Chapter 4.) Analysis of Research Results, but first the research design is specified in Chapter 3.) Methodology as well as the study´s limitations and quality measurements.

Chapter 4. Analysis of Research Results reports the results that emerged from careful analysis of interview data, structured by a logical order of concepts surfaced from consistent research data.

Chapter 5. Discussion opens the discussion to the results, the concepts and conceptual relationships found in the data. The discussion section once again stirs up the concepts of market orientation, artistic innovation, and the process of developing new artistic products. This leads up to the conclusion in Chapter 6. Conclusion, that summarizes the insights gained from the study, their implications and multiple directions for further research that can be build from this exploratory work.

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2. Literature Review

2.1.

Market Orientation

A market orientation is a business culture that performs superiorly because of the ability to create outstanding value for customers. This business culture relies on continuous learning about customers’ needs and competitors’ capabilities, and coordinated action to exploit this knowledge (e.g. Day, 1990; Kohli & Jaworski, 1990; Narver and Slater, 1990; Slater and Narver, 1995 in Narver & Slater, 2000).

In defining market orientation, Kohli & Jaworski (1990) integrate the marketing concept as a business philosophy into a definition naming specific activities that translate this philosophy into practice. They define market orientation as “the organization-wide generation of market intelligence pertaining to current and future customer needs, dissemination of the intelligence across departments, and organization-wide responsiveness to it” (Kohli & Jaworski, 1990 p. 6). The before mentioned activities that can be used to translate the marketing concept philosophy into practice – thereby engendering a marketing orientation – are intelligence generation, intelligence dissemination, and responsiveness (Kohli & Jaworski, 1990).

The goal of a market oriented corporate culture is to identify, understand and meet customers' needs. It is therefore crucial for a market oriented firm to direct their organizational culture towards generating,

disseminating, and responding to market intelligence. Thus, developing a market orientation requires a commitment throughout the organization to the process of gathering and disseminating information, as well as responding to customers’ needs, competitors’ offerings, and developments in the market (Chang et al., 2014).

The conventional marketing theory holds that being market oriented provides a firm with a better understanding of its customer, and thus enhanced customer satisfaction and firm performance. It also comes with better responsiveness to the environment and the competitors operating in it (Kohli & Jaworski, 1990). This is in line with Narver & Slater's (1990) distinction of market orientation into customer orientation, competitor orientation, and interfunctional coordination. These three behavioral components can be aligned with the definition of market orientation stated above. Customer orientation and competitor orientation include all of the activities involved in obtaining information about customers and competitors in the target market, and disseminating this information throughout the organization. The third component, interfunctional coordination, is based on engaging the obtained customer and competitor information in the firm's

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12 coordinated efforts across departments, with the goal of creating superior value for customers (Narver & Slater, 1990).

It has been found by a number of authors that being market oriented is often associated with superior performance in terms of profitability, sales growth, and new product success (Narver, Slater & MacLachlan, 2004; Atuahene-Gima, 1995; Han et al., 1998; Kohli & Jaworski, 1990). This result has been encountered in multiple commodity and non-commodity markets, controlling for important business-level and market-level influences (Narver & Slater, 1990).

Although market orientation is likely to be related to business performance in general, it is not always a critical factor. Market orientation is only profitable when the benefits it brings exceed the costs of

organizational resources that are necessarily committed to maintaining it (Kohli & Jaworski, 1990). Therefore, firms operating under environmental conditions involving limited competition, stable market preferences, technological turbulence and strong economic growth may not benefit much from a strong market orientation (Kohli & Jaworski, 1990).

A strong market orientation manifests itself through market-oriented learning. By learning here we mean customers – their perceptions, satisfaction and preferences – and factors that might influence these customers, such as competitors, economic and socio-cultural trends (Baker & Sinkula, 2005). Strongly market-oriented organizations possess the basis for rapid adaptation to customers’ manifest and latent needs, which in turn can lead to superior new products, profitability, market share, and eventually a sustainable competitive advantage.

To get to this conclusion, several studies were conducted exploring the link between market orientation and performance. Research has concentrated on several distinct environmental effects mediating the causal link between market orientation and performance. Among these are learning orientation, competitive intensity and innovation (Liao et al., 2011). This literature study will explore innovation as a mediating factor that brings a company from a market orientation to superior performance. We especially consider innovation in the context of new product development.

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2.2.

Innovation

First it will be worthwhile to define the concept of innovation in a business context in general terms. Innovation is the process of bringing new products or services to the market, with the goal of raising product quality possibly at lower prices to positively affect consumers' lives and create superior value. In order for a product, service or process to be truly innovative, it needs to be the initial introduction of a radical departure from past practice.

Through the process of finding new solutions to both latent and manifest consumer needs, and supporting freshly articulated user needs with the new function it offers, innovations are able to create new markets and transform existing ones. Because of that, innovation is a highly competitive process in the increasingly global marketplace, in which incumbents are at risk of being outperformed by small outsiders creating a dominant position based on their innovative capabilities (Hauser, Tellis & Griffin, 2006). Although innovation creates new industries with its associated distribution channels and staff support, it leaves obsolete firms and units of production (Abernathy & Clark, 1985).

