Gatekeepers and knowledge diffusion in the fashion industry

Paper presented at DRUID-DIME Academy Winter 2006 PhD Conference, January 26 – 28 2006. Gatekeepers and knowledge diffusion in the fashion industry Work in progress, please do not quote Atle Hauge Department of Social and Economic Geography Uppsala University [email protected] Abstract The prevailing paradigm in economic theory in general, and especially economic geography, has for the latest two to three decenniums been that product and organisational innovations are the basic elements for economic growth and prosperity. A common feature most of the innovation literature share is the notion that good ideas seldom develops in a vacuum; innovation is an interactive process and involves different kinds of social interaction. Hence, the relations between economic actors are key features if one wants to understand economic performance. In this paper I argue that this production and distribution of knowledge is not evenly distributed, but channelled through different patterns or channels. These information channels often take the form of relationships between agents, and are characterise by long duration and stability. These contacts can operate as “pipelines” for information, and usually involve interdependencies between actors and resources. The relations are often built through strategic and conscious work. I would argue that some actors have key roles in these systems of information diffusion; they serve as gatekeepers. They have high influence in what kind of knowledge that slips through the pipes and how this information is distributed. The fashion industry will be used as a case to highlight the argumentation. Keywords: Knowledge diffusion, pipes and buzz, gatekeepers, power Acknowledgements The author would like to thank the Swedish Research Council (Vetenskapsrådet) for their funding of the project this paper is based upon. An earlier version of these paper was presented at Swedish national PhD course Forskningsfronter i nutida ekonomisk geografi 2005. I am thankful for all comments received on that occasion 1 ‘Fashion is capitalism’s favourite child’ Werner Sombart Introduction The prevailing paradigm in economic theory in general, and especially economic geography, has for the latest two to three decenniums been that product and organisational innovations are the basic elements for economic growth and development. The literature on innovations and different systems underpinning these innovations are extensive (see for example Malmberg & Power 2004). A common feature most of the innovation literature share is the notion that few good ideas develops in a vacuum; innovation is an interactive process and involves different kinds of social interaction (Asheim 2000). Hence, the social relations between economic actors are key features if one wants to understand economic performance (Bathelt & Glükler 2003). With this point of view competitiveness is related to the ability of firms to continuously upgrade their knowledge base and performance (Porter 1990; Lundvall & Johnson 1994; Maskell and Malmberg 1999; Malmberg and Power 2004). It follows from this that knowledge is a key asset for competing firms and, consequently, that learning is a key process. At the same time production and distribution of this knowledge is viewed as socially embedded (Lundvall & Johnson 1994). The production and distribution of knowledge is not evenly distributed, but channelled through different patterns or channels (Bathelt et al 2004). Due to the structural embeddedness it can be distinguished between two sorts knowledge diffusion. The first is through so called “global pipelines”. These information channels often take the form of relationships between agents, and are characterise by long duration and stability. These contacts can operate as “pipelines” for information, and usually involve interdependencies between actors and resources. The relations are often built through strategic and conscious work, but actors can also access knowledge just by being part of a local milieu. The second type of knowledge diffusion has more of a geographically confined resource base, and this locally distributed knowledge has been identified as “local buzz”. This is usually intensified by being embedded in innovative information processes and (Storper and Venables 2003, Bathelt et. al. 2004). To have access to both local buzz and to global pipelines of information could give significant competitive advantages to firms and clusters (Bathelt et. al. 2004). Several researchers (see for example Tushman and Katz 1980, Giuliani and Bell, 2004, Aage 2004) have emphasised the importance of vital actors holding strategic positions in these systems of information diffusion; they serve as gatekeepers. Tushman and Katz (1980, p. 1071) defines gatekeepers as “those key individuals who are both strongly 2 connected to internal colleagues and strongly linked to external domains”. The metaphor gatekeepers give an indication of the power that these agents are holding. In this paper there will be an attempt to incorporate the dimension of power in the role of gatekeepers of knowledge and information. If it is true that knowledge is the most important strategic resource and learning the most important process (Lundvall & Johnson 1994, p. 1) then how do we conduct questions of power over the gates that separate and distribute the knowledge? One way to do this is to analyse the interaction between the social and relational dimension of business networks. The outline of this paper will be a brief discussion of the power concept, and how power is understood in this context. The fashion industry will be used as a case to exemplify the argumentation. This will be done by taking a closer look at gatekeepers on different geographical levels, which are the global fashion capitals, the fashion production and educational institutions in the city and finally a discussion of the single consumer as a gatekeeper. But first there will more of a theoretical look at some central characteristics of relations between economic actors, and how this is materialised in business networks. Relational economic geography and the network approach Bathelt & Glükler (2003) argue that there is a paradegmic shift in economic geography towards a relational approach to