Innovation intelligence and entrepreneurship in the fashion industry
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Procedia - Social and Behavioral Sciences 41 (2012) 315 – 321
International Conference on Leadership, Technology and Innovation Management
Innovation intelligence and entrepreneurship in the fashion
industry
Fatma Genç Ünaya, Cemal Zehirb
a Fatih University, Istanbul,34500,Turkey
b Gebze Institute of Technology, Kocaeli, 41400, Turkey
Abstract
Over the course of economic globalization, the innovation aspect of entrepreneurship has gained critical importance in almost all sectors,
including the fashion industry. The emergence of an entrepreneurial economy stimulated a new type of competition in the fashion industry
and changed the face and nature of the competitive advantage around the world. In this context, the introductory part of the study elaborates
on “innovative entrepreneurship” by focusing on the theories and definitions of innovation and entrepreneurship. In the light of the eminent
literature on innovation-related entrepreneurship we could argue that fashion businesses and fashion employers require high level of
innovativeness and entrepreneurship to produce high performing firms. As specifically emphasized in the literature, innovation increases
firm performance and contributes to competitive advantage. To support this argument, evidence on innovation-based entrepreneurs and how
innovativeness relates to entrepreneurship were given from fashion companies, entrepreneur-fashion designers and their various innovations.
The fashion industry provides numerous examples of individuals who are simultaneously inventors, owners and managers of fashion
business firms. These emerged as a product of commercialized fashion ideas and design, manufacture, business or marketing methods that
caused revolutionary or incremental change in the fashion industry. Their impact as elements of competitive advantage in the fashion
industry is also highlighted. In the last part of the study, innovation management in the fashion industry is evaluated. Despite the high
influence of fashion in modern society, its analysis from a management perspective has not been sufficiently conducted, and hence “fashion
creativity and business intellect” have been categorically viewed separate. Today, global business of fashion requires sophisticated
management techniques in addition to a high level of creativity and innovation in view of the rapid development of business strategies that
relate to fashion management.
Keywords: Innovation, entrepreneurship, management, firm performance, fashion business, fashion industry
© 2011Published
© 2012 Publishedbyby Elsevier
Elsevier Ltd.Ltd. Selection
Selection and/orand/or peer-review
peer review under responsibility
under responsibility of The FirstofInternational
International Conference
Conference on
on Leadership,
Leadership, Technology
Technology and Innovation
and Innovation Management
Management
1. Introduction
Throughout the history of fashion, many inventions have gone through a successful innovation process and were
widely marketed thanks to good functionality and the ability to create value. Innovation is definitely important
for the future development of fashion industry in the form of competitive businesses. Over time, the
entrepreneurs’ role in the economy and their contribution to economic change, as well as their creativity,
innovation, entrepreneurial and managerial aspects changed [1]. Fashion brands for their part strive for
innovation, differentiation and appeal. This is because the fashion business is essentially a forward-thinking
sector and one of the core characteristics of fashion brands is innovation which has been an essential aspect of
fashion business for centuries. For instance, Louis Vuitton’s the brand characteristics historically included
innovation and creativity, H&M’s retail innovation through collaboration with luxury designers and Levi’s
product customization [2].
* Corresponding author. Tel.: +90-212-8663300 ; fax: +90-212-2723066.