Innovations can be distinguished into radical and incremental innovations. To define these concepts, incremental innovation is what results when a firm is reactive to expressed consumer needs, adopting a strategy of adaptive learning directed towards processing articulated customer feedback (Atuahene-Gima, 1995). Radical innovation takes place when a firm is able to uncover latent consumer needs, not just the expressed needs, which means they are not solely customer-led but also make observations and think creatively about how to provide radical solutions to latent problems (Kohli and Jaworski 1990; Slater and Narver 1995).

Innovation has been demonstrated by multiple studies to be closely linked to business performance. It has become increasingly important as a mean of survival in the dynamic marketplace, to outcompete

competitors with superior products in the face of intense competition and environmental uncertainty (Grønhaug and Kaufmann, 1998 in Han et al., 1998). Most authors investigating the subject find a direct and positive relationship between innovation and performance (Kotler, 1991; Han et al., 1998). Others consider innovation to be a mediating factor in the relationship between market orientation and performance (Han et

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14 al. 1998; Menguc & Auh, 2006 in Liao et al., 2010). This view of innovation as a mediator will be elaborated on further.

2.3.

Market Orientation & Innovation

It has been explored by multiple authors whether the market orientation of a company either enhances or reduces its innovative capabilities. It has been stated in a number of studies that a market orientation

encourages the creation of products that transform market needs (Jaworski & Kohli, 1993; Narver and Slater, 1990). Market oriented businesses are able to generate superior innovations and new product development success (Jaworski & Kohli, 1993; Narver and Slater, 1990).

However, the contrary has been suggested by a range of authors as well, taking the position that a strong market orientation can lead to imitation of competitors, inertia and marginally new products in turn leading to reduced competitiveness and (e.g. Bennet and Cooper, 1979 in Lukas & Ferrell, 2000).

Despite what is stated by the before mentioned authors, it has been empirically proven by Lukas & Ferrell (2000) that a customer orientation increases the introduction of ‘new-to-the-world’ products – radical

innovation – and reduces the number of ‘me-too’ products, or incremental innovation.

Voss & Voss (2004) argue that the findings by Lukas & Ferrel (2000) suggesting that customer orientation enhances the capability to innovate are not applicable to all business settings. They established boundary conditions for market orientation to be effective in providing superior business performance.

They have empirically shown that an environment characterized by non-profit goals, high rates of intangible and artistic innovation, and customers who may not be able to articulate their preferences and rely on the product expertise of the producer do not profit from a customer-centred market orientation. They found that market orientation has a negative effect on innovation in this particular setting. From this they presume that there are boundary conditions on which the positive relationship between customer orientation and new product development is reliant.

This idea of boundary conditions has also been confirmed in Im & Workman's (2004) study of creativity and innovation in high-technology firms. “It appears that enhancing market orientation is less likely to help a firm

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15 create novel products (radically innovate), because current customers may not approve novel product ideas because of their inertia toward existing products in the market.” (Im & Workman, 2004 p. 126)

This once again leads us to the distinction between radical innovation and incremental innovation. This dichotomy further complicates the existing link between market orientation and new product development (Chang et al., 2014). It can be questioned whether market orientation facilitates or discourages radical and incremental innovation. Authors are divided on this subject. Some argue that market orientation leads to a reactive response to expressed customer needs, which stimulates incremental innovation only and hinders the firm’s ability to develop radically new products (Atuahene-Gima, 1995). That would mean market-oriented firms can only produce incremental line extensions, modifications and adaptations of current products, missing the emergence of new segments and market opportunities that lie beneath the usual consumer base. This is referred to as the “tyranny of the served market” (Hamel and Prahalad, 1991, p. 83 in Chang et al., 2014).

On the contrary, a market orientation based on sufficient data collection and understanding could be able to uncover latent needs and identify market opportunities, resulting in radical solutions to consumers’ problems. Thus, market orientation can provide firms with opportunities to observe problems that consumers are not able to articulate, enabling radical innovation (Jaworski & Kohli, 1993; Narver and Slater, 1990).

From what is stated in literature it can be concluded that the ability of a firm to radically innovate – and achieve superior business performance – is depending at least partially on their ability to uncover latent consumer needs.

It has been mentioned that innovation can be seen as a mediator of the relationship between market orientation and firm performance, strengthening its effects (Han et al. 1998; Menguc & Auh, 2006 in Liao et al., 2010). Being able to tailor best to consumer needs using innovation is a strong and mentionable indicator of superior performance (Narver & Slater, 1990; Slater & Narver, 1994). It is claimed that the mediating role of innovation in the market orientation-performance relationship varies across product types and industries. From literature this link proves to be apparent across diverse contexts, such as the industrial and consumer manufacturing firms, service organizations, and public institutions (Voss & Voss).

Voss & Voss propose three alternative strategic orientations; customer orientation, competitor orientation, and product orientation. Together these three roughly equal the characteristics of a market

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16 orientation already described previously (e.g. Kohli & Jaworski, 1990; Narver and Slater, 1990). The customer orientation and competitor orientation equal the organizational focus of a market orientation to integrate customers’ needs and competitors’ capabilities. Coordinated action to exploit this knowledge equals the product orientation, which reflects an organization’s commitment to integrate innovation into the product development process. It can therefore be considered that Voss & Voss (2004) managed to integrate the principle of innovation in the definition of a market orientation, as well as set it apart in three components that can be evaluated separately.