economic geography. The idea that relations are decisive in economic performance is however not a new one. Perroux (1964, p. 26) used the conception of 'economic spaces' as defined by the economic relations, which exist between economic elements. Perroux’ conception of space is abstract; it does not necessarily correlates with a topographical space. The concept of an 'abstract economic space' implies "...an abstraction from the spatial form in order to identify essential relations within which the economic activity takes place" (Asheim & Haraldsen 1991, cited in Haraldsen 1994, p. 75). When it comes to interaction, the relational distance between two firms is of more importance than their physical distance. Every firm "...has a dimension, receives a place in a network of relations, and constitutes a locus of action and of retroactions" (Perroux 1988, quoted in Haraldsen 1994, p.76). As we can see Perroux argues that economic actors are interconnected in relational networks. The relational perspective shares much of the “conceptual DNA” material with the “network-literature”. In this latter approach, there is also a notion that firms are involved in relationships of relatively long duration, and that these relationships are very important for firms performance. "[F]irms do not conduct business as isolated units, but rather form cooperative relations with other firms, with legal and social boundaries of variable clarity around such relations" (Granovetter, 1994 p. 453). With a network approach to the economy, a major focus will often be the on social and qualitative aspects of firms' interactions. This has 3 also been called a sociological approach to the economy. Social relations and interaction are seen as essential for firms’ achievements (Grabher 1993). Castells (1996) claims that networks and networking are the key to dynamic and change. "Networks constitute the new social morphology of our societies, and the diffusion of networking logic substantially modifies the operation and the outcomes in processes of production, experience, power, and culture" (Castells 1996, p.469). Networks are evident in all spheres of society, but according to Håkanson & Johanson (1993, p. 35) most research has been done on the social networks. They claim that there are qualitative differences between these, and industrial-economic networks. Economic actors are usually involved in more than one network, and the economy can be viewed as a complex web of networks, interlinked in different ways. "[P]roduction is organized primarily by business enterprises operating within extremely complex, dynamic networks of internalized and externalized transactional relationships of power and influence" (Dicken and Thrift 1992, p.287). The web of interlinked enterprises is not however static, it is changing and evolving all the time. With regard to the dynamics of social processes it can be assumed that power is particularly important. But as with information and knowledge, power is not evenly distributed in society. It has a tendency to be concentrated in some point or nodes, and with some key actors. Information diffusion is a key process in the understanding of power dynamics, and in the next part there will be a closer look at the key actors in the information diffusion; the gatekeepers. Gatekeepers and Power Power is one of the most debated concepts in the social sciences. This is also reflected in the large and diverse literature on this concept. Dedalus, quoted in Wrong (1995 p. viii), argues that power is "an essentially contested concept". Most of the literature on power is about what one might refer to as ‘power within political relationships’ (Wrong 1995, Pfeffer 1981). The literature that is specific about power in economic, or business, relationships, is not that rich. Only a few authors have done analyses on the specific power-relations in dynamic businessnetworks (for example Taylor 1995, 1996, Kutschker 1982, Axelson 1992, Allen 1997). The notion of gates and gatekeepers could be a one way to conceptualise some of the issues of power in the relational approach to economic geography raises. There are several ways to theorise the concept of power. One is the so-called foucauldian1 where the metaphor “power as discipline” is used (Taylor 1995, p. 21, italics in original). In this sense power is a series of interlinked strategies, techniques and practices 1 From the French idea historian Michel Foucault. 4 (Allan 1997, p.63). Foucault emphasised that power is dynamic and can best be understood as a set of relationships. This perspective fits well with the relational perspective in economic geography. Foucault discarded the notion of power as negative force. Instead he stressed the productive side of power (Allen 1997, p.64). One example of constructive power practices can be found in the distribution of information and knowledge. To Foucault, every system of knowledge depends on social arrangements of power for the production and maintenance of that same knowledge. Power techniques facilitate both the disciplining of individuals and governing groups (Foucault 1977). This of crucial importance when a group, in foucauldian terms, is to be disciplined into different mental and behavioural patterns. If the group is ‘well disciplined’, they will perform according to shared rules and norms, and the productivity can benefit from this. Foucault thus insists that power is not god or bad in itself, but can be misused and thus be exercised in a negative or destructive manner (Piomelli 2004). Even when power is viewed in this way; as a series of interlinked strategies, it is not evenly distributed. Focal points are to be found in these complex interlinked webs of power relations. At these vital positions are the gatekeepers to be found. They are central in the process of collecting, bundling and redistributing information. Perroux had ideas similar in many ways. He claimed that "[as] a field of forces, economic space consists of centres (or poles or foci) from which centrifugal forces emanates and to which centripetal forces are attracted" (Perroux 1964, p. 27). The economic zone of influence is determined through this process. This means that a firm's power influence could be viewed as having a certain extension within an abstract space. This power influence is in a