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Artivate: A Journal of Entrepreneurship in the Arts  Volume 7, Issue 2 
http://artivate.org  pp. 3-26 
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Copyright © 2018, the author    
  
 
 

 
A SHORT BUT DEEP DIVE INTO THE ECONOMICS OF ARTS:  
ART ENTREPRENEURS IN A PERIPHERAL MARKET 
Rafael Macedo Rubião,	Universidade	Federal	de	Minas	Gerais 
 

Abstract 
This article analyzes the organization, functioning, and peculiarities of the local visual arts 

market of the Brazilian city of Belo Horizonte, which has the third largest metropolitan area of the 
country. Furthermore, we also explore the perspectives for the young artists entering this market. 
For this purpose, semi-structured interviews were applied directly to the owners or managers of 
the city’s art galleries. Between August 2014 and January 2015, 26 galleries were visited, out of 
the 30 identified. Based on observations made in the fieldwork, on the plethora of themes that 
appeared throughout the interviews, and on the patterns identified in the tables, it was possible to 
organize the art galleries in four distinct types: (1) retail art galleries, (2) contemporary art 
galleries, (3) institutional galleries, and (4) alternative galleries. Organizing the main arguments 
of the interviewees and applying the Thematic Networks methodology, we found that the weakness 
of the entrepreneurial efforts in the local art market seems to be an outstanding feature jeopardizing 
innovation. We also found that there are two kinds of art galleries providing solutions to this. 

 
Keywords: art market; art galleries; innovation; cultural economics; creative economics 
 
 

There are several reasons to consider Belo Horizonte’s fine arts market a periphery of the 
peripheries, especially if compared to Rio de Janeiro’s or São Paulo’s. Brazil is still a small player 
in the international art scene, in spite of the growing volume of business observed in the last years 
(Fialho, 2014; Sá-Earp & Kornis, 2012). The availability of data on art markets is already lacking 
and scant in the most developed markets worldwide and, as expected, this situation is exacerbated 
in Brazil (Fialho, 2013). However, research in the fields of sociology and history of art, and cultural 
economics outlines some general characteristics of the Brazilian art market. For a more complete 
review of the Brazilian market development see Brandellero (2015). However, these studies were 
not able to deepen our understanding of the economic and entrepreneurial dimension of the art 
world. Part of this omission can be associated with artists’ and their peers’ reluctance to deal with 
art from a business perspective. Velthuis (2005) and other authors discuss this resistance better, 
which can, in brief, be associated with the well-known paradox that some agents from the art 
market face between commerce and “art for art’s sake”. This conflict arises from the 
commodification of an object that is allegedly covered with a kind of aura that should not be 
contaminated by “mundane” commercial interests. The need of artists and dealers to sell artworks 
in order to survive is what put them in the middle of this limbo. 

The first concern that gave origin to this study came from the professors of Federal 
University of Minas Gerais’ (UFMG) Fine Arts School who were worried about their students’ 
lack of awareness about the commercial side of their careers. They looked to us at the Economics 
School in 2013 to suggest a research project with the objective of answering the very question 
Gartner posed two years later, in 2015, while suggesting what should be addressed by the new art 
entrepreneurship field (hereinafter called AE): “How do artists organize themselves, both in terms 
of how they generate art, and, in how what is produced, as art, is valued and exchanged? […] a 



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more nuanced way of asking ‘how do artists make money?’” (Gartner, Roberts, & Rabideau, 2015, 
p. 5). More specifically, those professors were concerned about the money part of Gartner’s 
question, that would be, after all, the main factor determining their students’ subsistence in the 
future. 

In order to answer that question, we decided to understand first how the local art market 
functioned, and, as consequence, what were the perspectives for the local young artists to sell their 
work after graduating. The choice of analyzing local art galleries was straightforward, since they 
represent the main marketplace for artworks from living artists, connecting supply and demand, a 
role that allows one to understand the details of how art is exchanged as well as the economics 
behind the art markets. In order to achieve this objective, we designed a field research based in a 
semi-structured questionnaire to be applied in the city’s whole universe of art galleries. The 
answers were organized using the “Thematic Networks” methodology (Attride-Stirling, 2001) and 
analyzed through an interdisciplinary framework, using insights from the fields of cultural 
economics, sociology of art, and arts entrepreneurship. In this paper we discuss some of the main 
features we found on the local art galleries market. We also propose insights over some problems 
observed in Belo Horizonte´s market, especially those related to innovation and uncertainties. 

This paper is organized as follows: after this introduction, the second section reviews some 
of the existent literature about AE and art markets, trying to understand the art gallerist as an 
entrepreneur, and covering issues such as information asymmetry, uncertainties and art as a 
commodity. The third section explains the methodological approaches used. The fourth section 
presents and discusses the results, and, finally, in the fifth, we present some conclusions. 
 

Art Markets and Entrepreneurship: A Brief Review 
 

Some Attempts to Open the “Black-Box” 
The art market was already an object of inquiry at the beginning of the twentieth century. 

The renowned British critic and artist Roger Fry, a member of the Bloomsbury group, was one of 
the first to showcase his concerns about the art market’s complexities. According to Goodwin 
(1999), Fry was very concerned about the “market failures” arising from both demand’s and 
supply’s wide heterogeneity, as well as the lack of information and standardized means for 
evaluating artistic goods. In his writings, he demonstrated a constant dismay regarding the lack of 
preparation for the art world’s agents to deal with this opaque market, as well as with the 
widespread corruption that persisted among the leading practitioners. Furthermore, Fry also had a 
perception similar to the one that gave origin to this paper, since he thought that “artists, almost 
by definition were lost in the world of business” (Goodwin, 1999, p.30).  Despite these very 
intriguing features of art markets, “few studies, however, focus on galleries” (Benhamou et al., 
2002, p. 266).  

Many scholars have done studies of art pricing using auction data and hedonic regressions 
(Mei & Moses, 2002; Anderson, 1974; Chanel et al, 1996; Agnello and Pierce, 1996); others 
analyzed the returns on art as an investment and compared it with other assets (Baumol, 1986; 
Frey & Pommerehne, 1989; Buelens & Ginsburgh, 1993). In addition, there have also been studies 
of the structure of art markets from a broader point of view, while exploring the intricate 
interconnections among its actors: dealers, artists, critics, curators, collectors, etc. (Moulin, 1992; 
Jyrämä, 2002). However, even though “the literature devoted to the contemporary art market 
underlines the central role of galleries in the promotion and commercialization of works”, it “does 
not provide a firm analysis of their economic profile” (Benhamou et al. 2002, p. 265). 



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After the groundbreaking research of Raymonde Moulin (1967), which made an important 
distinction among galleries’ business models – between those bringing innovation to the market 
and those acting on the secondary market, or the resale of artworks – some other contemporaneous 
studies debated this same issue, deepening the understanding of the different roles and business 
models of art galleries, for example: classic vs. contemporary art; high end of the market vs. low 
end of the market; traditional art circuit vs. avant-garde art circuit (Moulin, 1967; Bystryn, 1978; 
Fitz Gibbons, 1987, Moureau & Sagot-Duvauroux 2002). Peterson (1997) also made an important 
case study of Parisian art galleries, proposing a different and interesting classification of art dealers 
based on their propensity to take different amounts of risk.  

