Support of Human Entrepreneurial Capital in Creative Industries

INTRODUCTION

The regional policy includes all public interventions leading to the improvement of the geographical distribution of economic activities. It seeks to correct inevitable negative consequences of the operation of the market economy in terms of achieving two interdependent goals: economic growth and improvement of economic effects.

Regional policy is an integral part of the macroeconomic economic policy of the state and is implemented in close cooperation with sectoral policies, and structural and urban policy (Miadokova & Rysova, 2023). This is a conceptual activity of the state, regional, and city authorities, the aim of which is to contribute to the reduction of differences and, on the contrary, to strengthen the balanced development of individual regions and improve their regional economic structure and smart cities (Corejova et al., 2021).

The current period of regional policy development focuses mainly on supporting clusters and cluster initiatives. The effort is to connect technology, human resources, and capital through a network of cooperating companies and institutions, striving to achieve a global competitive advantage. The subject is the creation of regional innovation systems (Landry, 2016).

A necessary condition for ensuring regional development is a suitable institutional and legislative environment and the development and application of a system of program documents. Current regional policy support tools (Miadokova & Rysova, 2023):

• Support for the creation of small and medium-sized enterprises.
• Support for the creation and dissemination of innovations.
• Implementation of deregulation measures.
• Emphasizing the role of local self-government.
• Implementation of support programs for foreign investors.

Among the critical local and regional development factors are knowledge, innovation, and creative and cultural industry support.

Along with the increase in studies supporting the importance of the creative economy for development, the number of supporting instruments applied within individual states and regions is also increasing. Individual countries apply different forms and types of support. Developed regions instead tend to help the development of human capital and its creativity. Lesser developed countries, on the other hand, focus on technology support (Mersch et al., 2010). There are also differences in the strategies applied from the national to the local level. However, they all intertwine and influence each other, mainly due to the diversity of creative industries (Balaz et al., 2022).

In recent years, besides public administration institutions, other entities like multinational institutions have participated in enhancing human capital and service quality and creativity, as well as the use of open data and big data (Fabus et al., 2017) within regions, e.g. The European Union (EU), as well as various development agencies, associations, consulting centres, etc.

Influencing and regulating the development of regions takes place at several levels (Smith et al., 2014):

• transnational – it is a regional policy implemented by the EU as part of the policy of economic and social cohesion,
• national – it is a regional policy implemented by the state within the spatial structure of the national economy,
• regional – this is the policy of the regions by which they participate in creating and implementing regional policy.

The state operates at the national level of regional policy and regional development. The state creates conditions for the development of regions (institutional, financial, legislative, systemic), but also in determining the strategic focus of regional policy. As a supra-regional actor, the EU determines important conceptual and legislative parameters of regional development for the state and the provision of financial resources supporting the implementation of national and regional policy. Other institutions involved in implementing regional policy are state agencies, professional and other interest associations, and professional institutions or organizations of the third sector (Cikanek, 2013).

Regional self-governments are the essential link to regional development policy at the regional level. In Slovakia in 2004, parliamentary approval led to the division of competencies between the state and the local government, resulting in a two-level centralist administration.  It is a state administration consisting of ministries and local state administration, and territorial self-government consisting of municipalities and higher territorial units, i.e., self-governing regions (Rentkova, 2019).

They stand at the lowest hierarchical level of regional development in terms of spatial dimensions of the municipality. From the point of view of the local level, these are municipalities whose involvement in regional development is necessary for all higher levels of regional development. The municipalities plan and implement their regional development through economic and social development programs (Jezek & Jezkova, 2018).

Different European and Asian studies and strategies recommend other types of instruments suitable for supporting the creative industries. This would better address the requirements of the creative sector, particularly the advertising industry (Jasurek & Sipikal, 2021).

Table 1 contains an overview of the measures most often used to support creative industries at the national, regional, and local levels (Balaz et al., 2022).

Table 1. Overview of the most frequently used measures to support creative industries.

