"MASTER OF BUSINESS ADMINISTRATIONAcademic year 2014-2016A DissertationEntitled Culture of Innovation: The analysis of Pro Helvetia-SDC fund inleading innovation in the Arts and Culture Sector in Southern Africaby Esther Karimi Malia ID Number: J00045604A dissertation submitted for the Master of BusinessAdministration(MBA)The Business SchoolUniversity of RoehamptonSubmitted 02 January 20171 ABSTRACTPurposeWith increased global complexity and insecurity, many organizations face challengesformulating appropriate innovation strategies. The problems are stimulated by the lackof resources or studies regarding the culture of innovation. These challenges are morepredominant in the arts and culture institution, where businesses operate in puzzlingenvirons, that are triggered by the current global economic decline. For that reason, lackof innovation strategies has the potential to affect employees and stakeholder negativelyin any organization. As a result, there is a fundamental obligation for culturalinstitutions to develop innovative strategies that aid in making competitive, creativedecisions. Therefore, the current study was motivated after the literature review, whichrevealed a limited culture of innovation studies carried out particularly in the arts andculture sector in SA.Design/methodologyIn order to determine the critical methods that an organization can utilize during theinnovation processes, an exploratory study of PH-SDC fund and relevant literature wasreviewed. A qualitative study was conducted and a framework incorporated to guidethe researcher with vital links to the culture of innovation. The data obtained andanalysed for the period 2012 to June 2016 and interviews conducted with seniormanagers.Findings/suggestionResults from the study uncovered that culture of innovation, whether related toproducts, process, marketing, or organization method is a sophisticated exploit thatinvolves several approaches such as organization culture, collaboration, strategy,structures/systems and value creation. Moreover, a relationship existed in the culture ofinnovation strategies with additional concepts such as learning and knowledgemanagement (LKM), strategic partnership, resource management, research anddevelopment (R&D), stakeholders focus, audience reach amid others detailed in thestudy. Some of the relationships were espoused in the survey during the analysis.Consequently, cultural institutions seeking to intensify their innovation strategiesshould encourage the culture of innovation within their organization.2 ACKNOWLEDGEMENTI would like to thank all the people who have directly and indirectly assisted to theachievement of this study, in so many ways:To my daughter: Jeanne Namanda, thank you for all the sacrifice you have enduredwith me, your constant love, good humour through music and dance, you are a star. Ilove you.To my incredible colleagues at Pro Helvetia Johannesburg: Joseph, Rucera,Germaine, Sthembile, Tiffany and Russel, Pro Helvetia Zurich: Jasper, Silvio, Karin,Isabel and Dalia and the entire Pro Helvetia team for creating a great environment ofunity, trust, constant support, advice and encouraging words. Thank you, Joseph, forproofreading every chapter of the study.To my supervisor: Dr. Dimitrios Koufopoulos, thank you for your kindness,productive conversation and the constant questions that offered clarity through theresearch journey. Thank you for all your close reading and advice.To my colleagues at Roehampton: you provided a great environment, great friends,and an incredible community of scholarship. My study mates, Ehi Ebrahim and LibertyMoyo, your intellectual curiosity and generosity is a continuing source of inspiration.To the SA Roehampton group, Este, Emmanuel, Felix, Kamie, Nandi, Zhakata, Zulu,and all the rest, thank you for all your encouraging messages. The group support hasbeen inspiring! Roehampton writing centre and study skills tutors: A big thank you toKate Connery for feedback and reviews during the study.To my mentors: Dr. Nonthando Hadebe and Pastor Vusi Vilakati you’ ve beenincredible friends and teachers over the years. I couldn’ t have done that without yourconstant encouragement and support.To my friends: Tsitsi, Mbongi, Clementine, Phibion, Becky, Liz, Victor, Njogu, Esauand Kaanto for your encouraging friendship and support, especially Kaanto to forproofreading. You are a real inspiration!To my family: my mother Josephine, my father Charles, my sisters Judy, Lydia, Doreenand Jacky who believed in me all these years and supported me throughout. I couldn’ thave done that without your love. To my cousin Kimathi Malia, I followed your advice,I am here now, thank you for your wise words. To the entire Malia clan, my uncles,aunties, and cousins. Thank you all for your love and encouraging messages.3 We hereby certify that this Dissertation submitted by Esther Karimi Malia conforms toacceptable standards, and as such is fully adequate in scope and quality. It is thereforeapproved as the fulfilment of the Dissertation requirement for the degree of Master ofBusiness Administration (MBA)Approved:Dissertation Advisor: Dr. Dimitrios KoufopoulosDate:… … … … … … … … … … … … … … … … .4 TABLE OF CONTENTSPAGE NUMBERCover page… … … … … … … … … … … … … … … … … … … … … … … … … … … … … .1Abstract… … … … … … … … … … … … … … … … … … … … … … … … … … ..................2Acknowledgement… … … … … … … … … … … … … … … … … … … … … … ..................3Approval Page… … … … … … … … … … … … … … … … … … … … … … .… … … … .......4Table of Contents… … … … … … … … … … … … … … … … … … … … … … … … … .......5List of Figures… … … … … … … … … … … … … … … … … … … … … … … … … … ........8List of Tables… … … … … … … … … … … … … … … … … … … … … … … … … … … … ..8Abbreviation… … … … … … … … … … … … … … … … … … … … … … … … … ...............9CHAPTER 1: INTRODUCTION… … … … … … … … … … … … … … … … … … … … .10Introduction… … … … … … … … … … … … … … … … … … … … … … … … … … … … ..10Research aim, objectives and the research questions… … … … … … … … … ................10 Problem Statement… … … … … … … … … … … … … … … … … … … … … … … … … … 11Research Approach… … … … … … … … … … … … … … … … … … … … … … ...............12Rationale for the study and the anticipated contribution to the study… … … .................12Structure and History of Pro Helvetia (PH)-Swiss Agency for Development and Cooperation (SDC) Fund… … … … … … … … … … … … … … … … … … … … … … … ..13Dissertation Outline… … … … … … … … … … … … … … … … … … … … … … … … … ..14CHAPTER 2: LITERATURE REVIEW… … … … … … … … … … … … … … … .… … 15Introduction… … … … … … … … … … … … … … … … … … … … … … … .… … … … … .15INNOVATION … … … … … … … … … … … … … … … … … … … … … … … … … … … 15Processes of Innovation… … … … … … … … … … … … … … … … … … … … … … … … 15CULTURE… … … … … … … … … … … … … … … … … … … … … … … … … … … … … 16CULTURE OF INNOVATION… … … … … … … … … … … … … … … … … … … … … 16CONCEPTUAL FRAMEWORK… … … … … … … … … … … … … … … … … … … … .19ORGANIZATION CULTURE… … … … … … … … … … … … … … … … … … … … … 21Staff/employees… … … … … … … … … … … … … … … … … … … … … … … … … … … 22Leadership Management… … … … … … … … … … … … … … … … … … … … … … … ...22Learning and Knowledge Management… … … … … … … … … … … … … … … … … … 23STRATEGY… … … … … … … … … … … … … … … … … … … … … … … … … … … … .23 5 Business Model Innovation… … … … … … … … … … … … … … … … … … … … … … ...23Strategic Partnership… … … … … … … … … … … … … … … … … … … … … … .............24Risk Management… … … … … … … … … … … … … … … … … … … … … … … … … … .24COLLABORATION… … … … … … … … … … … … … … … … … … … … … … … … … 25Vision and Mission… … … … … … … … … … … … … … … … … … … … … … … … … ...25Managing Projects… … … … … … … … … … … … … … … … … … … … … … … … … … 25 SYSTEMS / STRUCTURE… … … … … … … … … … … … … … … … … … … … … … ..25 Resource Management… … … … … … … … … … … … … … … … … … … … … … … … ..26Research and Development (R&D)… … … … … … … … … … … … … … … … … … … ..27Communication and Technology… … … … … … … … … … … … … … … … … … … ......27VALUE CREATION… … … … … … … … … … … … … … … … … … … … … … … … … 28Stakeholders/Customer focus… … … … … … … … … … … … … … … … … … … … … ...29Product and Service Quality… … … … … … … … … … … … … … … … … … … … … … .30Audience Reach… … … … … … … … … … … … … … … … … … … … … … … … … … … 30SUMMARY… … … … … … … … … … … … … … … … … … … … … … … … … … … … .31CHAPTER 3: RESEARCH METHODOLOGY… … … … … … … … … … … … … … .32Introduction… … … … … … … … … … … … … … … … … … … … … … … … … … … … ..32Research