NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Organizational Implications of Creativity: The US Film Industry in Mid-XXth Century

Ricard Gil, Pablo T. Spiller

NBER Working Paper No. 13253
Issued in July 2007
NBER Program(s):   IO   LE

We develop a basic framework to understand the organization of highly creative activities. Management faces a fundamental tradeoff in organizing such activities. On the one hand, since creativity cannot be achieved by command and control or by monetary incentives, internal/contractual production of creative products is plagued by hazards arising from their fundamental characteristics: extremely high input, output and market uncertainty, and the inherent informational advantages of creative talent. Procuring highly creative products in the market place, though, exposes the distributor to a fundamental risk: independently produced creative goods are generic distribution-wise. Thus, in procuring creative products in the marketplace, distributors face the unavoidable winner's curse risk. Since this risk is, to a large extent, independent of the creative nature of the product, the higher the creative content, the higher the relative hazards associated with internal or contractual production. Thus, internal/contractual production of creative goods will tend to be less prevalent the higher the creative content associated with its production. We apply this insight to the evolution of the U.S. film industry in the mid-XXth century. We exploit two simultaneous natural experiments -- the diffusion of TV and the Paramount antitrust decision forcing the separation of exhibitors from distributors and prohibiting the use of block-booking. Both events increased the demand for creative content in movies. We develop empirical implications which we test by analyzing in detail the decision by distributors to produce films internally or to procure then in the market place, in the face of an increase in the demand for creative content.

download in pdf format
   (230 K)

email paper

This paper is available as PDF (230 K) or via email.

Acknowledgments

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w13253

Published: “The Organizational Implications of Creativity: The US Film Industry in Mid-XXth Century,” with Ricard Gil, 50/1 California Management Review, 2007: 243-260.

Users who downloaded this paper also downloaded these:
Chisholm, McMillan, and Norman w12646 Product Differentiation and Film Programming Choice: Do First-Run Movie Theatres Show the Same Films?
Galenson w16024 Understanding Creativity
Galenson w15930 Innovators: Filmmakers
Azoulay, Graff Zivin, and Manso w15466 Incentives and Creativity: Evidence from the Academic Life Sciences
Spiller w14152 An Institutional Theory of Public Contracts: Regulatory Implications
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us