Besides those, a few other empirical studies of art galleries provide an in-depth analysis of 
this kind of business (e,g, Shubik & Shubik, 1992; Velthuis, 2005; Plattner, 1996; Jirämä, 2002) 
For instance, Plattner (1996) analyzed the art market of St. Louis from a sociological perspective, 
exploring deeply the conflicts and connections of the local dealers. Jirämä (2002), studied the art 
market of four different countries (France, England, Sweden and Finland), and identified features 
that differentiates the maturity of these markets, such as the level of specialization of art dealers 
and the importance of the state and institutions in discovering new artists. Velthuis (2005), besides 
doing a statistical analysis of pricing behavior, also explored the long-term and intimate 
relationships that exists between dealers and artists. 

Notwithstanding the existing literature on art markets and art dealers, Benhamou et al. 
(2002) named their paper “Opening the Black Box of the White Cube” – making reference to the 
“White Cube” format of contemporary art galleries and to the scarcity of internal data from these 
businesses. The authors managed to gather unprecedented data unveiling art galleries’ economic 
performance, aesthetic preferences, lifespans, and relationships with collectors and other agents. 
Besides making specific conclusions over the conjuncture of the French art market, the authors 
also observed the economic fragility of this kind of business, especially due to galleries’ small 
sizes, the limited number of buyers, the vulnerability to economic fluctuations, and the high-risk 
nature of the informal agreements they set up with artists (Benhamou et al. 2002). 

From Roger Fry’s writings until today, the academic works about art dealers and the fine 
arts market have focused on five main points: (1) the heterogeneity of artworks as commodities; 
(2) the information asymmetries of value appraisals; (3) the recurrence of intimate relationships 
among its agents; (4) the different roles of art galleries and institutions; and (5) the dichotomy 
among innovation-oriented/discoverer and traditional/imitative dealers. In the following sections 
we explore more deeply the theory behind these five recurrent issues. 
 
Art as a Mysterious Commodity 
 The analysis of art markets begins with understanding what type of object is negotiated 
therein. Artworks are different from ordinary consumption goods and their  peculiarities determine 
the distinctive characteristics of such markets. The first reason for this is that they are mostly 
produced by individual artists, each artist being a totally different unit of production, leading art 
to be an extreme case of a non-homogeneous good (Throsby, 2001). For instance, Bianchi (2015) 
emphasizes art’s “infinite variability” property, using the expression coined by Caves (2000). An 
artwork can take many dimensions besides authorship (e.g. support, format, lines, colors, styles, 
themes, etc.). Because of this, the universe of choices seems to have no end, either for the producer 
or for its potential consumers (Bianchi, 2015). Besides its originality, uniqueness and infinite 
variability, the judgment of an artwork’s value is, on one hand, associated with the benefits of 
individual’s consumption and enjoyment, and, on the other hand, attached to its cultural 



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component within a society in general, exhibiting some of the characteristics of public goods 
(Throsby, 2001). 

Artistic goods are also known as experience and/or confidence goods. Experience goods 
are those for which the quality or the provided utility can only be defined after the consumption 
such as a theatre play or a dance show. However, in the case of artworks, the uncertainty over 
quality can be even greater than typical experience goods, making them more similar to confidence 
goods (Prinz, Piening, & Ehrmann, 2014). Confidence goods are those defined by the impossibility 
of ascertaining the quality of a good even after its consumption. In other words, the uncertainty 
over an artwork’s value is an omnipresent characteristic. 

Since confidence goods cannot have their quality appraised individually, their value 
depends on the assessments of experts, who judge the artworks collectively by means of consensus 
(Velthuis, 2011a). According to Bourdieu, the value of an artwork ends up being socially 
constructed, leading to a market based on the production of beliefs (as cited in Velthuis, 2011a). 
Experts are individuals who have the capacity to endorse the creation of artistic value due to their 
accumulated experience and reputation throughout their careers as critics, dealers, curators, 
scholars, consultants, and artists, among others. 

This uncertainty arises for different reasons for each niche in the art market. For example, 
according to Moulin (1992, 2007), in the contemporary art market the uncertainty is based on the 
unpredictability of artists’ success. In the classic art market however, the mystery surrounds the 
authenticity of the artworks or the past artistic movements and artists that can come back into 
fashion, thus affecting current prices (Moulin, 2007). It is interesting to see how Prinz et al. 
emphasize the former, stating, “investing in the most recent contemporary art is a very risky 
endeavor. At the point of a first investment in an artist, it is almost impossible to predict the 
likelihood of success” (2014, p. 158). This volatility and uncertainty in subjective valuations and 
qualifications strongly influence the prices and economic values, having the power of both creating 
and destroying great fortunes as fast as the strike of an auctioneer’s hammer. 
 
Art Dealers: Filling an Information Gap 
 Bianchi (2015) considers the lack of transparency in the art world its main and most 
incurable deficiency. Besides the uncertainty-generating characteristics of artworks, Bianchi 
(2015) emphasizes that information asymmetry, in many cases, is used opportunistically. 
Following this, Velthuis (2011a) cites George Akerlof’s discussion of the market for ‘lemons’: 
“where the quality of the work is known to the seller but not to the buyer” (as cited in Velthuis, 
2011a, p. 37). Thus, “for diverse works of art (…) buyers need a great deal of information in order 
to make a satisfactory purchase” (Towse, 2014, p. 77). Prinz et al (2014), considering the art 
market to be innovation-intensive and to have a high degree of quality uncertainty, state that “new 
artists entering the market are unknown, and the products they manufacture require a lot of 
explanation and evaluation… It is the task of galleries to close the gap between artists and 
collectors/investors” (Prinz et al., 2014, p. 2). Their concept is drawn from the two-sided market 
notion of Rochet and Tirole (2003, 2006) in which the art gallery is the intermediate platform, a 
necessary role in such innovation-intensive and uncertain sectors, in order to correct their typical 
problems. We must highlight here that this constant innovative status of artworks is one of the 
fundamental features of an art market.  
  This view of the gallery is indeed closely related to the gatekeeper role attached to the 
dealers of the primary market, and usually to avant-garde art galleries. This concept, drawn from 
Bystryn (1978) and further discussed by Velthuis (2011b), refers to the dealer’s capacity of 
choosing who is in and who is out of the market by carefully selecting his or her team of artists 



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and in turn promoting their careers. Besides the gatekeepers and “informational-gap-filler” 
functions of art dealers, Velthuis (2005) points out that there is a “father relationship” that exists 
between artists and dealers that “hardly look like the anonymous interaction that has come to be 
associated with a logic of capitalist markets” (Velthuis, 2005, p. 55). Thus, we can assume that the 
gatekeeper and matchmaking roles must not be interpreted as neutral or cold attitudes within the 
marketplace but rather as intimate trust relationships. These relationships involve not only 
marketing the artists but also discussing their artistic ideas, praising and recognizing their work, 
and supporting them in many ways, even morally (Velthuis, 2005). 
 
