‘How Stakeholders Influence the Innovativeness of Music Events’

‘How Stakeholders Influence the

Innovativeness of Music Events’

A study in the field of event management: the influence of stakeholders on the innovativeness of music events and festivals.

by

JACOB NOORDMANS

University of Groningen Faculty of Economics and Business MscBA, Strategy and Innovation Management

February 2014

First supervisor: R. van der Eijk Second supervisor: W. Killian McCarthy

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Abstract

This thesis describes a study in the field of music festivals and events. It builds further on the existing body of research on the subject of stakeholder influence and the innovative focus of music festivals. Thereby the relation of the organisation with sponsors, governments and especially customers is emphasized. Stakeholder dependency and customer attendance strategies were linked with internal innovativeness. There was a positive relation demonstrated between pursuing a growth strategy in terms of audience and innovativeness. Music events and festivals prove to have a strong focus on internal innovativeness which is needed in the industry that is their playground. The findings of this paper provide further support for the need of an innovative focus in an ever changing environment.

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Executive Summary

The purpose of this study is to explore the relation between stakeholders and innovation in the music festival industry of the Netherlands. The number of music events has increased the last twenty years. Now for the first time this number is stabilizing. With the competition at its all-time high it is a nice moment to consider the innovativeness of the events. Thereby the importance of stakeholders is leading. The influence of the most important stakeholders is tested through measuring dependence on stakeholders and customer attendance.

From the existing body of literature various studies have been explored on the subject of stakeholder influence and innovativeness of festivals. Stakeholder influence has been divided in stakeholder dependency and customer attendance. There is focused on the most important stakeholders like government institutions, sponsors and customers. Several strategies have been identified that characterise the position of the event towards its customer. The literature recognizes how stakeholders can influence the innovativeness of the event. Starting point is the internal innovativeness of the event, which consists of the process and behavioural innovativeness of the event.

The degree of stakeholder influence and innovativeness is measured through a questionnaire. The questionnaire is completed by music event managers throughout the Netherlands.

The relation between stakeholder influence and internal innovativeness was measured through a regression analysis. There was made use of six models. Three models with regard to process innovativeness and three with regard to behavioural innovativeness. First the control variables were entered. Then the variables that represent stakeholder dependency were added to the model. And thirdly the customer attendance strategies were added. The results reveal some significant relations between stakeholder influence and internal innovativeness, most striking the aim on growth in terms of audience and process innovativeness.

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Table of Contents

Executive Summary ... 3

1. Introduction ... 6

1.1 Research questions and objective ... 7

1.2 Scope of the research ... 9

1.3 Reading guide ... 9

2. Theoretical Background ... 10

2.1 Defining Festivals and Events ... 10

2.1.1 Characteristics of the event industry ... 11

2.2 Stakeholder Influence ... 12

2.2.1 Measuring the influence of the key stakeholders ... 13

2.3 Defining innovation ... 15

2.3.1 Characteristics of innovation in organizations ... 15

2.3.2 Measuring the innovativeness of the event... 17

3. The Conceptual Model and Hypotheses ... 20

3.1 The independent variables ... 21

3.1.1 Stakeholder dependence ... 21

3.1.2 Customer attendance... 23

3.2 The dependent variable ... 25

3.3 Control Variables ... 26

4. Methodology ... 29

4.1 Research outline ... 29

4.2 Data collection ... 29

4.3 Development of the questionnaire ... 31

4.4 Variables ... 33

4.4.1 The dependent variable ... 34

4.4.2 The independent variable ... 35

4.4.3 Overview of the variables ... 36

4.4 Statistics ... 38

4.5 Quality criteria ... 39

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5.1 Respondents ... 40

5.2 Descriptive statistics of the events ... 40

5.3 Regression Analysis ... 44

6. Discussion ... 47

6.1 The control variables ... 47

6.1.1 Permanent co - workers ... 47

6.1.2 Entrée price ... 48

6.2 Stakeholder influence on innovativeness ... 49

6.3 Additional findings ... 50

7. Conclusion and Limitations ... 51

7.1 Conclusion ... 51

7.2 Implications for theory and practice ... 52

7.3 Future research and limitations ... 53

8. References ... 54

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1. Introduction

The globalization, the ever increasing possibilities of technology and the shifting interests of customers, drive event managers to innovation (Pegg & Patterson, 2010). The continuously changing environment causes events and festivals to develop through time. Although many events are held annually and often want to live up to a tradition, event managers cannot escape the need for innovation. The need for innovation can arise from different sources. The changing needs of customers in the marketplace for instance, but also a recession can feed the need for innovation. The decrease of sponsors through the financial climate, combined with governmental cuts in arts and culture, make it a challenge for event managers to keep up the same standard of performance. The influence of stakeholders represents an important part of this study. The purpose of this paper is to discover the power of stakeholder influence on innovation. The influence of these characteristics on the internal innovativeness of the event is discussed.

The importance of events and festivals is reflected by the literature on the subject. To begin with, meaningful is the community binding function it fulfills in many regions (Pegg & Patterson, 2010). Besides the fact that an event is a valuable way of spending leisure time, festivals and events provide a platform for social networking and communication (Jaeger & Mykletun, 2009). This function seems to get more and more important, and is often emphasized in the literature. Recreation as consumption has increased over the last decennia, Kwokbun and Sai - shing (2005) state that the need to attend events is coming from a “lost” feeling of togetherness. Not so long ago public celebrations were held in the marketplace or in the street, but these gatherings tended to disappear. The emergence of Amusement Parks can be seen as an indication for the increase of consumers’ interest for recreational activities. Events and festivals fulfill the need for people to share music, competition, eating and or drinking with a group of people for some days (Jaeger & Mykletun, 2009). The social aspect of attending an event, although significant is of course one side of the whole experience.