E-mail address: fatmagencunay@fatih..edu.tr
1877-0428 © 2012 Published by Elsevier Ltd. Selection and/or peer review under responsibility of The First International Conference on Leadership,
Technology and Innovation Management
doi:10.1016/j.sbspro.2012.04.036316 Fatma Genç Ünay and Cemal Zehir / Procedia - Social and Behavioral Sciences 41 (2012) 315 – 321
There are different definitions of innovation and entrepreneurship in the management and economics literatures
originating from different theoretical perspectives. It is clear that choosing an appropriate definition of
innovation seems to depend on the perspective being taken even tough creativity and innovations have been
constantly emphasized by professionals and academics alike. We focus on “innovation”, embracing the
exploitation of commercialized ideas and creative input in the fashion industry. In this part, we give the
examples of ‘commercial application of innovative ideas’ in the fashion industry in relation to the definitions in
the literature. For instance, Drucker (1985) defines ’innovation’ as the specific tool of entrepreneurs, through
which they exploit change as an opportunity (which is the source of innovation) for a different business or
service’ [48]. This understanding underpins Yves Saint Laurent’s realization of changing roles of women as a
result of the social changes and design innovation leading to the assertive, liberated woman of the 1970s and
1980s in the fashion industry [4]. Another definition comes from Ulijn and Weggeman (2001) which focuses on
the idea of ‘creating something new and implementing it successfully at a market’ [5]. As seen in the case of
Tom Ford (Gucci)’s innovation, trends in fashion history was changed with a mix of tradition and modern
innovation and Gucci became the hottest name in international fashion [4]. A different approach to innovation is
‘The process by which opportunities are identified and exploited’ [1] or the processes that to perform well to
create and deliver different goods and services [48]. It is possible to find innovation in the case of Marcel
Rochas’ unique trousers designs [4]. As ‘a new method, custom or device’ to adopt the definition in Webster’s
New World Dictionary [6], Charles Revlon’s marketing innovations modernized the cosmetics industry. Another
approach defines ‘Innovation as a new idea, practice or object’ [7]. However, Lowe and Marriot emphasize that
it is not just about having ideas because many people have ideas but do not have the desire, the vision and/or the
know-how to be able to commercialize them [1]. In terms of commercialized ideas in the fashion industry, Rene
Lacoste’s ability to commercialize his ideas can be given [4].
Innovation is also about “new processes and new ways of doing things” that may not be obvious to customers
but add significant value in delivering the services and products that customers require as seen in the case of
Callot Soeurs’s Asian-inspired western clothing [4]. Innovation occurs after a considerable time following an
invention that is the solution to a problem; innovation is the commercially successful application of the solution
[8]. Florence Eiseman’s design philosophy is a case for this type of innovative solutions [4]. According to Lowe
and Marriott “İnnovation is a process of creating, experimenting, transforming not only what is offered but the
way in which it is offered – “the business model” [1]. Although some innovations do arise from a flash of
genius, the successful ones tend to be born of a conscious, purposeful search for opportunities. As seen in the
cases of innovative entrepreneur Montgomery Ward, whose business model innovation in direct-mail retail
eliminated traditional retailers; or the world’s first fashion entrepreneur, Charles Frederick Worth’s balanced
combination of effective business strategies, modern fashion management requires constant innovation in
product design and business management systems [2]. According to Schumpeter, innovations are usually more
important than inventions, for instance “Richard Arkwright as an innovating entrepreneur with multiple
innovations, including an emergent factory system began to revolutionize the textile industry [9].The traditional
view of innovation is that strategies must be developed and processes and systems established to encourage the
generation of new or improved products, services, processes and ideas necessary for organizational growth and
development. But it is the motivated, skilled and knowledgeable individual owners, managers and staff who are
the innovators. As an example of knowledgeable innovator, Louis-Francois Cartier could be given with his best-
known innovations of the broche de de´collete´, convertible jewels [4].