Art Entrepreneurship 

Based on art’s uniqueness (Thorsby, 2001) and infinite variability (Caves, 2000) 
properties, and on the Schumpeterian concept of new forms of organizing production, new goods, 
the opening of new markets, and so on (Schumpeter, 1934) – art seems to be an extreme case of 
an innovative good, especially in the case of contemporary art and new artists. In his classical work 
about economic development, Schumpeter (1934) points out the innovative businessperson, or the 
entrepreneur, as the agent that take the risks to bring innovations to the market. Following Essig 
(in Taylor, Bonin-Rodriguez, & Essig, 2015, p. 7) “Entrepreneurship then – in the form of new 
venture creation – is the tool, the means, by which the art and the audience connect.” Hence, 
individuals that create new ventures (in this case, art galleries) to sell art can indeed be considered 
art entrepreneurs. In order to include an entrepreneurship perspective in our analysis, we offer the 
following remarks. 

Entrepreneurship, understood as the creation of new organizations (Gartner, 1988 as cited 
by White, 2017), should be analyzed within their context’s idiosyncrasies (Deeds, 2014). The 
specificities of the art environment must, then, serve as the base to study art gallerists as art 
entrepreneurs. The first specificity is the existence of non-profit organizations and the common 
“art for art’s sake” motives driving art entrepreneurs. “It is unlikely that anyone undertakes a new 
venture in the arts, especially the nonprofit arts, to maximize their financial gain (Taylor et al., 
2015, p. 6)” but rather to facilitate art availability to the audience. As cited by Taylor et al. (2015), 
individuals working in the core of the art world may experience a self-fulfillment that motivates 
them more than financial gains (Preece, 2011), what is also in accordance with some cultural 
economists’ theorizations. Menger (2006), for example, discusses the typical financial difficulties 
experienced by artists and how they compensate that through self-fulfillment.  

Another specificity is pointed out by Jason White (2017, p. 11): “there is evidence that core 
workers [in the art field, including art administrators] have engaged in various forms of 
entrepreneurship […] in an effort to overcome common challenges and opportunity barriers”, 
which again exhibits the environmental contextualization of art entrepreneurship. These first 
theorizations presuppose AE as a behavior that is (1) reactive to a market with unfavorable 
conditions and (2) unleashed by an inner driving force of self-fulfillment. Taylor et al. (2015, p. 
7) differentiate arts entrepreneurship from “the ‘discipline’ of entrepreneurship [as] opportunity 
recognition and, in the arts, opportunity creation […] to generate revenue, to create new businesses 
that support the arts […]”. And this is quite different from finding opportunities for making profits 
out of Schumpeterian rents (Mazzucato & Penna, 2015). This kind of rent can be defined as the 
“monopoly” rents that first-movers enjoy when launching innovations in the market.  Hence, art 
as a creative and innovative good seems to be an end in itself for art entrepreneurs, which could 
be associated to its characteristics as “merit goods” (Musgrave, 1956). A “merit good” is a concept 
in the field of public-sector economics that makes reference to goods that society or individuals 
should have access to based on need, rather than on their capacity to afford. It means that there is 



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a normative premise behind this concept, that people deserve a merit good simply because they 
are people. Healthcare, food, housing and education are often considered merit goods, and culture, 
or the arts, may fit in this concept as well. 

Regardless of the motives guiding art gallerists, the innovation-intensive artworks (i.e. 
new/young artists and contemporary art) depend upon their entrepreneurial endeavors to enter the 
market, or to have its market created, following Moulin’s (1992, 2007) words. And, in turn, their 
endeavors will depend directly on their motives, their context (i.e. the local market environment) 
and their entrepreneurial behavior. Entrepreneurship literature provides some approaches in order 
to determine which traits or behaviors characterize an entrepreneur, and, for example, risk-taking 
propensity is one of the most discussed. Haan (2010) states that entrepreneurs put they whole 
career at stake and share various forms of risks, for example (1) financial risks – risk of losing 
capital; (2) management risks – risk of poor management that can harm their enterprises; and (3) 
personal risks – risk of harming their personal life, what includes their career, family and standard 
of living. Local art entrepreneurs’ propensity to take risks may then affect directly the local market 
openness to innovations. 

According to Gartner (1990, as cited by Taylor et al., 2015), the understanding of 
Entrepreneurship must analyze, in conjunction, the person (an entrepreneur, that can be the artist 
himself, the marchand or the art gallerist), the innovative process (the creation of the artwork, the 
organization of the art gallery or a new way of connecting supply and demand) and the process’ 
result (the artwork or the introduction of the artwork in the market). Thus, it is the comprehension 
of these three dimensions altogether that defines AE: “There is potential in the perspective that 
arts entrepreneurship cannot be defined by the traveler, nor the road, nor the destination, but rather 
by the journey that combines all three” (Taylor et al., 2015, p. 4). Hence, we believe that a full 
comprehension of the individual art gallerists, “their road and their destination”, through their 
motives (if it’s for the “sake of art”, financial return, or else), risk-taking propensity, market 
strategies, education, historic, and business models, may then shed some light over the innovation 
propensity of the local market, and as consequence, the prospects for young artists thereof. 
 

Method 
Interviewing Art Gallerists 
 In order to reach our objectives, we intended to carry out semi-structured interviews with 
the whole universe of art galleries found in the city. The quantity of art galleries in Belo Horizonte 
and their availability to be interviewed have limited the number of interviews. We defined the 
questions  in order to capture information about (1) the internal characteristics of the gallery, (2) 
the general characteristics of the art market, and (3) the personal perceptions of the local market. 
 The first list of potential interviewees was taken from the tourism section of the City Hall’s 
official website, which proved to be incomplete and out of date (some galleries were missing and 
others no longer existed or had changed their names). Through direct contact with the gallerists, 
who were able to refer us to other professionals, and through references found in social and 
informative media, we identified 30 art galleries and out of those, 26 were visited. We considered 
every business or institution that called itself an art gallery, except the museum types. This universe 
is very heterogeneous; for example, some galleries are not commercial while others have 
distinctive business activities. The fieldwork was undertaken between August 2014 and April 
2015. 
 In Talking Prices, Velthuis (2005) highlights the difficulties in dealing with art market 
agents: “In the middle of one of the interviews which I conducted for this study, I decided to give 
up, desperate as I felt about the respondent’s reluctance to respond to my questionnaire. The art 



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dealer (…) refused to discuss what I was trying to understand” (Velthuis, 2005, p 1). We were 
relieved to see that we were not the only ones who felt this way about this kind of interview. The 
dealers’ reluctance and resistance to talk deliberately about their businesses, especially regarding 
quantitative figures, biased some of the data and made it impossible to gather some quantitative 
data and to trust some of their answers. Each interview had 42 questions and lasted approximately 
90 minutes, which provided us sufficient information to make three different but similar 
approaches to work with the data. 

First, after discarding nonsensical or illogical answers we constructed tables of descriptive 
statistics. Second, we created typologies for the galleries based on what we observed in the 
fieldwork and in the data gathered; we identified four types of galleries among the interviewees. 
Finally, in order to analyze the large amount of textual data we had at hand, we applied the 
qualitative method of thematic networks. Drawn from Attride-Stirling (2001), this method allows 
identification of the main themes addressed in the interviews and connections between them in 
order to recognize the issues covered by the gallerists in an abstract and grouped way.  
Thematic Networks 

 “The procedure of thematic networks does not aim or pretend to discover the beginning of 
arguments or the end of rationalizations; it simply provides a technique for breaking up text and 
finding within it explicit rationalizations and their implicit signification” (Attride-Stirling, 2001, 
p. 388). This qualitative method, in short, consists in building a scheme that connects a set of 
themes extracted from the raw textual data. According to Attride-Stirling (2001), the first step is 
to reduce the data by fragmenting the text into “manageable and meaningful text segments.” Then 
we must gather in groups those text fragments that have something in common with each other 
into a coding framework. This something may be a similar issue, a common keyword or a related 
explicit or implicit meaning. Our coding framework consisted of 40 codes, which are listed in 
Table 1, and was applied directly over a textual data of about 15,000 words. 

