The beauty and the beast : partner selection criteria in alliances between arts and business

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The Beauty and the Beast:

Partner Selection Criteria in Alliances

Between Arts and Business

Master Thesis

Msc Business Studies – Entrepreneurship and Management in the

Creative Industries

Silia Do Alena Traub

10621881

1 July 2014

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Abstract

Past research about alliances between arts and business has mainly analyzed the topic from the commercial firms’ side, ignoring the goals and benefits of cultural organizations. Furthermore, previous literature has not yet examined the formation phase of those alliances. This thesis aims to investigate relevant partner selection criteria in alliances between arts and business from the cultural organization’s

perspective. Empirical data was collected in the form of 14 qualitative interviews in 11 cultural organizations in Amsterdam and the surrounding area. The results show that besides looking for complementary resources, similarities in terms of image and goals are deemed important in the observed alliances. In addition, networking is seen as quintessential to getting in contact with commercial firms. The findings further indicate the presence of sequentiality in partner selection criteria. Either, partner search starts by actively looking for firms with complementary resources or alliances are randomly initiated via one’s network. Only after that, other selection criteria come into play.

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1. Introduction

This section gives a general introduction to the subject of this thesis. First, the motivation and purpose behind the study are introduced. Second, the research question is discussed and finally, the structure of the thesis is provided.

1.1. Motivation and Research Gap

There has been a growing interest in alliances between arts and business. As in all collaborations, selecting the right partner is crucial for ensuring success (Holmberg & Cummings, 2009), especially in light of high alliance failure rates (Bierly III & Gallagher, 2007).

The growing interest in alliances between cultural organizations and commercial firms seems rather surprising though, due to the omnipresent tension between art and business and a commonplace “hostility towards any form of economic constraint” (Collin-Lachaud & Duyck, 2002, p. 56) from the creative side. It seems like the two could not be more different, just as the Beauty and the Beast in the fairytale.

However, private firms have become increasingly relevant as funding sources for the arts sector, which is accompanied with a higher emphasis being put on business and marketing concepts in the cultural sphere (McNicholas, 2004). Non-profit arts organizations have experienced a greater importance of accountability in the sector and look for alternate ways of financial backing (Bakhshi & Throsby, 2010). Hence, alliances between cultural organizations and businesses have become more commonplace, which calls for a thorough analysis of influencing factors and circumstances that play an important role in the process.

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So far the literature on partnerships in the creative industries has focused mainly on sponsorship relationships. Only a few notable exceptions go beyond the scope of mere pecuniary transactions (Comunian, 2008; McNicholas, 2004). Most of them have examined the topic from the business perspective, concentrating on the benefits for commercial firms and neglecting the goals and intentions of the creative side. Furthermore, previous studies have not carried out an in-depth analysis of the formation phase of those alliances.

Henceforth, the term ‘cultural alliance’ will be used to describe collaborations between commercial firms and cultural organizations.

1.2. Research Question

This study aims to add to the emerging stream of literature about alliances between cultural organizations and businesses by analyzing partner selection criteria in the linkage formation process. It examines which factors cultural organizations take into account when choosing alliance partners. More precisely, it analyzes whether similar principles as in business-to-business alliances apply and how they might differ. The main points of analysis will be complementarities, similarities and network proximity. First, the concept of complementarities suggests that firms take into account whether possible partners have distinct resources that they could benefit from. However, if partnering organizations are too different, consumers’ perception of the alliance might be negatively influenced, which emphasizes the importance of the next point of analysis. Second, similarities to other firms function as a means of risk reduction and are thus vital in partner selection. Third, the principle of network proximity implies that organizations tend to collaborate with firms that are close to them in their network.

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This might lead firms to focus less on complementarities and similarities and instead just look for the best possible partner within their close network.

1.3. Structure

First, the scope and definition of alliances for the context of this study in presented. Second, previous research on regular business-to-business alliances is discussed and relevant partner selection criteria are analyzed. Third, the research methodology and data analysis approach are introduced. Fourth, the results are presented. Fifth, the findings are discussed, implications for practice are proposed and the limitations of the study with corresponding directions for future research are evaluated.

2. Literature Review

2.1. The Scope and Definition of Alliances

This study takes a quite broad approach to the scope of alliances. The theoretical background draws mainly from strategic alliance literature, but also includes notions of brand alliance research. It is, however, adapted to incorporate other types of collaboration that are characteristic to the cultural sector, namely sponsorship.

Strategic alliances have been described as “voluntary arrangements involving durable exchange, sharing, or co-development of new products and technologies” (Gulati, 1995a, p. 619). One can distinguish between equity alliances, where either a new jointly owned entity is formed (joint venture) or one firm partly owns the other one, and non-equity alliances that involve no form of ownership (Pisano, 1989 in Gulati, 1995b). Only the latter type applies to the case of cultural alliances.

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Brand alliances, or co-branding, occur “when two or more existing brands are combined into a joint product or are marketed together in some fashion” (Keller, 2013, p. 269). They can be seen as a subcategory of strategic alliances with focus on marketing efforts and are a popular way to leverage secondary associations and build strong brands (Gammoh & Voss, 2013; Keller, 2013).

Sponsorship refers to a company’s funding of some entity, usually related to sports, culture or causes. In return, the sponsoring firm can exploit the agreement by extracting commercial value from it and use it as a marketing tool (Cornwell, Weeks & Roy, 2005).

For the sake of this study, alliances that are purely formed out of necessity and do not encompass some kind of knowledge exchange or might be used as marketing tools are excluded. Such collaborations include contracts with cleaning or building companies, unless these contracts are part of a sponsorship deal.

Hence, cultural alliances are defined as collaborations between cultural organizations and businesses that are used to achieve strategic goals, such as resource acquisition, image enhancement or audience expansion, but are not formed out of pure necessity.