Looking at the definitions of an entrepreneur, one could face with conceptions such as “employer/ business
owner” (ownership of means), the manager administration of a going concern and the innovator (who produces
ideas) [12]. However, from a broader perspective, an entrepreneur has been defined as “creative and innovative
individuals as employees as well as in a self-employed capacity. These people are labeled ‘intrapreneurs’, and
organizations that wish to remain competitive in fast-moving or complex and competitive environments need to
nurture such individuals and harness their creative capacity in order to achieve sustainable competitive
advantage [1]. However, the important point is that for sustainable competitive advantage, the information which
company and entrepreneurs have should be converted to innovation. As Wickham (2004) suggests that
entrepreneurs are market actors who manage businesses in an entrepreneurial way; found new organizations;
bring innovations to market (whether these are new products or services, or new processes); identify market
opportunities etc. [11]. The innovation-based aspect of entrepreneurship is emphasized by Davidsson:
“Entrepreneurship is a process of exploiting opportunities that exist in the environment or that are created
through innovation in an attempt to create value. It often includes the creation and management of new business
ventures by an individual or a team” [5]. The common aspects of entrepreneurs and innovators’ creativeness
occurs in diverse areas, such as design, science, technology, the arts and organizational development and they
work for many different types of organizations [1]. Creativity has to be part of a system or structure, if we want
it to be a useful instrument in helping us to understand or improve our social and physical environment [13].Fatma Genç Ünay and Cemal Zehir / Procedia - Social and Behavioral Sciences 41 (2012) 325 – 331 317 Jung’s model seems to be the one which most accurately defines creativity in the context of fashion [14] where the creative challenge is to divine unconscious collective desires. 2. The Typologies of the Entrepreneur and New Competition in the Fashion Industry There is no consensus on how to define the entrepreneur in the economics literature. While Cantillon saw entrepreneurs as having a key role in economic development, he did not believe that entrepreneurs must be innovators [1]. On the other hand, Joseph Schumpeter placed the entrepreneur at the centre of the growth process [49] and saw “entrepreneur” as someone special, an innovator, who brings something new to the process and said “without innovations, no entrepreneurs [9]... Entrepreneurs are the agents of innovation and creative destruction…” [1]. However, Schumpeter explained innovation in terms of the role of entrepreneurs as individual inventors, not as instituted processes or organizational capability [49]. The following case indicates the harmony of innovative and business aspect of an entrepreneur. The corporate strategy of Pierre Cardin who has been related to innovation and creativity both in fashion design and business approach is a highly talented “fashion designer, a businessman, and an innovator” who adopted several aspects of the current fashion management [2]. Hence, there is a link with creativity and innovation with new markets, products, processes and technology. Entrepreneurship involves competitive actions to win the market, acting to exploit opportunities and actors to bear risks [5]. Considering a company operating in the fashion industry, forced innovation is fundamental because the innovation ingredient is necessary to relaunch, recreate and rethink at the whole organizational level. It is important to develop the creative process in companies which are being human organizations and living organisms. Maramotti highlighted the companies’ own ‘genetic code’ which is normally connected to the figure of its founder (entrepreneur). The company culture which is like an enormous database including its experience, skills, individuals’ contributions [10] formed by the genetic code of entrepreneurs. As seen in the case of Salvatore Ferragamo’s the family tradition of innovation [4]. As fashion historians mention, sometimes one creative, entrepreneur or designer could change the world and fashion history trends, because of his/her impact on corporate culture, organizational competence, and innovation management. On the other hand, corporate entrepreneurial behavior has also been recognized as necessity for creating continuous innovation and achieving competitive advantage in dynamic markets [15], [16], [17], [18] and building organizational capabilities that allow a firm to create the capacity for continuous innovation [53]. In this context, motivated people act as entrepreneurs who are able to spot opportunities and translate these to their organizational context. As organizations adopt more innovation supportive forms of organizing, the role of the middle management becomes more important in dealing with the need for more creative, responsive and learning-oriented organizations [19]. In other words, empowering change-oriented leadership behavior and learning-oriented culture increases firm performance in organizations [46] and by applying this approach fashion firms can successfully manage their continuous change nature of innovation. As Michael Porter emphasized by highlighting entrepreneurial edge that today the way to create competitive advantage is innovation [20] and “the essence of strategy is choosing to perform activities differently than rivals do. Rivals can easily copy your improvements in quality and efficiency. But they shouldn’t be able to copy your strategic positioning—what distinguishes your company from all the rest” [50]. As highlighted in the context of examples from the fashion industry above, the correlation between high performing firms and innovative entrepreneurs is compatible with the literature which advocates that innovation increases firm performance, and thus competitive advantage. Overall, the literature on innovation and entrepreneurship suggests that fashion businesses and employers need to display a high level of innovativeness in order to generate high performing firms with competitive advantage. Therefore, the following hypotheses are proposed: H1: There is a positive relationship between innovative capacity and entrepreneurial success in the fashion industry. H2: There is a positive relationship between entrepreneurship and firm performance. H3: There is a positive relationship between entrepreneurship and competitive advantage. 3. Remaining Innovative in Today’s Fashion World: Technology and Sustainability The twentieth century witnessed significant changes in society and technology that modernized everyday life and had a significant effect on fashion world as well. Fashion is not all about style and continuous style change. “The new game is about more efficiency and innovation” [53]. Fashion is also about technology management and design intelligence which use technology as an important element for customer benefit. There is a link between creativity and innovation in new markets, products, processes and technology. Entrepreneurship involves competitive actions to win the market, acting to exploit opportunities and actors to bear risks [5]. Porter emphasized that companies achieve competitive advantage through acts of innovation. They approach innovation in its broadest sense including both new technologies and new ways of doing things [20]. Throughout technological changes, the fibre, textile and fashion industries have undergone the most revolutionary changes
318 Fatma Genç Ünay and Cemal Zehir / Procedia - Social and Behavioral Sciences 41 (2012) 315 – 321
and seen the most remarkable innovations. Smart or intelligent textile innovation was one of the most
revolutionary development in textile innovation history [21]. “However, no existing smart clothing fully
integrates high technology and fashion design because the contributions from the electronics and fashion
industries are unbalanced” [22].