Paradigm… … … … … … … … … … … … … … … … … … … … … … … … … ...32Research Tools and Design… … … … … … … … … … … … … … … … … … … … … … ...33The Case Study… … … … … … … … … … … … … … … … … … … … … … … … … … … .34Data Collection… … … … … … … … … … … … … … … … … … … … … … … … … … … .34Radom Sampling… … … … … … … … … … … … … … … … … … … … … … … … … … ..34Interviews… … … … … … … … … … … … … … … … … … … … … … … … … … … … … .35Data Analysis Method… … … … … … … … … … … … … … … … … … … … … … … … ..36Ethics… … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … 37Reliability and Validity… … … … … … … … … … … … … … … … … … … … … … … … 37CHAPTER 4:DATA ANALYSIS, FINDINGS AND EVALUATION… … … … … .38INTERNAL DOCUMENTS ANALYSIS… … … … … … … … … … … … … … … … … 38INTERVIEWS RESPONSE RATE… … … … … … … … … … … … … … … … … … … ..40FINDINGS… … … … … … … … … … … … … … … … … … … … … … … … … .… .… … .42INTRODUCTION… … … … … … … … … … … … … … … … … … … … … … … … … … 426 FINDINGS ON THE CULTURE OF INNOVATION… … … … … … … … … … … … .42FINDINGS ON ORGANIZATION CULTURE… … … … … … … … … … … … … ..… 42FINDINGS ON COLLABORATION… … … … … … … … … … … … … … … … … … ..43FINDINGS ON STRATEGY… … … … … … … … … … … … … … … … … … … … … ...43FINDINGS ON STRUCTURES/ SYSTEMS… … … … … … … … … … … … … … … ..44FINDINGS ON VALUE CREATION… … … … … … … … … … … … … … … … … … ..47FINDINGS FROM INTERVIEWS… … … … … … … … … … … … … … … … … … ......47Interview 1… … … … … … … … … … … … … … … … … … … … … … … … … … … … ....48 Interview 2… … … … … … … … … … … … … … … … … … … … … … … … … … ..… … .48 Interview 3… … … … … … … … … … … … … … … … … … … … … … … … … .… … … ..49DISCUSSIONS AND FINDINGS… … … … … … … … … … … … … … … … ..… … … .50CHAPTER 5: CONCLUSIONS, RECOMMENDATIONS, LIMITATIONS… … … 53CONCLUSION… … … … … … … … … … … … … … … … … … … … … … … … … … ....53RECOMMENDATIONS… … … … … … … … … … … … … … … … … … … … … … … .54 Research Contribution… … … … … … … … … … … … … … … … … … … … … … … … ..54Recommendations for Future Research… … … … … … … … … … … … … … … … .… ..54LIMITATION… … … … … … … … … … … … … … … … … … … … … … … … … … … ..55REFERENCES… … … … … … … … … … … … … … … … … … … … … … … … … … … .56APPENDIXES… … … … … … … … … … … … … … … … … … … … … … … … … … … ..64APPENDIX A:CONSENT FORM… … … … … … … … … … … … … … … … … … … .64APPENDIX B: SECONDARY DATA… … … … … … … … … … … … … … … … … … .66APPENDIX C:SEMI-STRUCTURED INTERVIEW… … … … … … … … … … … … 68APPENDIX D:CODING SCHEME - SECONDARY DATA… … … … … … … … … 70APPENDIX E:INTERVIEW TRANSCRIPT… … … … … … … … … … … … … … … .74 Interviewee 1… … … … … … … … … … … … … … … … … … … … … … … … … ............74Interviewee 2… … … … … … … … … … … … … … … … … … … … … … … … … … … … 79Interviewee 3… … … … … … … … … … … … … … … … … … … … … … … … … … … ....847 LIST OF TABLES… … … … … … … … … … … … … … … … … … … … … … … … … … ..8Table 1: Framework of the culture of innovation… … … … … … … … … … … … … … ..18Table 2: represent random sample PH-SDC fund for the period 2012-June 2016… … .35 Table 3: Interview Response rate from PH-SDC … … … … … … … … … .… … … … … .35Table 4: Culture of innovation indicators in the documents analysed… … … … … … … 39Table 5: Resource Management/Number of projects… … … … … … … … … … … … … 45Table 6: Communications strategy… … … … … … … … … … … … … … … … … … … … 46Table B.1:Secondary data source… … … … … … … … … … … … … … … … … … … … 67 Table D.1:Coding scheme secondary data… … … … … … … … … … … … … … … … ..73LIST OF FIGURES… … … … … … … … … … … … … … … … … … … … … … … … … ...8Figure 1: Innovation processes… … … … … … … … … … … … … … … … … … … … … ..15Figure 2: Approaches to innovation… … … … … … … … … … … … … … … … … … … ..17Figure 3: Hierarchical framework culture of innovation… … … … … … … … … … … ...20Figure 4: Value chain for cultural institutions… … … … … … … … … … … … … … … ...29Figure 5: Interview response rate/number of years worked in the programme… … … .39Figure 6: Percentage of interviewee response rate/years worked… … … … … … … … ..41Figure 6: Number of projects funded for the period 2012-2016… … … … … … … … … 458 ABBREVIATIONSBMW - Bavarian Motor Works CH - SwitzerlandDRC- Democratic Republic of CongoFMCG - Fast Moving Consumer GoodsJV- Joint VenturesJHB - JohannesburgKM - Knowledge ManagementLKM- Learning and Knowledge ManagementNESTA- National Endowment for Science, Technology, and ArtsNGO- Non-Governmental OrganizationNPO - Non-Profit OrganizationPH- Pro HelvetiaPHJHB -Pro Helvetia JohannesburgSA - South Africa and Southern AfricaSADC- Southern Africa Development CommunitySADAC- South Africa Department of Arts and CultureSDC- Swiss Agency for Development and CooperationUK-United KingdomR&D- Research and Development9 CHAPTER 1: INTRODUCTION1.1.IntroductionThe culture of innovation paradigm has grown significantly among many researchers.Numerous studies highlight the importance of innovation as a means to attainsustainable competitive advantage and enhanced economic growth (Bakhshi & Throsby2010); (Schroeder, 2013); (Muller et al., 2009); (Dolinska, 2015), (Moses et al., 2012).In the exposition of the culture of innovation, (Tice, 2012, cited in Ebrahim, 2014, p16) asserts that “ five out of ten businesses do not survive the first five years with themajority not even making past the first year.”Hence, for organizations to remaincompetitive, organizations must continuously innovate, both in for-profit or non-profitorganizations (NPO). Therefore, for organizations to stay competitive, they mustswiftly formulate innovative strategies to meet customers/or stakeholder needs (Moseset al., 2012). In the opinion of Krastevski & Manchedki, (2012) most innovativecompanies such as Apple, BMW, Google, Procter and Gamble attribute their successto a culture of innovation.As a result, these companies focus on R&D to ensureinnovation remains an integral part of the enterprise. Consequently, because ofincreased global complexity and uncertainty, businesses are forced to add innovationas an integral part of their extended value chain. This approach is not only relevant forgiant companies such as Google or Apple. Instead, it is necessary for all organizationsdespite their size to innovate continuously. A view supported by the research conductedin Bakhshi & Throsby (2010) that many institutions are aware of the importance ofinnovation and its advantage to them.As a result, many institutions strive to understandthe innovative force present in the business to provide suitable support measures thatmotivate the culture of innovation to yield productivity and competitiveness in both thepublic and private organization sector.1.2. Research aim, objectives and the research questionsThe research will seek to achieve the following aim and objectives:§ Identify the factors that influence an innovation culture; § Develop an appropriate methodology to measure the culture of innovation in anarts and culture organization; § Develop a summary, recommendations and limitations relating to the culture of10 innovation in funding organizations in the arts and culture institution;§ Consequently, the following general questions are posed: What does innovationmean to a culture organization? What is your understanding of organizationculture? Does the organization/programme have clear defined strategies? Howhas collaboration assisted to achieve successful innovation? What are theinfrastructure/systems in place that supports each stage of the innovationprocess? How does the programme fund add to value creation in the arts andculture sector? All these questions will be addressed in the dissertation. 1.3.Problem Statement In recent years, there is much evidence of interest in establishing the level of innovationpresent in the arts and culture organization. Bakhshi & Throsby (2010), Hartley et al.,(2012) in their current research present modest evidence of innovation in the arts andculture organization. In support of this view, Pisano, (2015), add that innovation is anexasperating pursuit for many organizations, regardless of the vast investment of moneyand time. Besides, studies indicate a significant knowledge gap between cultureinnovation in the arts and culture institutions that creates potential for serious perplexity(Bakhshi & Throsby 2010).Also, few studies have been conducted in SA to establishthe culture of innovation in the arts and culture sector. Consequently, the current studywill determine whether the