constant flux, because a firm's economic space is dynamic and moving. The power of a firm has a finite scope. One could say that a firm’s power influence has certain 'space elasticity'2, meaning that firms could influence other firms through their power within a certain 'relational distance' within the 'abstract space'. Taylor (1996) argues that the fundamental basis for interaction between firms involved in network relations is inequality. What is important is what binds firms into functional networks, not firms’ formal entity (Taylor 1996, p. 1041). These functional networks are controlled from 'centres of strategic decision-making' (Cowling and Sugden 1993). These centres of strategic decision-makings can be viewed as nodes in topographies of firms interlinked in power relationships (Taylor 1995, p.9). The structure in these networks reinforces and maintains the asymmetrical power relations. It is not only power that is centred in these networks; there is a tendency for new technology to be developed at the centres of these 'power-networks'. There are correlation between firms 'positional power' and their technological level (Taylor 1996, p. 1042). 2 This concept is inspired by Kutschker's concept 'time elasticity'. 'Time elasticity' measures "how long the power position could be assumed to be valid" (Axelsson 1992, p. 191). 5 This is line with Gulliani & Bell (2005) empirical findings in wine-producing district in Chile. They have examined how the individual firms' learning capacity affects the cluster’s endogenous knowledge system, and how this is interconnected with knowledge found outside the cluster’s borders. Central in their analysis are the technological gatekeepers defined as “firms that have a central position in networks in terms of knowledge transfer to other local firms and that are also strongly connected with external sources of knowledge” (Giuliani & Bell 2005, p. 60). These firms are both centrally placed and knowledge intensive. In addition are they vital to the distribution of knowledge to their cluster neighbours. Knowledge flows within core groups of firms and is not evenly distributed in the cluster. The core firms are characterised by a “high absorptive capacity”. Their empirical findings suggests that different actors in different gatekeeping position have different skills in the gatekeeping performance. This in turn affects both the single firm and the group of firms within that district. Aage’s (2004) analysis of the leisure and sportswear industry in the industrial district of Montebelluna indicate that the gatekeeping function holds different importance if the industrial district is mainly characterised by firms with horizontal (i.e. competitors) or vertical (buyer – supplier) relations. Communicating directly to peers is the best strategy to acquire external information when the district is dominated by competitor relationships, while the gatekeepers are effective as translators of external information in buyer - supplier relationships. These examples shows us that both how an actor is positioned in a socio economic network, and how that actor performs is important in determine how that actor performs as a gatekeeper. Pfeffer (1981, p.98) argues that an organizational actor's power "is fundamentally determined by two things, the importance of what they do in the organization and their skill in doing it". An actor's localisation within socio-economic structures is important for its sources of power. But it is not the only factor; the actor's own skill in 'power-performance' is also an important power determinant. The same can is valid for gatekeepers of knowledge. It is not only what kind of knowledge that is decisive but also how the gatekeepers handles and distributes this knowledge. What kind of information gates and how they are placed within the socio-economic structure are also of the highest importance. Key positions in an important economic space make the gatekeeper potentially much more powerful than one that is not placed that central. Nevertheless even if two actors are placed at the same localisation within a structure, this does not mean that they handle their roles as gatekeepers in the same way. There will always be big individual differences in gatekeeping performance. 6 In addition to this structure-actor dimension, there is another dimension in gatekeepers’ power; contingent circumstances or the specific time-space context. The unique timetechnological environment where the gatekeeping is performed is also very important for an actor’s exercise of knowledge distribution. I will illustrate some of the points I have made above with examples from fashion industry. Gates and gatekeepers of fashion The term fashion can be related to any object or phenomenon that changes over time based upon individuals’ collective preferences, but this in this paper the focus is upon fashion clothes and garments. None the less has the production of fashion and that of clothing to be separated. Clothing does not translate into fashion without the endorsement of the institutional set up of the fashion system. The institutional set up is social, and is constituted of actors sharing the same values to achieve their specific goals (Kawamura 2005). The fashion industry is obviously very closely related to the clothing industry, but they are not synonymous. In the clothing industry it is the actual garment that is the end product, but in the fashion industry this is only, though vital, one of many inputs that will lead to a symbolically and aesthetically charged product for end consumers. Kawamura (2005, p. 1) argues that fashion as a belief is manifested through clothing, and as such fashion can not be understood without referring to clothes and designers. She views fashion as a system of institutions that produces the concept as well as the phenomenon and the practice of fashion (Kawamura 2005). Hence, fashion can be seen as an industrial system, i.e. a system of interrelated actors within a specific socio-institutional environment. In other words: the clothes have to pass through a system before they can be defined as fashion. As Luigi Maramotti, CEO of Max Mara Fashion Group puts it: “I must emphasize that I consider a designed garment ‘fashion’ only when it is marketed and worn by someone” (Maramotti 2000, p. 96). Clothing