During the late 1990s the textile sector entered a new era due to the emergence of new materials as the building
blocks of intelligent or smart textiles which increased comfort and safety in a non-obtrusive way. They are
applied in areas such as healthcare, protection, sports and leisure [23] 1. Following technological advancements
such as the use of nano-technology and using textile innovations in the fashion industry will bring fashion
businesses competitive advantage. For example, Rayon brought a new type of competition to textiles [9] and
continuous advances in fiber and fabric technologies would impact the future of apparel design such as
development of seamless garments [28]. In the area of fashion and clothing there have been many technological
inventions as well. Some have had only minor effects on the market, whereas others have or are about to
revolutionize them. For instance, the increase in the use of computers systems such as CAD [30], [31],
development of fibers’ and fabrics such as lycra (DuPont) [30] and other innovations in fabric technology is
making great inroads to improve quality of life and increase speed and quality of manufacture. Developing a
customized pattern language for apparel products could also save resources and time [29]. Innovation and
entrepreneurship have creativity in common, and that in most technology-based entrepreneurship a high degree
of innovativeness is required [5]. A number of designers also used technology to gain competitive advantage
such Paco Rabanne [4]. Nano-technology applications and adequate miniaturization of electronic devices for
inserting them into fibres were still expected to take a considerable amount of time, while the majority felt that
energy sources can be fully integrated into textile structures in the near future” [32]. Fashion board of directors
should bring technology and innovation into the boardroom strategy of companies and besides innovating in
production, entrepreneurs often had to change habits of consumption by using marketing in mass consumption
[33]. Design and product development processes would be heavily dependent on digital technology; as a result,
the role of technical design would grow in importance. Companies that can embrace technology without
eliminating the art elements of the business – functional with an aesthetic touch – would remain in an
advantageous position to sustain business profitability [28]. To this end, it ought to be highlighted that for
sustainable competitive advantage, change of business involves “valuable, unique, non-substitutable capabilities
of a firm” [47].
4. The Importance of Innovation Management for Fashion Entrepreneurs and Fashion Businesses
In the fashion sector, innovation is a continuous and almost infinite process; the emphasis should be on the
necessity of innovation as a devise of competitiveness for a fashion business. In the field of product innovation,
the market is always looking for new products. Universities continuously develop new inventions and strive hard
to commercialize their new technologies. Success still depends on the business model, marketing and finance
which must involve industrial partners in management [6]. Besides flexibility, the issue of innovation
management gains importance. Fashion companies ought to attempt to devise strategies for innovation, since the
successful inauguration of new fashions is increasingly likely to be the result of such planned approaches. In
noting the necessity for a strategic approach, the industry is acutely aware that not everything is possible, and
have learned by experience that new ideas must usually relate to what already exists if they are to succeed [10].