2.2. Business-to-Business Alliances

This section examines regular interfirm alliances and explores which criteria have been found to play a role in the formation process. In recent years, a dramatic increase in firm-to-firm alliances has been witnessed (Holmberg & Cummings, 2009). They are a popular way of doing business, despite high inherent risks and failure rates (Dyer, Kale & Singh, 2001).

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The alliance formation phase is characterized by the focal firm’s search for a suitable partner. It is essential for successful collaboration, because choosing the wrong partner often causes alliance failure (Bierly III & Gallagher, 2007; Holmberg & Cummings, 2009). Various factors have been shown to affect the formation process. Three specific ones were chosen for this study, because they are most applicable to the cultural sphere and have also received considerable attention in scientific literature on business-to-business alliances. The three factors are complementarities, similarities and network proximity. First, complementarities refer to complementary resources that firms take into account when selecting partners. By collaborating with other companies, a firm can get access to their assets and benefit from them (Lin, Yang & Arya, 2009). However, businesses also have to pay attention to not only look for firms with complementary assets, but should also consider similarities with their potential partners to minimize potential risks associated with interfirm collaboration (Keller, 2013; Uggla & Åsberg, 2010). Second, similarities in terms of working styles, goals and brand image will be analyzed. Third, network proximity describes how companies are more likely to collaborate with others that are close to them in their network. However, only looking for partners within one’s network might limit the chance to find the best possible match and thus decrease the importance of complementarities and similarities. The following sections will examine each of the three factors more thoroughly.

2.2.1. Complementarities

This chapter is concerned with complementarity issues in linkage formation. It is one of the most important, but also complex factors in the alliance formation process. When choosing appropriate partners, firms take into account the added value those companies provide to them. Each partner has certain specific resources that can also

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be valuable to the other firm and by forming alliances they can get access to these. Resources can be manifold: customer segments, geographical markets, distribution channels, skills and capabilities, strategic positions, status, intangible organizational attributes (e.g. status, brand image), as well as financial and technical resources (Lin, Yang & Arya, 2009). The following paragraphs will analyze complementarities drawing from two different streams of literature: the resource-based view (RBV) and branding literature. Both types of research show the benefits of resource complementarity, however emphasizing different types of resources. RBV is more concerned with tangible resources, such as financial means and distribution channels, but also knowledge and strategic positions, whereas branding literature highlights intangible resources in terms of brand values and image.

On the one hand, according to RBV literature, companies are resource bundles and alliances provide access to complementary assets, skills and markets (Ireland, Hitt & Vaidyanath, 2002; Rothaermel & Boeker, 2008). This allows firms to concentrate on their core competencies and partner up with other companies to satisfy resource needs, which provides them with competitive advantage and strategic flexibility (Bierly III & Gallagher, 2007). Common examples of complementary resources cited in RBV literature are financial means, market knowledge, distribution channels, technical resources and strategic positions (Lin, Yang & Arya, 2005).

Ahuja (2000a) differentiates between two drivers of linkage formation: inducement and opportunities. The latter is based on the notion that firms tend to form alliances because of the opportunities their network provides them with and will be discussed in more detail in chapter 2.2.3. Inducement, on the other hand, describes how companies are induced to enter alliances because of their need for resources. Ahuja notes that resource-based linkage formation is influenced by two types of

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accumulated capital. Technical capital is a firm’s capability to develop new products and innovate, whereas commercial capital refers to the ability to transform this technical capital into marketable products and services, which requires production and marketing know-how, as well as adequate facilities. Firms are induced to partner with others in order to get access to these types of capital. An often noted example in this context are alliances between large, established firms and small, entrepreneurial ones. The latter possess new and innovative knowledge, i.e. technical capital, whereas incumbents can provide access to their production facilities and distribution channels, i.e. commercial capital (Rothaermel & Boeker, 2008).

On the other hand, branding literature is mostly concerned with complementary brand values and image associations via co-branding (i.e. brand alliances). Complementary brand values can be beneficial, because a company can borrow some of the image components of their alliance partners (Uggla & Åsberg, 2010). When two firms enter an alliance, consumers form a link between them in their minds and thus some of the associations they have with one of the brands might be transferred to the other. This is captured by the concept of cognitive consistency, which indicates that a person’s opinions and beliefs are usually consistent with each other. Hence, what a person associates with one brand in the alliance, it also associates with the other (Festinger, 1962; Keller, 2013). These so-called spillover effects are dependent on several factors. First, the partner firm has to have sufficient awareness and consumers should hold positive associations about it. Second, those associations should also be meaningful and relevant for the other company in the alliance. Finally, associations should be transferable (Keller, 2013).

Co-branding is an efficient way to combine ‘the best of both worlds’, as the most useful qualities of each parent brand can be leveraged (Leuthesser, Kohli & Suri, 2003). Alliances between functional and symbolic brands might be particularly

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effective in that sense. The distinction between functional and symbolic is a common one in brand image literature. Functional brands aim to satisfy immediate and utilitarian needs of consumers and are usually associated with attributes such as performance and value, whereas symbolic brands are centered upon consumer’s emotional and self-expressive needs and generally evoke prestige and design associations (Bhat & Reddy, 1998). Bhat and Reddy (1998) argue that brands can be both functional and symbolic and do not have to be either or to appeal to consumers. Possibly, brands that tap into both image concepts can be exceptionally successful, which is illustrated by examples such as Nike and Apple. In order to get consumers to possess both functional and symbolic associations with a brand, it could form alliances with other brands that have complementary images and profit from the spillover effects described above. Hence, a functional brand might benefit from linkage formation with a symbolic brand by adding prestige and design associations to its image, whereas the symbolic brand could profit from higher performance associations.

Park, Milberg and Lawson (1991) have a contrasting view on brand images. They suggest that brand concepts should be consistent, hence either functional- or prestige- (symbolic) oriented and apply this to brand extensions, where an extension should have the same concept as the parent brand. In the realm of brand alliances, this would imply that brands should only cooperate with other brands that have the same or a similar brand image. This will be discussed in more detail in the similarities section (2.2.2).

