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Corresponding author:
1 Dnipro State Technical University, Ukraine.
E-mail: kopyl794@gmail.com
ORCID: https://orcid.org/0000-0003-3490-7332

DOI: https://doi.org/10.30525/2661-5150/2020-2-3

CONCEPTUAL BASES OF IMPROVEMENT  
OF THE ORGANIZATIONAL AND ECONOMIC MECHANISM  

OF INCREASE OF INVESTMENT AT TRACTIVENESS  
OF THE SPHERE OF CULTURE

Olena Kopyl1

Abstract. The purpose of this article is to develop the main elements of the organizational and economic 
mechanism of increasing the investment attractiveness of the sphere of culture. Method. The research is based 
on the use of a systemic approach to assessing the current state of functioning of the cultural sphere and 
improving the organizational and economic mechanism for increasing the investment attractiveness of the sphere.  
This research also uses a modeling method, in particular, to develop a concept of models of cultural services that can 
be provided by cultural institutions: free services, services on a co-payment basis and full payment by the consumer 
of cultural services. Results. The research identified the main problems of attracting investment in the sphere of 
culture and main components of the sphere of culture that need improvement. It is proved that the full functioning 
of the sphere of culture is possible only with the provision of quality services that can meet consumer demand.  
Also the place where the service is provided (infrastructure) and the staff who provide this service are very important. 
Therefore, to attract capital investment in the sphere of culture, it was proposed to use the tool of public-private 
partnership. To improve the quality of work of employees, it was proposed to introduce a system of key performance 
indicators for employees. In the course of scientific research, the main element of the organizational and economic 
mechanism of increasing the investment attractiveness of the cultural sphere in Ukraine was determined by the 
need to use a project approach to the formation of competitive markets for cultural services. It was determined 
that the solution of problems in the sphere of culture can be done only if the creation of legal and organizational 
conditions for financing the sphere of culture, results-oriented, diversification of funding sources, the formation of 
competitive markets for cultural services. Value/originality. According to the results of the research, an organizational 
and economic mechanism for increasing the investment attractiveness of the cultural sphere was proposed, the 
main elements of which were updated models of financing cultural services, new approaches to the remuneration 
system, use of public-private partnership, project approach.

Key words: investments, investment attractiveness, culture, organizational and economic mechanism, public-
private partnership, project approach.

JEL Сlassification: E22, J24, L32, Z10

1. Introduction
In the conditions of economic crisis, investments, 

which can serve as a basis for full-fledged social and 
economic development of this or that country, 
acquire considerable value for the countries. That is 
why the question arises about the need to increase 
the investment attractiveness of the country. 
Taking into account global trends, investors are 
beginning to invest in innovative products and 
goods that are the result of the development of 
the creative economy. Creating an innovative 

product is possible only by increasing investment 
in human capital, the basis for the development of 
which is, in particular, culture. In addition, in highly 
developed countries, investors looking for new and 
promising areas for investment are beginning to 
pay considerable attention to the sphere of culture 
and investment in the creation of cultural products. 
In the current realities of Ukraine’s development, 
it is culture that can become a driver for increasing 
the amount of investment in the country, but 
currently the sphere is financed on a residual basis. 



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Therefore, the question arises about the need to 
change approaches to financing the sphere, the use 
of modern tools to attract investment.

Currently, the main ways for the organizational 
and economic mechanism to increase the 
investment attractiveness of the cultural sphere 
remain insufficiently substantiated, and modern 
tools and mechanisms for attracting investments in 
the cultural sphere have not become widespread in 
Ukraine.

2. Problems of development  
of the sphere of culture

A number of factors can influence the increase of 
investment attractiveness for the cultural sphere. 
The main factor influencing the investor, which 
increases the flow of investment in a particular 
industry or sector, is to obtain maximum profit with 
minimum risk. Currently, the main problems of the 
sphere, which do not allow the sphere to function 
effectively and attract investments, are:

1. Outdated mechanism of financing the sphere.
2. Socio-cultural infrastructure, which is in an 

abandoned state.
3. Low share of financing of capital expenditures 

from the state and local budgets.

4. Lack of effective tools to attract extra-budgetary 
funds in the sphere.

5. Lack of highly qualified personnel.
6. Inconsistency between supply and demand 

(Figure 1).
For each problem, which is shown in Figure 1, 

a comprehensive solution should be developed, 
which in combination will form an organizational 
and economic mechanism to increase the investment 
attractiveness of the sphere, as a consequence will 
increase investment in the sphere (Figure 2).

