Globalization, organizational size, and innovation in the French luxury fashion industry: Production of culture theory revisited

According to production of culture theory, small organizations are more likely to produce innovative cultural products than large organizations; large organizations constitute oligopolies that control their markets and remain innovative by coopting smaller organizations, along with their creative talent. A study of the French luxury fashion market shows that a few large companies controlled by conglomerates dominate the market in terms of sales but have little influence on styles. Rather than coopting smaller firms, large firms use the myth of the designer as artist and connoisseur to enhance the saleability of products other than clothes, although the designer is increasingly an employe rather than an owner or a manager. Whether small firms influence styles depends on economic conditions that affect their capacity to compete with larger firms. A factor that has been ignored by production of culture theory, the increased cost of entry for new firms due to globalization of markets, inhibits their capacity for innovation and survival. Examination of rankings of fashion innovativeness by fashion experts over a period of seventeen years showed that, at the beginning of the period, when costs of entry were relatively low and the number of competitors was relatively small, small firms were able to achieve recognition for their innovations. By the end of the period, the same small firms, now grown to medium-size firms, were still influential, while new small firms, competing with larger firms in a market where costs of entry were high, were less likely to be perceived as innovative and may actually have been less innovative, since their precarious financial situation precluded experimentation. Rather than coopting smaller firms, large firms benefited from the global expansion of their market to sell products other than fashionable clothing. Successful new firms were generally foreign and well-financed. © 1997 Elsevier Science B.V. All rights reserved.