Looking at the relationship between market orientation and innovation in the manner of Voss & Voss (2004) could provide more insights in why firms in the same industry do not always respond to their changing environment in the same manner. Innovation is one of the key ways for firms to adapt, but still the success of innovation and whether they are radical or incremental in an industry differs significantly per organization. We use the distinctive components of market orientation – customer orientation, competitor orientation, and product (or technological) orientation – to evaluate this proposition (Gatignon & Xuereb, 1997).

A customer orientation resembles how customer knowledge and understanding is collected and

disseminated through the organization. This entails that changing customer needs – when identified – can be reacted on by the company as a response to the changing competitive environment.

Some companies anchor their reactions to environmental changes to the actions of other strategically similar companies, and others take a more independent stance by focussing on innovation and new product development (Kumar et al., 2012). The former can be considered more competitor oriented than the latter.

A competitor orientation proves to be at the source of product imitation (Lukas & Ferrell, 2000), so the most innovative companies are probably not adopting a competitor-oriented approach. A competitive orientation in a high-growth market can be useful nonetheless, because it enables the development of innovations at lower costs (Gatignon & Xuereb, 1997), albeit incremental innovation, cost efficiency-based innovations, or innovations that are new to the firm but not to the industry.

A product- or technological orientation addresses the focus on innovation and the development of new ground-breaking technologies in the product development and marketing process. It has already been confirmed that highly innovative companies – predominantly focussed on technology – do not need extensive

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17 customer knowledge to succeed in the market. They use their innovative capabilities and focus on new product development as a competitive advantage (Im & Workman, 2004). Thus, innovation-related business

performance requires less complementarity of marketing capabilities with innovation capabilities to be successful, in which case the consumer is practically ignored in the new product development process. Also for highly innovative companies in the artistic sector it seems to be the case that customer knowledge is not a necessity for new product success (Voss & Voss, 2004). This will be investigated further by zooming in on new product development in the creative industries, and the case of artistic innovation. But first, a small note on the new product development process.

2.4.

New Product Development

A strong market orientation in a company leads to superior performance at least in part because of the new products that are developed and brought to market (Gatignon & Xuereb, 1997). With markets becoming increasingly global and boundary-blurring, new products are introduced faster in an intensely competitive environment. The advantages a market orientation can provide to facilitate the process of product development and the outcome of this, are now reflected on.

A market-oriented corporate culture enhances organizational innovativeness and new product success (Han et al., 1998; Baker and Sikula, 2005). The capability to develop new products is identified as one of the core capabilities that is needed to convert a firm's market orientation into superior performance (Slater & Narver, 1994). The most crucial aspect of the market orientation regarding new product development is the ability to develop and market new products which represent the necessary characteristics that determine the product's success. These were generally identified as newness, cost, and product advantage (Gatignon & Xuereb, 1997).

Literature contemplates new product development as a function of generating solutions towards solving a general consumption problem (Golder et al., 2009) or understanding consumers’ needs and developing

products that meet those needs (Hauser et al. 2006). New product development is defined as a process of developing a new product or service for a market. It is done to develop an item to compete with a particular product or service in the market, to fulfil a newly surfaced customer need or to incrementally improve an already established product. New product development is closely related to innovation, as it stimulates the

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18 introduction of new products to a firm, market or sector with the goal of raising product value for its end users. These two concepts differ in the notion that in order to be truly innovative, a new product, service or process needs to be the initial introduction of a radical departure from past practice.

In general, adopting a market orientation increases new product success (Slater & Naver, 1994; Baker and Sinkula, 2005; Pelham & Wilson, 1996 in Langerak, Hultink & Robben, 2004). Nonetheless, none of these studies reveals through what process or activities of new product development this market orientation is translated into superior performance. Langerak, Hultink & Robben (2004) try to shed a light on this by empirically concluding that a market-oriented culture is converted into superior organizational performance only through higher product value for consumers, greater proficiency in launch tactics, and better new product performance in the market. What these results mainly show is the importance of a market-oriented corporate culture that is cohesive and focussed towards uncovering latent customer needs and stimulating the

emergence of new product ideas within a new product team. Once again, it proves that the ability to uncover latent customer needs – and thus the deep understanding of customers – as well as the inter-functional coordination and dissemination of this understanding are crucial in developing an effective market orientation that is able to enhance business performance.

The new product development process can be divided into the following stages; conceptualization, gestation, early incubation, and late incubation (Golder, Shacham & Mitra, 2009). Briefly explained, the preliminary conceptualization stage is about thinking up solutions to market needs or opportunities to use new technologies. During gestation, design principles are applied to develop a prototype. The incubation stage refines this prototype to improve its functionality. Commercialization is the final step in taking a product innovation to the market. These stages are however not related to the performance of a new product or the degree of market orientation. It can be considered an option for research to relate the pre-commercialization product development process to commercial product success, and see if the effect of market orientation plays a role in this.

