Luxury and the Entrepreneur

Based on fictional and non-fictional accounts, this chapter offers a narrative study of entrepreneurship in which the transgressive force of what Joseph Schumpeter calls ‘creative destruction’ is traced through the production of luxury objects emerging from the Meissen porcelain works. It is a narrative in which luxury and entrepreneurship are brought together, somewhat uneasily, under the forces of obsession, addiction, expertise, collecting, the affective power of things and civility.

Licensing and the Mass Production of Luxury Goods

This chapter examines the licensing business adopted by luxury fashion companies to extend their businesses for international markets and product-development strategies. The licensing business appears to conflict with the nature of luxury brands because the latter face the possible risk of diluting the brand identity and losing credibility. This chapter outlines the licensing business, its incentives, and its purpose, before examining its historical evolution over the past fifty years. It also analyses the current value of licensing luxury goods and evaluates why licensing still works. The discussion is mostly based on examples from haute couture, which is the pinnacle of the fashion-industry hierarchy, and high-end clothing brands. We focus on examples from Japan because they demonstrate the symbolic phenomenon of the global licensing business.

Luxury Brand Extensions and Perceived Luxury

Luxury-brand managers must balance optimising brand value while simultaneously maintaining the exclusivity of the brand. Corporate interests increase the focus towards strategies that return greater profit for the business. For example, managers may consider brand extensions or greater channel exposure to increase revenues. However, these strategies may have an adverse impact on brand exclusivity. The damage to over-stretched brands like Pierre Cardin and Gucci has been attributed, in part, to the use of brand extensions and increased distribution. This article examines the impact of brand extensions on consumer perceptions of luxury. Careful consideration of the degree of fit of the extension with the luxury brand as well as the channel exposure offers mechanisms for brand managers to extract greater profit from the brand while maintaining luxury-brand perceptions.

Economic Inequality and Luxury

Economic inequality is often associated with luxury. This is because an individual’s ability to acquire luxury goods and services depends on their access to economic resources. However, it is necessary to recognise that luxury can take marketised and sociocultural forms. Access to sociocultural forms of luxury is not dependent on the individual consumer’s economic resources. This chapter adopts a critical luxury studies approach to explore the relationship between luxury, manifest primarily in the form of luxury goods and services, and economic inequality. However, by recognising sociocultural and marketised forms of luxury, an understanding of the complexity of the relationship between luxury and economic inequality is achieved. Furthermore, it is argued that economic growth, while increasing the scale of inequality, has also lifted many people out of poverty and into the ranks of luxury-brand consumers. Importantly, it is suggested that focussing on luxury as a signifier of economic inequality is a distraction that conceals a lack of political will to address the causes of poverty and deprivation that are embedded in the neoliberal market economic system.

Intellectual Property Rights and Country-of-Origins Labels in the Luxury Industry

Intellectual property rights and country-of-origin labels are two different and often complementary mechanisms of protection. Entrepreneurs in the luxury business use them to inform the consumer and the custom authorities, to protect their innovations and know-how, and also to enhance the narratives of their brands. These protective mechanisms are historically contingent and subject to reinforcement or weakening due to the entrepreneurs’ lobbying, due to governmental protectionism, and more generally due to international competition. Intellectual property rights are not complete systems of protection and present numerous asymmetries between various countries and industries. This chapter also addresses both the effectiveness and the weaknesses of intellectual property rights and of nation branding in informing the consumer, and in deterring the production and purchase of substitute products.

Consumers’ Perceptions and Evaluations of Luxury and Luxury Brands

This chapter takes a critical look at concepts for measuring the perception and evaluation of luxuries by consumers. After a short clarification of the multifaceted relationship between consumers and luxury brands, the first focus lies on the presentation of relevant and much-noticed measurement concepts. The critical discussion of these approaches reveals three challenges that need to be mastered by future research: (1) the relevant points of reference for the perception and evaluation of luxury goods need to be identified in a more differentiated and systematic way; (2) the interplay between conscious and unconscious perception and appraisal must be considered; last but not least (3) the resulting perceived value of luxury brands should be recorded in a much more differentiated manner. Subsequently, the chapter mainly offers first proposals to close the highlighted research gaps.

Luxury and Corruption

Luxury, luxury business, and corruption are intertwined in multiple ways. Luxury goods, art, and real estate are used to launder proceeds from corruption and organised crime; luxury goods are used as bribes; the desire for luxury motivates corruption; images of illicit luxuries are used in corruption exposés and fuel populist politics; anticorruption measures impact luxury markets. Despite this, the relationship between luxury and corruption has not been an object of systematic research. This chapter is therefore exploratory in its nature, an invitation to think luxury and corruption together, and beyond the business of luxury. It argues that much can be gained from thinking luxury and corruption together and in new and critical ways. An analysis of the logic of luxury and of luxury business is not only key to understanding the driving forces behind corruption, but it also offers a powerful entry point to making sense of moral cultures, reigning political and economic views, and the making of global ethics.

Luxury Supply Chain Management

This chapter focuses on supply chain management in the luxury sector. The concepts of supply chain and supply chain management are introduced first, with an overview of the most prominent scientific research works as well as industrial frameworks and methodologies; a discussion of luxury supply chain management in scientific literature follows. The central section of the chapter is dedicated to dissecting the anatomy of the typical luxury supply chain: first of all, it argues that there is simply no such a thing as ‘the typical luxury supply chain’, as the luxury industry is characterised by opposing trends; the section continues by illustrating how these opposing trends are moving companies into clusters which are internally homogeneous but significantly differing from one another. The chapter then illustrates some market trends that are increasing the complexity of supply chain management in luxury, followed by a brief discussion on how brands are reacting.

Luxury, Craft, Creativity, and Innovation

Although often associated with the preservation of traditional craft skills, luxury is simultaneously linked to creativity and innovation in terms of new and technologically advanced goods. This chapter identifies how the timelessness of craftsmanship relates to creativity and innovation in the production of luxury-branded goods from bespoke shoes and silk scarves to luxury cars. Drawing on relevant academic literature from the fields of craft, creativity, and innovation, together with the exploration of examples derived from secondary sources, the chapter sheds light on the connections and tensions between these three attributes of present-day luxury-branded goods. The analysis presented provides insight into the varied and often complex connections between craft, creativity, and innovation in the context of the production of luxury-branded goods.

Luxury, Banking, and Finance

Luxury-specific production has expanded through upstream–downstream integration, from commodities (silk, precious metals, etc.) to processing industries and luxury houses. Banks financed companies, trade, foreign exchange, and flows of payment. They were partners for the valuation of treasuries and for the lightening of the debts of their clients. They accompanied them through the transferrals of property, within dynasties or outside. Starting in the 1980s, business bankers supported companies building capital for luxury firms: they helped them to integrate the game of financial markets, to open their capital and to ensure the dynastic transition within family companies. For managers of companies in the luxury sector, the challenge has ever been to create strong self-financing capacities in order to allow a distribution of dividends that will ensure the loyalty of family shareholders, finance investments (workshops, shop networks), and contain indebtedness. The volatility of markets and the financialisation of capitalism led investment bankers to join offensive or defensive pools when bids were launched, or to be part of the M&A teams.