The organizational dimensions of creativity: Motion picture production

California Management Review

Volumn 50, Issue 1, 2007, Pages

  Gil, Ricard ^a   Spiller, Pablo T ^b  

^a UNIVERSITY OF CALIFORNIA   (United States)

^b UNIVERSITY OF CALIFORNIA   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 36749099896     PISSN: 00081256     EISSN: None     Source Type: Journal    
DOI: 10.2307/41166426     Document Type: Review

References (37)

1. "Creativity," Encyclopedia Britannien, Encyclopedia Britannica on line, accessed April 25, 2007.
2. See Richard Caves, Creative Industries: Contracts between Art and Commerce (Cambridge, MA: Harvard University Press, 2000).
3. Ibid.
4. See Pew Internet Report, which shows that while artists are more educated than the average population, they nevertheless have an annual income below average. Pew Internet & American Life Project, "Artists, Musicians and the Internet," December 5, 2004, available at . See, also, Dekom, who reports that the average internal rate of return in the motion picture industry is negative (at around - 5 % ). P. Dekom, "Movies, Money, and Madness, " in J. Squire, ed., The Movie Business Book (New York, NY: Fireside, 2004), pp. 100-116.
5. This is not too different from defense procurement of new weapon systems. See Jean-Michel Oudot, "Renegotiation in Defense Procurement Contracts," mimeograph, 2006.
6. Caves, op. cit.
7. Caves, op. cit.
8. This is the problem of "tacit" knowledge, with its intellectual property implications.
9. See De Vany and Walls on the effect of movie stars on box office. A. De Vany and D. Walls, "Uncertainty in the Movies: Can Star Power Reduce the Terror of the Box Office?" Journal of Cultural Economics, 23/4 (1999): 285-318.
10. By internalization of production we mean both in-house production and contracting a specific project to another party. This is in contrast to buying a finished creative output from a completely independent production process.
11. O.E. Williamson, "Transaction-Cost Economics: The Governance of Contractual Relations," Journal of Law & Economics, 22/2 (October 1979): 235-261.
12. See John H. Kagel and Dan Levin, "The Winner's Curse and Public Information in Common Value Auctions," American Economic Review, 76/5 (December 1986): 894-920.
13. This may explain why art merchants do not normally buy at auctions.
14. An example of this process is visible in the Sundance Film Festival, where often a private screening is arranged for a previously selected distributor, who is given the right to make a preemptive purchase offer.
15. This is the case, for example, of the relation between the Weinstein Co. and Metro-Goldwyn-Mayer.
16. See A. De Vany, Hollywood Economics: How Extreme Uncertainty Shapes the Film Industry (New York, NY: Routledge, 2004).
17. These were Paramount, Warner Brothers, Loew's (MGM), Twentieth Century-Fox, and RKO. To these, we need to add the "Little Three" (Universal, Columbia, and United Artists) to complement the set of relevant players. T. Balio, "Introduction," in T. Balio, ed., Hollywood in the Age of Television (Boston, MA: Unwin Hyman, 1990), pp. 3-40.
18. Balio (1990), op. cit.
19. J.C. Strick, "The Economics of the Motion Picture Industry: A Survey," Philosophy of the Social Sciences, 8 (1978): 406-417.
20. See Roy Kenney and Benjamin Klein, "The Economics of Block Booking," Journal ofLaw and Economics, 26/3 (October 1983): 497-540.
21. M. Storper and S. Christopherson, "Flexible Specialization and Regional Industrial Agglomerations: The Case of the U.S. Motion Picture Industry," Annals of the Association of American Geographers, 77/1 (1987): 104-117.
22. F. Stuart, "The Effects of Television on the Motion Picture Industry: 1948-1960," in G. Kin-dern, ed., The American Movie Industry (Carbondale, IL: Southern Illinois University Press, 1982), pp. 257-307.
23. T. Balio, "Retrenchment, Reappraisal, and Reorganization," in T. Balio, ed., The American Film Industry (Madison, WI: University of Wisconsin Press, 1985), pp. 401-447.
24. J. Wasko, Movies and Money (Norwood, NJ: Ablex Publishing, 1982).
25. F. Stuart, "The Effects of Television on the Motion Picture Indus'try: 1948-1960," in G. Kindern, ed., The American Movie Industry (Carbondale, IL: Southern Illinois University Press, 1982), pp. 257-307
26. See Balio (1990), op. cit.; Wasko, op. cit.
27. Balio (1990), op. cit.
28. This does not mean a change in the taste of American moviegoers over this time. The two shocks presented here basically mean that the demand for creativity by distribution and production companies increased because now they had to compete against television and each movie had to compete with all other movies, as they were not sold in blocks any longer.
29. See Balio (1990), op. cit.; Stuart, op. cit.; G. Kindern, "United States," in G. Kindem, ed., The American Movie Industry (Carbondale, IL: Southern Illinois University Press, 1982), pp. 309-330.
30. United Artists was included in the trial but never sold movies in blocks. This created controversy about the real goal of the case.
31. Storper and Christopherson, op. cit.
32. See Spiller and Zelner for a similar analysis of joint ventures in telecommunications. P.T. Spiller and B. Zelner, "Product Complementarities, Capabilities and Governance: A Dynamic Transaction Cost Perspective," Industrial and Corporate Change, 6/3 (September 1997): 561-594.
33. The description of the data appears in the NBER Working Paper version of this article.
34. Most of the non-Paramount firms are not integrated. Thus, the relevant results are those in column 5.
35. See the NBER Working Paper version of this article.
36. Our results also show that independently produced movies distributed by integrated distrib· utors cost less to produce than movies distributed by independent distributors and less than those movies produced and distributed by integrated studios. These results are at odds with Robins. In his paper, Robins finds that Warner Brothers films produced by independent producers actually cost more than those produced in-house. James Robins, "Organization as Strategy: Restructuring Production in the Film Industry," Strategic Management Journal, 14/4 (Summer 1993): 103-118.
37. Darlene Chisholm, "Asset Specificity and Long-Term Contracts: The Case of the Motion-Pictures Industry," Eastern Economic Journal, 19/2 (Spring 1993): 143-155.