Summarizing the research requirements regarding the process of product development, it shows that there is little understanding of the manner in which market orientation is translated into the development of new products. In line with this, Hauser, Tellis and Griffin (2006) identify the need for prescriptive techniques of

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19 the product development process as being a research requirement on the agenda of innovation research. Even more so because the product development process has been transformed through global pressures,

increasingly accurate customer input, data availability and transparency enabled by online communication channels. These developments also supposedly have their effect on innovation within organizations, which is becoming more complex as data becomes richer and tools more effective. The present study therefore needs to be process-oriented in its research design to provide rich insights in the processes that move innovation.

In summary, the concept of market orientation has been repeatedly discussed in the literature in multiple settings, following from the first theoretical propositions of Narver and Slater (1990; 1994; 2000). In multiple industrial settings it has been identified that market orientation and the associated customer focus, competitor focus and organizational coordination provide superior business results, mediated by the increased innovation capabilities that deploy the generated customer knowledge and understanding. There are, however, two exceptions mentioned in literature, regarding the market orientation-performance link.

First, high-technology firms who focus their innovation capabilities on technology-driven radical innovations do not profit from a customer focus in new product development. The second exception is the cultural setting characterized by product or technological turbulence, unpredictable customer preferences, and competitive intensity, which are established as boundary conditions moderating the market orientation-performance relationship (Voss & Voss, 2004).

It is expected by Voss & Voss (2004) that when zooming in on artistic or aesthetic innovation, such as is the case in cultural and experience goods, there is a negative link with the extent of customer focus and new product performance – contrary to commodity product and service industries. Therefore, research requires a deeper understanding of this ambiguous occurrence, focussing in particular on artistic innovation in a cultural setting.

2.5.

Innovation in an Artistic Environment

Artistic innovation is defined as the programming of a work that is new to the artistic field. This can be understood as a radical departure from the existing practice of an organization, a geographical area or the complete arts world (Castañer & Campos, 2002). What differentiates artistic innovation from innovation in commoditized product and service markets is that it complies form and content innovation. To illustrate this

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20 distinction, content innovation contains of multidisciplinarity in art forms, where form innovation can for example be the way an organization design the interactivity with its audience during a performance. Another form of innovation that is typical for the performing arts is repertoire innovation, which counters the trend of repertoire standardization (Heilbrun, 1998 in Castañer & Campos, 2002). This means aiming for a repertoire that differs from the competition, instead of the tendency of competitors in a field to converge around the same repertoire.

Artistic innovation typically and almost exclusively takes place in the creative industries, to which art, theater, publishing, music, photography, film, video-games, but also industries such as fashion, fine furniture or jewellery and services like architecture, advertising, software and new media can be counted. The creative industries can be considered to comprise economic activities creating value through symbolic or aesthetic attributes.

What makes artistic innovation in the cultural industries such an exceptional case in the innovation literature, is the nature of cultural production. Cultural goods are experiential, which indicates that they are directed towards aesthetic enjoyment, and they cannot be properly valued by the consumer prior to

consumption. This implies that innovation plays a specific and distinctive role in cultural industries; it does not aim to improve performance or functionality, but to constantly introduce new products to satisfy the

consumer's diverse and ever changing taste (Peltoniemi, 2015).

In the turbulent creative industries, artistic innovation can make a very significant difference in business performance. It is therefore a concept on which further process-based research can be very insightful. Also, innovation regarding artistic or cultural products is not researched using the concept of market orientation as a starting point driving the new product development process. It can therefore be questioned what lies at the basis of artistic innovation; whether it is the customer, competitor or the product as proposed by Voss & Voss (2004). This leads us to formulating the research objective and research questions.

2.6.

Market Orientation, Innovation & Organizational Culture

It seems that in the creative industries one can typically speak of a small world network structure. This is a network structure that is highly locally clustered and familiar for its short path length. By working together with

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21 third parties repeatedly on diverse projects, the connectivity of actors in the network increases. This enables creative material to circulate in the network efficiently, as trust and credibility has been built up over time adding value to the creative contributions. This development is seen as highly beneficial for innovative new product development (Uzzi & Spiro, 2005).

A similar theory on the project-based nature of the creative industries is the latent organization structure (Ebbers & Wijnberg, 2009). Every project team working on, for example, a dance theater production is constituted of project-based contracts that are transactional in nature. Nonetheless, the individual members involved in the project team are also linked to each other by relational contracts through repetitive

collaborations and built up mutual trust. These relational contracts have proven to be more valuable in predicting the actors’ behavior in the team than transactional contracts. As the project-based team members act more as an organization, the flexibility that is created enables efficiency in terms of faster communication and reactions to market conditions. Latent organizations emerging from repetitive collaborations have a positive effect on innovation through enabling more organizational efficiency (Ebbers & Wijnberg, 2009).

However, theoretically intense connectivity can lead to homogenization of creative resources available, simultaneously closing the network or latent organization to creative input from outside the organization (Uzzi & Spiro, 2005).

2.7.

Conclusion

From taking the marketing orientation a firm has towards its environment as a starting point, consumer knowledge is generated. Assumably this consumer knowledge and understanding is also applied throughout the process of new product development, resulting in an innovative new product. We look specifically at artistic innovation in the creative industries, as the relationship between market orientation and innovation in this context is ambiguous and under-researched (Voss & Voss, 2000). The research explores the connection between market orientation and the outcome of artistically innovative products, and whether this link is positive or negative within the extraordinary conditions that are encountered in the creative industries, such as continuous oversupply and product demand uncertainty . It specifically focusses on mapping the process of artistic innovation and the influence of market orientation along different process stages.