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that the old sectors seize to exist (Bell, 1973, Toffler, 1980). The growth of a new sector however is very interesting from an innovative perspective. Offering experiences together with your product or service is thus of interest for many businesses. It is argued whether experiences should be considered as part of a product or service or as a separate commodity. One distinction that can be made is that experiences are more intangible than services, and the mental journey of the customer is more emphasized (Sundbo, 2009). Events and festivals of course are clear examples of experience based consumption. The current stream of the experience economy make it interesting to look at innovations is this particular sector. The core competence of a successful event is offering a great experience. Events and festivals therefore offer an ideal context to look at how experiences can be innovated through time.

Aside from the gradual shift to a more experience focused economy, one has to take into consideration the current economic conditions. Events and festivals can´t escape the recession and the cutbacks from government, sponsors and consumers that go along with it. Events represent an image and can be seen as a brand. Event managers spend many years to build up a strong name. Every year the event has to meet the growing expectations of customers. When financial resources decrease, it is challenging to offer the same quality to those customers. Innovation then becomes crucial to survive.

1.1 Research questions and objective

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subject for further investigation in the field of music events and festivals. The main research question that is central in the framework of this study;

“To what extent do stakeholders influence the innovativeness of music events?” And the sub questions that will help answering the main question;

1. How can festivals and events be defined?

2. What are important characteristics of the event industry? 3. What is the influence of stakeholders?

4. How to measure the influence of the key stakeholders? 5. How can innovation be defined?

6. What are characteristics of innovation in an organization? 7. How to measure the innovativeness of events?

The presented sub- research questions will be attended in order to reach a clear overview of the most important factors that influence the innovativeness of the event. The first sub questions are about defining festivals and events. The next step is to look at the influence of stakeholders that lead to innovation. Events are organized with help of many different parties in an inter- organizational network where every party participates based on utilitarian interests (Larson, 2003). This illustrates the linkage of an event with its environment. When looking at the drivers behind innovation the focus will be on its stakeholders. Among the most important stakeholders, are governments, sponsors and customers. The last sub questions elevate on to what extent an event is designed for innovation. The internal innovativeness is measured by looking at the process innovativeness and behavioural innovativeness of the event. The current tendency is leaning towards experiences being innovated through a more collective organization of idea development (Sundbo, 2008). As innovation is seen as an important part of doing business within the organization, this will reflect the innovative output. Then the assumption can be made that events with higher internal innovativeness are better prepared for changes in the environment.

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1.2 Scope of the research

This research looks at a restricted number of stakeholders. Governments, sponsors and customers are seen as the most important stakeholders when looking at sources of revenues and therefore used in this study (Andersson & Getz, 2008). Differences in innovativeness might occur from differences in resources. An event can be financed in many ways; governmental contributions, sponsor incomes and ticket sales. The level of each source of income differs across the events. The dependence on each source might also differ through the events, and might have different effects on the innovativeness of the event. This is the starting point of the study, so music events are tested for the relation between their stakeholder strategies and their internal innovative operations.

As mentioned the focal country of the research is the Netherlands. Only music festivals and events are used for the purpose of this study. So no cultural, arts or sport events are added to the study group. Although some music events might have elements of these kinds of events in their program; the core business of the events studied here is music.

1.3 Reading guide

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2.

Theoretical Background

As mentioned in the introduction there have been several studies on event and festival management. At this stage the most interesting and relevant findings will be presented and discussed. This will be done in the order of the presented sub- research questions. So first it is meaningful to discuss shortly what characteristics make a festival, and why customers are drawn to them. Then the motivations behind innovation will be discovered followed by the way events are designed for innovation. The importance of the event environment is presented, for events have to deal with several important stakeholders in their community. This leads up to last section in which innovativeness of the event is discussed, and to what extent events are designed for innovation.

2.1 Defining Festivals and Events

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2.1.1 Characteristics of the event industry

Festivals are the places where people come together in this day and age. The rise in festivals has been enormous over the past years. From research by Bureau Respons (2013), the number of festivals isn’t increasing for the first in 20 years. Currently there are 698 theatre, music, and culture festivals in the Netherlands that attract more than 3000 visitors. This is five times as high as thirty years ago, which reflects the heydays that festivals went through. Now for the first time this number is stabilizing. These numbers show that the market is almost saturated, as is the intensity of the competition. The need for an event to be distinctive has never been as high as at this moment.

One explanation can be found in the rise of the experience economy by looking at the hierarchy of psychological needs of Maslow (1970). In todays’ consumer market the fundamental material needs are not that hard to fulfill anymore (Sundbo, 2009). The same goes for the intellectual needs of the most people; these can be swiftly fulfilled by the knowledge sharing systems that are in place nowadays. When the lower needs are dealt with, people can focus on the higher needs. With the time and money that are available to a lot more people, experiences can fulfill these self- actualization needs (Sundbo, 2009). Events might be a perfect solution for many people to fill this gap.

There have been several studies on the motivations of customers to attend a festival. Important reasons of customers to go to a festival are; to socialize, to party, to experience novelty and excitement, to enjoy the festival program, family togetherness, variety and escape (Faulkner et al, 1999; Nicholson & Pearce Tomljenovic, Larsson & Faulkner, 2001). Pegg and Patterson (2010) found that the variety of activities and the atmosphere of the festival were leading for customers to visit. Contributing to the great atmosphere was the friendly, casual and relaxed nature of the event. The variety of the event is something that event managers should keep a close eye too (Pegg & Patterson, 2010). The uniqueness of the program can be a distinctive quality with regard to the competition. Event managers must add or diversify the program they offer, to present a novel and appealing event that persuades the customer to pay for the experience all over again (Pine & Gilmore, 2000).

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outperform the competition year after year and keep the customers coming back, is challenging. Innovation plays a growing part in the success of an event. Before looking at how events are organized for innovation, the role of key stakeholders is discussed.

2.2 Stakeholder Influence

Crucial to any organization is to know the environment you operate in. The marketplace is influenced by governments, sponsors, customers and other stakeholders. Basically a stakeholder can be seen as any group of individuals who can affect or is affected by the achievement of the firm´s objectives’ (Freeman, 1984). This research looks at the degree to which an event is dependent on a certain stakeholder. Stakeholder dependency has been described as an inter- organizational relationship where one party has a high need and another has control over the recourses that satisfy the other’s need (Pfeffer & Salancik, 1978). The way the event deals with these relationships can mean the difference between failing and surviving. This research looks at the most important drivers behind innovation that stem from the event environment.

