Innovation and Creative Industries

The Innovation and Creative Industries project explores the creation, commercialization, and diffusion of ideas. Our central objective is to draw economic insights from the creative industries that are broadly applicable to strategy and competition across multiple industries.

The “creative industries” considered here include industries that are either heavily science- or arts-based, where creative talent is a key input, ideas and intellectual property are key assets, and creative goods and services are key outputs. Since many traditional “humdrum” industries are adopting certain characteristics of creative industries to increase their competitiveness, insights from the creative industries have increasingly broad applicability.

Why are science- and arts-based industries grouped together as creative? Technology and certain arts and entertainment ventures have many similar economic characteristics. For example, biotechnology projects and film projects are both characterized by high fixed costs and relatively low variable costs and at the same time face extreme risk-return payoffs with high levels of uncertainty. Both types of projects require managing highly skilled and creative employees who often respond differently to incentive systems than the majority of the labor market. Both science- and arts-oriented industries are particularly influenced by domestic and foreign norms for sharing, protecting, managing, and enforcing intellectual property rights. Furthermore, due to the potential for market failure, governments are actively involved with policies intended to stimulate activity in these sectors.

Research Team

  • Ajay Agrawal, Martin Prosperity Institute, Rotman School of Management, and NBER
  • John McHale, Queen’s University, National University of Ireland, Galway
  • Alex Oettl, Rotman School of Management, Max Planck Institute of Economics
  • Christian Catalini, Rotman School of Management

Events

Economics of Entrepreneurship and Innovation Conference
June 14-16 2009
Queen’s University, Kingston, Ontario

In June 2009 the MPI Program on Innovation and Creative Industries co-organized and co-funded a research workshop on innovation and entrepreneurship at Queen’s University. Eight new, yet-to-be-published research projects were presented from scholars at Northwestern, Yale, University of Pennsylvania, Columbia, Cornell, College of William and Mary, Duke, and Boston University. The conference program is here.

Papers:

Markets Making Music
Tuesday, February 10, 2009 – 7:30pm

 


In 1999, an unknown Northeastern University student named Shawn Fanning released – with little fanfare – a program for sharing music over the Internet. Despite its modest dorm room origins, that innovation and subsequent permutations had a devastating effect on the recorded music industry worldwide. In Canada, for example, revenues declined by a stunning 50% between 1999 and 2007, after adjusting for inflation. In fact some industry observers, reflecting on the rise of Internet traffic and the concurrent decline in music sales, referred to the launch of Napster as “The Day the Music Died.”

Almost a decade later, however, in 2008, something surprising happened. In order to finance the recording and production of her debut album, an unknown artist in Montreal named Angie Arsenault turned to another Internet innovation and raised $50,000 from 531 “believers” spread across 34 countries using an online market-making platform that virtually no one had heard of – Sellaband. She was the first Canadian to successfully do so. Sellaband had been launched in the Netherlands – with little fanfare – two years earlier, in 2006.

Although it is too early to speculate on long-term industry trends, Prof. Agrawal will present insights based on Sellaband data, of what general lessons might be learned from this unique artist market in terms of peer-to-peer lending and microfinance (believers invest in $10 increments), foreign direct investment (artists raise much of their financing from outside their home country), and crowd-financing (believers have collectively financed only a select few from thousands of artists featured on the site).

Research


Related Courses


Competition and Strategy in Creative Industries (MGT 2022) – MBA, Rotman School

  • Project to develop a National Arts Strategy for Canada

Corporate Strategy (MGT 2021) – MBA, Rotman School


  • The post-automotive Ontario economy: project to develop a diversification strategy for an Ontario manufacturing firm in the automotive sector

Innovation (MGT 3091H) – PhD, Rotman School


  • This course introduces doctoral students to the literature that has laid the foundation for much of the current research on technology strategy and innovation policy. The primary focus of this course is conceptual; we seek to develop a broad understanding of seminal papers that have significantly influenced the direction of the field as well as recent papers that reflect current boundaries and debates-in-progress. That is not to say that we ignore implementation issues, such as the degree to which empirically tested hypotheses are appropriately identified, but our emphasis remains on understanding and organizing the primary concepts that underpin the field. The central objective of the course is to enable students to identify opportunities for good research questions that will inspire interest, have impact, and appropriately build on the extant literature. The course is organized around “paper pairs.” We discuss pairs of papers that address related points, identifying tensions between the arguments and findings presented in each as well as evaluating the dimensions along which the papers are complementary.

PhD and MBA students from other universities interested in inquiring about taking one of these courses as a visiting student may contact Professor Agrawal directly: ajay dot agrawal at rotman dot utoronto dot ca.