Micro-enterprises, or small and medium-sized enterprises, mainly represent the creative industry in general. Small and medium-sized enterprises represent a tool for increasing competitiveness and the possibility of penetrating the markets of other countries, thanks to their flexibility and ability to quickly adapt to market requirements. Small and medium-sized businesses play an irreplaceable role in less developed regions and rural areas, where they represent the basis of the local economy and are a vital sector for job creation and employment growth. Creating a quality business environment is a crucial factor for the growth and development of the Slovak economy (Huttmanova et al., 2019).

The primary financial implementers of financial aid for small and medium-sized enterprises in Slovakia are the Ministry of Economy of the Slovak Republic through the National Agency for the Support of Small and Medium-sized Enterprises. The Ministry of Finance also has a significant influence on the support of small and medium-sized enterprises, mainly through legislation concerning employees.

Most programs to support small and medium-sized businesses are implemented through cooperating institutions: Regional Advisory and Information Centers, First Contact Centers, and Business Innovation Centers (Kmety Bartekova et al., 2020). These centres are located directly in the regions, which makes them much more accessible for entrepreneurs and also provides advice in the field of state aid.

The scope of the Ministry of Economy of the Slovak Republic also includes non-profit organizations and contributory organizations, one of whose activities may be the support of small and medium-sized businesses, such as the European Education Academy, the Slovak Tourism Agency, and the Slovak Innovation and Energy Agency.

We can meet with a sufficient portfolio of support mechanisms in Slovakia for small and medium-sized businesses. The portfolio includes various financial and non-financial support instruments. Despite this, the intensity of support is still low, and the demand on the state budget is, on the contrary, too high (Ministry of Culture of the Slovak Republic, 2014).

The Association of Young Entrepreneurs of Slovakia also plays an essential role in business support in Slovakia. An association provides its members with space for cooperation and education. The association also operates the www.podnikajte.sk portal, where there is a lot of exciting information for those interested in entrepreneurship or for existing entrepreneurs. Among the successful activities carried out by the association is the organization of the largest competition of business ideas in Slovakia - Business Idea of the Year (Kmety Bartekova & Majduchova, 2019).

Situational Review

Activities of the Žilina Region in the field of business environment support are based on the Economic and Social Development Program. It is a development document that purposefully and conceptually guides and supports the overall socio-economic development of the Žilina self-governing region. It considers current trends and accepts the requirements of European structures and initiatives as well as the economic and social situation in the Slovak Republic and individual parts of the Žilina Region.

Previously, the program primarily supported innovations, investments, and professional education development, while also providing support for tourism. The result of the innovative activities of this period in the Žilina self-governing region was, e.g., the creation of a cluster in the information and communication technologies field and three tourism clusters. Subjects from the region are also involved in the newly established all-Slovak cluster of automation and robotization, which has a regional workplace in Žilina.

The development of a new program was related to the next program period, which is associated with the so-called RVIS+ project, which is co-financed by the European Regional Development Fund and is intended to serve as a basis for its development. For the new programming period, an Integrated Regional Operational Program was developed and approved by the European Commission, which is financed by the European Regional Development Fund and whose global goal is to contribute to improving the quality of life and ensure the sustainable provision of public services with an impact on balanced and sustainable territorial development, the economic, territorial and social cohesion of regions, cities, and municipalities (Kmety Bartekova & Rakova, 2019). The creative economy is also discussed within the Integrated Regional Operational Program framework, related to the established priority axis 3, entitled Mobilization of creative potential in the regions. This axis aims to support sustainable employment and job creation in the cultural and creative industry by creating a favorable environment for developing creative talent and non-technological innovations. The program was implemented through the so-called Regional integrated territorial strategies. This is one of the tools of the integrated approach, based on the implementation of the strategy determined by the self-governing region at the NUTS 3 level (Žilina Region, 2016).

