Wide open? Creative industries and open strategizing challenges

The traditional approach to the strategy-making process is based on two assumptions. The strategy concept is perceived as exclusive (available to a narrow group of managers) and is usually regarded as confidential (strategy as a root of competitive advantage is so important that it should not be revealed) [Whittington et al., 2011]. Although the idea of involving employees [Kärnä, 2015] or middle managers in the strategy-management process has previously been investigated to understand managers’ commitment [e.g., Barton and Ambrosini, 2013], it has not been comprehensively discussed in the context of the challenges it might pose. Whittington et al. [2011] introduced the OS concept and questioned the fundamental beliefs of the traditional approach. Such openness is rooted in broader inclusion and higher transparency in the strategizing process, according to which co-strategizing and including multiple stakeholders and designing a comprehensive communication process are recommended [Doz and Kosonen, 2008].

Even though implementing the OS approach can bring a wide range of benefits [von Krogh and Geilinger, 2019], there are also numerous risks associated with this concept. These risks are core sources of organizational dilemmas and challenges that accompany the decision-making process in two dimensions of OS – inclusion and transparency, both of which we further explore below.

As Miles et al. [1978] suggested, an organization should be studied as an integrated and dynamic whole, considering the interrelationships among strategy, structure, and process. This approach has been widely adopted [e.g., Andrews et al., 2009; MacLennan, 2011; Yuan et al., 2020]. Such a framework allows researchers to explore how organizations define their product-market domains (strategy) and design mechanisms (structures and processes) to perform the strategy. In recent years, some researchers have extended the scope mentioned above of organization analysis to organizational culture [e.g., Janićijević, 2017; Szczepańska-Woszczyna, 2018; Daulatkar et al., 2019]. We have followed this extended framework in categorizing the challenges mentioned above of pursuing an OS, and we have classified each of the challenges into strategy, process, culture, or structure. Table 1 summarizes the research categories.

Our research goal was to explore the challenges crucial to the comprehensive integration and implementation of the OS concept. For this reason, we carried out a qualitative study to gather in-depth insights into the problem under investigation [Charmaz, 2014]. We collected the data using semi-structured and in-depth face-to-face interviews, and we further coded the research material. As the topic of OS challenges has emerged in previous studies [Hautz et al., 2017; Gurca et al., 2021], we decided to apply pre-identified codes [Saunders et al., 2018] and verify whether these codes find adequate representation in the data obtained in the context of a specific industry, which reflects the deductive coding procedure [Elliott, 2018]. As previous studies on OS challenges have not focused on the industry context, in addition to verifying if and how these more general codes refer to a particular industry, we also wanted to explore new categories that might emerge from our study. The research scenario is presented in Appendix 1. Our research procedure is shown in Figure 1. The coding process is briefly described in Appendixes 2 and 3.

Figure 1.

As stated by Suri [2011], theoretical and purposive sampling is recommended in exploratory research. We have chosen the CI as a context for this research, as previous studies have highlighted some characteristics of these industries that may relate to more openness: the majority of firms in CI are micro firms, blended within different configurations of networks [Hesmondhalgh, 2013], and often need to be divided into creative ecosystems to operate effectively [Flew, 2013]. Knowledge creation and absorption, crucial in these industries, are favored by open-up strategizing [Pittz et al., 2019]. The use of an organization’s absorptive capacity is carried out by applying inter-organizational learning [Vaisz et al., 2021]. Finally, innovative activities often depend on sustaining formal and informal networking [Meiqing and Yingli, 2009]. Due to these characteristics, creative communities seem to be a natural environment for open initiatives [Chesbrough and Appleyard, 2007]. At the same time, we may expect in the CI some characteristics typical of open organizations, such as a high level of flexibility, flat organizational structures, a lower level of formality in organizing teams and projects, devolved decision-making processes, and more informal communication flows [Bilton, 2007]. Each of these industries differs in its business ecosystem. However, they are similar in some respects (e.g., ideas generation, imagination, copyrights, intellectual property). Therefore, we believe that studying OS challenges in the context of CI might yield exciting insights.

Poland was chosen as the geographical context for our research in line with the report provided by UNCTAD [2018]. Poland occupied the 9th position among the top 20 creative goods exporters, and the country was mentioned as an economy to be watched as a rising star in the CI. Therefore, it is worth investigating that market to identify some idiosyncrasies.