 
 
 

 
Table 1. Coding Framework 
1. Property types features 21. Pricing 
2. Administration 22. Artwork's assessment 
3. Economic costs 23. Transaction's process 
4. Team 24. Difficulties 
5. Investments (on the gallery) 25. Indulgences 
6. Collection 26. Customer profile 
7. Marketing 27. Competition 
8. Gallery's activities 28. Seasonality 
9. Internet Sales 29. Conflicts 
10. Cultural Incentive Laws 30. Art as an investment 
11. Gallery's origin 31. Local market features 
12. Gallery specialty/focus 32. Future expectations 
13. Picking up artists/artworks 33. Art market features 
14. Owner/Manager training 34. Artists' submissions 
15. Number of artists 35. Insertion of the artist in the market 
16. Contracts 36. Sales flow 
17. Exclusivity 37. Profit 
18. Unsold works 38. Visits 
19. Rental of artworks 39. Artists' profile 
20. Commission 40. Current gallery situation 



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The second step is a purely interpretative effort. The text fragments are read within the 
context of their respective groups. Thereafter, following this order, a list is made with the many 
issues addressed by collecting the text fragments and then synthetizing them into one or a few 
words. Using these more pertinent groups, we discover and extract the most recurrent themes 
addressed by the reunited text fragments. The newly extracted themes are themselves the basic 
themes presented in this paper in figures 3 and 4. In the final step, the thematic networks are built, 
clustering the basic themes subsequently into more general and encompassing themes, done twice. 
To do so, it is necessary to group the basic themes by similarity, which is also an interpretative act. 
The reference points or common issues around which we organize the basic themes must guide 
the abstraction of the organizing themes, which must synthetize the main issues treated by the 
basic themes. Having on hand such thematic clusters allowed us to deduce “global themes”, which 
are “the core, principal metaphor that encapsulates the main point in the text” (Attride-Stirling,  
2001, p. 393).  See Figure 1 as an example. This is done through the same process that gave origin  

 
Figure 1: Structure of a Thematic Network from Attride-Stirling (2001, p. 388) 
 

 
to the organizing themes, that is, an abstraction of the main “claim, proposition, argument, 
assertion or assumption that the organizing themes are about” (Attride-Stirling, 2001, p. 392-393). 
These three levels of theme clustering  should be understood in a web or network format, in a way 
that the hierarchies are clear and the different branches and clusters are well separated and 
organized.  
 

Analysis of Results 
The Typology 

The typology that follows was built based on three pillars: (1) the personal impressions and 
observations of the interviewer; (2) the comparisons made using discrete data (e.g. the number of 



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exhibitions per year or whether the gallery is specialized in contemporary art or not, etc.); and (3) 
the qualitative interpretation of the discourse of each dealer. We have defined four types of art 
galleries based upon these criteria, although there may be overlaps between some of their 
characteristics. Despite the fact that the galleries have shown the features of their own types in 
different degrees, we have classified each gallery in only one type. According to Velthuis (2011b), 
the various general classifications of galleries proposed in the literature are similar and many of 
them served as an inspiration for our typology. The art galleries are subdivided into 2 major groups: 
A and B. Group A comprises only commercial galleries, which are subdivided into three types 
(A1, A2 and A3). Group B are the non-commercial galleries – or “institutional” – and it is 
comprised of only one type (B). Thus, our analysis will be based in four types (A1, A2, A3 and 
B), as following: 

Type A1 - Retail art galleries. These galleries are better defined by what they do not 
consist of. They drift apart from the “basis of the current system of galleries” (Benhamou, 2001, 
p. 78). This means that they do not focus on the primary market, they do not enter into exclusivity 
agreements, and they do not invest in young artists to help them create a career in their activity 
(Moulin, 2007; Benhamou, 2001; Towse, 2014; Shubik, 2003; Velthuis, 2011b). Essentially, this 
type of gallery does not have a well-defined style and they instead look for different means to 
survive in Belo Horizonte’s art market. They make few investments, diversify their activities, 
avoid taking risks, and prefer artists and artworks that are more traditional and well-established in 
the market, therefore avoiding the uncertainties of contemporary art. When referring to eclectic 
Brazilian galleries (from the 1950s) with no focus in any artistic style or movement, Bulhões 
Garcia states: “The lack of market segmentation was seen as an indicator of low risk-taking and 
high conservatism” (as cited in Brandellero 2015, p. 221). This suggests that our Type A1 galleries 
are a kind of lost-in-time gallery, indicating that the Belo Horizonte art market shares some of the 
characteristics of those in São Paulo and Rio de Janeiro at the beginning of their development. 

More specifically, these galleries: (1) are marked by the absence of a defined style for their 
artworks, that is, they have no focus (they can eventually sell contemporary art, but none will work 
only with that); (2) prefer the security of well-established artists rather than risking themselves 
with the new ones; (3) do not work in an exclusive basis; (4) tend to work in the secondary art 
market with modern, academic or figurative art; (5) have a diversified business in that the gallery 
is not the unique or not the center of the activities of the dealer (for example, he or she can be an 
auctioneer, an artist, and a framer, among others); (6) do not intend to have a “white-cube” space; 
(7) have their business size ultimately determined by a complementary activity; and (8) are marked 
by the heterogeneity among galleries. 

Type A2 - Contemporary art galleries. Unlike the Type A1 galleries, which seek to adapt 
to the local market, the Type A2 galleries try to adjust themselves to the international standards of 
contemporary art galleries as much as possible. There are well-known international patterns of 
contemporary art galleries, which are the practices of the already mentioned currently dominant 
system of galleries (Benhamou, 2001). Type A2 galleries may incur important costs to be able to 
fit in the international profile. Thus, while Type A1 galleries have a heterogeneous, adapted, non-
intentional and unplanned profile, this second type contains galleries with an intentional, 
homogeneous and well-defined profile. These are the galleries that: (1) have a focus, especially in 
contemporary art or in one of their niches: (2) are focused on the primary market: (3) are more or 
less willing to take risks, perhaps allowing unknown artists a chance to become well-established 
(as it will be further discussed on the thematic networks, we suspect that, on average, all the 
galleries from Belo Horizonte, including Type A2 galleries, avoid risks and do less investments 
than the galleries from more developed markets); (4) work with exclusivity agreements based on 



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trust and cooperation; (5) are more open to innovations and to the discovery of new artists, 
renewing the supply side of the market (despite the already mentioned limitations of the local 
market); and (6) have an architecture close to the “white-cube” style. 