The Žilina Region is intensively applying the new program for the years 2021-2027 (with a view to 2030). It is a crucial document that sets the direction and priorities of the region’s development and, at the same time, serves as a tool for drawing public funds and European funds for the next ten years. Thanks to this program, the Žilina Region can effectively set up measures and activities to which funds from the European Union should go. It is based on knowledge of the current situation and problems of the region, as well as possible risks and threats linked to existing strategies and concepts. The program’s goal is to ensure the continuous development of the region after considering the problems and expectations of municipalities, cities, the private sector, and other socio-economic partners of the Žilina Region. It consists of an analytical part, a strategic part, a program part, and an implementation-financial part. A SWOT analysis is also included, which defines the region's strengths and weaknesses, possible opportunities that the Žilina Region can take advantage of, and threats that must be avoided (Žilina Region, 2019).

The Žilina Region is home to several vital institutions supporting business and creative industries, the most important of which are defined in the following paragraphs.

Regional development agencies are non-profit organizations and associations of legal entities, e.g., cities, chambers, or associations representing private entrepreneurs or non-governmental organizations. Their activity is supported through a contribution from the state budget, and the managing organization is the Ministry of Transport, Construction, and Regional Development. Agencies develop quality projects and grant schemes to obtain foreign and domestic financial resources for their region, either from EU programs, grants, or various foundations and central state administration bodies. Their activity is also oriented towards providing consulting services and training activities, and they initiate the construction of business incubators and industrial parks. These development agencies are also required to actively participate in the preparation of various analyses of the development potential of the territory, as well as their involvement in the preparation and elaboration of the Regional Operational Program of the Slovak Republic (Rybarova, 2020).

IPA Slovakia is a leading company in Central Europe, active in consulting, education, design, and research for industry. It focuses mainly on industrial engineering, supporting selected projects of non-profit organizations, individuals, and students. It works on industrial projects, and its key customers are international concerns in engineering, electrical engineering, or domestic enterprises in engineering, IT, construction, services, etc. Typical results of the work of IPA Slovakia are new products, services, new values for the customer, new production or business processes, etc. (Majduchova & Kmety Bartekova, 2020).

The Žilina Science and Technology Park is an association of legal entities focused on supporting small and medium-sized businesses and employment in the region, increasing competitiveness by concentrating on innovation in the regional context, and cooperation between the public and private sectors in developing small and medium-sized enterprises. It also provides consulting services aimed at improving skills and knowledge, mediates exciting contacts, and thus helps in the search for business partnerships. Since 2001, it has been cooperating with the University of Žilina and the most important companies from the region to support innovations, innovative companies, and business support. In collaboration with the university, it offers an elective course on entrepreneurship to students, providing them with practical business experience and the chance to apply their theoretical knowledge. ŽU Students and regional companies are also provided with so-called Career Emergency-first aid for their careers. It aims to help students develop their skills for business and better employment. Thus, it tries to help companies with a more effective process of selecting new high-quality employees. The Žilina Science and Technology Park also operates a technology incubator and a currently functioning coworking and business centre – Banka Žilina (Fiabane et al., 2021).

Banka Žilina is a new coworking and business centre, which is a concept of a creative space for modern business. In addition to coworking, it also offers several offices, conference and meeting rooms, and a café, which are intended to serve future and current entrepreneurs, young people looking for space to develop their ideas, or students who want to learn in the field of business (Holla Bachanova & Garbarova, 2019).

The Slovak Productivity Center was established as a national, open association with the cooperation of the Ministry of Economy of the Slovak Republic, the University of Žilina, and the Association of Employer Relations, and its primary goal is to contribute to the acceleration of changes in the area of productivity in Slovak industry. It allows any legal entity to become an association member and thus influence current and future events in the Slovak Republic. Many organizations in Europe and the world fully accept the Slovak Productivity Center. The Slovak Minister of Economy organizes the National Productivity Award annually as a national program to increase the productivity and competitiveness of the Slovak economy (Koscelnik, 2021).

CEIT is a Central European technological institute that was founded with the support of the University of Žilina as a spin-off of the Slovak Productivity Center. The main goal is the integration of scientific research activities to strengthen competitiveness. The company mainly focuses on the most modern technologies, approaches, or methods and thus tries to create tools to support innovative activities, stimulate economic growth and prosperity of commercially oriented scientific and technological research, and the results of university research in business practice (Koscelnik, 2021).