Getz (2002) questions the business operations, the durability and the effectiveness of festivals considering that many festivals stagnate and fail after some time. On the opposite there are festivals that are institutes in their region, and will be present for years to come. Reasons for why one event fails and other prosper, are not easily given. Though, it appears that many festivals lack a decent marketing orientation (Mayfield & Crompton, 1995; Lade & Jackson, 2004; Mehmetoglu & Ellingsen, 2005). This may be due to the non - profit nature of many festivals, but to be successful an event needs to create a relationship with its environment. So important is that events cultivate an approach that focuses on its environment.

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participation of the key stakeholders. However to overcome threats and eliminate weaknesses, events are forced to build strong ties with its stakeholders.

2.2.1 Measuring the influence of the key stakeholders

Events need to be creative in the ties it maintains with its immediate environment. This is true for the relations with sponsors, government, media and customers. Strong ties can be crucial in surviving and attaining the resources that are required. Through creating strong and weak ties with stakeholders in the close environment, events can be institutionalized in the region and assure its future. Focused here is on the most important stakeholders identified in the literature. Governments, corporate sponsors and customers have been identified as the greatest sources of income (Jaeger & Mykletun , 2009; Larson, 2003) , and can be classified as the key stakeholders.

Local governments have been known for playing an important role in relation to the event organization. This particular relation in described as dependence on local government that play a central role in making it possible to arrange the festival, among other things because they issue the necessary permits (Getz, Andersson & Larson 2007). The degree of influence of the local government is a clear indicator of stakeholder influence. Besides the local government, sponsors are identified as noteworthy stakeholders. Getz, Andersson and Larson (2007) note this as dependence on sponsors that contribute various kinds of resources in exchange for using the festival as a marketing tool. More than government dependence this is more of a two- way relationship. Sponsors want to see short term results and sponsors might not be the same every year. Government and sponsor dependency has been identified as the most important stakeholder relations aside from dependence on customer attendance. Therefore the influence of these two stakeholders will be focused on during this research.

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Special attention is there for the main reason that events exist; customer attendance. The degree to which the event put value on the need to attract and please customers however differs. These dynamics provide an interesting perspective on the role of the environment on the innovativeness of an organization. Needless to say, without any customers to attend the event, there would be no event. The strategy towards the customer can have an effect on the innovativeness of the organization. For example events that are dependent on ticket sales are more vulnerable than events that do not need ticket revenues (Larson, 2011). Events that depend largely on ticket revenue therefore may have different views on innovation. One view is that renewing the event might cause damage in the short term (Larson, 2011). Misjudging trends in the marketplace for instance might lead to a decline in attendance. Event organizers might be reluctant to take risks by making changes. On the long run however this lack of innovation might damage the image of the event. Customers don’t get excited anymore and attendance drops (Larson, 2011). Although it has been made clear from looking at earlier research, not all events put their faith solely in the hands of customer attendance.

Three strategies have been identified as indicators of a focus on audience (Andersson & Getz, 2008). First there is the growth strategy towards audience. An aim on attendance growth obviously can be seen as a sign for wanting more revenue from customers. It therefore shows a stronger reliance on customers and ticket sales.

Directing activities to one market segment is another strategy related to audience that can be applied by a festival. Aiming on one market segment can be seen as a threat or a weakness (Andersson and Getz, 2008) and therefore needs to be counteracted by the management of the event. Innovation is a tool that can be used in the strategy to cope with this challenge. Strategy first and foremost is to strengthen the points that make the festival successful and thereby minimizing the points that are a threat or weakness (Andersson & Getz, 2008).

A third strategy that has been identified by Mehmetoglu and Ellingsen (2005) is adopting a tourism orientation. Festivals that depend on entrée revenue have to be more marketing oriented, and a tourism orientation stimulates this. Two marketing strategies that can be played out by a festival are a focus on branding and/ or a focus on innovation (Andersson & Getz, 2008). In this study the emphasis lies on innovation.

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study. Especially the relation between the strategies and the innovativeness of the event will be among the main objects to be discovered.

2.3 Defining innovation

So offering an inviting experience is the first challenge for an event manager. Once this has been achieved, the second challenge is already waiting; getting the customers to come back. The ability of an organization to innovate is regarded as one of the most decisive factors in its survival and success (Doyle, 1998; Quinn, 2000). Innovation can be defined as the intended employment within a role, group or organization of ideas, processes, products or procedures, novel to the relevant parties, designed to significantly benefit the relevant objective (West & Farr, 1990). Then there is a distinctive difference between innovations and innovativeness in the literature. According to Helen (2004) innovation seems to incorporate the adoption and/or implementation of “new”, defined in rather subjective ways, whereas innovativeness appears to embody some kind of measurement contingent on an organization’s proclivity towards innovation. The difference between the two concepts is that innovativeness says more about the mindset throughout the organization, where innovation can be a more isolated event. When discussing innovation in organizations, the concept of innovativeness as it is defined by Helen (2004), will be used as the underlying principal.

2.3.1 Characteristics of innovation in organizations

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mistakes are repeated (Winch, 2000). So in project teams, which have a fixed time in which they have to attend to a repetitive task, many changes in performing this task are not appreciated (Larson, 2011). For an event that has to perform largely the same end- product every year, one could imagine falling prey to the innovation paradox.

So clearly there are some pitfalls on the road to innovation. Of course having an experienced project team in place can also be beneficial. Larson (2011) found that the organizational culture that develops over the years contributes to a productive sense of commitment. A shared identity combined with shared expectations creates a bond in a team. The culture that develops provides conditions for collective actions (Larson, 2011). The culture is a considerable factor on the innovativeness of an organization. Important for innovation is to have an environment that stimulates creativity (Amabile, 1997). As the workgroup meets continuously to brainstorm about changes, an atmosphere of sharing is beneficial. The members must feel free to ventilate any ideas, and not feel ashamed or afraid to do so (Larson, 2011). The event managers can overcome the pitfalls by stimulating creativity in their operations.

