The project involves researchers from the following: Universiteit van Amsterdam; City, University of London; Università degli Studi di Bari Aldo Moro; Universitat de Barcelona; SWPS Uniwersytet Humanistycznospołeczny; Universität Wien; Observatory of Cultural Economics; KEA European Affairs; Stockholms universitet.

Objectives

This project rests upon Europe’s legacy as home to a rich and diverse tradition of creative and cultural industries (CCIs). These industries do not only produce a wide variety of goods and services whose main selling point is their symbolic meaning, but they also drive (especially local and regional) economic growth and, in addition, provide cognitive markers for often deeply rooted local heritages. These CCIs consist of both large firms such as, for instance, Endemol, Axel Springer, and LMVH, as well as a plethora of smaller and medium-sized firms and institutions. Together they constitute an intricate ecosystem underpinning the production of a wide range of creative commodities from fashion to architectural design and medieval music to modern dance. According to The First Global Map of Cultural Industries (EY (2015), Europe’s strength as a global cultural powerhouse is rooted in its associated legacy of a unique concentration of heritage and arts institutions. The CCIs – those economic activities which produce goods and services for which their symbolic or aesthetic value is their main selling point – can draw on an extensive multifaceted ecosystem of firms and related institutions in the European Union to create and reproduce the skills of those involved in making creative commodities and the skills or discerning tastes of the public enjoying and buying them. This project builds on the idea that it is through understanding Europe’s diverse cultural and creative business ecosystem that we will be better able to make policy

With this project, we aim at investigating how CCIs in the EU contribute to (local) economic development, sustainability, social cohesion and identity. Nearly two decades ago, CCIs were first identified as significant drivers of especially urban development. These early inquiries started with discussions on how to conceptualise, operationalise and measure these cultural and creative industries (cf. Pratt, 1997; Scott, 2000; Ilczuk and Wieczorek; 2000, Florida, 2002; Power, 2003; Kloosterman, 2004; Power and Scott, 2005). These initial, more general studies, were followed by a large number of much more focused case studies which looked at, for instance, architecture (Kloosterman, 2008), fashion (d’Ovidio, 2015), music (Power and Hallencreutz, 2002), publishing (Sarikakis et al., 2016), performing arts (Tomova, 2004), film (Scott, 2004a; Coe, 2015) and artistic craft (Leslie and Reimer, 2003). These studies typically departed from a cluster perspective in which firms were the main actor said to benefit from proximity and the ensuing agglomeration economies. Early research, then tended to treat the firm as a black box and self-evident basic building block of economic activities, and furthermore privileged local ties over larger spatial scales.

Such an approach, although valuable in its own right, tends to neglect or underestimate changing organisational formats of production (e.g. project-based networks) as well as the supra-local ties which are becoming ever more important as production processes are increasingly carved up into several phases, each of which can take place in separate locations benefiting from specific local conditions (notably the presence of a specialised labour pool or a particular regulatory context). This carving up or ‘second unbundling’ (Baldwin, 2016) is a key characteristic of the current phase of globalization. The unbundling of CCIs has been shown in Mapping the Creative Value Chains; A Study on the Economy of Culture in the Digital Age (European Commission, 2017). In short, cultural and creative businesses of all sizes thrive on ever quicker and expanding knowledge and business connections across and beyond Europe.

In our view, a meaningful understanding of the EU-wide, national, regional and local issues regarding CCIs is only possible if we explicitly take into account how these dispersed, multi-format activities are simultaneously embedded in local contexts and inserted in larger global networks. Consequently, effective policies should be based on a thorough understanding of the evolving multi-scalar spatial division of labour in CCIs involving not just traditional firms but also other actors such as the (often part-time) self-employed (cf. d’Ovidio, 2010; Watson, 2013).

To capture CCIs’ simultaneously local and global integration, this project will apply the Global Production Network (GPN) approach. The GPN approach departs from the view that contemporary production processes are confined to one place and posits instead that production processes are integrated in complex networks which often comprise locations in a number of countries (Coe, 2015). Such an approach goes beyond traditional value-chain analyses by considering the organisational and spatial patterns of production networks as well as investigating the embeddedness of the various components in multi-scalar institutional regulatory contexts. It entails - among other things - examining the historical roots of local assets (notably the reproduction of specific skills); the power relationships between different actors; and the broader institutional and political setting on various spatial scales. To grasp the multifaceted nature of global production networks of EU-based CCIs, a multi-disciplinary framework which encompasses approaches using insights and methods from geography, sociological, economics, business studies, history and political science is needed.