The Institute of Competitiveness and Innovation is an organizational unit of the University of Žilina, which was created by the Faculty of Mechanical Engineering and the Faculty of Electrical Engineering of the University of Žilina. The Institute of Competitiveness and Innovation is a research, development application, and training workplace with an orientation to the problems of technological research, entrepreneurship, and innovation, which are the basis of the growth of productivity and competitiveness. The main activities of the institute are the integration of new production methods, increasing productivity and competitiveness using modern techniques, transfer of research results into practice, management of European, state, and regional projects focused on innovation, teaching, and support of talented students and young researchers, etc. (Koscelnik, 2021).

ICT Cluster called Z@ict Klaster is an interest association of legal entities that was created to ensure the sustainable development of the Žilina region in information and communication technologies. The association's main goal is to increase the region's attractiveness and support the competitiveness of institutions and companies operating in the field of IT. The subject of the activity is education support, creating and maintaining a communication platform, and raising awareness of IT. It also offers various educational courses (Koscelnik, 2021).

The ORAVA cluster is a tourism association whose activities aim to put Orava on the map of sought-after European destinations, present Orava under a single brand at home and abroad, create competitive tourism products, and stimulate regional cooperation (Garbarova & Vartiak, 2022).

The Slovak Chamber of Commerce and Industry is a public-law institution that brings together natural and legal persons who carry out business activities in other economic sectors besides agriculture and food production. The activities of the Slovak Chamber of Commerce and Industry are focused on three areas: business and information services, educational and publishing activities, and library services and foreign business activities. An essential activity of the chamber is the support of international trade based on concluded bilateral agreements with foreign partner chambers, the provision of consultations, and advice in the search for business partners. It also participates in the organization of foreign trade missions with the participation of Slovak companies, and the organization of company presentations at domestic and foreign fairs or exhibitions (Gunisova, 2019).

MATERIALS AND METHODS

This paper is focused on entrepreneurial support in the creative industries at the national, regional, and local levels. It is also centred on the support of small and medium-sized enterprises and institutions that affect the business environment and can influence the support of creative industries, mainly advertising in the Žilina Region. The paper aims to determine the current state of entrepreneurial capital support in the creative industry. The paper is focused on analyzing and evaluating the research results in the advertising industry of the Žilina Region, which represents the mainstay of the creative industry. We set the following secondary objectives to achieve the paper's aim:

• analysis and synthesis of the theoretical starting points of the solved problem of the creative economy and its concepts,
• definition and analysis of the advertising industry,
• analysis and synthesis of the creative economy support policy,
• defining regional policy and its business support tools at the national, regional, and local levels,
• analysis of the current state of the advertising industry in the Žilina Region,
• determination of support for entrepreneurship in Slovak conditions, primarily oriented towards small and medium-sized enterprises and the possibilities of their financing,
• business support and institutional security of business in the Žilina Region.

The proposal to improve business conditions in the Žilina Region is preceded by primary research focused on four investigation areas: public support, human resources, institutional infrastructure, and financing. These four areas of investigation within the research part were based on an analysis of the current state of Slovakia's creative and advertising industries. Some studies mapping the current state of Slovakia's creative economy, in line with the strategic goals of Europe 2020, presented recommendations and priority goals in the area of development and support.

The creation of the paper was mainly based on the study of professional and scientific literature strategic documents of multinational institutions. Important sources were primarily scientific articles and scientific publications in domestic and foreign journals and anthologies, mainly found in the Web of Science database.

For the needs of the paper, quantitative research was carried out in the form of personal, telephone, and electronic inquiries. The object of the investigation was business entities whose subject of business was listed in the statistical database as the activity of advertising agencies operating in the Žilina Region. The questionnaire used identification, filtering, and different types of questions. Within the typology of questions, there were mainly closed and open questions and rating scales. Within each area, the questions in the questionnaire were aimed at finding out the current state of business in the advertising industry, in which business entities see the most significant shortcomings. The most important thing is to find out the proposal for improvement by the respondents, or which would lead to improving the very conditions of doing business in the advertising industry in the given researched area. When establishing these researched areas, the study of the creative economy was based on different peculiarities of the creative industry that were identified in comparison to the traditional industry. These specifics, which apply to the creative industry in general, were investigated more specifically in advertising.