Type A3 – Alternative art galleries. Few galleries of this type have been noted in Belo 
Horizonte. They are the “Art Entrepreneurs of the local market”, being innovative and offering 
disruptive proposals, which make them very different from all the other types. Type A3 galleries: 
(1) act in the primary market with young artists; (2) do not work with exclusivity agreements; (3) 
have the objective of fostering art and culture, especially in the emergent artistic scene of Belo 
Horizonte; (4) operate in the vanguard environment; (5) criticize and offer an alternative to the 
“elite” of the high art market; and (6) diversify their activities in a more audacious way by, for 
instance, being attached to a bar, selling souvenirs, having online platforms, and sell broader art 
projects with their team of artists such as events, workshops, and urban interventions. These kinds 
of projects and services are innovative and disruptive ways for capturing value in the art market, 
signaling that some art entrepreneurs are finding new ways to sustain innovation. 

Type B – Institutional art galleries. These galleries take on the “discoverer” role and 
hence are less risk-averse than galleries Type A1 and A2. Although not being as disruptive as Type 
A3, Type B galleries take the responsibility to introduce young or unknown artists and in turn 
foster innovation on the art market, a function that is lacking in Belo Horizonte and that will be 
further discussed in the second thematic network. These galleries: (1) are attached to larger 
institutions or companies such as private, public, or private-public partnerships; (2) are not profit-
driven and thus don’t sell art; (3) organize exhibitions of artists picked up by competitive selection 
processes and experts’ judgments; (4) enhance new local artists’ careers and hence also regional 
contemporary art; (5) are administered by the employees of the institutions of which they are part; 
(6) foster culture, their direct purpose, by helping artists who have difficulty gaining visibility; and 
(7) are noticed by other gallerists, especially Type A2, as the major means of artists’ insertion into 
the professional market besides art salons, contests, and prizes. Since they try to create new 
opportunities for local art, they can be considered nonprofit “Institutional Art Entrepreneurs”, as 
denoted in White (2017). 

Comparisons and observations. Besides the characteristics of each type of gallery 
mentioned above, some observations and comparisons among them are necessary. Type A1 
galleries represent 42% of all galleries, Type A2 galleries 31%, Type A3 galleries 12%; and Type 
B galleries 15%. Furthermore, Type A2 galleries have the most projects submitted for government 
funds (special tax incentives). Some Type A2 gallerists refer to the Type A1 gallerists in a 
pejorative way, calling them mere “painting’s shops”, and the same Type A2 interviewees 
indicated that the Type B institutional galleries are one of the best ways for a new artist to enter 
the market and begin his or her career. Type A1 gallerists did not make such comparisons but 
rather pointed out some generic qualities as the determinants for artists to be part of the market 
such as luck, talent, and marketing. 
 
Table 2. Average annual number of exhibitions per gallery type 
Type Frequency 
Retail galleries (Type A1) 2.2 
Contemporary art galleries (Type A2) 4.3 
Alternative galleries (Type A3) 8.7 
Institutional galleries (Type B) 6.5 



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We built an index of the number of yearly exhibitions per gallery, which is a proxy for the 
galleries’ willingness to promote art, take risks, and make investments. All else equal, a gallery 
with a larger number of yearly exhibitions is likely to be making more investments and efforts to 
promote its team of artists and hence to be riskier. Thus, according to Table 2, which contains the 
yearly exhibitions index, the typology seems to fit well. Indeed, as can be seen, Type A1 retail 
galleries are much less willing to spend money on exhibitions than the other types. Type B and A3 
produce more exhibitions, which reflects their idea of promoting art and culture as a public good. 
Due to their objectives of creating a career for their team of artists, of bringing attention to their 
business, and of enhancing sales, Type A2 contemporary art galleries promote a significant number 
of exhibitions. 

Attending art fairs has similar implications as organizing exhibitions since it is a form of 
investment to increase the sales and the visibility of the artists. Participation in art fairs also 
symbolizes the insertion of the gallery in the international contemporary art circuit. Doing so 
follows one of the “best practices” of contemporary art galleries of the international elite, which 
corresponds to the profile that Type A2 galleries seek to fit. Thus, we created, for each type of 
gallery, an index calculated as the average attendance of a gallery at art fairs per year. This index 
shows, as expected, the tendency of Type A2 galleries to frequent more art fairs. Type A2 galleries 
attended on average 2.67 art fairs per year whereas other types of galleries attended virtually zero 
per year. 

Another interesting issue concerning our typology is the different “reasons of creation” 
(why the gallery was created), which surfaced from each type of gallery. The results of Table 3 
align with the typology. First, it can be noted that the purposes of galleries of Type B and A3, i.e. 
to promote arts, are very different from the other two types. Second, Type A1 galleries seek the 
continuation of another previously existent business, which is a more practical and professional 
connection to the art world rather than a sentimental one. In contrast, despite still having this 
business connection to the arts, Type A2 galleries seem to exhibit more emotional and intimate 
motivations. 

  
 

Moulin shows a clear distinction between contemporary art galleries and the traditional 
figurative art galleries, which are similar to our retail galleries. According to her, the latter “exclude 
the risk associated with innovation. The choice of artists is made in function of the expectations 
and the acquisition means of the clientele” (2007, p. 24). This adaptive character and subordination 
to demand is remarkable among our Type A1 galleries.  
 
Thematic Networks 

Using the thematic networks methodology, we determined two “global themes”, each of 
which is a “core, principal metaphor that encapsulates the main point in the text” (Attride-Stirling, 

Table 3. What was the objective/reason for the creation of the gallery?  
Answers Frequency 

Type 
A1 

Type 
A2 

Type 
A3 Type B Total 

Continuation of another existent business* 5 2 0 0 7 
Previous professional experience in the sector 3 0 0 0 3 
Personal circle 2 2 0 0 4 
Interest in arts 0 3 1 0 4 
Fostering arts  0 0 2 4 6 
Did not answer 1 1 0 0 2 



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2001, p. 393). The two global themes addressed by the art gallerists in our interviews are: (1) “The 
agents of the art market are subject to incentives and symbolic values, which cannot be translated 
into prices or pecuniary compensations”; and (2) “The functioning of the Belo Horizonte art 
market is disturbed by market failures and shortcomings caused by the absence of certain cultural 
habits and demand for artworks, which lead also the gallerists to avoid making investments and 
innovation efforts.” Figures 2 and 3 should be read according to the scheme in Figure 1, in which 
the basic themes are clustered around the organizing themes, which are, in their turn, clustered 
around one global theme. 

The first thematic network (Figure 2). The first thematic network was built around the 
Global Theme 1 and it covers general theoretical subjects that can be related to every art market. 
It means that they are, theoretically, not exclusive of Belo Horizonte. 

Figure 2: The first thematic network 
 

 



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In order to understand the first Organizing Theme 1.1, it is useful to recapitulate the findings 
of Table 2. We can see that a previous related business, a previous experience in the field or 
previous contacts with insiders are the most important reasons for creation of the gallery. These 
are each a kind of previous “proximity” to art, that is, a previous personal link. Further, all of the 
six answers in the “Interest in the arts” motivation belong to Type A3 and B galleries (i.e. 
alternative and institutional galleries).  

To become a dealer, there is no need to have a diploma or special licenses (Velthuis, 2011b; 
Shubik, 2003), and “the appellation of art dealer tends to be self-selected” (Shubik, 2003, p. 194). 
In Table 4, we can actually see that the proportion of interviewees who graduated in arts is the 
same as those who graduated in business and economics. Thus, it seems that the “quasi-necessary” 
condition to become an art entrepreneur of Type A1 and A2 is to have a previous life experience 
or personal connection to the art world, but not necessarily to graduate in an arts field. Among our 
interviewees, almost all of them have at least one of the following links with the art world: close 
relationships (friends, relatives, or partners); have collected art before; or have had previous 
professional experience in the field (framer, critic, artist or gallery employee). Furthermore, 
similarity to the results found by Shubik & Shubik (1992) reinforce ours. 
 