There are also risks to teaming up with firms with complementary values and attributes, if the image and personality of the two brands involved are too different. Consumers might be confused and unsure about what the alliance represents, which could have negative effects on the partnering firms. Their positioning might become

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blurred, which can harm brand image and result in loss of core customers (Keller, 2013; Uggla & Åsberg, 2010). Hence, some sort of compatibility and logical fit between partner brands is necessary, in addition to having complementarities (Keller, 2013). This leads us to the next chapter of criteria in alliance formation processes: similarities.

2.2.2. Similarities

Previous research found that not only above-mentioned complementarities, but also similarities between potential partners are important in alliance formation. Companies try to overcome the high inherent risks in linkage formation by partnering with firms that are similar in terms of corporate culture and working styles ( e.g. Kale & Singh, 2009), goals and motives (Brouthers, Brouthers & Wilkinson, 1995; Leischnig, Geigenmueller, Lohmann, 2014), as well as brand image (e.g. Simonin & Ruth, 1998). These three factors will be analyzed in more detail in the following paragraphs.

First, it has been shown that similarity with regard to corporate culture is important for partner selection (Kale & Singh, 2009). This includes partners’ working styles, organizational structure and decision-making processes. If partnering firms have compatible working styles, alliance formation and success are facilitated, due to ease of knowledge transfer and communication. Similar degrees of formalization and centralization, i.e. how structured and centered decisions-making mechanisms are, have a positive effect on information processing between partners. This means that collaborating firms have comparable ways of reaching decisions and producing outputs within their company domain, which should also enhance the quality of cooperation with each other (Lane & Lubatkin, 1998). Due to the increased quality of information exchange and knowledge processing, it is also easier for firms to

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capitalize on their complementary resources. Although these might create the opportunity to generate profit, it is nevertheless important that partnering companies work together and can reach decisions efficiently. Coordinated action is essential to create revenue (Dyer & Singh, 1998).

Second, previous research has also shown that partnering firms should have compatible goals and motives. Conflicting objectives can cause dispute between collaborating companies and eventually alliance failure (Bucklin & Sengupta, 1993 in Leischnig, Geigenmueller & Lohmann, 2014). It is thus essential to avoid vague objectives and to coordinate activities effectively (Brouthers, Brouthers & Wilkinson, 1995). Furthermore, similar goals enable firms to create rents from the learning potential inherent in their complementary resources (Kale, Singh & Perlmutter, 2000). Compatible motives also enhance communication quality and ease between partner firms (Leischnig, Geigenmueller & Lohmann, 2014).

Third, drawing from branding literature, another important similarity factor is consistency in brand image. It has been shown that if the images of the two parent brands are dissimilar, consumers tend to evaluate the brand alliance more negatively (Simonin & Ruth, 1998). In a related study in the realm of brand extensions similar results have been found (Park, Milberg & Lawson, 1991). Although brand extensions only involve one parent brand, the idea can also be applied to brand alliances, because they “raise the same basic issues” (Leuthesser, Kohli & Suri, 2003, p. 37). Park, Milberg and Lawson (1991) argue that success of brand extensions is not only dependent on similarity in product features and category, but also on the consistency in image of the parent brand and the brand extension (or partner firm in the case of brand alliances). They introduced the idea of brand concept consistency as an important factor for brand extension success. They further distinguish between function-oriented and prestige-oriented brands (i.e. functional and symbolic as

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described in the complementarities chapter 2.2.1). The former are mainly associated with product attributes such as performance and value, whereas the latter are concerned with consumers’ self-expression and image. For prestige-oriented brands the notion of brand concept consistency is significantly more important than for function-oriented brands, which also entails that consumers are more willing to accept brand extension into other non-similar product categories of these firms. In the domain of brand alliances this implies that prestige-oriented brands should pay attention to partnering with firms that are also associated with prestige and self-expression, but might operate in different sectors and product categories than they do. Function-oriented brands, in comparison, should focus on collaborating within their product category or segment.

Sponsorship literature offers similar findings. Gwinner and Eaton (1999) found that a brand and the sponsored event match either on a functional basis (brand is used during the event) or because they have a similar image, both of which enhance image transfer. The functional fit is comparable to fit based on complementary assets, as mentioned in the complementarities chapter. The sponsoring brand offers valuable resources that are used during the sponsored event, which in turn offers itself as a marketing tool. The image fit of firm and event, on the other hand, is in line with the above-mentioned brand image consistency.

2.2.3. Network Proximity

Another important influence in partner selection is the network a firm operates in, which is essentially an accumulation of alliances (Gulati, 1999). A company’s network consists of direct and indirect ties, and structural holes. Direct ties are firms that the company collaborated with before, whereas indirect ties are third party links, where

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no direct connection exists but the two firms have common partners. Structural holes are disconnections between firms in the network of a company (Ahuja, 2000b).

Several studies show that firms are more likely to form alliances with companies they collaborated with before or with which they share third party ties (e.g. Baum et al., 2005; Gulati, 1995a). Engaging in embedded ties (past direct or third party ties) reduces risk and leads to densely clustered networks. The further away two firms are in a network, the less likely they are to form an alliance (Gulati, 1995a). Forming alliances with nonlocal ties (unknown partners) can also have benefits, such as new and unique information, but these can be outweighed by the greater risk and uncertainty they entail (Baum et al., 2005).

On the one hand, network embeddedness leads to more information being available about potential partners (Arthur, 1989 in Gulati, 1999), which should increase the feasibility of partner selection. On the other hand, it also narrows the scope of firms to collaborate with and secludes the firm from information outside the network (Arthur, 1989 in Gulati, 1999; Uzzi, 1997). Hence, previous research has shown that forming alliances with firms within one’s network can have positive and negative effects on the efficiency of partner selection. Uzzi (1997) notes that negative effects occur after a certain threshold is passed and most firms in the network are connected through embedded ties. This is exemplified in a small world network, which is „both highly locally clustered and has a short path length“ (Uzzi & Spiro, 2005, p.448). This overembeddedness of firms in their network might decrease the importance of complementarities and similarities in partner selection, because rather than looking for the best possible company to collaborate with in the market, they only look for potential partners within their close network.