RESULTS AND DISCUSSION

A questionnaire survey was conducted to find out the current state of business support in the advertising industry in the Žilina self-governing region. The object of the investigation was business entities in the Žilina Region, which had the activity of advertising agencies listed in the statistical database as a business object. Fifty-four respondents participated in the research. Data collection occurred from December 1, 2023, to January 31, 2024. Respondents were contacted via e-mail and on the Facebook social network.

The so-called spin-off processes are typical for the advertising industry. It is a separation from the parent company, caused by the departure of employees who start their own company. Most advertising agencies within the Žilina Region are located in the districts of Žilina, Martin, and Liptovský Mikuláš. Up to 70% of the agencies surveyed have been active in the advertising market for more than 20 years, roughly dating back to 2005, a period marked by rapid economic growth, when the pace of start-ups in creative industries grew compared to other industries. Finally, during the economic recession, the momentum of their establishment decreased substantially, indicating that the industry is sensitive to the economic cycle.

The main activities of the agencies in question are primarily graphic design, implementation of graphic design, import, production, and printing of advertising items, design of websites, sale of advertising space, or processing of texts. Activities such as marketing consulting, SEO optimization, PPC advertising, or event preparation are mainly carried out by specialized agencies operating as businesses.

The majority of advertising agencies that participated in the research do not use or have not used any public support in their business, whether from the state, self-governing regions, cities, or municipalities. Of the respondents, 70% did not use any support, and 22% did not but are considering it.

Based on the achieved results, it can be concluded that the lack of interest on the part of the subjects is mainly caused by the high administrative burden when obtaining a particular type of support and low awareness of such support options. Support programs are primarily not clearly defined for the advertising sector and, on a general level, are instead intended for small and medium-sized enterprises. An appropriate solution would be to create individual support programs and tools for the creative sector, which would be addressed to individual creative industries and take into account their real needs in the business environment.

The results of the questionnaire survey also showed that most advertising agencies are not members of any professional association and do not cooperate with any of the mentioned institutions supporting business. The exception was about one-third of the agencies cooperating or cooperating with the University of Žilina, the ORAVA cluster with the Advertising Council, Regional Agencies, and the Institute of Competitiveness and Innovation. Most agencies are considering becoming members of the Association of Young Entrepreneurs of Slovakia, joining the Club of Advertising Agencies KRAS, and cooperating with the Žilina Science and Technology Park.

In terms of financing, their sources of financing and profit are significant for advertising agencies. Only some of the respondents indicated that they use foreign sources of financing such as bank loans or unique forms of financing - forfeiting and leasing. Public financing in the form of grants, loans, or resources from structural funds is not a very common way of financing in the advertising industry. The most common proposed form of support in the field of financing, which the public sector should provide for the advertising industry, is the reduction of the tax burden, which was indicated by 69% of respondents. Other proposed forms of support were simplifying access to capital, non-refundable financial contributions, and new, more favorable forms of financing. Legislative changes in the field of financing, simplified access to EU support financial programs, and a reduction in administrative costs would also be helpful.

CONCLUSION

The creative industry, in general, is represented by smaller businesses or self-employed people, sometimes with zero employees. It is no different in the advertising industry within the Žilina region. From the point of view of employment, it was most often a micro-enterprise, which makes up 72%. The remaining 28% are small enterprises with more than ten employees. Not one was classified as a medium-sized enterprise. Most advertising agencies are registered as limited liability companies or operate as a business. The so-called are also typical for the advertising industry. spin-off processes. It is a separation from the parent company, mainly by the departure of employees who start their own company, most often a limited liability company or a business. This process is typical for small companies with high and innovative potential. During a personal interview, we learned that the respondents see the spin-off process as one of the problems of doing business in advertising.