is accordingly the tangible material product whereas fashion is a symbolic cultural product. Fashion is often viewed as one of the cultural industries. These industries produce a wide range of outputs – music, film, video games and advertising to name but a few (Power and Scott 2004). Cultural industries have a tendency to agglomerate in urban settings. This is because in cities there is easy access to a skilled labour force, one can find suppliers and specialised service providers, but there is also the idea that firms can take advantage of the creative resources and energy of other industries (Scott 2000b). Cities can uphold these 7 economic functions because there is both a concentration and variety similar activities (Rantisi 2004). In addition do modern economies produce, circulate and consume cultural commodities, and this points toward the increasing convergence, between the economic order on the one hand and systems of cultural expression on the other hand (Lash and Urry 1994). The relational perspective mentioned earlier in the paper dominates even in the studies of the cultural industries (see for example Power & Scott 2004). The focus is redirected away from any single firm or role in the sequence of discovering, producing, and delivering a product, to an attention to interconnections and interdependencies between them in order to get to the final product or outcome (Hirsch 2000, p. 356). Even in the cultural industries it is a basic assumption that long-term industrial competitiveness is related to firms’ learning abilities and absorvative capacity (Power and Scott 2004). Fashion as one of the cultural industries, is not normally regarded as high tech, but is it definitely a knowledge intensive industry (Rantisi 2002a). Information and knowledge useful for fashion industry can be found in a variety of sources. To know the recent trends on the big international fashion scenes and at the same time feel the pulse of their home market, actors will call for both global knowledge bases but also need to be part of local information processes. To catch recent trends early and to understand “what’s hot and what’s not” is one of a fashion company’s core competences. Consumers’ taste has to some extent become globalised. International issues Vouge, GQ or Cosmopolitan verifies that you can buy the same so called designer outfits in Singapore, London, Paris or Stockholm. It doesn’t matter where you travel; you will find the same logos and brand names in every city with a bit of self esteem. Despite this development there are always local and regional differences. If fashion actors want information and knowledge on recent trends on the big international fashion scenes and at the same time feel the pulse of their home market, they will need global knowledge bases but will also need to be part of local information processes, or have access to the “local buzz” (Storper and Venables 2003, Bathelt et. al. 2004). In addition to information found in the local milieu, there is also a need for information providers on more global fashion trends. In other words fashion companies need “pipelines” where information on trends, looks and recent development in the international capitals of fashion. From what has been said hitherto it is reasonable to suggest that some actors have central role this industrial system underpinning fashion; they serve as gatekeepers of information. They influence both what kind of knowledge that slips through the pipes and how this information is distributed (Gulliani & Bell 2005). There are a variety of gatekeepers and gatekeeping functions in the 8 fashion industry, and along with the creators and consumers, they constitute the fashion industry as a cultural industry (Hirsch 1972, Rantisi 2004). The gatekeepers of fashion industry can be identified at different geographical levels; from the global via the urban fashion production milieu down to the consumer. The Swedish fashion industry will be used as a case to exemplify how these different levels are mutually interlocked and co-dependent. There will be an effort to point at some important features in an attempt to understand the recent changes and underlying power structures in the fashion industry. Swedish fashion industry The fashion industry is chosen to highlight the theoretical argument presented above. This will be done through analyses of earlier studies of fashion industry. In addition some empirical findings will be presented3. These have its source in on an ongoing project on the Swedish fashion industry. It is based on semi structured interview with fashion companies, service providers, (such as photographers, fashion forecasters) media and representatives from fashion education. The research project takes its point of departure in research on industrial competitiveness and transformation in general and modern research in economic geography in particular. Swedish fashion industry shares organisational trends with most other high cost countries. Firstly, production in-house is almost non existent. Instead more and more products are bought from producers in low cost countries, whereas high cost functions such as designing, marketing and branding are done by the brand owning company (Dicken 2003). In recent years the Swedish fashion industry has developed into a competitive export industry and a thriving employer at home. In the period from 94 to 99 there was 6% growth in the number of employees in fashion and clothing (Power 2002). A number of high profile firms have had considerable success on international markets and have attracted media attention in Sweden as well as in international fashion press and magazines. The best known example is obviously HM, with an almost 50 year old history, over 1000 stores worldwide and a turnover close to 63 billion SEK last year (source: www.hm.com). Swedish fashion industry is however more than retail. Design and high street oriented examples include: Filippa K, J. Lindeberg, Gant, Oscar Jacobson and more resent established brands like Nudie Jeans, ACNE, Whyred, Encore, Velour and WE. In addition, there is a growing number of small and, so far, unknown firms. Many of these are started up by young entrepreneurs, 3 When informant’s quotes are presented they are translated from Swedish. 