 

 
The next issue concerning the Organizing Theme 1.1 is the pleasure that gallerists draw from 

their jobs, which motivates them to become a gallerist and to remain in the profession. Unlike an 
entrepreneur that seeks an industry that maximizes profit, a gallerist gains utility from other means 
than just monetary rewards. As Velthuis stated, “even when their enterprise fails to make money 
by them, a partner’s income, pre-existing wealth or side jobs may allow art dealers to continue 
their business longer than would be the case with loss-leading firms in other markets” (Velthuis, 
2011b, p. 28). He also points out that some dealers treat their job more as a hobby or a “social 
pastime than as a rational means of making a living” (2011b, p. 28). Additionally, Plattner (1996) 
questions whether the dealers must be a priori wealthy in order to sustain their art gallery business.  

Although some gallerists need to earn money for subsistence, the point is that the 
accumulation of capital may not be the main driving force in this business. Instead, some of them 
would rather refer to their occupation as a “passion” driven by their taste for art. Many of our 
respondents reportedly see the sale of an artwork as a celebration, stating that they do not treat 
their activity as a job obligation but rather as a form of leisure. The joy that gallerists feel from 
selling art is, according to them, derived from the amusing contact with artists and from the honor 
and recognition that come along with being an “insider” of the art world. Table 4 exemplifies and 
reinforces the point that the financial return is of lesser importance for some art dealers, which is 
in accord with the extant literature on art entrepreneurship. 

 
  

  
Table 4. In which fields did the gallery owners/administrators obtain their university degree? 
Answers Frequency 
Arts 6 
Business/Economics 6 
None. Just experience in the field 4 
Arts and Business/Economics 3 
Other  3 
Did not answer 4 



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Table 5. What is greatest return [from running an art gallery]? 
Answers Frequency 
Pleasure 10 
Financial returns 5 
Other * 7 
Did not answer 8 
* Within "Other" there were answers such as "a good and reliable team of employees"; 
"status"; "good clientele"; "media attention"; "promotion of new ideas" and so on. 

 
Some cultural economists argue over the reasons for the excess supply of artistic labor, trying 

to explain why artists pursue such risky, unstable and, tough careers. Menger (2006) defends the 
idea that some jobs may offer non-monetary rewards in addition to the monetary ones. What we 
propose is that this “pleasure payback” applies not only to artists but also to art gallerists. 
 The next Organizing Theme 1.2, in short, brings to the fore the importance of trust among 
artists, clients, and dealers, an issue discussed by Velthuis (2005), Bianchi (2015) and Santagata 
(1995). It covers matters such as the exclusivity agreements, distrust conflicts, intimate 
relationships, and artworks’ authenticity. Since a high level of information asymmetry 
characterizes the art world, the abusive use of privileged information is an omnipresent hazard for 
uninformed agents.  

In our interviews it was very common to hear gallerists talking about the necessity of trust 
among one another and with the artists they represent. They have often complained about the 
artists’ reluctance to trust the gallery with respect to three issues: (1) the real price at which gallery 
was selling the artworks, which could be higher than the reported price used to calculate the artist’s 
~50% share of the value; (2) the disrespect of the exclusivity agreement; and (3) the artists’ view 
of the galleries as “necessary enemies” rather than as important partners that create value on 
promoting their artwork. Furthermore, some of our interviewees had straightforward strategies for 
creating intimate relationships with customers. They said, “We have no clients, but friends […] 
We are going to build a space to receive our friends so that we can meet again and so that they can 
bring their own friends to know the gallery and get closer to art. It’s a strategy.” From another 
point of view, this is rather a peculiarity of a “gift economy” – which is detached from conventional 
market logics – where the agents exchange conversation and build long-term relationships based 
on trust and friendship (Velthuis, 2005). 

Besides trustworthiness, reputation is also crucial for the relationships within the art 
market, as we can see in the Organizing Theme 1.3. Specialized knowledge about art, endorsed by 
reputation, is a key “symbolic capital” for the art market entrepreneurs and experts. Since they 
deal with very subjective qualities, i.e. values and judgments, it is hard to prove one’s 
qualifications to perform in these professions. Thus, it is necessary to build a reputation over time 
to establish trust in an expert’s judgments. As one dealer states: “To attract clients, it is important 
to have word of mouth about quality, name, and recognition. A good service and its results are 
long-term, rational, slow, but assured investments.”  Whilst some of the dealers directly referred 
to the importance of having a good reputation, others indirectly assumed to invest in reputation by 
attending important art fairs, organizing good exhibitions, hiring esteemed critics, and so on. 

Finally, the Organizing Theme 1.4 states that demand is associated to many subjective 
elements that are not scarcity problems as defined by mainstream economics. First, reducing prices 
is negative and doing that could hinder an artist’s reputation and “burn” him in the market. (Many 
gallerists interviewed used the Portuguese word queimar (meaning “to burn”) to refer to the effect 
of an action that marks negatively on artists’ reputation.) Second, the importance to the opening 



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of Inhotim, an outdoor art museum near Belo Horizonte, to create a taste for contemporary art on 
the local people was remarked upon by dealers. As we can see in Table 6, many gallerists reported 
an increase on the publics’ interest, and they often related it to the opening of Inhotim. Third, a 
recurrent issue mentioned among the respondents was the importance of creating and showing the 
value of an artwork for the customers, which involves describing the career of its creator, the 
material, the historical and artistic context. In Moulin’s (2007) words, their role is to fabricate the 
demand. Lastly, when asked about selling on the internet, most dealers were welcoming of the 
advent of internet in the art world. However, they all showed some concerns over this unsolvable 
“need for physical contact,” which is, according to them, necessary to assess the subjective value 
and capture the complexity of an artwork. 
  
Table 6. Do you agree that the publics’ interest for the arts have increased? * 
Answers Frequency 
Agree 17 
Disagree 2 
Do not know 1 
Did not answer 6 
*The results of the Latitude (2014) report, which indicate such increase in São Paulo and Rio de Janeiro, were 
shown to the interviewees. 
 

The second thematic network (Figure 3). The second thematic network, Global 
Theme 2, consolidates some problems of the local art market and tries to explain them through 
the entrepreneurs’ reasoning. The following arguments concern a specific local market. 
However, it is indeed expected that they shed some light over general problems that exist in 
other art markets as well.  