We adopted an in-depth interview technique to explore the challenges of OS. Our interviewees were chosen purposefully, with the following criteria determining the selection. First, we chose one representative of each creative industry as distinguished by the definition proposed by the KEA European Affairs [2006]; such sampling allowed for the necessary similarities rooted in one group of industries (creative) as well as the contrasts [Saunders et al., 2018] resulting from potential idiosyncrasies of a particular sub-industry. Second, the informants were people directly involved in the management processes – owners or co-owners of companies. Third, with one exception, our informants represented small businesses, reflecting the CI structure where 98.9% are microenterprises [Main Statistical Office, 2020]. Table 2 presents a short description of the companies investigated.

All the interviews were semi-structured to verify categories found in the literature and allow some previously unidentified vital issues to emerge during the discussion [Arsel, 2017]. The interviews lasted about 1.5 h on average. They were recorded and transcribed to provide comprehensive information.

To analyze the research material, we used a coding procedure. Following the etic approach, we began with a “prefigured” coding scheme [Charmaz, 2014]. We searched for codes based on an a priori framework of OS challenges found in the literature. However, following the suggestions of Elliott [2018], we were also open to adding codes that emerged during the analysis. We followed Campbell et al.’s [2013] suggestions by adopting both a unitization strategy – we focused on meaning units rather than on sentences or paragraphs – and a “negotiated agreement” approach that involved coding the transcripts separately, comparing codes, and then discussing our disagreements to reconcile them and arrive at a final version. Our data analysis had three stages. We distinguished initial codes, themes, and aggregated dimensions, as Gioia et al. [2013] recommended. To ensure the reliability of the constructs extracted, we applied two approaches. First, we used coder triangulation to improve the confidence and coherence of the findings [Archibald, 2015]. Second, we decided to use an iterative coding path with several rounds of iteration. After the first coding round, we proposed the initial codes that emerged, which we further developed into second-order themes. However, we decided to return to the data to clarify the concepts created. We did this several times to modify the first proposal. Finally, we were able to gather some insights from our study.

Among the challenges identified in this category is the dilemma of challenging the status quo. Our informants confirmed this, but the dilemma was limited to internal stakeholders. The reasoning for such an approach is rooted in the belief that external stakeholders will exert pressure to achieve their goals. Moreover, some interviewees’ comments suggest that companies may have a low willingness to open up the strategy-making process because they are used to established routines and are not eager to innovate and change a functioning model; for example: “For the previous 20 years, the theater was the same, ‘because it was always like that and it was good’” (I2). Interestingly, our informants revealed that the strategy-making process was limited to a small number of people: “When we were a smaller group, we were in fact all equal, and we all made decisions […] But when there are more people in the company, unfortunately, a decision-making person, plus possibly two or three more, is needed” (I4). The next exciting issue in the context of the opening-up strategizing process is the size of the company. Our interviewees suggested that the opening-up strategy-making process is possible in small companies rather than in large ones: “In micro-companies, perhaps also in small ones […], employees […] should participate in, let’s say, strategic meetings of the board, or with the manager, in terms of undertaking future strategic decisions. On the other hand, in large companies […] the question is who exactly and how many of these employees should be involved in the decision-making process?” (I7).

The necessity of deciding about the level of interference in the strategy was also confirmed. The informants pointed out that consultations with stakeholders rather than involvement in the decision stage were observed in the strategy-making process. This consultative approach also translates into resolving the dilemma between following one’s vision versus meeting stakeholders’ expectations. However, we were able to distinguish two approaches: companies that have an established business model and do not include stakeholders’ suggestions and companies that are flexible and ready to proceed with the co-creation process with a client. Our interviews also revealed that the independence of the strategy-making process depends on the relationship with substantial stakeholders. For example, I1 mentioned the strong influence of a client, which led to a situation in which “some strategic decisions regarding the project were not taken by us, but only by this client, who, however, was guided by his interest, and not our interest.”

Furthermore, some interviewees’ comments indicated the dependence on external stakeholders (for example, public institutions), which reduces the ability to decide on strategy independently. Among the strategy-related challenges accompanying transparency, we confirmed the dilemma of maintaining a competitive advantage despite revealing sensitive information. Our interviewees pointed out that information about costs, business models, and critical business partners was not disclosed. Moreover, a willingness to keep secrecy regarding the conditions of cooperation with customers was mentioned. The advertising company owner said: “First of all, we don’t share our arrangements with customers. Because they’re our arrangements” (I4). Our informants also revealed that they were somewhat skeptical about disclosing strategic information. As one of them explained: “If we have such a very specific knowledge, specific know-how which is our competitive advantage, I would advise against such an [OS] formula” (I8).

