How do multinational corporations' luxury fashion brands adjust their strategies in response to changing trade policies?

Abstract

This thesis investigates how multinational luxury fashion firms respond strategically to trade policy uncertainty, with a particular focus on production location. Using a multiple case study design, it examines the actions of LVMH, Kering, and Richemont due to recent U.S. and EU tariff tensions. The study applies Dunning’s Eclectic Paradigm (OLI), the ESP model, and Institutional Theory to understand how firms balance economic efficiency with symbolic brand legitimacy. The findings show that location choices in the luxury sector are not only driven by cost or regulatory pressure. Instead, production decisions are considering brand identity, heritage, and consumer expectations around authenticity. LVMH demonstrates a hybrid approach, relocating partially to the U.S. while maintaining symbolic links to France, while Kering maintains European production entirely, and Richemont deepens its embeddedness in European manufacturing. The thesis contributes to international business theory by arguing for a broader definition of Location advantage, one that includes symbolic and institutional dimensions. It also highlights how industries sensitive to loss of legitimacy often resist cost efficient adaptations, even under external pressure. While focused on three European firms and based primarily on secondary data triangulated with expert interviews, the study offers insights based in theory into how firms navigate global trade uncertainty when brand meaning is deeply place bound.