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3. Methodology

This chapter gives a detailed description of the research methodology of this thesis. First, I will analyze the research design and instrument. Second, the sample selection and the data collection process are investigated. Third, the method of analysis is discussed.

3.1. Research Design and Instrument

Little is known so far about alliances between commercial firms and cultural organizations, especially about the formation phase and relevant partner selection criteria of those collaborations. Very few studies address this topic and none of them carry out an in-depth analysis. The aim of the research is to explore how cultural organizations select partners and what kind of criteria they use for doing so. Hence it is adequate to follow a qualitative approach when gathering and analyzing evidence for this study. Qualitative data can be used to investigate meaning and context of situations, understand processes and examine causal relationships. It is useful when the subject matter needs a thorough analysis and not many insights have been developed yet (Saunders & Lewis, 2012). Moreover, it allows for flexibility and enables the researcher to adapt to emerging concepts while still in the data gathering phase (Gephart 2004). However, there are also downsides of qualitative data. Many researchers argue that qualitative studies are often biased by the people who conducted them (James et al., 2008). For instance, during an interview the researcher might unconsciously ask so-called leading questions, which induce certain answers from the interviewee (Emanuel, 2007).

In addition, the study follows an inductive approach. Rather than testing hypotheses derived from theory, it aims to investigate specific alliances and draw

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some generalizations from them. This bottom-up approach is suitable in case of an understudied topic, such as alliances between cultural organizations and commercial firms (Saunders & Lewis, 2012).

This research further applies a multi-case method, where participants in several cultural organizations are interviewed. A case study aims to answer questions of why, how and what and is useful to get detailed information about a topic. However, due to the rather small number of cases, it can be difficult to draw generalizations from the gathered data (Saunders & Lewis, 2012).

The study is based on primary data and follows a cross-sectional approach, meaning the data in each cultural organization is gathered at once and not over a longer period of time.

The research instrument is a semi-structured interview with prepared guideline questions in English (see Appendix). Semi-structured interviews allow for flexibility when conducting the interview while, at the same time, assuring that central questions are not omitted. This facilitates the natural flow of the conversation and accounts for possible, unforeseen turns the questioning might take. The questions are open-ended to better examine the underlying processes in alliance formation with commercial firms (Hesse-Biber & Leavy, 2010).

3.2. Sample Selection and Data Collection

The study is based on 14 interviews carried out in 11 cultural organizations in Amsterdam or Amersfoort. The cases are limited to organizations that are dependent on external funding, either from public institutions or through sponsoring from private firms. Apart from the fact that creativity plays an important role in cultural institutions,

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a dependency on external funding further distinguishes them from commercial firms and will thus highlight the differences in alliance formation behavior more clearly.

To be able to generalize the findings of this study, organizations that differ in size and creative industry segment are chosen. They range from theaters and museums to music and theater festivals. Movie Platform (respondent A) offers a monthly membership that gives access to arthouse cinemas in several cities in the Netherlands. They further operate a website with articles and interviews about the movie industry. Theater A (respondents B, C) is a theater in Amsterdam specialized in cultural and political debates. Museum A (respondents D, E, F) is a filmmuseum and cinema in Amsterdam. Museum B (respondent G) is a photography museum in Amsterdam. Museum C (respondent H) is a museum that shows exhibitions based on its contract and collaboration with a museum in St. Petersburg. Festival A (respondent I) is a classical music festival taking place in June in various locations in Amsterdam. Festival B (respondent J) is an electronic music festival in Amersfoort. Festival C (respondent K) is a theater festival showing performances of graduating theater students. Theater B (respondent L) is a theater in Amsterdam specialized in urban arts. Festival D (respondent M) is a modern theater festival in Amsterdam. Theater C (respondent N) is a theater in Amsterdam.

All of the interviewees are somehow involved in the alliance formation process with commercial firms. Most of them are managing directors (4) or sponsoring coordinators (3) and thus more concerned with the business side of the organization. Five interviewees are general (co-) directors. One of the participants is a co-founder and has no official position at the moment, but is still involved in the daily routines of the organization (Theater B). One interviewee is Director of Presentation (Museum A) and thus more involved with the artistic side of the organization.

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Most of the participating organizations were found via Internet search, for example through iamsterdam.com, the official web portal of the city of Amsterdam. The cultural organizations were contacted via email, using email addresses available from their websites.

The interviews were conducted in a one-month period from the beginning of May to the beginning of June 2014. Seven interviews were carried out in the office facilities of the respective cultural organizations, six in adjunct restaurants or cafés and one in a café nearby the office. Ten of the participants were women and five were men. The average duration of the interviews was 41min 13 sec. They were conducted in English, which was not problematic in most of the interviews, despite none of the participants being native speakers. However, some of the interviewees seemed to have struggles expressing themselves in English and often used Dutch words for lack of finding the correct English translation.

3.3. Quality of the Research

The semi-structured, qualitative approach of the interviews enables the consideration of emerging topics, which adds to the validity of the research. However, it also implies that not all interviewees were asked exactly the same questions and not all of the topics could be covered in all the interviews. The latter is also connected to the time constraint that some of the interviews were subject to.

To ensure generalizability, cultural organizations from different creative industries were chosen, to be able to find common partner selection criteria that are not specific to either of the industry segments. Furthermore, the participating organizations differ in size and awareness level to account for possible effects those factors might have on alliance formation.

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3.4. Method of Analysis

The interview transcripts were analyzed using a qualitative data analysis software tool (MAXQDA). The statements in the interviews were categorized into key themes that are also reflected in past research and are described in literature review section (complementarities, similarities and network proximity). Furthermore, nodes for previously unaddressed topics were created. All of the key themes had several subnodes to further clarify possible differences in behavior and selection criteria.