According to Robert Hisrich “successful companies continually innovate and the entrepreneur needs to
understand product innovations and process innovation” [52] and as “tomorrow’s competitive advantage will be
different from today’s…the real focus for the companies is the opportunity to compete for the future”[54]. For
instance, Zara has the fashion industry’s most effective and responsive operations techniques. Richardson (1996)
suggested that competition in the fashion industry was shifting from “price and quality” towards a deeper focus
on “timing” such that designs can be quickly imitated and production only continued for successful items. The
consequence of this is that responsiveness could be an effective substitute for the ability to accurately predict
future trends [3]. Innovation is an essential element in enterprises by creating new business activity, in
generating growth and ensuring survival for an existing business in order to gain a competitive edge. However,
the point is that innovation is driven by creative and enterprising individuals and does not occur spontaneously
[1]. Today, the business of fashion requires sophisticated management techniques in addition to a high level of
creativity and innovation [2].
1
As smart biomedical garments (a wearable monitoring system) Wearable Motherboard™( [24] and [25] (developed for monitoring of
soldiers in combat situations), Wealthy [26] The Lifeshirt™ [27] a sensorised Tshirt, The Mamagoose pyjama (for children). There is still a
long way to go to obtain reliable commercial. Hence, as technology is gradually provided, smart textile systems for children will become
available; adapted and accepted as a second active skin and enhancing their level of comfort and well-being. smart biomedical garments [23].Fatma Genç Ünay and Cemal Zehir / Procedia - Social and Behavioral Sciences 41 (2012) 325 – 331 319 There are two dimensions of “creativity and innovation” in the fashion industry. The former concerns product innovation related to the creativity of fashion/textile designers that is important to create stronger international brands and world-leading, competitive products, i.e sweat resistant shirts and odor-resistant socks in the UK [35]. The second dimension concerns innovation on “business operations”, the use of PR and marketing techniques, supply chain management etc. The innovation process comprises five stages: Recognition, invention, development, implementation and diffusion [36]. The first of the three models of innovation is incremental innovation or continuous improvement (kaizen) which is a Japanese-inspired model of innovation [49]. It means “improving existing” goods, processes or services and integrates applied research and production. The second is radical innovation and means the “development of new” goods, processes or services of value that have not existed previously [6]. It is an American big business model in which innovation is concentrated in R&D labs and isolated from production. The third is a new model called ‘open systems’ regional innovation which represents firms, or networked groups of firms, that have demonstrated a regional capability to innovate and rapidly reinvent products [49]. As well as posing new challenges for marketing, discontinuous innovations and, slightly less so, dynamically continuous innovations, cause disruption to the internal operations of an organization. If the innovation is disruptive, it might require a radical change in the firm’s management processes such as manufacturing, distribution and marketing. It might even need a complete re-invention of the firm’s business model and practices [1]. In markets with competitive characteristics, the benefits of innovation are passed largely on to the consumers through lower prices. However in the case of pronounced oligopolistic or monopolistic markets, the benefits of technological innovation might be retained by the innovating firm through higher profit margins [34]. Governments can also be innovators and facilitators of innovation. Government- sponsored research may lead to industry innovations [1]. For instance, the UK government is seeking to foster better links between universities and the industry in the hope of bringing more innovation to the market [37]. British brands view fashion as a business venture that is sustained by artistic talent and business innovation. The British brands therefore develop and apply their corporate strategies accordingly. 5. Future Trends: Next Fashion, Fashion Innovativeness The principal success of a new fashion product is determined through its adoption by a majority of consumers in a market [42]. This mass acceptance of a new fashion is often initiated and accelerated by fashion leadership, which commonly involves two major dimensions; namely fashion innovativeness and fashion opinion leadership. Fashion innovativeness concerns the tendency to buy a new fashion product earlier than any other consumers [43]; while fashion opinion leadership relates to the ability or tendency to convey information regarding a new fashion in a way that influences successive purchasers to accept or reject it (Workman and Johnson, 1993 cited in Kang and Park-Poaps). Innovation on both the side of the specific product and business operations has historically enabled competitive advantage to different nations. Research for future trends indicate that technological advancements will act as a major force for change; development of specialized fibers or fabrics will continue to develop; and future apparel styles would emphasize individuality, comfort, casualness and ethnicity [28]. Future trends for the fashion industry will include evoking potential