GPN approaches have often been applied to networks producing material goods – e.g. cars or electronic devices – as these were among the first products to be unbundled (Henderson et al., 2002; Coe et al., 2008; Coe and Yeung, 2015). Services have only quite recently been analysed from a GPN perspective (Lambregts et al., 2016; Kleibert and Horner, 2018). There have been a few studies applying the GPN perspective to selected CCIs using secondary data (cf. EY, 2015; Coe, 2015; Kloosterman and Koetsenruijter, 2016, 2018). So far, however, no systematic, comprehensive, international comparative analysis of CCIs based on original empirical research from a GPN perspective has taken place. The proposed research project will provide cross-border comparative case studies of selected CCIs to unpack their production networks, their embeddedness, and their impact on a local, national and EU-level. This project, then, will be a highly innovative departure from analyses to date and will open a new window on how best to understand the dynamics and impact of CCIs in the EU in an age of hyper-globalisation. The GPN approach will not only structure the research questions, but also reveal gaps in the existing data sets, thereby helping us to address policy-oriented questions in a novel way.

Central to the PhD project at Stockholm University is conducting 2 case studies: the music sector; Archives, libraries & cultural heritage sector. Each case study will contribute to the overall project and will be structured according to the following questions:

1. Where is value created, accrued and captured?

Within global production networks, value is created, accrued and captured in ways that reflect the organisation and control of various nodes. These dynamics not only influence the distribution of wealth among companies but also, through the geographical articulation of networks, local development opportunities with regional, national, and trans-national implications.

Companies with greater production capacity are often those which control value creation and distribution along the chain. By contrast, companies with low production capacity are easily substituted and struggle to remain competitive; these companies are more vulnerable, more unstable and have less power within networks. Conceived in this way, global production networks are characterised by an unbalanced capacity of value appropriation, whereby lead firms shape the structure of networks so to maximise their own profit. However, companies’ conditions are variable. Through processes of industrial upgrading (process and product), functional upgrading and chain change, companies can advance along the chain by tapping into more added-value segments of the network and thereby capturing greater gains.

This movement within networks has important consequences for local regional development because the extent of development will depend on the concentration of certain types of firms within a specific node. When considering where value is created, accrued and captured in the networks of production which link CCIs, particular attention must be devoted to the creation of immaterial value and to the process of culture incorporation in good or services.

2. What are the working conditions in various segments of production networks? How much agency do workers have within and across nodes?

Assessing workforce and workers’ ability/capacity to act independently from other agents (within the same nodes and from other nodes) is an essential component of the GPN approach. Working conditions of creative and cultural workers have been extensively analysed, however, analysing these conditions from an explicitly GPN perspective will help shed light in a dynamic and holistic way on the diverse work segments of production chains.

Case research per sector conducted under this guise will consider processes of value creation and appropriation, relevant employment features (i.e. skills, formal training and education, informal, low skilled/labour, knowledge intensive work, etc.), and different working conditions (i.e. working times, project-based work, , union’s presence) with implications in terms of exclusion or/and empowerment (i.e. gender dimension, ethnic minorities, age groups, etc). The impact of digitisation and the automation processes on the production activities of CCIs will also be carefully examined.

3. How, where and by whom knowledge is produced, transferred and used?

Knowledge plays a crucial role in the production networks connected to CCIs. Hence its production, transfer and use will be given special attention. Value chain relationships must be seen as multi-faceted processes of interaction between companies performing different roles (i.e. buyers- suppliers) and involving different modes of (tacit and codified) knowledge transmission and development within and across nodes. Case study analysis per sector will consider the way in which knowledge fluxes are managed and shared along networks, between for instance design and production companies. Analysis will also explore issue of standardization as well as of management practices.

In addition, connections to education and training systems are also taken into account at all network segments (i.e. the kind of formal education requested at a given node, the type of schools and their relationships with the production activities, etc.).

4. Are there conflicts within networks, or related to it?

As power is asymmetrical within production networks, we envisage the possible existence of counter- trends that seek to re-balance power among or within nodes. These can take different patterns: explicit conflicts and social rights demands (i.e. through strikes, demonstrations, cross-border organizations) or attempts to modify power structures through disintermediation or the creation of more balanced relationships. Examples include networks connecting producers and distributors that seek to build fairer relations as well as informal workers’ organisations trying to rebalance uneven relationships. The extent to which workers in creative and cultural professions are able to promote their own inclusion in labour markets by having a stake in shaping power relations and through the professionalisation of their activities will also be explored.

Consumers, of course, play a crucial role in the issue of power asymmetries. So-called ‘name and shame’ campaigns and boycott campaigns have become powerful tools for rebalancing power relations and raising consumer awareness about production processes and working conditions. As such, case analysis per sector will include considerations of both production and demand, which are intricately connected.