Solving the problems of investment attractiveness 
that are inherent in the sphere of culture can be 
done only if the legal and organizational conditions 
for financing the sphere of culture, result-oriented, 
diversification of funding sources, the formation of 
competitive markets for cultural services.

The updated organizational and economic 
mechanism for increasing the investment 
attractiveness of the cultural sphere should perform 
the following tasks:

1. To ensure more efficient use of financial 
resources provided in the state and local budgets 
for culture.

2. To ensure the receipt of extra-budgetary funds 
in the sphere of culture and create opportunities for 
the development of socio-cultural infrastructure.

Components of the sphere of culture

Components of the sphere: service
Main problem (s):
Not high quality

Not available (territorially and 
financially)

Component of the sphere: personnel
Main problem (s):

Do not receive a good reward for 
their work

They do not have the appropriate 
qualifications

Component of the sphere: 
consumer

Main problem (s):
Supply does not meet demand

Component of the sphere: 
infrastructure

Main problem (s):
Outdated

Does not provide conditions for 
providing / consuming the service

Who provides? 

For 
whom

? 

1. Private partners (investors) do not cooperate with the state
2. Investors do not invest in the sphere

Where? 

What is produced? 

Results 

Figure 1. The main components of the problem of low investment attractiveness  
of the sphere of culture in Ukraine



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3. To create favorable working conditions to 
attract highly qualified personnel to the sphere.

4. To create a competitive market of cultural 
services in which the supply meets the demand.

Thus, the main elements of the organizational 
and economic mechanism that are able to ensure 
the implementation of these tasks are:
– Updated models of financing cultural services 
provided by cultural institutions;
– Updated system of remuneration for employees 
in accordance with the results of their activities;
– Public-private partnership for culture;
– Project approach for the formation of competitive 
markets for cultural services.

3. Models of financing cultural services
Models of financing cultural services provided 

by state and municipal cultural institutions should 
be based on state guarantees of affordability and 
take into account the solvency of the consumer 
of cultural services. Thus, a broad offer should be 
created in the market of cultural services, under 
which each consumer would be able to meet their 
cultural needs. It should also take into account the 
fact that there are certain state guarantees, so we 
should not forget about the services that must be 
provided to the citizens of Ukraine free of charge. 
In turn, in order to attract private investors, it is 
necessary to develop models for financing cultural 

services, which are provided on full payment by the 
consumer, this type of service is the most interesting 
for the investor, who aims to make a profit. 

It is necessary to introduce three main models of 
cultural services that can satisfy the interests of the 
state, consumers and investors. Opportunities for 
attracting investment through the introduction of 
models for the provision of cultural services, which 
can be provided by institutions and organizations 
that carry out their activities in the sphere of culture 
are given in Table 1.

4. Remuneration system
The next element of the organizational and 

economic mechanism of increasing the investment 
attractiveness of the cultural sphere is the 
modernization of the remuneration system.

The system of remuneration should include 
incentives for quality and efficient work of 
employees of cultural institutions, in particular, 
provide for the relationship between remuneration 
and productivity of the employee. The employee 
must also receive rewards as opportunities for 
professional development and training.

The introduction of a system of “key performance 
indicators” can serve as an incentive that will 
positively affect the motivation for quality and 
creative work of employees of cultural institutions 
and will attract highly qualified personnel to the 

Problem

Cultural services are not of high quality

Low-skilled staff

Staff do not receive a normal salary

Cultural services are not available

Cultural infrastructure is outdated

Solution

To generate new models of financing 
cultural services provided by state and 

municipal institutions

Introduce a system of remuneration of 
employees in accordance with key 

performance indicators

Identify existing financial gaps in 
capital expenditures

Introduce effective financial 
mechanisms to support and develop 

cultural infrastructure

Figure 2. Ways to improve the organizational and economic mechanism  
to increase the investment attractiveness of culture



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cultural sphere. In turn, increasing the share of highly 
qualified and motivated staff will have a positive 
impact on improving the quality of cultural services. 