The local art entrepreneurs very often complain about having difficulties in generating 
business, prospect visits, and selling artworks. This could be due to an alleged structural 
backwardness of the local art market. In our interviews, it was very common to find such 
claims; Table 6 summarizes their answers. It is also noteworthy that the dealers were inclined 
to make comparisons with São Paulo, and sometimes Rio de Janeiro, as a way of showing the 
relative backwardness of the local market. Plattner (1996) perceived the same issue in his 
remarkable study of the St. Louis (US) art market. According to him, this hierarchy bothers 
the agents of the “down home” small market, since they are condemned to be “[…] forever 
‘not in New York’” (Plattner, 1996, p. 77) 

Regarding the financial challenges galleries face, the most common explanation 
provided by gallerists is the weak demand in Belo Horizonte. Dealers often blamed the 
‘culture’ and the provincialism of the local people; or, sometimes absence of knowledge or 
shyness prevent them from visiting an art gallery. There were also complaints about the 
provinciality of some of the local collectors, which would lead them to seek status by making 
purchases outside of Belo Horizonte (e.g. in São Paulo), even paying more for the same 
artwork. Other gallerists also declared that buying art just for decorative or status motives – 
or just not enjoying art at all –  are also harmful local customs. Some gallery entrepreneurs 
complain about the excess of bargaining, or, in other words, the reluctance of buyers to spend 
large amounts of money in art, in comparison with other luxury goods – such as fancy clothes. 



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All these customs lead to the scarcity of serious collectors in comparison with other cities in 
and outside Brazil. 
 
Figure 3. The Second Thematic Network. 



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Organizing Theme 2.2 states, “the gallerists tend to avoid risks and thus preclude 
innovation efforts and investments,” is an important characteristic of Belo Horizonte’s art market. 
From the point of view of innovation, the galleries act as its promoters, since one of their roles is 
the discovering of new artists and the creation of a market for them (Moulin, 2002; Santagata, 
1995). Within this organizing theme there are 4 basic themes that deal, in brief, with the following 
subjects: consignment; reluctance to accept the candidatures of emerging or unknown artists; and 
low levels of investments in the exclusivity/brokering relations.  

 

 
 Consignment, the predominant practice among art gallery entrepreneurs, is a way to reduce 

risk by eschewing capital commitment and transferring the risks of not selling to the artists. Dealers 
usually have their own collections of more or less established artists, which they can use as an 
inventory for future sales. However, buying young artists’ artworks can also be seen as an 
investment. If an art gallery intends to promote an artist’s career, the success of this endeavor is 
ultimately the appreciation of this artist’s works. Thus, the dealer can buy the early production of 
an artist at lower prices. Then, after the whole process of creating a stable demand for the artist, 
the dealer can sell the products at higher prices and hence, make profits. This practice – common 
among “explorer galleries” (Santagata, 1995) – is also a way of supporting the young artists in the 
early years of their careers. As we can see in Table 8, most of Belo Horizonte’s galleries do not 
take the risk of such investments. 

 
 
Table 8. Do you consign or do you buy the artists’ works? 
Answers Frequency 
Consignment  13 
Consignment and purchase 5 
Purchase 2 
Other 3 
Did not answer 3 

  

Art galleries’ innovation efforts can be undermined by the necessity of diminishing risks 
because, like in many other industries, such efforts require risky capital investment. Due to the 
aforementioned deficiencies of the local market, which reinforce the needs for diminishing risks, 
it seems to be too difficult for the local galleries to focus on innovation. Evidence of this is seen 
in how the local galleries deal with artists whose reputations are not yet solidified. The reluctance 
to prospect new artists leads the gatekeeping (Bystryn, 1978) activity of the galleries to be much 
more restrictive in Belo Horizonte than elsewhere.  

 
Table 7. What is the greatest difficulty in running an art gallery? 
Answers Frequency 
Low sales or financial problems 7 
Getting good art or artists  3 
Taxes 3 
Having a good team of employees 2 
Other 3 
Did not answer 3 



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Another notable risk-evading practice that we found in the local market is the diversification 
of activities that we found in some galleries – especially those in Types A1 and A3, the ones we 
called “retail galleries” and “alternative galleries.” One dealer in a gallery that also operates as a 
frame shop said: “It’s tough to run a gallery in Belo Horizonte; one should not depend on it as his 
[or her] only business.”  

It is also usual to see artists diversifying their work time in order to reduce their personal 
risks, which are inherent to their profession (Menger, 2006). They do that principally as teachers 
or by undertaking other part-time jobs. Menger (2006) calls artists “Bayesian Actors” in the sense 
that artists act rationally but face a high degree of uncertainty and information asymmetries. 
Instead of being rational fools (Sen, 1976), risk lovers or just working for love (Freidson, 1990), 
they would rather act rationally with the information available and conscious of the risks involved 
(Menger, 2006). In short, artists may diversify their working time in order to equalize the necessity 
for income with their desire of making art (referring to the ‘equalizing differences’ thesis from 
Rosen, 1986). Thus, it is interesting to see that this applies not only to the artists, but also to some 
art galleries (especially Type A1 and A3 galleries). The side-activities that appeared in our 
interviews are diverse, with some gallerists working as artists, auctioneers, framers, bar-owners, 
and selling other products besides art, ranging from souvenirs to antiquities.  Also, some gallerists 
are retired from a previous profession, such as businessman, framer, critic, and so on. Furthermore, 
we emphasize the distinct practices we observed in alternative galleries, which offered parallel 
products (t-shirts, various objects, prints, etc.) and services (painting commercial establishments, 
live painting during events) from the artists working with them. 

Organizing Theme 2.3 suggests that in comparison with the standard patterns of the 
international art market (including São Paulo’s), Belo Horizonte’s is still “incomplete” or in its 
early- or mid-development stage. Thus, each of the basic themes in this section covers one of the 
“missing elements” of a more mature market. Notice that the very existence of contemporary art 
galleries (Type A2) – which deviates roughly from a mere “place that sells paintings” – is a feature 
of this international art market model. Although we are not suggesting that this is an artificial 
model or that there may be alternatives to it, it is important to have in mind that this kind of market 
was exported to Brazil by international agents, who virtually created an art market and its 
institutions in the country, mirroring their experiences abroad (Brandellero, 2015).  

Indeed, conflicts and misunderstandings between agents are not an exception in the art 
world, since many authors have already discussed problems of moral hazard and the necessity for 
confidence in art market relationships (e.g., Shubik & Shubik, 1992; Velthuis, 2005; Plattner, 
1996). However, we note that the conflicts exacerbate the specific problems of incipient art 
markets. If agents face a higher pressure on their budgets due to the structural fragility of the 
market, it may be too demanding to follow “best practices,” since they are costly and require a 
high degree of risk-taking. For example, “Art fairs are expensive, visibility is expensive,” in the 
words of one entrepreneur. Our data indicated that financial problems and the need for cash flow 
make the relationships less “professional” and make the agreements more subject to moral hazards 
from the part of both artists and gallerists. It is noteworthy that, again, we have observed 
comparisons with São Paulo, in the sense that the interviewees considered São Paulo the 
professional market and Belo Horizonte the amateur one.  

On the other hand, the conflicts with customers are considered natural, and related to the 
dissatisfaction, on the part of gallerists, with some buyer’s habits and resistance to understanding 
the value of an artwork (See Organizing Theme 2.1). However, buyers can be even more 
problematic if a collector goes directly to an artist’s studio in order to contour the commission and 
spend less money. As an entrepreneur states, “[There are conflicts] such as if a client sees an 



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artwork in the gallery and then goes to the studio to buy it, there is no respect for the 
representation.” 

Returning to conflicts with artists, many entrepreneurs complained about the artists’ non-
recognition of the high expenses that they have to carry in order to promote their career, such as 
art fairs, exhibitions, critics, invites, vernissages, etc. If an artist does not understand the role of a 
dealer and its presumed importance, it creates a discomfort in the relationship between them. 
“Many artists tend to see the gallery as a ‘necessary enemy’ because of the commission.” We have 
also seen that some gallerists blame the local artists for these problems, alleging a lack of 
professionalism, since some of them compete with the galleries by selling directly through their 
studios. 