4. Results

4.1. The Different Types of Alliances

While conducting the interviews for this thesis it quickly became clear that the participating cultural organizations are engaged in three main types of alliances: facilitating, sponsorship and content alliances. Facilitating represents the least collaborative one with only minor interaction and knowledge exchange between partners. In comparison, content alliances are characterized by rather intense collaboration between the two parties. Sponsorship can be placed in-between those two according to the level of interaction. Within these categories further distinctions can be made, which will be explained in the following subchapters.

The distinction between these different sorts of alliances is essential due to their effect on partner selection. Depending on what kind of cooperation is in place, different alliance formation behavior could be observed. Each alliance category will be described in further detail in the following sections.

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4.1.1. Facilitating

Facilitating represents the ‘loosest’ of the three types of alliances with a rather low degree of interaction between partners. It refers to renting out the whole or parts of the building of the cultural organization to commercial firms. These rent-outs are not part of a sponsorship deal with a company (as will be described in the next chapter), because in that case other partner selection criteria, namely those of sponsoring, would apply.

There is a difference between facilitating for internal events and external events. The former are only accessible to a certain (invited) audience, such as employees or customers of the commercial firm, whereas the latter are open to the general public.

We make a distinction between things where we rent out the venue that are visible to the general audience and things that are only visible to certain people.

(respondent L)

This type of alliance naturally only applies to cultural organizations, which have their own building with performance halls or showing rooms and not just office facilities. The latter is the case for the festivals that were participating in the study, as well as for the movie platform. All the cultural organizations with own venues occasionally rent out their halls. This includes theaters and museums.

Within facilitating for internal events, two different types were observed. First, the cultural organization merely contributes to the internal event by providing the venue, but the commercial firm alone develops the creative concept. This is treated as an alliance for the context of this study, because these undertakings by the cultural organization fulfill one important strategic goal: access to financial means. One of the

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struggles of many cultural organizations is the constant lookout for money to fund the organization and the earnings from renting out halls can be used to produce cultural offerings by the organization itself.

Second, the contribution of the cultural organization to hosting the internal event includes more than the mere provision of the venue, but also involves some connection to its program. This could be a workshop or a tour through the exhibitions of the cultural organization. In contrast to the first type of alliance for internal events, the agenda of the event is created by the cultural organization. This distinction is essential, because by connecting the event to the creative output of the cultural organization, another important strategic goal can be fulfilled: audience expansion. This will be explained in further detail in the complementarities section (4.2.).

The distinctive feature of facilitating is that it is not perceived as part of the programming, but as a third-party event, from the perspective of the cultural organization. This applies to the first type of internal facilitating and facilitating for external events. In the latter case, this can sometimes be problematic, because from an outside perspective it might be perceived as a co-production between the cultural organization and the commercial firm. The distinction between what is part of the program and what is external facilitating is sometimes only visible from within the organization, as the public audience doesn’t have insight into the processes behind the production. This is illustrated by Museum A’s collaboration with a popular sunglasses manufacturer (respondent F):

Then people were confused if we now do exhibitions about sunglasses. There were all these little film fragments, so people thought it was a real exhibition. So

you have to be really careful. (...) it’s a thin line between what is a commercial event and what is a cultural exhibition. We work together with them and we rent

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out our space, because we need the income for other things. [...] But of course, it’s not a serious exhibition.

4.1.2. Sponsorship

In the realm of culture, sponsorship has previously been defined as a company supporting a cultural organization by providing financial means or goods with economic value and in turn being offered the opportunity to exploit the agreement by extracting commercial value from it.

With one exception (Theater B) all participating organizations are involved in some kind of sponsoring. There are two important kinds of distinctions in sponsoring that became apparent whilst analyzing the interviews for this study.

The first one refers to whether the sponsorship deal comprises monetary or in-kind sponsoring. A company can either support a cultural organization by directly providing it with cash payment, which will henceforth be referred to as monetary sponsoring. Or, a firm can offer certain services, goods or other tangible objects (such as buildings and sites) for free or a reduced price. This in-kind sponsorship does not involve exchange of money. The price of the offerings of the company, that the cultural organization would have to pay, if they weren’t part of the sponsorship deal, is translated into the value of the sponsorship. This translation is called a barter, as described by the head of development at Festival A (respondent I):

So you translate, it’s called a barter. You look at the value. [car dealer] is probably the best example. [car dealer] gives us cars to use as our car service throughout the festival. [...] What you do is, you name a price. How much would that have cost us, if we had to pay for it. In this case, it’s more than, for example,

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the business partners contribute, so automatically they’re a sponsor. Then we look at the value of the sponsorship and we give privileges in return.

These sponsorship deals either start as normal supplier relationships or are initially set up this way. Examples of in-kind sponsorship deals include technical equipment (screens, projectors), legal advice and rental cars. Often in-kind sponsors also provide monetary sponsoring, as is the case with Museum C’s collaboration with an airline on an exhibition about the Silk Road, where 50% of the deal consisted of cash payments and 50% of in-kind sponsoring in the form of advertisements, an interview with the museum’s director in the airline’s travel magazine and free flight tickets to organize a press trip to Silk Road excavations.

The second type of distinction in sponsoring is concerned with the scope and time horizon of the sponsorship deal. Firms can either support the cultural organization as a whole on a long-term basis. This will henceforth be called corporate sponsoring. Or, companies only serve as sponsors for a specific venture, which will be referred to as project sponsoring from now on. Both types involve monetary as well as in-kind sponsoring.

There are two types of corporate sponsors: main sponsors and members of the business club. The main difference between these two is the value of the sponsorship deal. Main sponsors give more money or in-kind sponsoring of a higher value than firms in the business club. Furthermore, the partnerships with main sponsors usually involve sponsoring packages that are tailor-made according to their specific needs and wants. These packages include goodies and services from the cultural organization, in return for the companies’ financial and in-kind investment. Examples of these benefits are free tickets, special organized events, workshops and free or discounted rental of the facilities of the cultural organization. Main corporate

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sponsors are usually big firms, such as banks, lotteries or alcoholic beverage producers.