9 seeking a livelihood and career in fashion. The fashion industry is not just important as an export industry and employer; it has also a crucial symbolic and aesthetic impact on everyday life in Sweden. Traditionally has Gothenburg and Borås been the Swedish centre of garment and clothes production. Practically all of the traditional production is gone, but old spatial structures is still evident in Swedish fashion industry. Except for HM, most of the retail based fashion companies are based in this region. This includes companies like Lindex, MQ, JC and KappAhl. Gothenburg has besides these rather big and established companies a fashion scene dominated by daily and basic wear: jeans, t-shirts, sweaters are typical products. Stockholm, on the other hand, is dominated by firms with a higher fashion content in their collection. But there is also a thriving fashion scene dominated by smaller firms that produce design intensive clothes in smaller batches. Many of these firms were started by highly educated fashion designers and producers. The fashion content is usually high, and the market approach is towards smaller niches. One can find a micro clustering of such firms in heavily gentrified Södermalm district (NYT August 29, 2004). Global cities of fashion In fashion industry there is a global network of cities that serve as central points in interlinked flows of goods, people, ideas and images. A handful of cities with global status in the geographies of fashion culture form an urban hierarchy. Paris, London, Milan, New York and sometimes Tokyo are considered to be the fashion capitals of the world. These cities are hubs of command and control in the world order of fashion industry (Gilbert, unpublished). This notion comes from what has become known as the World Cities literature (Friedmann 1986). This strand of literature claims that there is hierarchy of global cities, where the world economy’s key functions, such as financial and other producer services are concentrated. These cities don’t only function as aesthetic centres, but also as managerial and business centres for the biggest and most influential fashion companies. Many of the traditional fashion houses have merged into to global conglomerates specialising in luxury good, so that quite a few of the major luxury brands are now controlled by less than a handful companies. The top cities are followed by less influenced cities but they are entwined in global networks. This picture of the global hierarchy has changed little in recent history. The idea of ‘Paris fashions’ represent one of the most powerful and stable brand images of a specific place in 10 modern history. As a global centre of style, Paris has a history that stretches back at least two centuries, and still holds a dominant position. The prevailing leading role is explained through the clustering of elite designers, the structure of the couture system, and the power of the Paris fashion industry to direct fashion styles globally (Gilbert, unpublished). All these features functions as nucleuses in a world system of pipelines of fashion industrial knowledge. Swedish fashion is influenced by the fashion capitals both in the sense that many of the trends are started and developed there, but also because of the function these cities hold as core of an industrial system. The 'world city of fashion' decides the ebb and flow in the global fashion industry. The global cities have their fashion weeks at the same time every year, and the big fairs follow the same pattern. These cycles is followed by most of the fashion industry. Swedish companies regularly attend these fairs. For the Scandinavian market is Copenhagen Vision the major fair. Even though this does not have the status of its colleagues in the above mentioned global fashion capitals, it is never the less regarded as the most important industrial meeting points in Scandinavia. Most of the interviewed firms went there. Both to sell their collection but also to gather information on what was going on with their colleagues and competitors. The Swedish fashion industry is urban as it is concentrated to the two largest cities. At a national level these cities have clearly a decisive power over trends, brands and other aspects of the fashion business. What is regarded as fashionable is very much the outcome of these two cities’ establishes fashion production system; both the producers, consumers and the institutional set up. Even though some Swedish companies have a sizeable export rate, it would never the less be a pretty big exaggeration to claim that Sweden has a very important voice in the global fashion business4. Never the less, some Swedish fashion companies want to be associated with the fashion capitals. This is especially companies in the high street segment. To be sold in one of the big department stores or one of the famous fashion streets, next to more famous brands is a goal for many companies. Some even want to open an own office in Paris. This especially to be adjacent to buyers from other part of the world. The presence in the fashion capitals is also used as a marketing strategy. It is without a doubt also good for business in Sweden to be sold in influential markets abroad. One of the informants drew parallels to the music industry: “You know it is like when a band plays abroad. The press just loves it when a band is mentioned in foreign press or played on the radio, even if it just a small 4 The exception is HM, that together with the Spanish company Zara is market leading in their niche; fast moving trend sensitive high street fashion (Tungate 2005) 11 college radio station or whatever. This gives valuable press at home, and is good for sales” (personal interview 2005). The gatekeepers has valuable sources external information, but this has to be translated and diffused to locally orientated production system, but even within these system there are mediators of external communication. Gatekeepers in the industry All the way up to the 1960s, clothes and fashion were basically a craft orientated industry, but with bigger retailers and new production techniques mass produced clothes in large batch sizes became customary (Crewe and Davenport 1992, p. 185). This consolidation trend of retailers and retailing in fashion has continued and key personnel in the big chains has become important