culture of innovation exist in the arts and culture fundingorganization. The study conducted by Lewandowski, (2015) found that arts and culturesector was perceived as a challenging arena for the development of success. The authorsrefer to “ soft innovation”to describe the change present in the arts and culture sector. Additionally, there is modest evidence currently available that identifies the variousways in which these institutions engage, adopt, utilize and contribute to the processesof innovation.Notwithstanding the well-documented agreement linking innovation andculture, many arts and culture organizations struggle with the challenge to develop tobe successful innovators. Besides, the culture of innovation in creative industries ishindered either by lack of funding and research (SADAC). Furthermore, significantwork is required in R&D in SA to develop and set up data for creative industries(SADAC, 2011).SADAC identify with “ ...more than 160 community art organizationswith varying operations from community-initiated to government-managedorganizations”The bodies function at different levels, ranging from educational11 funding, promotion, advanced programs such as advocacy and training(http://www.gov.za/about-sa/arts-culture). The available substantiation demonstratesthat most thriving arts and culture organizations, approach change in a holistic andsystematic way. Therefore, the group that declares achievement owe their outstandingrealization to a sustained record of continuous “ culture of innovation.”An exampleprovided in Bakhshi & Throsby, (2010) is NESTA in the UK. The success in theopinion of Schroeder, (2013), achieved by developing an innovation strategy fullyintegrated into the organization’ s strategy while aligning their goals and objectives tothe team culture, strategy and structures.1.4. Research ApproachThe study will identify the culture of innovation and attempt to determine approachesthat arts and culture organization can employ to improve innovation strategies. Themethodology espoused in the research was a qualitative case study. Usage of secondarydata revealed much information on the fundamental concept of the culture ofinnovation.The initial stage involved organizing data through random sampling for the analysis ofinternal documents. And the study in the form of interviews was carried out to ensurethe validity of the findings. The respondent of the interviews were senior programmanagers in the organization.The respondent of the interviews determined that there was validity in the keyapproaches to the culture of innovation in the program fund. The literature review,conceptual framework and findings informed the basis for the findings/discussions,conclusion, and recommendation.1.5. Rationale for the study and the anticipated contribution to the studyFew studies, especially in SA, have investigated the culture of innovation andapproaches to innovation in an arts and culture funding institution. Therefore, thecurrent research will seek to contribute to the body of knowledge of culture change ata theoretical and methodology level. Firstly, to an established a method in the arts andculture sector, the applying qualitative methods will introduce a method in the study of12 the culture of innovation in the arts and culture sector. Secondly, the study will generateknowledge and new approaches to innovation in arts and culture organizations. Thirdly,the study aims to create knowledge of innovation including a framework to facilitatethe improvement of learning innovation in the arts and culture sector.Lastly, the studyanticipates generating proposition concerning the culture of innovation. Theinformation gathered from the qualitative research will assist in providing approachesof the key factors that influence innovation.1.6. Structure and History of Pro Helvetia (PH)-Swiss Agency for Developmentand Cooperation (SDC) FundPro Helvetia Johannesburg (PHJB) is Swiss Arts Council liaison office in SouthernAfrica. The organization acts as a funding body, advisory office and co-producer ofcultural (exchange) events between Switzerland (CH) and Southern Africa (SA)(http://www.prohelvetia.org.za/).The office is also mandated to manage funds madeavailable by the SDC. The