benefits of smart clothing from technological, human and competition perspectives; development of design technologies for smart clothing; establishing significantly different design processes; and providing concrete examples. Real cases of knowledge- intensive innovation include products such as MP3-player jackets, photonic clothing, bio-monitoring clothing, systems that manufacturers already commercialize. A critical aspect of the production and dissemination of smart clothes is that they evoke trends, methods, and strategies worldwide. The future trend in wearable computing is to integrate electronics directly into textiles for better performance. There are a large number of medical applications that will clearly benefit from intelligent textile technologies [38]. Therefore fundamental research has to support the use of these textile materials sufficiently. Children suffering from diseases such as diabetes, hypoglycemia and cystic fibrosis could considerably improve their quality of life with the help of smart biomedical garments. In the future garments will detect risks and report them, resulting in an appropriate reaction and thus prevention. When exploiting many advantages of textiles, such as large contact area with the skin, permanent availability and comfort, much physiological data will be collected in a non-invasive way through the garment fabric [23]. Commercial applications of wearable smart textile and apparel products include the computerized jogging shoe No. 1 by Adidas which is also indication of future trend. Interactive Photonic Textiles by Philips may bring a few more around. As a result, smart textile, garment and nano-technology applications will be available in the market between five to ten years, most likely in sports and extreme wear, in occupational and professional clothing and in technical textiles [45]. From the perspective of the use of technology in fashion marketing, Sorensen argued that “in the future, virtual reality could transform the whole fashion business. There would be no need for supermodels or scrambles to get the front row at the fashion show.
320 Fatma Genç Ünay and Cemal Zehir / Procedia - Social and Behavioral Sciences 41 (2012) 315 – 321
Designers could have the model they wanted parading around their saloons, while clients could view whole
couture collections in the comfort of their own homes by using the digital technology” [30].
As in other industries, the most important future trend is collaboration between firms [53] in the fashion industry.
Such an approach has been widely adopted by several firms in the retail market such as Swedish fashion brand
H&M’s retail innovation through collaboration with luxury designers’ business collaboration [2] and LG
Telecom’s collaboration with Prada, a luxury apparel brand, to create the “Prada Mobile Phone,” a high-tech,
buttonless, touch screen cellular phone with a distinctive, fashionable design [40]. These collaborative strategies
between LG and Prada enhance the product’s strengths through the combination of high-tech elements and a
fashionable appearance [41]. As described by Prahalad, despite the traditional competition the new age of
innovation has a valuable meaning about the business collaboration to identify new opportunities for process
innovation and customer value [53].
6. Conclusion
This study has examined the state of the art of the research on the innovative aspects of fashion entrepreneurship
as a competition tool and the importance of its management in the sophisticated business world. Today, there is
growing interest in the managerial and policy implications of innovation and entrepreneurship. This is a natural
result of the shift toward a knowledge-based economy in the era of globalization. Hence, this study appears to be
a valuable aid in understanding the entrepreneurship and innovation dynamics of competitive advange of fashion
businesses. On this issue, the literature states that high performing and competitive firms require a high level of
innovation and entrepreneuship in industries which necessitates high level of creativeness such as fashion.
Although this study may be limited by the generic judgement on the issue, these limitations do not render the
examples any less significant, but open the way for further research in this area. At the same time, the present
study represents an important and original contribution that examines the relationship between entrepreneurship,
innovation and competitive advantage in the fashion industry. Such an approach indicates the importance of
innovation–related entrepreneurship for fashion businesses. As such, the driving force and long-term goal of
future research is to test the conceptualisation of innovation-related fashion entrepreneurship and leadership
measures in different settings such as different country and management contexts. Future research should be
done using a broader array of cases in fieldwork by analysing a variety of fashion businesses to eliminate certain
methodological limitations. All in all, this study has demonstrated that with reference to fashion businesses there
is a positive relationship between entrepreneurship and innovation; entrepreneurship improves firm performance;
and entrepreneurship along with creative edge leads to competitive advantage. As a concluding remark, this
approach is crucial both theoretically and practically with regard to the critical link between innovation-related
entrepreneurship in the fashion industry in terms of firm performance and competitiveness. Fashion businesses,
in turn, have a great economic and social impact in their home states and across the world.
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