5. How do production networks contribute to local economic development?

Case analysis will consider the variety of ways in which regional economies and production networks are integrated. There are essentially three ways in which this integration is expressed. First, there may be ‘an endogenous combination,’ in which local areas/regions have specific resources that lead to high added- value activities and are extremely functional to production networks. Access to lucrative resources implies that the area/region in question is in a position to exercise great value capture and heavily influence network dynamics. Second, there may be ‘a functional combination,’ in which companies located in a particular area/region rely on specific resources and competences. Third, the combination can be ‘structural.’ In this case, regional/local companies have generic competences and/or resources or specific competencies and/or resources, but no competences and/or resources that lead them to a relationship of dependency on the network.

Conditions of sustainable development are therefore ensured by endogenous/functional relationships between specific areas and global production networks. Specific resources, competences and capabilities in a certain territory can attract global networks whose fluxes touch down with consequences, for instance, in terms of formation of new economic activities, new jobs, salaries, technical requirements and so on. In addition to economic upgrading, the research will also investigate the connection between the presence of creative and cultural industries in a territory and social and environmental upgrading processes.

To answer these questions, each case will be structured by four wider tasks. These four tasks mirror the dimensions which characterise global production networks. By conforming to these four tasks, each case study will relate the organisation and structure of global production networks to the sectors Archives (including libraries and cultural heritage) and Music.

T1. Analysing specific input-output structures

There are two fundamental principles associated with value chains: 1) the specialisation and division of labour between firms; and 2) the interconnected capabilities across firms that link flows of resources and value-adding across national boundaries.

Although the main segments in production chains vary by industry (products and technologies are the main drivers), the segments typically include research and design, inputs, production, distribution and marketing, sales and in some cases, the recycling of products after use.

Figure: Example of Input-Output Structure of the Design-Clothing Sector

This input-output structure involves goods and services as well as a range of supporting industries. The input-output structure is typically represented as a set of value chain boxes connected by arrows that show the flows of tangible and intangible goods and services, which are critical to mapping value which is added at different stages in the chain and to layering information of particular interest (e.g. jobs, wages, gender, and the firms participating at diverse stages of the chain- i.e. SMEs, large companies, private or public, etc.).

T2. Analysing the spatial organisation and geographical scope of networks of production

The literature on GPN indicates, on the one hand, that the most globalised (i.e. longer) networks are those where competition among companies is high, production capacities and required labour competences are low, and capital is extremely mobile. In these sectors (i.e. the clothing sector), lead companies usually rely on a large number of geographically dispersed subcontractors.

On the other hand, less globalised (i.e. shorter) networks often include sectors which must rely on greater capital intensity. These sectors tend to concentrate product/service conception, management and production activities in the same region (or proximate ones), although some low added-value phases can be delocalized in peripheral regions. New evidence suggests there may be a trend toward a regionalization of global value chains in response to a variety of factors, including the growing importance of large emerging economies and regional trade agreements.

T3. Analysing the institutional conditions which influence networks of production

The institutional context refers to the comprehensive set of socio-institutional conditions and policies that, at different scales (local, regional, national, international), can influence the organization of global production networks and their participation in the global economy.

Economic conditions refer to the availability of key inputs, i.e. labour costs, available infrastructure and access to other resources such as finance. Social conditions include, among others, workforce presence, its skill and competences, gender participation in the labour market and informal work.

Institutional conditions include labour and tax regulation, incentives, innovation policy, and, in general, policies that can promote or hinder an industry’s growth.

Institutional conditions are not to be understood only as contextual elements but also as important variables capable of shaping actors’ motivations and behaviours within networks. Institutional conditions also contribute to explaining very important structural elements, such as a company’s profile, productive capacity, and relation with other nodes with key implications on both the wider production network and local development.

T4. Analysing power distribution within global production networks

Governance analysis allows one to understand how a network is controlled and coordinated when certain actors in a network have more power than others. Governance refers to authority and power relationships that determine how financial, material and human resources are allocated and flow within a network. Initially, governance was described broadly in terms of “buyer-driven” or “producer-driven” chains. Analysis of buyer-driven chains highlights the powerful role of large retailers as well as highly successfully branded merchandisers, in dictating the way chains operate by requiring suppliers to meet certain standards and protocols, despite limited or no production capabilities. In contrast, producer-driven chains are more vertically integrated along all segments of the supply chain and leverage the technological or scale advantages of integrated suppliers.

Understanding governance and how value networks are controlled facilitates firm entry and development within global industries. In practice, governance analysis requires identifying lead firms in the sector, their location, how they interact with their supply base and their source of influence and power (e.g. standards compliance).

Lastly, the aim of this project is also to deliver a policy framework that is able to address the challenges and opportunities presented by the CCI increasingly organised along the lines of GPN. Such policies have to be based on a clear understanding of the industries that they seek to influence and the PhD-project will contribute in this respect.