Kretschmer, Klimis, and Choi (1999)
|Kretschmer, Klimis and Choi (1999)|
|Title:||Increasing Returns and Social Contagion in Cultural Industries|
|Author(s):||Kretschmer, M., Klimis, G. M., Choi, C. J.|
|Citation:||Kretschmer, M., Klimis, G. M., & Choi, C. J. (1999). Increasing returns and social contagion in cultural industries. British Journal of Management, 10(s1), 61-72.|
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|About the Data|
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|Cross Country Study?:||No|
|Government or policy study?:||Yes|
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A formal definition of cultural industries is developed following four distinct features of cultural goods: (a) oversupply, (b) quality uncertainty, (c) network effects and (d) demand reversal. Drawing on economic and socio-psychological notions of ‘network’, increasing returns and social contagion effects are distinguished. Increasing returns may govern the adoption of standards when choices are binary, social contagion explains the diffusion of cultural goods when choices are multiple. Together, the four structural features delineating cultural industries account for curious competitive dynamics prevalent in cultural markets, such as the notorious 10 : 90 proportionality (under which 10% of cultural goods account for 90% of the market), causal ambiguity about the reasons for success, and the formation of fashions. Six managerial recommendations are advanced, focusing on a criticial circulation point triggering self-sustaining diffusion patterns. Finally ‘project-based enterprises’ and ‘network forms of governance’ are identified as the organizational forms most suited to the dynamics of the cultural markets.
Main Results of the Study
- In order to benefit from social contagion and increasing returns, goods in cultural industries have to reach a critical mass of circulation.
- The managerial recommendations researchers derived from the structural features of the cultural industries are consistent with organizational forms favoring rapid responses in a climate of competition.
- Analysis suggests that ‘critical mass management’ relies heavily on the integration of social structure in at least two ways (1) cultural industries draw from a pool of professionals that is not organized as a market; and (2) cultural industries are organized around ‘boundary spanning’ contacts who have the ability to cross social networks.
- Analysis suggests that cultural exchange conditions favor a particular form of network governance.