It should be noted that the system of key 
performance indicators that are acceptable for any 
organization must meet the following requirements:
– Limited number of indicators;
– Unity for the whole organization;
– Measurability, the ability to quantify indicators;
– Direct relationship with the most important 
factors of success;
– The ability to influence numerous factors; 
– Incentive for the employee (Panov, 2013).

In order to improve the quality of cultural 
services, it is proposed to introduce an evaluation 
system of the employee’s work, for the results of 
which bonuses will be paid to the salary, as well 
as an annual bonus based on key performance 
indicators set at the beginning of the year.

In addition, it is proposed to use the management 
system of providing quality services by cultural 
institutions (Figure 3).

5. Public-private partnership for culture
The basis for providing affordable cultural 

services to the population is modern infrastructure 
that allows for the provision of quality cultural 
services. In order to increase the share of capital 
investment in culture, it is necessary to use modern 
tools to raise funds, in particular the instrument of 
public-private partnership.

Public-private partnership has become 
widespread in economically developed countries 
and serves as a tool to attract extra budgetary funds 
in various sectors of the economy. Given the state 
of funding for the cultural sphere on a “residual 
basis” and the limited budgetary resources, the use 
of this tool for the cultural sphere can serve as an 
impetus for the development of the sphere.

The introduction of public-private partnership 
will create opportunities to attract extra-budgetary 
funds for infrastructure and innovation projects 
in the sphere of culture, restoration of cultural 
heritage sites, reconstruction and modernization 

Table 1
Attracting investments through the introduction of models for the provision of cultural services that 
can be provided by institutions and organizations that carry out their activities in the sphere of culture

Model 
provision 
of cultural 

services

Interest in investing
Steps needed to implement  

the model
State (public investment – budget 

funds of all levels of budgets)
Private investor

fr
ee

 c
ul

tu
ra

l s
er

vi
ce

s The state investments, first of 
all, ensure the fulfillment of 
the functions of the state and 
the norms of the Constitution, 
according to which the state 
provides cultural rights for the 
citizens of Ukraine.

Investing in the production of 
services provided free of charge 
can, above all, serve as a basis 
for obtaining preferences from 
the state, such as tax benefits, or 
exemption from certain types of 
taxes.

1. Definition at the legislative 
level of the list of services that will 
be provided free of charge and 
included in the basic set of cultural 
services
2. Development of a single method 
of calculating the cost of free 
services

cu
ltu

ra
l s

er
vi

ce
s o

n 
a 

co
-p

ay
m

en
t b

as
is

Investing public investment 
primarily ensures the performance 
of state functions to support and 
develop the cultural sphere

Investing in the production of 
services provided on a co-payment 
basis can serve as a basis for 
obtaining preferences from the 
state, such as tax benefits, or 
exemption from certain types of 
taxes. Making a profit

1. Development of models 
of differentiated financing 
for different types of cultural 
institutions and different types of 
cultural services
2. Development and approval 
of guidelines for calculating the 
cost of services provided on a 
co-payment basis

cu
ltu

ra
l s

er
vi

ce
s 

on
 te

rm
s o

f f
ul

l 
pa

ym
en

t b
y 

th
e 

co
ns

um
er

The state does not invest directly 
in the provision of paid services, 
but may direct capital expenditures 
for the development of cultural 
institutions, which in turn will 
have an impact on the quality of 
cultural services

Making a profit

1. Definition and approval of 
the list of services that can be 
provided by cultural institutions 
on the terms of full payment by the 
consumer



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Procedure
(Established method of carrying out the activity or process)

Process
(A set of interconnected and interacting varieties 

of activities of a cultural institution)

Process monitoring

In
pu

t
(R

es
ou

rc
es

)

O
ut

pu
t Cultural 

products 
and 
services

The effectiveness 
of the process

Figure 3. Schematic definition of the process for the management system of quality services 

Source: (Voronina, 2015)

Table 2
The main advantages of using public-private partnership in the sphere of culture

Benefits for the public partner Benefits for a private partner

1. Savings in budget funds
2. Obtaining a socio-economic effect
3. Ability to gain access to modern and innovative processes and tools 
that can be used in the activities of institutions
4. Attracting capital investment for the construction of new facilities
5 Allocation of investment risks with a private partner

1. Opportunity to invest under state guarantees
2. Receiving preferences from the state, for example, 
obtaining tax benefits
3. Distribution of investment risks with the state 
partner
4. New opportunities for project implementation