In order to stimulate creativity it is beneficial to create a platform where ideas can be ventilated. One way of doing this might be by having brainstorm sessions where people can bring new ideas to the table. The quantity of ideas, freely coming up with ideas, room for mistakes and stimulating the combination of ideas are aspects that are part of this instrument (Osborn, 1957). An emphasized advantage of this method is that ideas presented by a coworker might inspire other team members, which synergizes the idea generation process (Osborn, 1957). However although other studies support these statements, there are also many studies that find that brainstorming is not the best way. They found that individual co- workers come up with more and better ideas independent form the group, than groups that have brainstorm sessions (Diehl & Stroebe, 1987). Despite these contradicting stands on how an organization can best innovate, there needs to be a culture of idea sharing in place (De Dreu et al., 2011).

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especially is true for the high- profit- oriented part of it (Sundbo, 2009). The emphasis will lie on the business processes that run in the event organization.

2.3.2 Measuring the innovativeness of the event

The extent to which an organization is designed to be innovative is known as organizational innovativeness. In other words it is an organization’s overall innovative capability of introducing new products to the market, or opening up new markets, through combining

strategic orientation with process and behavioural innovation (Catherine & Pervaiz, 2004). Process innovativeness and behavioural innovativeness are

important parts of an organisation’s innovative capabilities. These two capabilities present the internal innovativeness of an organisation. These factors therefore enjoy special attention because the research revolves around the internal innovativeness of the organisation.

Earlier, technological innovation was discussed. This aspect is integrated in the process innovativeness of the organisation. Kitchell (1997) discusses that technological innovativeness can be best researched in the light of the nature and process of innovation adoption. Others explain technological innovation as a part of machinery and production methods as measures for technological innovativeness (Avlonitis et al. (1994). Catherine and Pervaiz (2004), contribute to the question by stating that technological innovativeness is either part of the product innovativeness like new technological applications in new products, or part of process innovativeness that is about technological improvements in equipment’s or work processes. This leads to the following definition of process innovativeness; The introduction of new production methods, new management approaches, and new technology that can be used to improve production and management processes (Catherine & Pervaiz, 2004). This approach will be used in this study, so technological innovativeness as a part of process innovativeness.

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the team's adaptability to change (Lovelace et al., 2001). This is not merely the sum of individual innovativeness, but a synergy as a result of effective group dynamics. The innovativeness of the management can be defined as the willingness to change, and contribution to stimulate novel ways of doing things, as well as the willingness to develop novel ideas (Rainey, 1999). When behavioural innovativeness is present on the three levels, an innovative culture can grow, and the general acceptance of novel ideas and innovation rises (Catherine & Pervaiz, 2004).

So the degree to which an event is internally focused on innovation can become clear from several factors. An important indicator as just pointed out is the culture of an organization. The way co- workers are stimulated to innovate clearly is a strong measure of this. Then there are the possibilities of technology that are constantly expanding, and it is interesting to see to which degree events apply new work processes. Lastly there is the willingness to innovate. The value that the event managers themselves place on innovation is an indicator of this. The priority of innovation within the event organization is a pillar of its overall focus on innovation. The identified factors that indicate the motivation to- and the design for- innovation are presented in the next section that contains the conceptual model.

Concept Definitions

Festivals and events ‘A public themed celebration’ Getz (2005)

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Stakeholder dependence ‘An inter- organizational relationship where one party has a high need and another has control over the recourses that satisfy the other’s need’ Pfeffer & Salancik, (1978) Innovation and innovativeness ‘Innovation seems to incorporate the adoption and/or

implementation of “new”, defined in rather subjective ways, whereas innovativeness appears to embody some kind of

measurement contingent on an organization’s proclivity towards innovation’ Helen (2004) Organizational innovativeness ‘An organization’s overall innovative capability of introducing new

products to the market , or opening up new markets, through combining strategic orientation with process and behaviour innovation’ Catherine & Pervaiz (2004) Behavioural innovativeness ‘The sustained behavioural change of the organisation towards innovations’ Avlonitis et al., (1994) process innovativeness ‘The introduction of new production methods, new management

approaches, and new technology that can be used to improve production and management processes’

Catherine & Pervaiz, (2004)

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Internal innovativeness of

the event

- Process Innovativeness

- Behavioural Innovativeness

Stakeholder influence

H1: Stakeholder dependence

• H1b: Government for grants (-) • H1c: Major sponsors (-)

• H1d: Small sponsors (-) • H1e: Paying customers (+)

H2: Customer attendance strategies

• H2a: One market segment for audience (-) • H2b: Growth strategy in terms of audience (+)

• H2c: More tourism oriented (+)

Control variables

• - Size

• - Age of event • - Aim for profit

3. The Conceptual Model and Hypotheses

Figure 1: Conceptual model

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add value to the strength of the test results are also addressed in this section.

In this research the focus is on two relations. The first one is the relation between stakeholder dependence and the internal innovativeness of the event organization. And second the relation between customer attendance strategies and the internal innovativeness of the event. The dependent variable here is the internal innovativeness of the event, consisting of process innovativeness and behavioural innovativeness. The independent variables that measure the dependent variable are stakeholder dependence and customer attendance. These are measured through the earlier introduced indicators of stakeholder influence. The natures of the relations are further discussed in the next section.

3.1 The independent variables

3.1.1 Stakeholder dependence

As can be drawn from the figure, the motivation to innovate contains the independent variables that influence the innovativeness of the event. There is looked at the degree of motivation that originates from outside of the organization. Two important pillars of motivation, already introduced in the previous parts will be tested here; stakeholders influence and customer attendance. These will lead to the formulation of eight hypotheses. Stakeholder influence is about the forces that events endure from the environment. These can stem from sources like sponsors, governments or customers. When looking at the influence of stakeholders on an event, a distinction can be made. The customer is generally regarded as the most important stakeholder. Customer attendance can be seen as the end product of event organizations’ efforts, while the stakeholders’ like sponsors and government are more at the preparation stage of the event. The most important distinction however is the difference in reliance on the several stakeholders between the events (Anderson and Getz, 2008). That is why customer attendance is discussed separately.