gatekeepers. Retailers will most often not dictate design per se, “but they establish the parameters within which designers create” (Rantisi 2004, p. 102). The retail buyers are a group of big influence, they ultimately decides what garments that will be offered to the consumer. Entwistle (2005) have examined the role of a womenswear team of buyers in one of the large London stores. She found that buyers’ knowledge were critical to the store’s market strategy and essential for translating its market identity into products that are right for its target customers. The position at the interface between the retail business and the consumer becomes ever more important. Fashion buying has an economic function, but it also demands sensitive and detailed cultural knowledge as well as social skills. Fashion buyers actively build markets and define consumers’ niches, rather than relying upon fixed ideas of what and who these are. As trends move fast, product categories and meanings constantly shift and must be translated and reinterpreted by buyers. Fashion buyers are always risk calculating as they have to balance clothes that draw customers’ attention and curiosity with clothes that actually sell. Riskier commodities must be supported by more commercial products. Knowledge about key products and imagined customers is a key tool for risk management. Much of this knowledge is tacit; is based on experience and instinct. Entwistle (2005) states that this is difficult to learn. As her informants claim: ‘you’ve either got or you haven’t’. Cultural industries such as fashion tend to value people who use their experience, instinct and the subjective knowledge. This knowledge coexists alongside formal business strategies (Entwistle 2005). Findings from the Swedish case are in line with Entwistle’s (2005) results. One recent example of how important the buyers are to firm can be found in the retail chain Lindex. They 12 have 330 stores in Sweden, Norway, Finland, Germany and Estonia, Lindex's business areas are lingerie, women's and children's wear. Big mistakes was made in the 2004s collection; both unfortunate choices of products and the volume which it was acquired. It was especially a collection of trousers that became the scapegoat, but other garments were also difficult to get out of the stores. Much had to be sold out at reduced prices, and they even had to give away some to charity. The big volume of unsold garment also resulted in increased marketing and personnel costs. The estimated loss was 45 billion SEK. The result was that much of the board of directors had to leave their positions, and one of the daughter companies was sold out (DI.se 040324). Even though fashion companies has interesting products to offer, the retailer have practical issues into considerations when they decide their suppliers. They have to trust their suppliers, both that they deliver what is ordered and that this happens on time. This seems as obvious demands, but it is not uncommon that these standards are not met. It is evidently viewed positively if the suppliers are able to stock up on relative short notice. If a special piece of clothing or a collection does well, shop will want to have the choice to add to this. This illustrates the one of the most important premises in the business; the mix between creativity and business. In her work on the British fashion industry McRobbie (1998) highlights the pressure between the artistic process and the commercial demands. Most of our informants was very clear on how it was important to be taken seriously as a business, and that this can be quite difficult to learn. One of the informants put it this way: “You can have the best design and the most exciting brands, but if it is not delivered at the right time and in the right volume, no one will want to do business with you”. The relationship between buyers and suppliers illustrates the reciprocity and dynamic aspects power relations in fashion. Buyers might want to work with a specific brand or company, but it is not exceptional that the fashion company turns down potential big orders. For fashion companies not focusing on the mass marked, and that compete on fashion content in their clothes rather than price, there has to be an aura of exclusivity associated with the brand. Exclusivity in this sense is not only relating to price, but also other types of accessibility. The potential for a short term high profit is thus often sacrificed for long term revenue. The place where the products are sold and what other brands that are presented at the shop is very important for the brand value. There has to bit a tight balancing between exclusivity and accessibility. “We only want to work with that particular store that is best on jeans in that city. We want to have a close relationship with the persons behind that store, and that 13 is why we only choose the stores that understands out message and can disperse this to the end consumer (personal interview 2005).” Several of the informants accentuated the importance of the shop where their products were sold. The retail sector is characterised by the juxtaposition between production and consumption. In retail production and consumption is coming together (Pettinger 2004) and can thus be seen as the last stage in fashion industry’s production system. Branding is ubiquitous in retail and is currently the dominant strategy around which retail competition is structured. Sales assistants prepare the store as a branded environment, and are very important when clothes are presented to potential consumers. Many of the informants were well aware of this, and offered additional information or even courses on their products to fashion shop employees. This was to heighten the awareness on the design and quality of their products. The relationships between suppliers and important shops are to a high degree characterised by trust and cooperation, and can be described as social embedded network relations. In Rantisi’s (2002a, 2002b, 2004) study of New York’s fashion industry she suggests that there is an institutional set up embedded in the city that function as gatekeepers. Educationaland fashion industry related institutions “function as a part of a well-established production system, characterised by shared conventions and business practices” (Rantisi 