In distinction to main sponsors, two of the participating cultural organizations offer memberships in so-called business clubs. Members of a business club also give money to the cultural organization, however the amount is smaller compared to main sponsors and the packages for these sponsorship deals are not tailor-made. Generally, the same types of goodies and services are offered in return, but to a lesser extent. The head of development at Festival A, describes their business club offering as follows (respondent I):

We have the business club called [Festival A] business. I think at this point we have 8 business partners and they pay 5000€ per year. The program is pretty standard that we do for them, except for during the festival we support them with

organizing a special event, either for internal or external relations. And throughout the year we invite the CEO and mostly also the account manager for activities throughout the year that we have. They’re invited for the opening of the

festival, the final performance of the festival. (respondent I)

She further explains the difference to main sponsors:

The sponsors give more. The sponsorships are also tailor-made, much more than the [Festival A] business. And with our largest sponsor, which is [bank], we organize, for example, a special event before the opening. On the opening night we invite our VIPs, our special relations and the reception is hosted by [bank].

Also, we organize throughout the festival a couple of events with them and [organization], so the employers’ organization. They organize a larger event for

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[Festival A] Young, our young professional program, in the [bank]. Throughout the year we just talk a little bit more and more often about how to be most

efficiently for both parties.

In the case of Museum A, most members of the business club are (former) suppliers of the organization. Hence, they don’t have a logical connection to the programming of the institution, but were more connected to the construction process of the new building. The organization only has a business club and no main sponsors, but is aiming to expand its sponsorship offerings by looking for main sponsors and additional members of its business club.

Concerning project sponsoring, where sponsors are only connected to one specific event or production, instead of the whole organization, the creative responsibility lies with the cultural institution. The creative offering is planned by the cultural organization itself, rather than collaboratively or solely by the firm. The cultural organization then asks a sponsor to provide monetary or in-kind sponsorship. A good example of this type of sponsoring is the above-mentioned collaboration between Museum C and an airline on an exhibition about the Silk Road. The museum staff came up with the concept and asked the airline to become a sponsor, providing money as well as in-kind sponsoring.

In light of the recent economic crisis, public subsidies in the cultural sphere have been cut back extensively, affecting almost all of the participating organizations. When asked whether they lately experienced budget cuts, the sponsoring and partnership coordinator at Museum A said: “Definitely in funding from the government. But that’s what everyone experiences, of course.“ (respondent E). This caused many cultural organizations to be more dependent on financial means from private sources and thus led them to increasingly form sponsoring alliances: “This

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year we are a little bit lower on budget. I tried to find it in private funding. “ (respondent M).

4.1.2. Content Alliances

Content alliances are the ‘deepest’ form of cultural alliances, according to the level of interaction. They are collaborations where creative output is produced together with commercial firms and that are part of the programming of the cultural organizations. The distinguishing characteristic of this type of alliance is that the creative concept is generated conjointly: “...we have our intellectual capital that we put in to make the evening better. [...] we’re producing the evening artistically with them.“ (respondent N). This means that the programming is not done either by the cultural organization with the firm merely being a financial contributor (this would fall in the sponsorship category) or by the company itself with the cultural organization merely providing the venue (i.e. facilitating). Another essential characteristic of content alliances is that whatever their output is, it is publicly accessible, because content alliances are part of the program of the cultural organization. Thus, not only certain invited guests of the firm are allowed to participate, but everyone who is willing to take whatever opportunity costs the participation requires.

One useful illustration of a content alliance is Theater C’s collaboration with a magazine (respondent N):

They have once a year an evening where they produce the top 100 most powerful women. And that’s done is a sort of award ceremony evening. That we do together with them. Because it’s not only the award ceremony, but there’s also

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The cooperation with the magazine is part of a special program of the theater, where program makers from the theater work collaboratively with other organizations (some of them commercial firms) on the concept for an event. The deputy director at the theater clearly distinguishes this type of alliance from just renting out the halls in the building and notes that “there we have our intellectual capital that we put in to make the evening better”. Whereas for renting out, “there’s not a programmatic or artistic side to it. It’s just facilitating them.” (respondent N).

The business director at Theater A, describes the distinction between co-productions and facilitating as follows (respondent B):

The motive is always, is it a topic or a subject that is relevant to society and that’s something that we want to have a program about. Because otherwise it can also be done within [Theater A], but then they just hire the hall and it’s up to them, it’s

not [Theater A].

The quote above illustrates that in addition to conjointly coming up with a concept, this concept has to further be deemed important and relevant for the cultural organization. As content alliances are co-produced by the organization and are part of its programming, it is essential that whatever is produced there, reflects the image of the cultural organization.

Some interviewees pointed out that an important part of content alliances is that the cultural organization has the final say in the collaboration, because of their creative expertise. This is also a distinctive feature to facilitating for external events, where it is the commercial firm that has the creative responsibility in the alliance.

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But it has to be clear from the start who is the organization that has the final responsibility, final say about the evening. We do that in Expanding Theatre. It’s

always the Stadsschouwburg that’s doing that. Otherwise it’s renting out the space. (respondent N)

4.2. Complementarities

Most complementarities that were named by interviewees were tangible resources, rather than complementary skills or brand values (i.e. intangible).

Unsurprisingly, the main complementary resource to get access to was money (or saving money in case of in-kind sponsorship). This was the first and foremost reason to enter into sponsorship deals. In sponsoring and facilitating, this was sometimes the only reason to form alliances with certain firms: “It was mainly about the money. That’s actually the main goal.“ (respondent E). Other companies also emphasized the importance of choice of certain sponsoring partners, pointing out that money is the initial reason to set up the collaboration, but other factors, such as shared brand values or overlap in audiences are also important (see similarities section 4.3. and sequential choosing section 4.5.).