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that plays a central role in making it possible to arrange the festival, among other things because they issue the necessary permits (Getz, Andersson & Larson, 2007). So organizations for one need the local authority to be allowed to host the event, but may also depend on their financial contributions. Events that depend highly on government agencies are assumed to be less innovative because they are assured of resources, and therefore have to invest less to attract customers.

H1a: Dependence on local authorities is negatively related to the innovativeness of the event.

H1b: Dependence on government for grants is negatively related the innovativeness of the event.

Besides dependence on government agencies there is the dependence on sponsors as a stakeholder. Earlier defined was the dependence on sponsors that contribute various kinds of resources in exchange for using the festival as a marketing tool (Getz, Andersson & Larson, 2007). So this is a clear reciprocal relationship. Sponsors more than local governments use events as a marketing tool. The group of sponsors might differ through the years. This goes for the major sponsors as well as the smaller ones. Important for the organization, is that the loss of sponsors is taken care of with bringing new sponsors in. Sponsors are a significant source of resources so efforts should be made maintaining sponsors. It is hypothesized the greater the dependence on sponsors the less innovative the event needs to be. This leads to the formulation of the following two assumptions.

H1c: Dependence on major sponsors is negatively related to the innovativeness of the event.

H1d: Dependence on small sponsors negatively related to the innovativeness of the event.

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charging events are generally dependant on sponsors and customer attendance. When comparing the two sets of financial sources one is more secure than the other. Relying on sponsors and governments seems like a stronger financial position, than when relying on customers to show up. Events that depend on ticket sales need to reduce the high risks (like the weather) that are associated with sales variability (Anderson & Getz, 2008). Therefore when attracting customers is more crucial to an event the assumption is that there will be invested more on innovation. The need for a high number of paying customers is simply higher. Therefore the innovativeness of these events is also assumed to be higher.

H1e: Dependence on paying customers is positively related to the innovativeness of the event.

3.1.2 Customer attendance

The second hypothesis is closely related to the first but looks more at the core purpose of events; namely attracting customers to the event. There will be looked at the importance that an event attaches to this relation. Getz et al., (2007) describe this relation as the dependence on customers that are the most important stakeholder, if the festival is going to have any chance of surviving in the long term. So for every event it means it has to establish a long lasting customer relationship. Larson (2003) states that in order to avoid a decline in attendance, developing and innovating the festival product is necessary. This is a process in which new ideas are created and developed simultaneously with adapting to social trends (Larson, 2003). Crucial to survival of events of course are financial resources. There might be different sources of income for music events. Governmental support, sponsor incomes and ticket sales are the most important revenue streams. Events that rely on customers are however more vulnerable to financial cutbacks. Customers get used to a standard of quality, meaning events need to be able to offer the same standard of performance even if their resources decrease (Larson, 2009). Events that depend more on customers are more hurt by financial cutbacks, because they need to perform better to attract customers.

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for their resources but that there was a difference between events that largely depend on local authorities and events that largely depend on paying customers. This dependence might have an effect on the innovativeness of the event. Because it was also noted that free events attract relatively more customers than entrée charging events (Andersson & Getz, 2008). This seems a logical observation bearing in mind that these were publically financed events. They seem less dependent on entrée revenues and therefore don’t have the barrier of the entrée fee to attract customers. Events that rely more on customer attendance are therefore more vulnerable for declining attendance than other events. So the assumption stands that events that there is a positive relation between relying on customer attendance and innovativeness.

Three customer attendance strategies that have been discussed earlier are used to test the importance of customer attendance for an event. Adapting an audience growth strategy naturally emphasizes the importance of customers for an event. The same goes for having a tourism orientation; it is specific way to broaden your customer base. The first hypothesis however is testing the dependence on one market segment for audience. Aiming on one market segment reduces growth possibilities. This strategy is therefore hypothesized to be negatively related to innovativeness.

H2a: Being dependent on one market segment for your audience is negatively related to the innovativeness of the event.

H2b: Applying a growth strategy in terms of audience is positively related to the innovativeness of the event.

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3.2 The dependent variable

The design for innovation of an organization can be measured by looking at certain indicators of innovation. Important is that the emphasis here lies on an organization’s proclivity towards innovation (Helen, 2004). This basically says something about the willingness to innovate as well as the degree to which an innovative culture is present within the organization. The innovativeness of an organization can be seen as a composition of process innovativeness and behavioral innovativeness.

Behavioral innovativeness has been described as the sustained behavioural change of the organization towards innovations’ (Avlonitis et al., 1994). Important is this respect is implementing an organisational culture that stimulates innovation. Making co-workers aware of the need to innovate is a significant part of this process. An event that establishes an innovative culture inherently has employees that support that culture. Such an event can be described as an organization that constantly guides organizational members to strive for innovation and stimulates a climate that is conductive to creativity (Levent & Mehmet, 2004).

So an important catalyzer of innovation is creativity (Amabile, 1997). Creativity can arise from a structured process, but teams can also be forced to be creative through time constraints and environmental uncertainty. Improvisation can be an important source of innovation (Larson, 2011). Brown and Eisenhardt (1995) found that teams that are more experimental and improvise more, develop ideas faster. Improvisation challenges group members to come up with new ideas; it stimulates creative thinking, and may lead to a successful innovation. Improvisation needs to be supported by the work environment. There needs to be a positive relation between the members, where mistakes are tolerated and criticism is not given needlessly. It is interesting to see whether the organizational culture of an event is prepared for unexpected happenings. So an organization that stimulates its co- workers might be more innovative than organizations that put less emphasis on innovation.

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customer insight for instance. But technology can also be used to enhance the performance of the artists, like better sound systems for instance. The focus however will lie on the processes that stimulate innovation during the event. So apart from stimulating the co- workers to be innovative it is an indicator for innovativeness to constantly improve the technologies that are used in the organisation. This is also known as process innovation, the introduction of new production methods, new management approaches, and new technology that can be used to improve production and management processes (Catherine & Pervaiz, 2004).