The interviewed managers were possibly concerned about transparency due to the risk of information leakage (“Sharing information brings a risk of leakage. The more people know something, the easier it is that someone unauthorized might know” [I8]); the fear of hostile use of information against a transparent company (“If we find dishonest partners, they will use our openness against us” [I8]); sabotage (“there are some financial decisions and strategies that probably should not go beyond the door […]. So, I think that this also brings the danger that such sabotage and stupidity can turn the company upside down” [I3]); and the fear of stealing an idea (“If it is a serious company or serious organization, it [transparency] can sometimes also have some unforeseen effects. In the sense that someone can pick up an idea and use it in some way” [I5]). Another problem relating to transparency, confirmed by our research, is the inadequate scope or timing of information disclosure. As the photography company owner pointed out, transparency entails “the risk of disclosing too much information, or too early” (I5). We also confirmed the necessity to deal with the dilemma of sharing resources, as this was mentioned by some of our informants. For example, I3 revealed: “We share our knowledge very much, and we also share our business orders.”

Among the process-related challenges, we confirmed the dilemmas concerning selecting actors involved in strategy-making and searching for valuable partners. Our informants indicated the need to include people from different levels of the organizational structure and identify the required competencies: “We try to be inclusive when there is a specific expert knowledge needed” (I8). However, such a process of searching for competencies may either be planned in a structured manner or spontaneous and unstructured. On the other hand, such inclusion of stakeholders is sometimes forced by the lack of knowledge and competencies, which is also a result of some spontaneous analysis revealed by I8: “We first try to analyze it in our group – if there is a need to include someone because I know that he or she is, for example, a specialist in a specific database that we want to use, then we include such a person.” It suggests that strategic awareness is blended in that process, as reflected by the ability to admit that the owners’ managerial competencies may not be sufficient. For instance, as I6 confirmed: “I am not an alpha and omega. I listen to dressmakers […] they also know various things better than I do.”

On the other hand, the selection process is not as straightforward as it may seem. Some difficulties may arise in shaping the relations by defining the boundaries between power and influence. Surprisingly, despite the positive attitude toward openness, we observed some exclusion of young and inexperienced workers. It was admitted by the advertising agency owner (I4): “In our studio, we do not include the youngest people as […] they have all the answers, and, most often, they authoritatively express themselves about how we should run this company.” Therefore, it seems that some stereotypical thinking also occurs. All these challenges, in turn, create other challenges related to moderating and facilitating the process. As pointed out by our informants, searching for appropriate tools and solutions would reduce the negative aspects of inclusion. For example, I1 mentioned the actions undertaken by their company: “We developed an interesting design process […] [branding sprint] – and it was our process that we developed together.”

Consequently, time reduction and increased inclusion were observed. Among the process-related challenges outlined in the transparency area, we confirmed the necessity of dealing with differences in transparency expectations. The need to differentiate transparency standards was also mentioned: “And now when somebody opposes and says that his expectations are not fulfilled, because it used to be like that, and now it is different, then I have to consider it individually as well” (I2). Sometimes, the ability to moderate dialogue and enhance responsiveness is required in order to reduce unproductive discussions and the feeling that “such attempts usually end up in a way that at some point they simply begin to get chatty and this is a waste of time” (I7). Our research did not confirm the category of challenges that reduce unnecessary bureaucracy.

The need to change the hierarchical structures within organizations was investigated among the structure- related challenges accompanying inclusion. Based on our interviews, we were unable to confirm this challenge. None of our informants indicated activities that could be linked to changes in the hierarchical structures. Another structure-related challenge is the dilemma of strategy approval. Our interviews revealed that the larger the company, the more difficult it is to maintain the democratic process of strategy acceptance, which is why informants commented on the need to make decisions in smaller groups: “When there are more people in the company, unfortunately, you need a decision-making person plus possibly two or three” (I4). In the same vein, the owner of the computer/video games company pointed out that smaller companies find it easier to achieve a more democratic approval of the strategy: “With a smaller company, it is definitely easier to achieve [OS]” (I8). Given the structure-related challenges accompanying transparency, there is a need to make changes to the organizational structure. One of these changes involves enriching the organizational structure with people who have an autonomous sense of what should be disclosed. As the owner of a design company elaborated: “We don’t want to have to hire a person, some project manager, who will just have to have their hand held by us, and to be led by us through life, right? We want to work with people, employ people who don’t need this handholding so that they can work directly with clients” (I1). Our interviewees also mentioned that a diversified, large team makes transparency difficult and hinders the understanding of the strategy.