In contrast, when referring to facilitating for internal events with content provision by the cultural organization, other factors come into play as well. Cultural organizations aimed to deepen the relationship with firms in these alliances or expand their audience, hoping that participants of the internal events would also come to the institution in their leisure time:

We don’t make a lot of money on it. It’s maintaining a relationship and you have to start somewhere. If an HR department has a good experience with you,

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whatever reason they have, that’s a good entry. So you do have to start a relationship with workshops, or room rental, product presentations. (respondent

G)

[...] the reason that we do that is because we hope that they come back in the weekend with their families. For instance, yesterday we had a conference of

300 businessmen. It was nice, they had a good conference. We had a little introduction about what we are and they looked around. Downstairs we have a permanent digital exhibition and also some tools for kids to play with. So what I hope is that these 300 businessmen will come back one day with their families

and their children. By organizing these commercial events you attract an audience that is not your natural audience. (respondent F)

Some other complementarities that participants named include using the firm’s marketing channels, getting access to its network and publicity.

And we used their marketing channels. They just did a makeover of their magazine, which is in all the planes. They put something about the exhibition in

there, but they also did an interview with me. (respondent H)

The [bank] is an important part of the cultural network in Amsterdam. Through the [bank] we also connect more to the other cultural institutions, that they support,

which is great. (respondent I)

[...] people come across this museum who would otherwise not have come here. That’s good, because word-of-mouth is the best publicity one can get, positive

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Concerning complementarities in terms of intangible resources, these are often connected to status. Being connected to big and widely known companies, contributed to the cultural organizations’ image by adding status and approval by others.

It’s not only about the money, but also working together with big firms, gives you status and approval by other firms. When other companies see that you collaborate with lots of other firms, they might take you more seriously. The same

goes for customers, of course. (respondent H)

Furthermore cultural organizations aim to add to their image by collaborating with businesses in content and sponsoring alliances, because they don’t want to be seen as too highbrow or serving a very specific customer sector. They intend to widen the way they are perceived and do this by entering into alliances with commercial firms that are unrelated to their field. However, they do not seem to target specific brand values of the firms they are collaborating with, but rather, just the fact that they are working together with a firm, which operates in a completely different industry, is a contribution to their image.

Our goal is again extending our footprint in society, not only being connected to cinephiles and film institutions, but also work together with companies and

institutions from other business sectors and branches. (respondent F)

Complementarities in terms of tangible resources (e.g. money, marketing channels) were especially important in facilitating and sponsoring, where they often represented the only factor that cultural organizations considered when forming these alliances. However, in content alliances and facilitating for external events similarities

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complementarities still play an important role in entering into these alliances, they are less pronounced than in sponsoring and facilitating for internal events. Content alliances are seen as a good way to contribute to the image of the cultural organization, however, not in terms of looking for firms with complementary associations in the image of the company. Rather, collaborating with firms with similar images is seen as emphasizing one’s own (see similarities section 4.3) or simply being connected to commercial firms adds to the image of the cultural organizations by extending it.

It seems that commercial firms mainly aim to improve their image and look for complementary brand values. When asked whether they benefit from certain

associations each partner in the sponsoring agreement with a bank has, the Head of Development of Festival A points out: “We certainly have those for the

[bank]. That’s why they support us.“ (respondent I)

4.3. Similarities

4.3.1. Working Styles and Decision-Making Processes

The findings on working styles and decision-making processes are quite diverse and sometimes contradictory when comparing the different participating cultural organizations.

Some interviewees note that they prefer working with small or medium-sized companies, because the way they reach decisions and their working styles are similar to their own. This facilitates the collaboration, making things faster, easier or generally more pleasant.

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So if a company is medium-sized, then we can speak directly to all the directors. We can together make a plan on how to get return on investment out of this

partnership. (respondent G)

In line with this alliances with bigger firms are seen as more problematic. Due to their larger size, the cultural organizations have to deal with a greater amount of people at the firms, which impedes collaboration. Furthermore, they are perceived as less flexible and more rigid in their decision-making.

And if it’s a huge, national organization [...] we have to speak to marketing departments, internal communications, external communications, PR departments and sales departments, and then people responsible for client

events. It’s a bit of a different scale. (respondent G)

Then again, most interviewees acknowledge the differences in working styles and decision-making, but point out that this is usually not a problem, because they anticipate those differences and act accordingly. The alliance formation phase is already characterized by making contracts and deals that aim to avoid potential complications, resulting from discrepancies in corporate culture.

It’s not a problem. It’s a matter of making the agreements and it’s also knowing what we both expect from each other, what we can expect. Since it’s tailor-made,

you set the goals for each other. You discuss possibilities and impossibilities. [...] We always evaluate afterwards and you learn from each partnership.

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We're really flexible and of course, for partners it takes time. You take that into account, if you need an agreement, you start in advance. And because I worked

before with all of these big firms, I know how much time things can cost. (respondent E)

However, some participants mention the exact opposite, namely that larger firms are easier to collaborate with because their decision-making is quicker and more efficient. On the one hand, this might be because the alliance with the cultural organization is treated as a project and thus a project management team is specifically assigned to it. On the other hand, money plays a less important role in big, commercial firms, which accelerates decision-making.

Generally at bigger firms that have a lot of money, decisions are made quite rapidly, because money is not an issue. At smaller firms, it’s more decision

making, because there is a lot of financial negotiating. It’s very different, depending on the scale of the company. (respondent L)

That can be a difference from commercial organizations, where the decision-making structure is more a straight line. [...] That’s also because, the commercial

firms, if they do something here, for them it’s a project. So they have one project manager. And for us it’s part of the organization and the operation. That’s why

everybody here has to be involved in what’s happening. (respondent N)

4.3.2. Compatible Goals

Regarding the findings for goal compatibility, there was an obvious difference in what kind of alliance the cultural organization and firm are engaged in.

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In the case of sponsoring and content alliances, compatible goals were quite important. Cultural organizations look for firms with similar ambitions in entering into those types of collaborations, noting that these are connected to the cultural program of the organization.