Research of the most effective forms of 
cooperation between the state and territorial 

communities (state partners) and private 
partners in the sphere of culture 

Identification of potential cultural objects that 
can be realized with the use of public-private 

partnership

Establishing communication between public 
and private partners in the sphere of culture 

Ensuring the preparation of quality
investment projects, which are carried out 
in the terms of public-private partnership 

1 

Basic steps

A list of world best practices for
using the instrument of public-
private partnership to attract

investment in the sphere of culture

List of investment projects

Business platform by type
"market-place"

Step-by-step recommendations
on the possibilities of using

the public-private partnership
instrument to attract investment 

in the sphere of culture

Result

2 

3 

4 

Figure 4. The basic steps for the implementation and use of the public-private partnership instrument  
to attract investment in the sphere of culture



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of cinemas, theaters, libraries and clubs, creation of 
new cultural spaces (Table 2).

To use the tool of public-private partnership for 
culture in Ukraine effectively, it is necessary to 
follow the steps shown in Figure 4.

Thus, the instrument of public-private partnership 
is a universal and, at the same time, an effective 
mechanism for attracting financial resources and hig-
hly qualified personnel to address strategic challenges 
of socio-economic development in a budget deficit.

6. The project approach
The last and main element of the formation of 

a favorable investment field for the development of 
culture in Ukraine is the introduction of a project 
approach to the formation of competitive markets 
for cultural services.

The competitive market of cultural services 
should be formed and developed on the basis of 
taking into account the demand and supply for 
cultural services (products), focus on the current 
needs of consumers of cultural services and the 
state of their satisfaction.

Today at all levels there is an introduction and 
development of project management technologies, 
which allows to focus attention and resources on 
the implementation of a certain set of tasks with 
certain restrictions, such as time, resources, budget.

The sphere of culture is one of the priorities 
for the use of methods and techniques of project 
management, the implementation of which will 
contribute to the formation of optimal organizational 
structure and interaction of executive authorities 
and local governments, increase the number of 
alternative resources, optimize their use, stimulate 
supply and consumption of cultural services.

The project approach to financing the cultural 
sphere is not only a tool for creating a competitive 
market for cultural services, but also a key element 
for attracting investment and creating a favorable 
investment field for cultural development. The 
main advantages of the project approach are:
– allowing to combine different forms of investment 
using a percentage;
– taking into account the proposed models of 
financing cultural services: the use is possible for 
the provision of free services, for services provided 
on a co-payment and full payment basis;
– creating competition between cultural service 
providers;
– giving the opportunity to provide cultural services 
and products at the best value;

– being the basis for the use of public-private 
partnership, crowdfunding, fundraising;
– giving a clear logical model of project 
implementation;
– providing the possibility of multi-channel financing;
– leading to more efficient use of funds;
– increasing investment from domestic and foreign 
investors.

The project approach as the main element of 
the organizational and economic mechanism of 
increasing the investment attractiveness of the 
cultural sphere should serve as a prerequisite for 
increasing investment.

7. Conclusions
At the present stage of economic development, 

there is a gradual combination of passive and 
active roles of consumer and producer, which leads 
to the transformation of financial relations and 
the emergence of new financial instruments and 
methods of capital mobilization.

The development of ties between culture and 
business, the establishment of various forms and 
opportunities for mutually beneficial cooperation 
in these areas, as well as the formation of public 
opinion in favor of cultural support will attract 
alternative funding tools and other resources 
(human, material, information, etc.).

Not only cultural products and services, but also 
cultural projects are common practices for attracting 
public or private investment in culture. That is, the 
introduction of a project approach to finance the 
cultural sphere and the creation of competitive 
markets for cultural ambassadors, can serve as 
a basis for organizational and economic mechanism 
to increase the investment attractiveness of the 
cultural sphere in Ukraine.

Solving the problems of investment attractiveness 
that are inherent in the sphere of culture can be 
done only if the legal and organizational conditions 
for financing the sphere of culture, result-oriented, 
diversification of funding sources, the formation 
of competitive markets for cultural services. The 
main elements of the organizational and economic 
mechanism to increase the investment attractiveness  
of culture are updated funding models, new appro-
aches to the system of remuneration of employees in 
the sphere, the use of public-private partnerships, and 
the introduction of a project approach.

Further research should be aimed at developing 
a model of multi-channel financing of culture in the 
framework of the project approach.



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