A Proposal for a Standard With Innovation Management System

Elissaveta Gourova, Ivan Draganov and Kostadinka Toteva
and appreciated by mass audience, which aims at entertainment and pays less attention to the
cultural value and content. Thus, large CCI often focus on higher profits and target mass audience
demands rather then those of a cultural elite. In fact, the market for cultural products is characterized
by a high volatility and unpredictability of demand and audience response. The limited European
markets (due to language diversity) raise other challenges for CCI, especially for those in smaller
countries. They face with a difficult business model due to the higher investment risks and lack of
national funding and support. At the same time, the dependency of CCI on intangible assets, which
are difficult to measure and are not included in companies’ balance sheets, creates great difficulties to
access finance, especially for small businesses, as banks often do not recognise the economic value
of intangibles (HKU, 2010).
Looking at the innovation dimensions of CCI, they create and propose to the market specific goods –
new cultural products or services, which are considered as non-technical innovation. Potts (2009)
considers that ‘the creative industries are by definition involved in the process of new value creation,
because their business opportunities and value-added derives from the very existence of novelty and
innovation in other sectors – to which they provide various innovation services – many of which are
business-to-business, rather than direct to consumer markets’. Since CCI operate in fast moving and
often fashion oriented markets, continual innovation and creativity is core to their competitive
advantage. Therefore, these industries are significant generators of IP, in particular copyrights.
However, many of the types of knowledge, goods and services produced by CCI cannot be protected
by patents, and do not fall under the standard innovation metrics (Power, 2010).
In fact, CCI follow all phases of innovation considered in literature – knowledge (idea) generation,
technology (product) development and market exploitation. For example, Potts (2009) considers a
model of CCI over the whole innovation trajectory: starting by origination, going through adoption and
retention phases. The specificity is that most CCI are not research and technology intensive firms,
except some larger ones. Their major contributions are to ‘service innovations’ and ‘soft innovations’.
The intellectual capital-based model of Galabova et al. (2011) fully coincides with the way CCI use
creativity and intangibles, deploy human capital (HC), structural capital (SC) and relationship capital
(RC) for realising cultural and market values (Figure 1).
Figure 1: IC-based value-creation model (Galabova et al., 2011)
New technologies changed the perception for CCI, giving opportunities for mass production and
distribution of art goods and services over the converging media, preservation of cultural heritage and
fostering culture. As main technology enablers could be pointed out (Zwass, 2010):
� broadly accessible means of production;
� means of coordination of effort provided by the Web;
� broadly dispersed means of aggregation of digital products;
� Global means of distribution of digital products, encompassing sourcing and mass access.
Looking at historical trends in CCI, it could be seen how they adopted step-by-step technological
innovations and changed their products. For example, the delivery of books, audio and video products
changed significantly with the development of new digital devices and the Internet. Today, books
traditionally delivered on paper could be accessed on a computer or a mobile device. Similarly, video
products are webcasted, distributed on different digital media, not just shown on TV or in cinemas.
Another example is architecture which adopts new materials and construction elements for designing
energy-efficient buildings, whereas designers are meeting the demands for quality, comfortable
healthy-built environments.
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