Balancing the score: the financial impact of resource dependence on symphony orchestras

Expenses in the performing arts have historically increased at a rate faster than earned revenues due to the labour reliance of the sector. Flanagan (The perilous life of symphony orchestras: artistic triumphs and economic challenges. Yale University Press, New York, 2012) found that US symphony orchestras were able to avoid the negative consequences of this earning gap by fostering strong private support. In the present study, we find that, in contexts where private funding is not as readily accessible, like in Canada, arts organizations have more incentive to keep expenses under control. This can be understood in terms of resource dependence where government funding bodies, due to a homogeneous set of demands, put pressure on organizations to control their expenses and reach greater audiences. Using panel data covering a period of 8 years and forty-eight orchestras, the results show that Canadian orchestras, when compared to US ones, achieve a lower rate of expense increases over time and are more reactive to economic downturns.