Balancing artistic and financial performance: is collaborative governance the answer?

• Date: 19 November 2019
• Pages: 78-93
• Published date: 19 November 2019
• DOI: https://doi.org/10.1108/IJPSM-05-2019-0138
• Author: Simone Fanelli,Chiara Carolina Donelli,Antonello Zangrandi,Isabella Mozzoni
• Subject Matter: Public policy & environmental management,Politics,Public adminstration & management

Balancing artistic and financial

performance: is collaborative

governance the answer?

Simone Fanelli, Chiara Carolina Donelli and Antonello Zangrandi

Department of Economics and Management,

University of Parma, Parma, Italy, and

Isabella Mozzoni

Department of Humanistic Studies, Social and Cultural Affairs,

University of Parma, Parma, Italy

Abstract

Purpose –Opera houses have been traditionally publicly financed in many western countries. However,

today many opera houses are facing serious financial troubles, due to the recent financial crisis. There is thus

a widespread public debate on measures to ensure agency efficiency for performing arts organizations.

Focusing on the reform implemented recently in Italy, which submitted opera houses that had severe financial

difficulties to a recovery plan and encouraged forms of collaborative governance (CG), the purpose of this

paper is to investigate the impact of CG on the performance of the arts sector.

Design/methodology/approach –Multiple case studies are used, on longitudinal data from multiple

sources over a period of up to five years, in order to triangulate the narrative of financial and artistic

performance and ensure trustworthiness. The study thus spans the period before the Bray Law came into

force (2013) and covers the entire period in which recovery plans were implemented.

Findings –The analysis explores how opera houses are building sustainability for themselves and the

community in terms of financial and artistic performance through CG. Various forms of CG adopted yielded

positive results. Furthermore, more robust forms of CG generated better performance, especially from a

financial point of view.

Originality/value –This paper adds to the limited knowledge of CG in the non-profit sector bybridging the

fields of agency performance and CG. It discusses how the introduction of forms of CG can buildup long-term

sustainability, solving the dilemma of how to achieve financial equilibrium without compromising artistic

quality, focusing on the case of opera houses, which are notably affected by Baumol’s cost disease.

Keywords Framework, Collaborative governance, Economic sustainability, Art sector,

Economic-financial performance, Opera house

Paper type Case study

Introduction

Opera is one of the most fascinating forms of performing arts, and gives expression to

human passions and emotions at the crossroads between music and theatre. The modern

tradition of opera dates back to the nineteenth century, as do the related financial problems:

the frequent gap between income required and income acquired (Baumol and Bowen, 1966)

and the difficulties in measuring the intangible benefit to society (Throsby and Glenn, 1993).

Opera and financial sustainability have always been considered awkward bedfellows. On

the one hand, there is a requirement to keep ticket prices affordable to ensure access to this

public heritage, as a “merit good”; on the other hand, opera entails extremely high fixed

costs, which can rarely be lowered (Cwi, 1980; Towse, 2001). Financing is also a critical

International Journal of Public

Sector Management

Vol. 33 No. 1, 2020

pp. 78-93

© Emerald PublishingLimited

0951-3558

DOI 10.1108/IJPSM-05-2019-0138

Received 21 May 2019

Revised 30 July 2019

25 September 2019

Accepted 13 October 2019

The current issue and full text archive of this journal is available on Emerald Insight at:

www.emeraldinsight.com/0951-3558.htm

The research was carried out without funding. No competing interests are at stake and there is no conflict

of interest for any of the authors. The work presented in this paper was first presented at the International

Symposium on Collaborative Governance, University of Palermo, October 2018. The paper builds on helpful

comments of the reviewers both at the Symposium and from the Journal. The authors would like to thank

the special controller appointed by the Ministry, Gianluca Sole, for his valuable assistance.

78

IJPSM

33,1

variable for performing art organizations as it can preclude the achievement of their mission

of artistic performance. Sustainability is here understood as the ability of an organization to

“deliver social value via the pursuit of its social mission”(Weerawardena et al., 2010, p. 347),

thus serving the financial and artistic needs of current and future generations.

Since the recent economic downturn, these organizations have been caught between the

need to lower costs, due to a progressive reduction in public funds allocated to culture

(Rubio Arostegui and Rius-Ulldemolins, 2018), and the need to ensure high artistic

standards. Their long-term viability can no longer be exclusively based on public subsidies

(Towse, 2001) and their inability to diversify sources of revenue has compounded the severe

financial difficulties in the sector (Baumol and Bowen, 1966). In many western countries, two

main approaches can be observed. On the one hand, there is a trend towards privatization

and decentralisation (Zan et al., 2012), and on the other hand, there is a new managerial

attitude, encouraging opera houses to be more business oriented, including through new

forms of governance, strengthened by central government reform (Dubini and Monti, 2018).

In Italy, for example, the “Bray Law”introduced forms of collaborative governance (CG) to

overcome long-standing financial difficulties of opera houses, without compromising the

quality of their artistic performance.

This paper discusses the issue offinancial sustainability,including financial independence,

minimization of debt and short-term efficiency (Moldavanova and Goerdel, 2018) of Italian

opera houses, focusing on collaboration at the governance level,which the literature suggests

is a potentially useful path to follow (Amsler and O’Leary, 2017; McGuire, 2006) and to date

not fully addressed in performing art studies. It addresses the following question:

RQ1. How does CG impact on the performance of opera houses?

This paper considers CG and its relevance for performance for organizations which struggle

to be financiallysustainable, such as opera houses in Italy.It outlines firstthe Italian scenario

and the evolution of the regulatory framework of opera houses, then the regulatory

framework of CG and its effects on performance. The paper then discusses the method and

results by presenting how CG impactson artistic and financial performance in the performing

arts sector, and concludes with a discussion of the practical and theoretical outcomes.

The evolution of the regulatory framework of Italian opera houses

Italian Opera is internationally recognized for its outstanding value in communicating inner

human emotions, and is a point of reference for art lovers in the western world. The

performing arts scenario in Italy is dominated by 14 opera house foundations located in

major cities. In terms of the volume of activities and workforce, they are similar to

medium-sized companies, and are usually funded through a combination of grants from

local and/or national government.

The current regulatory framework of Italian opera dates back to 1936, when opera was

acknowledged as a form of performance of significant interest to the state, and a means to

promote music education, culture and national identity. Over the decades, several pieces of

legislation aimed to regulate the cultural sector and ensure economic sustainability

(Zan et al., 2012). The most significant reform, dated 1999, started a process of privatization,

transforming opera houses from state bodies, into private foundations under private law,

with boards of directors, budget autonomy and legal liability. This shift was intended to

foster flexibility and help to overcome the limits of heavily bureaucratic organizations, to

attract private capital through fiscal incentives and develop solid relations with a wider set

of stakeholders. On the whole, opera houses were not prepared for such substantial change,

and partly because managerial culture was slow to develop, they recorded disappointing

performances in terms of accountability, differentiation of their revenue stream and

development of a support network. Thus, a series of further reforms followed, including a

79

Balancing

artistic and

financial

performance