Concluding, the exclusivity agreements and the substantial investments expected from 
brokering the artist are probably associated with the observed conflicts and “market failures.” 
Indeed, it is not possible to suggest that these problems are a particularity of Belo Horizonte’s 
market or of equivalent peripheral markets, since the literature often mentions the same problems 
for central markets. That is, these conflicts seem to be inherent to trust relationships, which are 
common in every art market. However, the situation of the agents of this local market seems to be 
more problematic in comparison to more developed markets, where a better environment may be 
the consequence of a more active demand and fewer financial problems. 
 

Conclusion 
 

This is a case study of a specific entity (the art market) of a certain place (Belo Horizonte). In 
contrast to evidence based on statistical significance, our paper offers to the literature a close 
example of how some of these theories happen in practice and how the agents deal with them in 
real life. 

Both the Thematic Network analysis and the typology show that the innovation environment 
for art galleries in Belo Horizonte is still incipient, few galleries exhibit the entrepreneurial 
behaviors of taking risks, creating new opportunities for art, and launching innovations into the 
market. Few gallerists allow themselves to partner with new artists or to sell contemporary art, 
which can be considered quite conservative for an art market, a typically innovation-intensive 
sector. However, the analysis also showed us that Belo Horizonte’s art market and art galleries 
present some interesting characteristics and attitudes. Many of these features are already covered 
by the literature, and turn out to be evidence for some existing theories.  

For example, we showed what gallerists think about their own activity and how they claim to 
derive pleasure from it, rather than from ordinary pecuniary compensations. This is a relevant 
difference from ordinary entrepreneurship, and is in accord with some texts that discuss “arts 
entrepreneurship” (e.g., Taylor et al, 2015; Preece, 2011) and cultural economics (e.g., Menger, 
2006; Rosen, 1986; Sen, 1977; Freidson, 1990). What can be called the “pleasure payback” is 
associated with some theories about artists’ incentives to keep working. This “pleasure payback” 
is seen by some cultural economists as evidence of how artists derive utility from their jobs – and, 
as we suggest, this applies to art entrepreneurs (especially gallerists), as well. In other words, it 
explains how they benefit from their jobs when the financial return is not enough. This idea serves 
to explain how the art market survives despite all the reported uncertainties, turbulences and risks.  

We also confirmed the existence of important social networks and long-term relationships 
among the local art market agents. Together with confidence and reputation, these remarkable 
features of the art market are consequences of the nature of artworks as tradable goods. As we 
have seen, the nature of the artwork creates a market after its own image: uncertainty, risk, 



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innovation, subjective appraisals, confidence, symbolic values, and so on, are all crucial elements 
that mold agents’ attitudes. Further research to reinforce and help understand these specific 
mechanisms operating in art markets is welcome and suggested. 

In addition to the thematic networks, we also designed a typology of the local art galleries. 
Most importantly, when analyzed together, the results of these two outputs showed us what is 
probably our most important result: innovation can be undermined by the necessity of diminishing 
risks because, like many other industries, art requires a risky and costly capital investment. Due to 
the alleged structural backwardness of the local market (especially demand), which reinforces the 
needs for diminishing risks, it seems to be too difficult for the local galleries to focus on innovation 
and to have an entrepreneurial risk-taking behavior.  

One evidence of this is in how the local galleries deal with artists whose reputations are still 
not solid. Except for gallery Types B and A3 (the smallest), very few gallerists assumed to be open 
to or to prefer emerging artists, and virtually none of the Type A1 (retail galleries), which is the 
largest group. Furthermore, the dealers pointed out other means for artists to enter the market for 
the first time. Before being chosen by an art gallery, it was recommended that the artists already 
have an institutionally-based reputation – especially through exhibitions in Type B galleries, 
earning prizes, and exposure in art salons.  Accordingly, the explorer role of avant-garde galleries 
seems to be lacking and delegated to the scarce Type B and A3 galleries. The reluctance to prospect 
new artists leads the gatekeeping activity of the galleries (Bystryn, 1978)  to be much more 
restrictive in Belo Horizonte than elsewhere (in the sense that the gatekeeper is rigorous and lets 
just a few artists enter the market).  

One of the more relevant characteristics of an artistic good is innovation; thus, the alleged 
weakness of the innovation efforts in the Belo Horizonte art market may be its most troubling 
failure. Although some of the contemporary art galleries (i.e. Type A2) promote innovation, it is 
the galleries from Type B and A3 that take most of the responsibility to discover new talent. Since 
Type B galleries are not profit-driven, they are more out than in the market. They would rather act 
as cultural development agents, given that in Belo Horizonte it is necessary for an outsider to fill 
up the “explorer” gap left by most of the commercial galleries. This gap was not created 
intentionally, however, but was rather a necessary condition for the survival of the businesses. As 
we have shown, given the local market conditions, some galleries cannot afford to invest 
themselves in such costly innovation investments. This is another evidence of the lack of 
entrepreneurial activity – that is, the absence of a “creation of opportunities” behavior. Given the 
local market’s challenges, galleries Type A1 and A2 do not undertake entrepreneurial behavior in 
order to create new opportunities to increase public contact with art. Instead, they would rather 
limit their risks and preserve the status quo. 

Although Belo Horizonte’s art market has many contemporary art galleries and although 
innovative Types B and A3 galleries exist, the level of innovation seems to remain low and the 
local market is still considered incipient and provincial. The fact that most of the commercial art 
galleries mentioned the institutional ones as the major means of introducing new artists into the 
market indicates that there are agents whose role is to supplement a function that the market cannot 
cover alone, more specifically, the function of promoting and intermediating the contact between 
new artists and the public.   
 Both networks are hypotheses about how reality may work and differ from theory. We 
consider that one of the most important features of artwork is its innovative status, and we have 
shown how innovation can be inhibited by the specificities of a local market. For the art market, 
innovation is comprised of what is produced by new, unknown, or young artists whose capacities 
are still not tested or whose success is still not granted. As stated earlier, the first motivation for 



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this research was to discover the opportunities that the local art market had to offer for the young 
artists graduating from UFGM’s art school. In other words, we wanted to know how they could 
start their careers there, or how they could innovate there. The implications of our findings are 
especially relevant regarding this issue, making evident that most young artists may not be able to 
sell their work in Belo Horizonte. Since they are “innovations,” they will find resistance from local 
dealers and buyers if they do not build a reputation beforehand. Hence, the main implication is that 
there is a problem for these new artists in this market.  

In spite of this problem, we could also see that this same market is providing some seminal 
but interesting solutions, that is, the alternative and institutional galleries (Type B and A3), which, 
however, still need much more dissemination and support. As Brandellero (2015) states, “[p]ublic 
funds for the arts remain very limited” in Brazil, and we must emphasize the importance of public 
funding for the arts, especially for those more vulnerable artists: the young and the unknown. We 
also found that disruptive contemporary art institutions like Inhotim are crucial for the 
development of taste and for enhancing people’s contact with innovative art. Since sound demand 
is fundamental for the development of a strong art scene, this kind of enterprise must also be 
encouraged. 

 
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