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2.7.1. Research Objective

The research objective is to gain understanding in the process of artistic innovation that takes place in a creative yet commercial, business-related organizational context. The focus lies predominantly on the effect of the company's market orientation on its capabilities to innovate, and the ability to integrate market knowledge and understanding into the new product development process. Especially in the case of artistic innovation, this relationship requires in-depth exploration.

2.7.2. Central Focus Question

The central research question is formulated as follows;

How does the market orientation of a firm influence its capabilities for artistic innovation?

2.7.3. Research Questions

In order to answer this question, there is a number of sub-questions that needs to be considered in a logical order, to focus the respondents’ attention on the process of new product development with the market orientation of the organization as a presumably valuable starting point.

How can artistic innovations be classified?

From literature the distinction between form and content, and incremental and radical can be used. Does any other manner of classification arise from the qualitative data insights?

How are the innovative capabilities in the organization distributed over the organizational structure and throughout the development process?

Where in the organization do innovative products come to existence, where do ideas come from and what information is used as input? What teams or units can be identified in the organization and what is their place in the innovation process? Here we can use the phases identified by Golder et al. (2009) as a guideline to see how innovative ideas are developed further on through the organization; conceptualization, gestation, early incubation, and late incubation (Golder, Shacham & Mitra, 2009).

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What is the market orientation of the company?

Is the company competitor oriented, customer oriented or product oriented? And what information does the company collect, disseminate and respond to? Relating back to the first question; what is the influence of this market orientation on the artistic outcome and the manner in which it can be classified? The impact of innovative capabilities of the firm’s individuals or units is likely to be conditional upon the market orientation.

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3. Methodology

3.1.

Research Design

As the concepts discussed in the literature – market orientation and artistic innovation – are barely linked in previous studies, exploratory research is required to gather in-depth knowledge on the mind-set of cultural producers that decides on how these concepts might interact in the social world, and most importantly what processes enable the transformation of a market orientation into innovative new products.

This study will seek to develop grounded theory. Therefore, a qualitative research approach is taken, to build theory inductively from data that is gathered in order to achieve an overview of concepts as they are linked in reality through the perception of the cultural producers. Subsequently, an interpretivist and

subjectivist stance is taken, as it approaches the data in the subjective context of its social construction such as

language, shared meanings and instruments (Bryman & Bell, 2011).

The research design will be cross-sectional, empirically investigating the before mentioned phenomenon in its real-life context across multiple companies and interviewees as sources of evidence at a particular point in time.

Techniques used to gather data are interviews with cultural producers at multiple levels and disciplines in a company, to seek understanding of their view on the market orientation-artistic innovation relationship that is the focal point of this research. This data can be used to develop theory inductively and establish an exploratory discussion on related concepts interacting in the social world.

3.1.1. Methodological Philosophies

3.1.1.1. Epistemological Considerations

This research takes an interpretivist epistemological stance, as it aims to understand social actors in the process of gaining market understanding and developing new products in their own specific environmental context. The differing social roles of the research subjects in the case organizations each give their own interpretation to the process and outcome that this research focuses on, according to their particular set of meanings. Respondents are treated as knowledgeable agents, meaning their thoughts, intentions and actions

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25 are interpreted and explained according to their experience, knowledge and environmental perception (Gioia et al., 2013).

The data gathered through this research design is highly intrinsic and can therefore only be treated subjectively. This stance makes comparison of cases more difficult, but will also provide rich insights on the functional interactions of social actors in a cultural organization or during a new product development process.

3.1.1.2. Ontological Considerations

This research takes the subjectivist ontological view that social phenomena are created from the

perceptions and consequent actions of social actors (Saunders, 2009). This means that these social phenomena are in constant state of revision through a continual process. It is believed that also the process of new product development and innovation is continual, as it relies on the emergence of ideas and concept from

organizational learning. This also suits the assumption that reality is socially constructed. All interview subjects in different organizational positions involved in new product development decisions are likely to place very different interpretations on the situations in which they find themselves, evaluating situations and concepts differently as a consequence to their own referential world view. It is therefore not the objective of this research to find a definitive entity that is market orientation or artistic innovation, but to gain insights in the social interactions and interpretations of meaning that shape reality to knowledgeable social actors, who are involved in developing new artistically innovative products through a market-oriented corporate culture (Saunders, 2009; Gioia et al., 2013).

3.1.2. Research Approach

For this research an inductive approach is chosen, as it leads to understanding the reality of social actors searching to understand and explain the processes by which they interact in their particular context.

The inductive approach is enabled by using qualitative data analysis methods by which these deep insights can be collected and interpreted. Concepts are operationalized for internal validity purposes, and it is then explored how these concepts relate and are defined in the minds of the research subjects – the social actors actively involved in managing the market orientation to new product development process in a case organization.

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26 This research uses a grounded theory approach, which is a suitable strategy for predicting and explaining qualitatively observed behaviour, leading to the development of theory. As is common practice with grounded theory, this research will start data collection without the formation of an initial theoretical framework.