Process innovation and behavioural innovation are indicators of internally focused innovation (Ibrahim et. al, 2009). The extent to which an organisation is internally focused on innovation says something about the priority that an organisation has to innovate. This is why these aspects of innovative capabilities are highlighted here. Opposite from the internally focused innovation there are externally focused capabilities consisting of market innovation and product innovation (Ibrahim et. al, 2009). These are innovative capabilities that are directed outward and that say less about the degree to which an event has an innovative course.

So innovation can emerge in different ways. It can be a structured brainstorming session that generates ideas, or a creative solution for a problem at hand. The importance of renewing the event has been very clear in the literature. The emphasis of events on the process behind innovation is a strong predictor of the innovativeness of the event. The next step is discussing the control variables that are used in the study.

3.3 Control Variables

Important when conducting the research as it is lined out above is to account for factors that can influence the results. The variables that need to be controlled for are identified by looking at previous studies. The control variables that will contribute to the value of the independent variables are the following; the size of the event, the number of times the events is held, and their aim for profit.

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Both are characteristics that make them more vulnerable than bigger events, and might relate to the innovativeness of an event. It provides legitimate reasons to control for the size of the event. Audience size and attendance are the principal means by which festivals evaluate their success according to Rolfe (1992). So size is an important measure of success and therefore can be related to the innovativeness of the event. Further measures of size are identified by Jaeger & Mykletun (2009), namely budget and employment. So there is controlled for the amount of budget and the number of own staff as well as number of volunteers.

The second control variable is the number of times the event is held. Getz (2002) observed that many festivals and events stagnated over the years or even failed. This is mainly due to a lack of keeping customers interested. This indicates that there is less innovation as the event is held more often. Age is a difficult variable in this respect. Andersson and Getz (2008) claim that younger events are often more flexible, and could find efficient and effective new ways of organizing an event. Also the structure and processes behind the event seem to change very slowly making events suffer from inertia. These are clear indicators of older events being less adaptable then younger events. However it has also been observed that older events are better equipped for competition through their experience, and therefore have more innovative strength (Andersson & Getz, 2008). So age is a difficult variable, but certainly one that has to be taken in mind when conducting this research.

The third variable that is accounted for is the aim on profit of an event. This is strongly linked to the way the event is financed. Publically financed events are mainly not-for -profit and might be less focused on innovation than for- profit events. Andersson and Getz (2008) found that every event depends on stakeholders but that the relative power of stakeholders is dramatically different. So the way the event is financed indicates where the ownership of the event lies. They also conclude that for profit must be more customer and marketing oriented than not- for- profit events. Logically follows that for- profit events adopt a stronger focus on innovation than not- for- profit events. Thereby the height of the entrée price is also included in the measurement. The focus on profit is consequently the third variable which will be controlled for.

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4. Methodology

4.1 Research outline

This study builds for a major part on quantitative data. As has been outlined earlier in the research, the main object of this research is to test stakeholder influence on the innovativeness of music events. A quantitative approach was chosen because unlike qualitative research it allows for comparing the characteristics of the events (Thomas, 2003). Comparing quantities throughout the music event industry of the Netherlands fits the purpose of this paper. Questionnaires were sent out to a sizeable number of event organizers to attain the required data. In preparation of this questionnaire qualitative research was conducted to support the research framework. This was done because qualitative research ensures getting more insight in the characteristics that you want to measure (Thomas, 2003). Four semi- structured interviews were held to gain insight in the event industry and to make sure the right questions were asked. The findings from the qualitative research supported the structure of the further research.

4.2 Data collection

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online- survey platform was used to develop the questionnaire, while internet research provided the mail addresses of the event organizers. The questionnaire was diffused through mail, and when a telephone number was available a call was made, when no response is given. In the questionnaire the seven- point Likert scale is applied, for the respondents to express their standpoint. The seven –point scale is used instead of the regular 5- point scale to get a clearer gradation between the respondents. The acquired data will lead to insights with regard to the chosen research topics.

Before however the questionnaire was diffused among the event organizers, some research about the topics was necessary. To gain insight in the world of events four semi- structured interviews were held with experts1 on the field. Of these experts three represented an annually held music event, and another provided supporting activities for music event organizers. The practice- oriented approach of these event organizers/ experts contributed in gaining a perspective of innovation in event management. Their experiences combined with the theoretical foundation provided the knowledge to compose a relevant and to the point questionnaire.

The data that is gathered through the questionnaire will provide clear indications of the drivers behind innovation. The motivations for innovative behavior will become clear and also what inspires the event to innovate. Aside from the need to innovate there will be looked at the innovativeness of the event. It is interesting to see at what degree events themselves emphasize innovation in their organization. The extent to which events invest time and resources in innovation shows the value that organizers place on renewing. The most important drivers will be identified, and this will explain why events innovate.

When looking what event organizers can innovate regarding the experience they offer, several areas can be distinguished. Innovations can be found in the design of the event, for instance with regard to marketing and durability. However the motivation to innovate and the extent to which an event is organized is the pith of the matter in this paper. So the attitude the events take towards innovation is researched. Before discussing the variables however the process of developing the questionnaire is discussed.

1

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4.3 Development of the questionnaire

Before distributing the questionnaire to the selected event organizers, it is important to know that the right questions are asked. The process of composing the questionnaire therefore is of interest. This paper is built on other research and uses topics that are current and relevant. So at the same time insights are necessary from people that can be called experts in the field of organizing events. As stated this was accomplished by arranging four semi- structured interviews with different event organizers.

The medium of semi- structured interviews was chosen to gain input from the perspective of the organizer. The semi- structured approach allows for a more informal line of questioning and subjects can be steered during the interview. The knowledge from the organizers added value to the questionnaire development in the selection of relevant issues.