The next challenge relating to organizational structure and transparency concerns dealing with more significant exposure to regulatory influence. Our informants confirmed that an organization is forced to be transparent when public funds are used or when a public stakeholder is involved in the organization’s processes. As pointed out by I5: “Transparency is crucial because, as an NGO, we have to show that these public funds simply work.”

Our literature review revealed that OS faces several challenges relating to organizational culture. One of them was the need to create a sense of organizational trustworthiness, which was challenging in terms of transparency. One of the informants paid attention to the absence of double standards as essential to building sincere relations and an organizational culture based on trust: “Because there is no such double communication, that we are talking about-something, and still there are various unprocessed topics, information, suspicions, gossips, slander, etc.” (I3). It suggests that true transparency requires an organizational culture where formal discussions are combined with informal communication and both are coherent.

Concerning the necessity of enhancing individual actors’ commitment, our interviews confirmed the role of a creative leader: “Our director makes sure that everyone can have their say, even if they have a different opinion from him” (I2). At the same time, internal motivation seems crucial for enhancing commitment. As one informant stated: “The creative industry, especially the video game industry, is specific in the sense that enthusiasts often work in it. These people got into this industry not because of a recruitment ad or because they live nearby. Still, because they want to work particularly in the video game industry, […] they just want to contribute something to the company, it is like their internal motivation […], their passion creates this contribution” (I7). However, such internal motivation is difficult to create and control: “What is missing in many companies is such employee involvement […], not only coming to work for eight hours, then closing the door and turning the head off, and being like a little robot that only carries out commands [¼] it is a huge challenge to create such commitment” (I8). It suggests that internal motivation may foster the commitment of individual actors.

Surprisingly, there was support for a culture based on the superiority of older and more experienced employees. One of our informants stated: “In our studio, we do not include the youngest people […] because all attempts have failed” (I4). It contradicts the view that creativity is associated with youth.

In addition to all the challenges identified and categorized according to our research model derived from the literature, we were also able to identify some additional issues mentioned by our informants. Those themes include feelings, beliefs, and fears that may accompany the process of opening up the strategizing process. Surprisingly, we noticed the negative feelings our informants expressed when talking about the possibilities of performing OS. Our interviews revealed two contradictory attitudes: on the one hand, concern, fear, and anxiety when relating to OS performance, and, on the other, mental readiness for transparent communication. One of the managers felt worried about being transparent with their employees. First, he was fearful of employees questioning the strategy content, including the pricing strategy, which was not revealed to employees because he was worried that it might not be understood in the broader context. But there were also contradictory opinions about the transparency of financial issues: “I think that transparency […] also brings some sense of justice in the employer-employee relationship. […] I also think it generates a more useful situation; it builds better social capital in such a company” (I3).

There were also fears about the employees’ reaction to the disclosure of strategic failures: “We do not internally share ideas for company development. I mean, sometimes we do, but we don’t share if there are failures” (I4). Our interviews also revealed a fear of disagreements that could lead to differing points of view and potential conflicts: “Among the disadvantages, it may turn out that where there are two voices, there are three opinions, and then some problem arises” (I5). It suggests that various opinions are perceived as a problem rather than a potential benefit: “If too many people know everything about that issue, then, as I said before, there will certainly be conflicts” (I4). One of the informants also mentioned that the conflict might lead to a drop in authority. Such findings suggest that various opinions and points of view are not as welcome in the CI as might be assumed.

As the additional issues mentioned by our informants are linked to thoughts, feelings, and behaviors and may be characterized as temporal and subjective, we can describe them as climate-related factors. It differs from the culture, which refers to an evolved context (within which a situation may be embedded) [Ehrhart and Schneider, 2016].

The main theoretical insights resulting from our studies are threefold. First, our findings show that the investigated companies operating in the CI are not as open as we assumed based on suggestions by Chesbrough and Appleyard [2007] that open initiatives often emerge in creative communities.

Second, our study confirms all the main OS-related challenges identified in the literature: strategy, structure, process, and culture but in a new context. Previous studies on OS-related challenges have not focused on CI, which is why our findings are context-specific, and we follow the suggestions of scholars to shift from context-excluded research to context-embedded research [Tsui, 2007; Michailova, 2011] and to investigate the OS phenomenon in various industrial settings [Hautz et al., 2017]. Despite the specific features of the CI, the investigated companies were not immune to the struggles and challenges that may result from such a strategy. On the contrary, these companies found OS challenging and demanding.