Instead, data is collected in order to form predictions that can be tested in a later stage by further observations that can either confirm or disprove these predictions. Strong consistency in the observations will strengthen the predictions as well as the importance of the research needs emerging from it. Grounded theory is used in this case to unravel the process of innovative new product development and provide insights on the ambiguous role of a market orientation in this process.

Propositions have not been formed in this particular research design, because literature comes with contradicting insights on the influence market orientation of a cultural organization might have on innovative capabilities in the new product development process. In some cases it is presumed to be positive, and in others the relationship is assumed to be negative (e.g. Narver & Slater, 1990; Kohli & Jaworski, 1993; Bennet and Cooper, 1979 in Lukas & Ferrell, 2000). Propositions can therefore not facilitate a direction for the relationship, and it needs to be explored whether this relationship has a valid effect in the chosen empirical setting.

3.1.3. Research Strategy

In order to obtain rich data on the artistic innovation process and develop grounded theory from that, an inductive research design is chosen. To facilitate this, a semi-structured interview approach is taken (Bryman & Bell, 2011). Interviews will be performed with key decision makers from different levels and disciplines in the sample organizations, the interviewer's inquiry led by the interviewee's knowledge and understanding of their environment. Consider hereby amongst others artistic directors and marketing executives of dance companies.

It is expected that about 10 interviews will be conducted for the purpose of this research. In these interviews, first of all the degree of market orientation and availability of market information will be identified, as it will also be seen what the depth of understanding and use of this information is. It will then be evaluated by means of current and recent product development practices, how the artistic products of the company are developed, what tools are used and how innovative capabilities are distributed and applied in the organization towards the creation of a new production.

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3.1.4. Research Design

The research design involves multiple case studies of companies in the Dutch dance theater industry. This industry provides the context in which the relationship between market orientation and artistic innovation is investigated. The multiple cases that will be studied will provide multiple sources of evidence for reflection on and exploration of this relationship in its real life context.

The reason for choosing a multiple case study design in this case is the exploratory nature of the research. It aims to gather rich, in-depth data which will result in new insights after analysis, that are able to indicate a next step in empirically proving the existence of a relationship between market orientation and artistic innovation. Also, the importance of investigating this relationship in its real life context, as well as the

processes being enacted in this context led to choosing a multiple case study design. Results will be most likely generalizable for the sample industry, the Dutch dance theater industry, but will only be indicative for other comparable creative industries.

In summary, the body of qualitative data that is collected at a single point in time on multiple cases can be used to uncover insights and assumptive patterns and relationships that provide directions for new theory. The choice of this multiple case studies design, however, comes with certain limitations. As data is highly influenced by its context and the respondent’s personal frame of reference, external factors have a very limiting effect on the study’s validity. Also, as data is collected at one single point in time, developments over time cannot be recorded. Even though the research will look at the new product development process, this process is not followed over time due to time and accessibility constraints.

3.1.5. Research Purpose

The multiple case studies have an exploratory aim, to draw preliminary conclusions on the connection between the concepts market orientation and artistic innovation in comparison to the empirical conclusions already drawn on the subject of innovation in technology-driven and commodity markets – contrary to the distinctive conditions of the cultural industries (Saunders & Thornhill, 2004). It requires in-depth understanding of the cultural market and extensive conversation with participants to comprise artistic innovation as a process, as well as an outcome of market orientation.

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3.2. Performed Research Activities

3.2.1. Sampling Techniques and Selection of Respondents

3.2.1.1.

Population

The study will focus on the dance theater industry, as this is a cultural field that has went through many developments recently resulting in an increasing amount of business opportunities, interest and demand that indicates possibilities for business growth and market development. The sampling frame of dance companies that fit the requirements is quite small, which is why a cross-sectional, multiple case study design will be in place. The study is limited to dance companies invested in developing one or multiple productions per season that will be sold commercially and performed independently. Also, dance companies serving very young audiences will be excluded from the sampling frame. For a specified overview of the sampling frame, see Appendix IV. Sampling Frame. The participating dance companies will be analysed on an organizational level,

making the unit of analysis the organization. As the sampling frame consists of approximately 20 dance

companies fitting the research requirements (Fond Podiumkunsten, 2015), the sampling will be done according to voluntary participation, without any necessary pre-selection. The sample contains three out of four parties that are in the Dutch “Landelijke Culturele Basisinfrastructuur” or BIS. These institutions are subsidized to cater a nationwide cultural supply of dance theater and art, and fall under direct municipal responsibility. That is why these four are the ‘big players’ in the market, the greatest producers of dance theater in the Netherlands, with also a significant degree of international renown. The BIS-institutions that were open to participate in the research were Introdans, Het Nederlands Dans Theater and Het Nationale Ballet. Also, one extreme case has been included namely the commercial organization ‘pANdADDy’ that has produced the international show ‘BLAZE’. This is one of few commercial organizations making dance theater, and this specific case does this with high investments and to a large global market. All the organizations were approached via e-mail and telephone contact, or through the researcher's personal network.

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3.2.2. Undertaken Research Activities and Response

3.2.2.1. Interview Protocol Development

In developing the interview protocol, it is kept in mind that the organizations in the sample as well as the functions of the respondents within these organizations differ significantly. That is why the interview responses are expected to differ based on context and personal frame of reference. A semi-structured interview approach is therefore best suited.

