Board Composition and Organizational Performance in the Cultural Sector: The Case of Italian Opera Houses (Abridged)

by Paola Dubini and Alberto Monti

The most significant event of opera houses in Italy is the reform of 1996, transforming opera houses from government bodies into foundations with boards of directors, budget autonomy, and responsibility for hiring and firing. As a consequence of the reform, the general manager is appointed by the board rather than by the ministry and the local mayor serves as president of the board. Additionally, private contributions to the theatre’s endowment are set at a minimum of 12%. In Italian opera houses, the size, representation and role of the board are defined by law; therefore, the degree of freedom left to different stakeholders in the composition of the board relies very much on the personal characteristics of each board member.

In this article, we address the issue of sustainability of Italian opera houses, by focusing on the relationship between board composition and performance, on the assumption that a functioning board is instrumental to engaging stakeholders and donors in a mutual reputation-building exercise as it addresses issues emerging from outside the organization and affecting its reputation. In order to do this, we identify the following roles within the board of directors: artists, controllers, cultural managers, influential people and other specialists. Our research is based on the analysis of 14 Italian Lyric and Symphonic Foundations, between 2001 and 2012.

Teatro alla Scala (Photo: Frances Craven).

Teatro alla Scala (Photo: Frances Craven).

Our findings suggest that boards do matter and that their composition affects the ability of opera houses to reach out to different categories of revenue provider. For instance, controllers and influential people both affect theatres’ global performance and earned income. We found no effect of the proportion of influential people on both public and private income, although we did find a relationship between influential people and public income.

Similarly, we hypothesized that cultural managers and other specialists influence earned income, since they might have the competencies necessary to help theatres maximize this type of revenue. This hypothesis was not confirmed.

An interesting result concerns the proportion of artistic profiles on boards of directors in explaining both public and private funding. In line with expectations, the presence of those with artistic profiles on the board was negatively correlated to private funding.

Yet our results also indicate a non-significant effect of a high proportion of board members with an artistic background on public financing, although artistic quality is a specific driver of public funding in Italian opera houses.

One of our findings concerns the relationship between competence diversity among board members and within the board overall. Although all board functions are performed at the group level, specialization at the individual level could matter. Different board members with different profiles will contribute to board activities in different ways. Board members might be individually diverse – each one having several non-mutually exclusive profiles – while at the aggregate level the board might have a degree of homogeneity in terms of profiles represented. Our results indicate that skill diversity in individual board members and at the board level impacts performance in different ways.

Finally, in the case of earned income, the gross domestic product at a regional level positively and significantly affects private funds, although the magnitude is small (€247). Additionally, the presence of new members on the board seems to strongly and positively affect theatres’ ability to raise private funds. New members increase theatres’ ability to attract private funds by approximately €182,000.

Read the full article in the International Journal of Arts Management, Volume 20, Number 2, Winter 2018.

 

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