Third, our research has also yielded some new insights into this field. In our interviews, we observed a recurring pattern of challenges relating to organizational climate. This category was not present in previous studies on OS. Based on our data, we suggest that the company’s decision to open up the strategizing process requires a specific organizational climate, which we call an “open climate.” Based on our findings and previous studies in the fields of organizational climate [Patterson et al., 2005; Rožman and Štrukelj, 2020] and creative climate [Ekvall, 1996; Amabile, 1997], we suggest this category is rooted in the concepts mentioned above, albeit with a more outward orientation, which is necessary for including external stakeholders and being transparent to them. Based on our findings, we suggest that an open climate concept should be explored further in other industries’ contexts, and if the challenges we identified find confirmation in different industries, it should be considered as a part of the explanation of the OS phenomenon. Previous studies in this field have not included this concept. The findings from our study revealed new gaps in the literature that have not been previously exposed and adequately described. Surprisingly, based on our understanding of an open climate, our data indicated that such a climate was lacking in the investigated companies. Our informants reported many anxieties and fears when relating to an OS, which we interpret as a low level of open climate. Such identity and security challenges have already been discussed in the context of hierarchical relations and the episodic involvement of lower level employees [Mantere and Whittington, 2021]. This might be why these informants reported that they had faced a limited range of challenges in categories such as the strategy, structure, or processes involved in opening up the strategy. We believe that creating an open climate might simultaneously be the first step and the first challenge in opening up the strategy. Only when such a climate exists might further challenges relating to strategy, structure, process, or organizational culture be fully revealed.

The practical implications we can mention are threefold.

First, we suggest that CEOs of companies operating in the CI should, when considering OS, be aware of several challenges that such a strategy might pose and which sometimes seem invisible initially. Identifying the organizational climate within the organization, particularly the signs of an open climate, might be the first step in opening up the strategizing process.

The second implication of our research relates to the finding that the ownership structure might influence strategy approval. Our interviews revealed that a single decision-maker is more willing than a group of decision-makers to allow others to participate in the decision-making process. Therefore, companies with a group of decision-makers that decide to open up a strategy-making process should be particularly sensitive to the inclusion of other stakeholders. Without involving a wider group of actors in the decision-making process, there is a risk that that team will dominate a company with a small group of decision-makers.

The final managerial implication relates to the challenge of including debates and different opinions in OS. Managers should consider how to encourage opinion-sharing respectfully and productively. It may require applying or creating new tools or techniques of moderation that have not previously been used in the company.

The findings in this paper have several limitations.

Our study was based on a possible sample variation by selecting one manager from each of the eight CIs. Still, more representatives of each industry might bring new insights and allow better data saturation.

Another limitation relates to context. Our study was conducted among Polish companies, which might impact the results. Poland has a relatively low level of trust toward others: only 12% of Poles believe that most people can be trusted [Czapiński and Panek, 2014]. This result may also be translated to Polish managers’ attitudes toward opening up the strategizing process. As this process is based mainly on a willingness to develop and perform strategies, it requires high levels of trust. It would be interesting to investigate companies in other countries to provide more context-specific insights. A cross-national study could reveal any cultural differences relating to a willingness to open up the strategizing process, and it would enable checking whether the results are contextual.

This research has raised many questions requiring further investigation. More research is needed to better understand OS-related contextual issues, with the industry context being one of them. Future studies could explore other industries to identify benchmarks when a full OS implementation is possible.

Also, the size of a company seems to be a factor relevant to an OS. We investigated mainly small companies, whose view was that it is easier for large organizations to open. However, further investigation and comparative studies are needed to resolve this issue. Moreover, our informants represented industries embedded in very different types of ecosystems. The ecosystem’s role in creating open possibilities while simultaneously setting practices and culture for the focal organizations seems theoretically critical. As it seems to differ, exploring that interface will likely yield some essential theoretical insights.

Moreover, future research could also investigate previous managerial experience with more open organizational practices to reveal their cognitive and behavioral reactions.

Finally, if the debate on an open climate and its relation to OS is to be moved forward, a better understanding of an open climate needs to be developed. Future studies that focus on and explore an open climate could help to elaborate a more accurate conceptualization of this term.