The first step is to get to know the organization, its orientation towards the market it competes in and serves, its view on innovation, and its organizational structure. Also the background and position of the interviewee in the company will be of contextual influence. Apart from these stated facts, interpretive questions will be asked such as; what does innovation mean to you, to the organization or to the industry?

Second, it is relevant to identify the market orientation of the company, which means to what extend it focuses on obtaining, disseminating and reacting upon market information. It can also be seen if this market orientation compiles of the elements competitor orientation, customer orientation and product orientation and what their contribution is to the product development process.

Third, what is the organizational structure of the firm, and how are innovative capabilities distributed in the organization? Furthermore, what are these innovative capabilities and how are they enabled by the organizational structure?

Next, the interviewer will introduce the process of new product development. Where in the organization do innovative products come to existence, where do ideas come from and what information is used as input? Here the phases identified by Golder et al. (2009) are used as a guideline to see how innovative ideas are developed further on through the organization; conceptualization, gestation, early incubation, and late incubation (Golder, Shacham & Mitra, 2009). In this stage the interviewee will also be inquired on his or her role in deciding what innovative ideas will be pursued further and criteria that are used for this.

What can also be questioned is how the organization classifies and evaluates its innovations. It will be seen whether the same distinctions are visible as the ones in literature; which are incremental and radical, form and content innovation – or whether the organization has a different way of classifying innovations.

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30 Finally it can be inquired how the organization evaluated the success of its innovations, or new products released in the market. How is an innovation evaluated internally in the company, and how it is acted upon for future development decisions?

The interview guide will give the interviewer directions on how to probe and acquire information on the interviewee’s stance on market orientation and the process of developing new, innovative products.

3.3.

Quality of the Research Findings

“Different models are available that address how to build trust in qualitative research, such as the model of trustworthiness of qualitative research proposed by Lincoln and Guba (1982 in Thomas & Magilvy, 2011). This model addresses four components of trustworthiness that are relevant to qualitative research: (a) truth–value (credibility); (b) applicability (transferability); (c) consistency (dependability); and (d) neutrality (confirmability)” (Thomas & Magilvy, 2011, p. 152)

a.

Credibility

Credibility – or internal validity – is ensured by comparison across cases. Consistent findings show that there is a representative image of the focus industry given through research data. As mentioned before, participants are knowledgeable individuals whose social world is expressed in the interview transcripts. This interpretation of the social world is highly consistent amongst respondents in the Dutch dance theater industry, and thus shows representability of the results. Respondents share a certain experience that they interpret in a same manner, suggesting that they would also recognize the experiences and views brought upon by each other (Thomas & Magilvy, 2011).

To strengthen the credibility of the findings, at the end of the interview the respondents were asked to give their opinion on the aim of the study, and near the end of the data collection process some preliminary conclusions were shared. Confirmation of the researchers’ thoughts gave more affirmation to the findings, and thus more credibility.

To ensure internal validity of the multiple case studies, the in-depth data collection on the cases and the embeddedness of the researcher in the social context of the cases will ensure a high level of congruence between concepts and observations (Bryman & Bell, 2011).

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b.

Transferability

Transferability is supported by good research practice and so-called 'thick description' of cases which will enhance both credibility and transferability (Bryman & Bell, 2011). A rich description of the sampling frame was added – and substantiated with logical arguments – in appendix IV. Sampling Frame. Also, the circumstances of the particular research setting were describe in detail and considered in reviewing the results. However, results were not tested across context, other than the Dutch dance theater field. This is expected to form a limitation to the research’ findings.

On the contrary, generalizability for a multiple case study design is always hard, if not impossible, to achieve in qualitative research. However, the results of this study are likely to be generalized on an industry level of Dutch dance theater due to the involvement of both typical and unique cases in the sample.

c.

Dependability

Dependability is ensured by following specific guidelines supplied by the University of Amsterdam, which also requires accurate and detailed description of the entire research process and choices that were made during the process. Support and advice given by field expert and research project supervisor Mr. Ebbers enhances both dependability and credibility of the research results. The research can thus be followed step-by-step also in other contexts. It has to be kept in mind, however, that behavioural phenomena such as those grounded in this research data are inevitably bound to context.

d.

Confirmability

As the current study is in its qualitative nature directed towards reflective interpretation of the research data, one needs to be aware of the reflexivity aspect. The researcher is aware of the likelihood of her own

preconceptions affecting the interpretation of research results. Especially since there is only one researcher in this particular study, the risk for assumptions is on hand. This bias is limited by following interview techniques that allow the discourse of the respondent to lead instead of the researcher’s inquiry steering into a certain direction (Thomas & Magilvy, 2011). Interview data as well as an audit trail is included and can be subjected to external scrutiny. Also see Appendix I. Interview Guide, Appendix II. Coding Scheme and Appendix VI.

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e.

Reliability

The external reliability of the study is hard to establish due to the distinctive social settings, organizational structures and roles it will be applied to. Internal reliability is however strengthened by the consistency of observations through one researcher (Bryman & Bell, 2011). It was anticipated that the weakness of the study lies in the highly differential cases, which – even though in the same field and industry – have very distinctive organizational cultures, and approaches to market orientation and innovation. This is likely to make the comparison of cases and the aggregation of case data more challenging to come to grounded theory.