There also was made use of research that looked at the innovativeness of an organization although looking at other kind of organizations. The questions that measure the variables therefore were used in this questionnaire. To assure for reliability and validity in the data gathering process there was chosen to use validated scales and measures. Earlier measures of respectively stakeholder dependence and innovativeness were used to attain the right quality of answers. Thereby multi- items were adopted to measure the construct. For the large part measures were used that were tested and validated in earlier research. From related research the measures that had the best fit with this research were selected. Measures that were used were that of Catherine and Pervaiz (2004), along with insights of Ibrahim et al. (2009), which study organizational innovativeness. Their study discovered the innovativeness of firms which is strongly related to the main question of this paper. The same goes for the recent developed innovation survey of Rao and Weintraub (2013) that was consulted in building the questionnaire. Besides the design for innovation, the way the event is influenced by stakeholders is an important part of the study. On this side of the spectrum was made use of the research done by Andersson and Getz (2008). The statements that were presented to the respondents in their study showed similarities with the course of this paper.

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work with them”. Besides that they made use of statements about dependence on stakeholders with 1= “Completely disagree” and 7= “Completely agree”. Catherine and Pervaiz (2004) that studied organizational innovativeness used the same type of scale where 1=strongly disagree, 2=disagree, 3=slightly disagree, 4=neither disagree nor agree, 5=slightly agree, 6=agree, 7=strongly agree. A neutral answer choice was given, "neither disagree nor agree", to reduce uninformed response, because it insures that respondents do not feel obligated to answer every questionnaire item (Wilcox, 1994). In order to keep the same level of validity and reliability of the survey the decision was made not to change the scales or the characterization of the items. One item that measures behaviour innovativeness however needed to be slightly adapted in order to make it applicable to the respondent.

Although the questionnaire consists of measures that have been previously used, it was pre- tested by two peers to see whether the question content was understandable (Blumberg et al., 2008). Before the questionnaire was definitely distributed it was also important to examine whether the results could be processed in the right way.

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4.4 Variables

At this stage the variables that will be tested in this study are presented. These are the variables that have come out from the literature and fit the research. First an overview is given of the authors that shaped and measured the variables in earlier studies. Then the items that measure the dependent variable are shown. The following table naturally captures the items that measure the independent variables process and behavioural innovativeness. Ended is with a complete overview of the definitions, operationalization and measurement scales of the variables.

First an overview is presented of the variables and the references that go with them (Table 2).

Table 2. Used References and Variables

Stakeholder Influence Behavioural innovativeness Process innovativeness

Getz, Andersson & Larson (2007)

Andersson & Getz (2008)

Rainey (1999)

Hurt (1977) Catherine & Pervaiz (2004)

Lovelace (2001) Avlonitis (1994) Kitchel (1997)

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4.4.1 The dependent variable

The dependent variable can be summarized as stakeholder influence and for the purpose of this study, is divided in stakeholder dependency and stakeholder strategies aimed at customer attendance. Stakeholder dependency is measured by the perceived dependence on stakeholders. The items that relate to governments, local and nationwide, sponsors, major and small, and customer attendance were selected for this research. The variables that measure these items are listed below (Table 3). The customer attendance strategies that measure the approach of the organization towards its audience are also included.

Table 3. Stakeholder influence measures

Stakeholder Influence Stakeholder dependence

On our local authority (municipality).

On government agencies that give us grants. On our major corporate sponsors.

On our small corporate sponsors. On paying customers.

Customer attendance strategies

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4.4.2 The independent variable

In this research the relation between stakeholder influence and innovativeness is leading. So the next step is revealing how to measure internal innovativeness. The independent variable, internal innovativeness, consists of process innovativeness and behavioural innovativeness. So the innovativeness of the organization is measured though items that fit respectively process and behavioural innovativeness. The items that measure the variables regarding the innovativeness of the organization are shown below (Table 4).

Internal Innovativeness Process innovativeness

Item Key Variable

1. We are constantly improving our business processes.

2. Our company changes production methods at a great speed in comparison with our competitors.

3. During the past five years, our company has developed many new management approaches. 4. When we cannot solve a problem using conventional methods, we improvise on new

methods.

Behavioural innovativeness

Item Key Variable

5. There is a lot of support from managers if employees want to try new ways of doing things. 6. In our company, we tolerate individuals who do things in a different way.

7. We are willing to try new ways of doing things and seek unusual, novel solutions. 8. We encourage people to think and to behave in original and novel ways.

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4.4.3 Overview of the variables

Completed is now with an overview of the presented variables by linking them to literature, the definition of the variables and the operationalization that indicates how the variable is measured. The measurement scale is also included in the table (5).

Variables Author Definition Operationalization Type Scale2

Dependence on government Getz, Andersson and Larson (2007) Dependence on local government that play a central role in making it possible to arrange the festival, among other things because they issue the necessary permits.

Events that show greater dependence on local government and

authorities that issue the necessary permits are less innovative. Independent Ordinal Dependence on Sponsors Getz, Andersson and Larson (2007) Dependence on sponsors that contribute various kinds of resources in exchange for using the festival as a marketing tool.

Events that are show greater dependence on sponsors are less innovative. Independent Ordinal Dependence on customer attendance Getz, Andersson and Larson (2007) Dependence on customers that are the most

important stakeholder, if the festival is going to have any chance of surviving in the long term.

Events that show greater dependence on customer attendance are more innovative.

Independent Ordinal

2

37 Behavioural

Innovativeness

Avlonitis et al., (1994)

The sustained behavioural change of the

organization towards innovations.

Events that show higher levels of behavioural change towards innovation have a higher level of innovativeness Dependent Ordinal Stimulation of co- workers Levent and Mehmet, (2004) An organization that constantly guides organizational members to strive for innovation and stimulates a climate that is conductive to creativity.

Events that constantly stimulate co-workers to be innovative are more innovative. Dependent Ordinal Process innovativeness Catherine and Pervaiz (2004) Introduction of new production methods, new management approaches, and new technology that can be used to improve production and

management processes.

Events that introduce and improve new production methods of process innovative are more innovative. Dependent Ordinal Size Rolfe (1992) Jaeger and Mykletun

Audience size and attendance are the principal means by which festivals evaluate their success.