agreement stipulates that the funds directed towards arts andculture projects in Southern Africa. The study focus on PH-SDC SA Programme,Regional Art and Culture Programme 6th Agreement 2012-2014 and 7th Agreement2015-2017. The overall objective of the mandate is to promote and support thedevelopment of a regionally networked program and meaningfully contribute to social,economic and cultural goals in the art and culture sector in SA. Also, the core focus ofthis mandate is to encourage exchange and collaboration between countries within theSA region. The fund supports cultural organizations and individuals who areprofessionally active in the field of arts and culture (PH-SDC, 2015).13 1.7.Dissertation OutlineChapter 1The section serves as a preface that provides the reader or researcher with theinformation on the study purpose, problem statement as well as information regardingthe study background. Consequently, it introduces the reader to the objectives andquestion tackled in the next chapters of the study. Chapter 2The section presents the literature review and provides a background to the research.This section also contains information key approaches to culture of innovation aconceptual framework to enlighten the reader or researcher. Moreover, the underlyingprinciple and connotation of carrying out the study also specify the significance of thesurvey to researchers who are eager to pursue the study further, especially in the artsand culture institutions.Chapter 3This section presents the methodology approach to the study of the culture of innovationin the arts and culture funding organization. The section also specifies the sample andtechnique used throughout the data gathering process. This section will discuss how thestudy was conducted, research design, data collection method, data analysis and thetype of data collected.Chapter 4This section offers the findings of the investigation. The chapter also presents theanalysis and discussions of the study. The results were determined following theliterature and research questions.Chapter 5This section presents the conclusion, recommendations and limitations of the study theculture of innovation in the arts and culture organization.14 CHAPTER 2: LITERATURE REVIEW2.1.IntroductionThe reviewed literature the culture of innovation in the arts and culture sector isrelatively diverse.According to Bakhshi & Throsby, (2010), the culture of innovationhas assumed less research, a view that is supported in Sabatier & Coblence, (2014),who maintain that there is modest information available on innovation present in thearts and culture organization. Additionally, in the opinion of Lewandowsky (2015),until recently only a few studies addressed the issue of the main approaches to theculture of innovation across cultural institutions.Therefore, as policy makerscontinuously call on arts and culture organization to embrace the mantra of change inorganization strategies. Bakhshi & Throsby, (2010) urge cultural institution to integratethe culture of innovation in the strategic planning since it has the remarkable impact onthe strategic goals and objectives of the organization.2.2.INNOVATION There are many definitions of innovation. The first notable description of innovation isa remarkable positive change, a result or an outcome (http://scottberkun.com). Moseset al., (2012), explain innovation as the execution of a new or notably enhanced product(goods or services) or process. Consequently, there is a call for organizations to developenvironments that encourage innovation. Urabe et al., (1988) describe change as theprocesses of planning, decision-making, and implementation. Many researchers take abroad approach to innovation, for example, the study conducted by Schroender, (2013),refer to organization culture, collaboration, strategy, and systems. Bakhshi & Throsby,(2010) place emphasis on business strategy, value creation, and audience reach astheoretical approaches to the culture of innovation.2.2.1. Processes of InnovationThere are four categories of innovation discussed in Moses et al., (2012), Trigo, (2013),namely: product, process, marketing and organization methods.ProductProcess Marketing Organization method Figure 1: Innovation processes15 "