Based on the analysis of the advertising industry within the Žilina Region and the responses of advertising agencies that participated in our questionnaire research, we set recommendations for developing the advertising industry for individual levels of regional policy. Our recommendations are based on the areas we focused on in our research part of the advertising industry: public support, institutional infrastructure, human resources, and financing.

Recommendations for the Development of Entrepreneurial Capital Support in the Creative Industry

The state plays an essential role at the national level, which should mainly create a healthy business environment. Effective supporting regulatory and legislative measures could help the development of the advertising industry - in connection with the activities of advertising agencies as follows:

• reduction of administrative complexity in various areas of state administration - by introducing e-government services,
• stabilization of legislation, its simplification and transparency,
• legal regulation of sponsorship,
• legal regulation of business in the digital environment,
• improving the enforceability of intellectual property law,
• stabilization of the legal environment concerning the change in the conclusion of contractual relations in the field of copyright,
• reduction of the tax and levy burden,
• the creation of a web portal for the advertising industry, which could be connected to ministries and other interested state and commercial institutions, where relevant and timely information from the field related to business issues in Slovakia, opportunities to participate in projects, publication of job offers, offers for public contracts, as well as effective tracking of statistical data on the advertising sector,
• making the system of providing state support from structural funds for the advertising sector more transparent, reducing the administrative complexity, and shortening the process of obtaining these funds,
• increasing awareness of new financing models, e.g., mezzanine financing, venture capital funds, or micro-loans,
• Remove barriers associated with drawing funds, e.g., to support maintaining employment, starting a business, employing a disadvantaged job seeker, etc.
• cooperation with labour, social, and family offices, monitoring the application of high school or university graduates preparing for the advertising industry on the labour market,
• the introduction of new curricula and specialized departments for advertising, which would be more narrowly specialized at a higher level of education and which would meet the expectations of employers in the advertising industry,
• introduction of new ways and modern forms of education, support of interdisciplinary educational programs, support of education in students in digital skills,
• support of the connection between the business sphere and academia, and support of joint and multidisciplinary projects connecting entrepreneurs and students through educational institutions.

Recommendations for regional policy:

• support of clusters and cluster initiatives,
• the creation of creative incubators,
• increasing awareness of the possibilities of drawing financial resources within the EU operational program in the form of training, organizing public presentations,
• raising awareness of the work of advertising agencies and prioritizing local suppliers in the provision of advertising agency products within the entire Žilina region,
• presentation of successful projects,
• the allocation of funds from the operational program within the priority axis for connecting the business environment of advertising agencies with universities operating in the region,
• support of intersectoral cooperation,
• the creation of specific support for creating jobs in the industry in question could lead to creating space for the emergence of a spillover effect within the advertising industry, which will affect other critical industries in the region.

Recommendations for local policy - the policy of cities and municipalities:

• reduction of fees and local taxes (e.g. tax benefits for advertising agencies that would show cooperation with vocational secondary schools and universities, or also the introduction of tax holidays for advertising agencies at the beginning of their business),
• support of intersectoral collaboration in the industry,
• mentoring programs,
• raising awareness through effective presentations of advertising agencies, which can be connected, e.g. with an award for the most successful advertising projects.

To conclude, the Žilina Region can be described as a region with a high potential for developing the creative industry. A good prerequisite is a sufficient creative workforce, emerging incubators such as Campus, developed tourism, cooperation with domestic and foreign regions, and developed institutional infrastructure.

In the future, it would be beneficial to improve business support in the advertising industry in the Žilina region to conduct similar research in other regions of Slovakia and compare the results. Based on the results compared in this way, it would be possible to create uniform, adequate business support for the given creative industry in the entire territory of Slovakia.

ACKNOWLEDGMENTS: None

CONFLICT OF INTEREST: None

FINANCIAL SUPPORT: The paper was undertaken as a part of the research project 2/KS/2023.

ETHICS STATEMENT: None