Further indicators of size are events' budgets and

Events with higher audience numbers, more co-workers and a higher budget are more

innovative than smaller events.

38 (2009) potential for employment,

as well as how they are staffed and financed.

Aim for profit Getz (2005), (2007) Commercially

motivated events, which are events constructed so that the organizers can make a profit.

Commercially motivated events are more innovative.

Control nominal

Table 5. Overview variables; definitions, operationalization and measurement scales.

4.4 Statistics

After the required data is attained the analysis of the results is the next stage in the research. The data is analyzed by making use of statistical program SPSS 20. First descriptives, frequencies and the correlation table are analyzed in order to get an insight in the events. With regard to the independent variable first a factor analysis was performed.

The factor analysis was conducted to see whether the items used to test the dependent variable measure indeed the same construct. The principal components method was applied and specified on varimax rotation. Then the KMO and Bartlett’s Test was consulted to make sure the a factor analysis is appropriate and above 0.50, this proved to be so. For process innovativeness (KMO = .690, Sig. = 0.00), as well as for behavioural innovativeness (KMO = .747 Sig. = 0,00). The reliability also tested satisfactory for both variables (Cronbach’s Alpha > .70). After analyzing the inter- item correlations it was decided to remove the items that were lower than .3 on correlation. This increased the Cronbach’s Alpha level to a higher level of reliability. For the variable process innovativeness it means that item 4 is removed and for behavioural innovativeness item 5. The analysis thus will be executed without these items.

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4.5 Quality criteria

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5. Results and Analysis

5.1 Respondents

For this research, festival organizers all around the Netherlands were asked to fill in the questionnaire. From 242 event organizers that were send the questionnaire 89 responded within a week, that is a response rate of 37%. After sending out a reminder this number rose to 118 (49%). This is also the sample size that was used for the data processing. Not all questionnaires were completed by the event organizer before sending it in. Especially the amount of budget many event organizers were reluctant to provide. The missing values were when possible completed after further research, compensated by the mean or in some case not used for the analysis.

5.2 Descriptive statistics of the events

When looking at the sample characteristics, several observations can be made. The sample for instance includes small festivals with only 110 visitors as well as big festivals with up to 1.500.000 visitors. There is a festival with 25 people that work for the festival on a daily basis, but most of them are run by volunteers. Budget also differs immensely throughout the sample. The smallest budget is €1000, - while the largest budget amounts to €10.000.000, - (table 6). Further it is important to know that 105 of 118 festivals state that their event is not commercial.

Item Outcomes

Respondents 118

Visitors 110 – 1.500.000

Number of permanent Co-workers 0 - 25

Number of Co-workers at peak 0 – 6.000

Budget €1.000 – €10.000.000

Commercial Yes - No 10,2% - 89%

41 40% 21% 25% 14%

Entrée price

Then it is interesting to see an indication of the amount events charge for the event. Figure 2 provides an overview of the percentages and the price range of the 118 music events. It shows that a large part of the sample offer free entrance. Most of the events charge a price between €0,- and €30,- , and a few are somewhat more expensive and charge over €30,- . The entrée price might say something about the innovativeness of the event, because it may reveal the dependence on customers of the event.

Figure 2. Pie chart entrée price

The characteristics presented here are mainly the control variables that have been discussed earlier. They provide valuable information about the sample and might influence the outcome of the results. So it is important to include these variables in the analysis.

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innovativeness and the remaining items. For one, the number of permanent co –workers correlate with the items of process innovativeness. Further there is some correlation between dependence on local authorities and innovativeness, and pursuing a growth strategy and innovativeness.

The findings from the correlation table (7) are given a follow up through the regression analysis.

5.3 Regression Analysis

This section shows the results of the tested hypotheses after regarding the coefficients of the variables in an OLS regression. The dependent variable internal innovativeness is measured through two components, these being process innovativeness and behavioural innovativeness. These components on their turn are measured by each three items that are indicators of these variables. The main part is to test the influence of stakeholder dependence and customer attendance with respect to the internal innovativeness. Thereby the introduced control variables will be tested in relation to internal innovativeness. This is done by a hierarchical regression analysis with use of the Enter method.

To make the test applicable the mean of the items is computed to represent respectively the process innovativeness and behavioural innovativeness of the organization. It is a three- stage design meaning that three models are used that capture an ascending number of variables. Because this procedure is done for process innovativeness and behavioural innovativeness, this results in six models. The variables have been grouped in the way that was presented in the literature. In the first model the control variables are included. The second model adds the variables that reveal stakeholder dependence to the analysis. Finally in the third and last model all variables are included (table 8).

Results of Regression Analysisª

Process innovativeness Behavioural innovativeness

Variables Model 1 Model 2 Model 3 Model 4 Model 5 Model 6

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ªStandardized regression coefficients are reported Standard errors in parentheses

** P< 0,01 *P< 0,05

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As can be deduced by looking at the R squares and the significance level some conclusions can be drawn from the regression. First of all it can be observed that only in the case of process innovativeness significant relations are found. This is the true for the independent variables; dependence on paying customers and a growth strategy towards audience. However the relation between dependence on paying customers and the independent variable is a negative one, whilst a positive relation was predicted. About the control variables can be said that the number of permanent co- workers and the entrée fee indeed display a significant relation with process innovativeness. For behavioural innovativeness none of the tested relations are significant (Table 9).

Hypothesis Type of analysis Process

Innovativeness

Behavioral Innovativeness Dependence on local

authority

Regression model 2 & 5

Rejected Rejected

Dependence on

governments for grants

Regression model 2 & 5

Rejected Rejected

Dependence on major sponsors

Regression model 2 & 5

Rejected Rejected

Dependence on small sponsors

Regression model 2 & 5

Rejected Rejected

Dependence on paying customers

Regression model 2 & 5

Rejected Rejected

One market segment for audience

Regression model 3& 6

Rejected Rejected

Growth strategy towards audience

Regression model 3& 6

Accepted Rejected

More tourism - oriented Regression model 3& 6

Rejected Rejected