Creativity and Organization

Sounds a bit like an oxymoron, I know, but a new study outlines the issue this way:

Management faces a fundamental tradeoff in organizing such activities. On the one hand, since creativity cannot be achieved by command and control or by monetary incentives, internal/contractual production of creative products is plagued by hazards arising from their fundamental characteristics: extremely high input, output and market uncertainty, and the inherent informational advantages of creative talent. Procuring highly creative products in the market place, though, exposes the distributor to a fundamental risk: independently produced creative goods are generic distribution-wise. Thus, in procuring creative products in the marketplace, distributors face the unavoidable winner's curse risk. Since this risk is, to a large extent, independent of the creative nature of the product, the higher the creative content, the higher the relative hazards associated with internal or contractual production. Thus, internal/contractual production of creative goods will tend to be less prevalent the higher the creative content associated with its production. We apply this insight to the evolution of the U.S. film industry in the mid-XXth century.  ...  We develop empirical implications which we test by analyzing in detail the decision by distributors to produce films internally or to procure then in the market place, in the face of an increase in the demand for creative content.

The study by Ricard Gil and Pablo Spiller is here (pointer via Organizations and Markets).

Comments

[Kelly Shaw]

This is quite cryptic.
The authors seem more concerned with distributors of creative content than the creative originators.
When engaging creative talent (whether internal or contractual) management needs to be sure the talent's contributions are fully valued and rewarded in order to enable innovation and prolific output. Failing here should be the demise of management not creativity.
A few stories come to mind.
John Fogerty - an originator who could not perform his own songs due to unfortunate distribution agreements.
Do these agreements still exist?
If so, are they really creating value?
Keanu Reeves - gave up performance fees in The Matrix for a piece of the distributors pie. A risk that paid off for Keanu as one of the originators.
Pearl Jam - fights Ticketmaster and labels, in the end producing and distributing an amazing amount of original material on their own.

Creative Organization or Creative Management are only contradictory when creativity is misunderstood.

Thanks for allowing me to join the conversation.

[Michael R. Bernstein]

Richard, I found a free version of the same paper here:
http://imio.haas.berkeley.edu/spiller090607.pdf