2004: 99). US and New York design schools are renowned for their ability to balance arts with business. The fashion students have separate courses in business and management, besides their traditional art associated courses. Internship in fashion companies is common and almost nine out of ten students find employment in the local industry upon graduation (Rantisi 2004). Hence, US fashion students are much more prepared for what is commercially viable than most of their European colleagues. The Swedish educational system has met many of the same criticism; the do not prepare the students for what it takes to work professionally in the fashion business. It seems that this a critique that is taken seriously, because it is emphasised that fashion student should gain some practical experiences through internship or other types of projects in established firms. There are many sorts of companies that specialize in fashion related services that serve as key gatekeepers in market information. Some of this services is not visible for the end consumer, but have a huge impact on the industry. Forecasting services and trade publications are examples of such industries. These companies are used by fashion designers and 14 manufacturers for trend information and best practices in the industry (Rantisi 2004). One of the products that these companies provide is “trend books.” They are luxurious publications with, stylish photographs, text, fabric swatches and other illustrations. They summarizes the agency’s predictions of next trends and is used by for inspiration and information by designers. There are similar internet based services. (Tungate 2005, p. 81 – 90). Other types of institutions are very visible in their effort to regulate the entry for products to marketplaces. They function as distribution and market channels from the designers and producers to the consumers. Fashion magazines and fashion shows are examples of such intermediary institutions in the consumer-producer relationship. Media play an important role in the information diffusion of new trends styles. This group of institutional gatekeepers also function as a significant infrastructure “that interprets the cultural product for a consumer, and in that process, may alter its symbolic value” (Rantisi 2004: 103). One of our informants, working for a fashion magazine, pointed out that fashion journalism is no academic discipline, and a lot of fashion journalists are former models, designers, stylists etc. Only a few of them have formal journalistic backgrounds. Consequently, they know the business from the inside, but can also be in danger of groupthink or lock in. It is also very rare that fashion journalist share their colleagues in cultural journalisms critical approach in covering their field. It is exceptional to see a critique of fashion collection in the same way as for example arts, film or music is reviewed (Kawamura 2005). Hence, one can raise questions on how objective fashion magazines are in their covering of trends and brands. The ultimate negative critique for a fashion company is no press at all. There is an intricate system behind how fashion covered in the press. Several of our informants revealed that the borders between editorial articles and adverts are getting more blurred; the advertisers demand that they also will be mentioned editorially. It is thus very common to find advert for a company, and find that the same business is included in some of the fashion features, either in an article or that the models are wearing the same brand in editorial photo coverage. As one of our informants told us: “The fashion magazines are in reality only advertisements for clothing”. Even though there are different logics and the market functions differently for an editorial coverage and an advertisement (Aspers 2001) they can be difficult to tell apart. This might be because it is the same people that have created both. This does not in any way imply that fashion journalist only write about the brands they get advertising money from. They are under a constant demand, both from readers and their editors, the new, exciting and hip designers, looks and brands. The fashion companies are also in need for coverage in the press. The relationship it therefore a symbiotic 15 one, and the editor of French Vouge maintains it can best be described as a sort of mutual understanding or even a partnership (Tungate 2005, p. 128). Consumers as gate keepers The end consumer is maybe the most important gatekeeper, especially when it comes to the choice of distinct brands. This reflects a view that consumer are very self aware and reflexive; people are not buying products just because they work, but consumers “are involved in relationships with a collectivity of brands so as to benefit from the meanings they add into their lives” (Fournier 1998: 361). Despite the strong emphasis on branding in today’s fashion industry, this is actually a quite new phenomenon. Even if one saw traces earlier, it was not until the beginning of the eighties the fashion sector first looked intensively into strategic brand management. Building brand loyalty now takes pole position in determining the industrial and innovation dynamics of the fashion industry commodity chain. Branding is a promise of higher performance, more exclusivity, more cool than the competitors. If this promise is kept, consumers are willing to pay a little extra. Fashion is by definition ephemeral and elusive, a target that keeps moving (Crewe 2001). Strong brands succeed to bind their customers to them emotionally; they are thus able to endure fluctuations in demand due to their customers’ devotion and inspire loyalty beyond reason. The relationship between product marketing and branding is so close it is impossible to distinguish the character of an object from that of its branded image; they are one and the same. The manipulator – victim dichotomy that some commentator has as a point of departure (see for example Klein 2000, Quart 2003) is in my opinion a simplistic way to describe the advertising consumer relationship. The process of advertising is much more complicated, and it can be seen as a polysemous process with a diversity of readings and responses (Pavitt 2000). The American sociologist Schudson suggests that we should view advertising as just one of society’s awareness institutions. Advertising is best viewed as a form of seduction; it is using our already established needs and desires (Heat and Potter 2004, p. 208). How well the advertising work depends on what other types of information that is available; “Advertising is much less powerful than advertisers and critics of advertising claim, and advertising agencies are stabbing in the dark much more than they are practicing precision microsurgery on the public consciousness.” 