Does government financial support guarantee organizational performance? : The status of cultural arts organizations the effects of support

Culture arts are fields where market failures are likely to occur, so the government uses financial support as an important policy tool to mitigate risks ensure the sustainability of the arts. However, it is difficult to say that government support has the same impact on all cultural arts organizations. In addition, the direction of the support may not lead to improved performance, or it may even hinder performance if it exceeds a certain level. In consideration of this non-linearity, this study examined the effects of accrued financial support on the performance of cultural artistic organizations. The analysis showed that the financial performance of cultural organizations improved positively with repeated receipt of public funding, compensating for the initial lack of resources. However, we found an inverted U-shape, where the effectiveness of improving performance decreases beyond a certain level. In terms of operational performance, the cumulative effect of public financial support has a U-shaped relationship, with an initial negative impact, but a gradual transition to a positive effect over time. This suggests that while short-term increases in support alone are unlikely to improve operational performance, cumulative support over the long term may contribute to improved performance. We also examined an organization's reputation or status as an important contextual factor, considering how active it is within the local cultural ecosystem: organizations with higher status were less likely to be able to make transformative changes or improve their performance with stable funding, while organizations with lower status showed potential to expand their access to resources and improve their performance with public funding. These differences suggest that government funding can work differently for different organizations depending on their position in the local cultural ecosystem, highlighting the need for tailored support that takes into account the characteristics and context of cultural organizations.