Innovation in Performing Arts Organizations: An Empirical Study

Abstract

This study aims to expand the Operations Management field’s discourse to recognize the idiosyncrasies of not-for-profit performing arts organizations (PAOs) and how they can survive and achieve their ultimate goal, i.e. providing products/services to improve and benefit a community and the broad public interests. In doing so, we consider innovation as a strategic weapon in addressing PAOs' increasing need for improvement in their operating structures and performance outcomes. Particularly, we determine the drivers of innovation in today’s PAOs and explore how innovation in both products and services can affect their financial, artistic, and social performance. Drawing on the theory of dynamic capabilities and based on a systematic literature review, four major internal capabilities are identified that can enhance PAOs' level of product and service innovations: Environmental Intelligence, Internal Integration, Core Operational Capability, and External Partnerships and Collaborations. A survey targeting top managers from a random sample of North American orchestras is conducted to empirically validate our conceptualization of the PAO Innovation and examine the proposed conceptual model. The results indicated that every capability significantly enhanced at least two innovation dimensions. Moreover, product and delivery innovations were positively influential on artistic performance and ultimately, financial performance.