When we not only look at the workshops, but at relationships with companies, that’s what you look for. You look for shared brand value and shared ambition

and goals. (respondent G)

You always finally close the deal with a company that is also interested in your cultural program. (respondent F)

When it comes to facilitating for internal events with the cultural organization merely providing the venue, shared goals play a less important role, because those types of collaborations were mostly formed out of financial reasons and will not reflect on the outside.

It’s our income [...] As long as it’s not public we don’t really care what it is about. (respondent C)

Concerning facilitating for internal events with creative input from the organization, the findings are mixed. Only two of the participating organizations engaged in this type of alliance, but they had different opinions on the subject matter.

The deputy director of Museum B, points out that „within a workshop program, they are a client and we just deliver.“ (respondent G) and that compatible goals do not matter in those kinds of alliances.

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For instance, we had a big law firm, that was not doing anything with film, but once a year they organize a big event for their employees and their partners and

relations. They don’t want to do just a dinner, they also want to have screenings with introductions, workshops, all related to film. We did that now for two times. It’s a big success for them, because it gives it a different atmosphere, a different

kind of experience for their people. That is good, because that has spread the word for us and people come back. Not only to organize another event, but we

also hope and we know that individual employees of that company or their partners are coming back as well. So it’s also a possibility of giving access,

opening the entrance to a broader audience. (respondent D)

The quote above illustrates that those internal events are more than a product that the museum delivers, but that there are certain goals connected to it. On the one hand, it demonstrates that the goal of the firm in entering into this alliance was to offer its employees and partners an extraordinary experience by choosing the museum as a venue, because of the content it provides. On the other hand, by showing its collection and connecting the events to its program, the museum aimed to expand its audience. Because both goals are connected to the same element, namely the content offered by the museum, they are compatible and both partners are satisfied with the outcome of the alliance.

Regarding facilitating for external events, the sponsoring and partnership coordinator of Museum A, mentions that there were some incompatibilities in the goals in their alliance with a popular sunglasses manufacturer. The firm rented one of the museum’s exhibition halls to show its new sunglasses model and wanted to present it as a normal exhibition. The museum however, did not see it as a normal exhibition, but just as facilitating them and a way to earn money. They were not

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interested in promoting the new sunglasses. Hence, goal incompatibility was in place, but due to this being the only example, no generalizations can be made.

4.3.3. Similar Image

Concerning sponsoring, content alliances and facilitating for external events most cultural organizations look for partner firms with similar brand values and image. This is deemed as very essential, because it reflects on the cultural organizations own image.

As a cultural institution our identity is very important. [...]potential commercial partners that we’re looking at, that we’re talking to, have to at least relate to that

identity. We can’t work with commercial partners that jeopardize that identity. (respondent L)

The kind of shared brand values that cultural organizations are looking for can be very specific and connected to their own distinct programming and image. For instance, the director of Festival D describes similarity in image with a beer sponsor as follows: „We feel a connection to that beer, because it’s very environmentally friendly.“ (respondent M). The festival also aims to improve its sustainability and looks for environmentally friendly ways of organizing everything connected to the festival. Another example of a quite specific image association can be found in Museum C’s alliance with an airline on their Silk Road exhibition. They share a connection to travelling:

Both have something to do with travelling. The works that we bring here for our temporary exhibitions come from abroad. [...] you could say that when you go to

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[Museum C], you take a mini journey, you travel through time, through art history, through the world, seeing this art. And [airline] is offering travel packages all over

the world (respondent H)

Although many of the similarities in image are quite particular, there are two shared image associations that seem to apply to a couple of the observed partnerships. First, many cultural organizations look for partner firms that reflect their quality in the services and products they offer: “Clearly, it has to do with quality. We position ourselves as an A brand, so we’re looking for other A brands.“ (respondent G). The commercial firms that cultural organizations collaborate with are mostly unrelated to the creative industries, which could hinder finding common ground, but quality and excellence can be applied to any sector and are unrelated to what kind of products and services are offered or what kind of positioning the brand has.

Second, it seems that some cultural organizations tend to look for brands that are also connected to self-expression. This could either mean that they look for firms with a prestigious and elegant image, if they perceive themselves as prestigious and elegant. This is illustrated by the following quote by the sponsoring and partnership coordinator of Museum A: “Think about the word chique, think about the word art, think about the word film and then you can probably come up with the brands that would match and the brands that wouldn’t match.“ (respondent E). Or, if the cultural organization is younger and sees itself as ‘hip’ or ‘cool’, it looks for a firm with similar associations: “For each brand we must discuss, if it is cool, is this fit for the festival.“ (respondent J).

In comparison, some participants admit that there might be some incompatibilities in their images, but those are perceived as minor or not having an effect on the

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image of the cultural organization. The positive similarities outweigh potential incompatibilities.

Funny enough, I don’t know anybody personally who would have positive associations with [sponsor], yet everybody I work with is happy with [sponsor],

because they have money. [...] We were convinced that the negative effects would be minimal. Everybody would understand why we would do it. [...] And I think our assumption got confirmed. We haven’t had any backlash or reactions

through even low-threshold mediums, such as Twitter or Facebook, on the sponsorship deal. (respondent A)

However, many interviewees pointed out that there is always some possibility to find shared brand values and that they do not necessarily exclude based on the image of the firm. They are generally open to collaborate with all kinds of firms, unless they have a dubious reputation and are involved in shady business.

[...] our collection and our knowledge about film is so broad that there is always something we can think of that is in principle suitable for every company. There is

always a possibility to find a connection. (respondent D)

Unless they are connected to weapons or something comparable. We consider everyone. (respondent H)

In the domain of facilitating for internal events, the image of the partner firm does not play a role. This is the case for both types of internal facilitating, with the cultural organization either providing the venue or also some creative content. Internal events

The beauty and the beast : partner selection criteria in alliances between arts and business