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4.

Analysis of Research Results

4.1.

Analysis Strategy

The analytical approach to this study is inductively based, as it seeks insights in an unexplored area of research to generate a direction for further empirical research. Thus, a grounded theory approach is adopted to make sure there is a good fit between the social reality of the research participants and the resulting theoretical propositions that emerge from data. This means the coding process was initiated with open coding, resulting in first-order terms, which consequently led to axial coding, integrating categories that are related across cases into second-order themes. In turn, this was followed by selective coding through which aggregated dimensions emerged; associations, relationships and a few distinctions that could be related to each other (Saunders, 2009; Gioia et al., 2013). These selected dimensions uniting categories functioned as a basis for structuring the results section. An overview of the data structure can be found in Appendix II. Coding Scheme.

Through conducting interviews with the majority of respondents in the sampling frame, I hope to reach theoretical saturation. Of course, the inclusion of critical cases is purposely stimulated.

4.2. Context: The Creative Industries & The Artistic Product

4.2.1. The Creative Industries

The cultural or creative industries represent a branch of business that is very distinctive in nature from other product- or service-based industries. Defining the cultural industries, it can be stated that the cultural industries are those that produce experience goods with considerable creative elements and aim to distribute these to the mass consumer market (Peltoniemi, 2015).There are two features that are specific to the cultural industries that are also important to consider in the context of this research. First, there is a persistent oversupply of creative products and labor, which is independent of economic cycles. This means that there are much more dancers, choreographers and aspiring dance companies than the market can support. This indicates intense competition, not only for jobs and audience, but also for funding in the form of subsidies. Second, the success of a product is extremely uncertain, and cannot be predicted as prior to consumption one cannot evaluate the product completely (Hirsch, 2000).

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4.2.2. The Artistic Product

The nature of a creative product is characterized by its low utilitarian value, and its high aesthetic and symbolic value. Cultural goods are judged based on their experiential value, which is their ability to entertain and bring enjoyment to the consumer (Holbrook & Hirschman, 1982). Prior to consumption, a consumer can barely estimate the value of the experience which makes the consumption and production of a creative product highly uncertain. This also means that innovation plays an important role in the creative industries, as it is crucial to constantly introduce new types of cultural products to please very diverse and changeable tastes (Holbrook & Hirschman, 1982 in Peltoniemi, 2015).

4.2.3. The Dutch Dance Theater Industry

With these insights from literature in mind, the context of the research can be further completed with the obtained data.

The Dutch dance theater industry is a relatively small field of creative production in the Netherlands that represents a number of dance companies and production houses that cater dance shows and productions to both the small, but significant dance theater market and the commercial dance market. The difference here being the artistic works that are brought on stage by the companies themselves, and the commercial assignments they take-on at other parties’ request. These producers of dance theater are complemented by dance festivals, study programs and institutions in the Netherlands that build on the international reputation of Dutch dance theater and keep its quality and reputation on the market high. To name some, the Holland Dance Festival, CaDance and De Nederlandse Dansdagen are festivals that engage dance theater makers with each other and their target audience. Internationally, the Royal Ballet Academy, the Dutch National Ballet and the Nederlands Dans Theater are institutions that are known for their high quality standards and role in the industry.

The field of dance in the Netherlands represents a number of dance styles, ranging from folk to classical, modern contemporary and urban. It has known some internationally renowned choreographers who have fulfilled a particular role in dance innovation as an art form, such as Krisztina de Châtel, Hans van Maanen, Ed

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35 Wubbe and Conny Janssen, as well as hosted international choreographers such as William Forsythe and Jirí Kilían with a great reputation for innovation in dance.

Also the Dutch television broadcasting agencies have recently been building bridges between dance as a popular art form and mass media, by involving dancers and choreographers from the field into the making of television programs. Examples of this are ‘So You Think You Can Dance’, ‘The Ultimate Dance Battle’ and ‘Everybody Dance Now’.

“SYTYCD has built bridges between different worlds. For example between the niche modern dance world and

the rougher urban dance scene. Something you can still see in for example the theater offerings. ‘Narnia’ from

the Dutch National Ballet and ISH is a direct example thereof.” - Jan Kooijman, presenter and dancer for

broadcasting network RTL4, 2015.

The Dutch dance industry is largely financed by governmental funding parties, such as Fonds Podiumkunsten and local municipalities, and field associations such as the Nederlandse Associatie voor Podiumkunsten. The providence of subsidies is therefore a very crucial factor in the direction and management for not-for-profit dance theater production companies. The requirements set by the funding parties come with certain restrictions and expectations, and therefore have an impact on decision-making, strategic goals and direction of dance companies. This includes the goal to make the art form accessible to a large part of society and reach a broad and diverse audience, while maintaining artistic quality and artistic progress.

The market for dance theater productions in the Netherlands is relatively small. The base of regular dance theater visitors who are interested in the art form is too small to build upon, which is why the need arises for dance companies to attract a broader audience. This suggests a necessity to be market oriented, which is strengthened by the subsidizing party’s goal to make cultural production accessible to the majority of society.

“Well there is not a very broad interest, it remains a limited audience group that is interested in that. That is just

the way it is.” - ID

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