16 (Schudson 1984: xiii) This line of argument does not suggest that marketing and advertising is without power over the consumer. Rather, it is critical to the notion of companies’ ability to brainwash naïve consumers. It is a much more reciprocal relationship between the buyer and what is bought. Consumers are actively creating meaning of their consumption; they are not passive receivers of marketing stimuli. Consumers have a high degree of reflexivity on brands, and consumers and producers negotiate brand meanings. The brand’s meaning is thus not fixed, but is repeatedly socially constructed (Bengston 2002). At the same time there are consumers that have a more central position in the process of determing what is hot and what is not in fashion. Marketers and producers have long been aware of the important role key consumers play in introducing new products on the market and they have been traced and mapped by marketers and producers. One party of consumers recognized as major trendsetters that carry a tremendous influence is the loosely defined group celebrities. If a well-known celebrity is seen worn a special garment or brand this can be very significant in setting a new trend. “[Celebrities] are the gatekeepers of fashion,” claims Stefani Greenfield, owner of Scoop NYC, a line of high-end fashion stores in Manhattan and the Hamptons. Cotton Incorporated Lifestyle Monitor TM, have analysed how the wardrobe choices of the stars impact consumer patterns, and they have seen a significant trend upward from 1994 to 2003 in the percentage of consumers looking toward celebrities as fashion inspirations (www.cottoninc.com). But customers without a celebrity status can also function as opinion leaders. Gladwell (1997) describes ‘coolhunters’ that are working for sneaker companies. Their job is to search out what the coolest kids were into and report back, so next season’s styles would be in step with emerging fashions. Gladwell (1997) argues that the mechanisms in how trends spread through key individual are to be found in diffusion research, which is the study of how ideas and innovations spread (Rogers 1983). One of the pioneers in innovation diffusion research was the Swedish geographer Hägerstrand (1967). He used the idea of space-time path to demonstrate how innovations spread spatially or temporally by individuals. Central to this theory is that the agents of diffusion, or carriers of new information, are human beings and that diffusion is a special type of communication concerned with the spread of messages that are perceived as new ideas. In diffusion theory is the first individuals to adopt new technology labelled "innovators". These are the people Gladwell’s coolhunters are seeking. However, Innovators aren’t able to lead opinion, to persuade the rest of society to follow their lead. This 17 is up to somewhat larger group of "early adopters" This is a group that enjoy the respect of more people, and who will provide an evaluation of the new idea upon which the next in line. They are followed by a two major groups of adaptors "early majority" and "late majority," who are the sceptical masses. Only after they had been converted did the "laggards," the most traditional of all, follow suit. This model has been used empirically in research project on fashion behaviour (see for example Beaudoin et. al. 2003). The critical thing about this sequence is that it is almost entirely interpersonal, and as such individuals have key positions in the diffusion process. This interpersonality is reflected in many of our informants scepticism towards traditional marketing channels such as advertising, posters or tv commercial. For many of the companies it is a question of economics, they can not afford a full force campaign that is distinctive enough to compete with the big players marketing efforts. Instead form of peer to peer marketing is used. The marketing effects is seen as very high it the clothes are seen on the right people in the right settings. This creates the buzz that many fashion companies are craving for. “We have so not spend any money on marketing, but rather working directly with key consumers. We want the nice and cool people to wear our stuff, but not at any costs” (personal interview 2005). Blogs are increasingly becoming an integral part of the digital media informed daily life. This is basically a web based diaries, and quite a few of them are dedicated to fashion and other consumer trends. The blogs can respond quickly depending on often they are updated, and is thus a well suited to fashion news (La Ferla 2005). The blogging channel has also made an impact in the Swedish fashion scene. One of the most profiled journalist5 and chronicle writer mentioned how much she liked a typical brand in her blog, and the company send her one of their garments (http://expressen.se/index.jsp?a=288190). She even reported this on the blog, and this started a discussion and buzz on this particular brand. The company confirmed that this was in fact very good marketing in an interview. But even less profilied or even anonymous bloggers can make their voice heard. The more popular fashion blogs are forceful enough that "to ignore them is to run the risk of seeming out of touch," as Brandon Holley, the editor in chief of Jane, women's fashion magazine (quoted in La Ferla 2005)). Readers identify with bloggers' distinctive, rebellious voices, and Jane magazine have even added two online diarists to her stable of contributors. 5 Linda Skugge in the newspaper Expressen. 18 Conclusion One of the basic arguments underpinning this paper is the notion of the importance of knowledge and innovation in the present economy. As innovation is best comprehended as a social process, the relations between economic actors are critical in the understanding of how firms achieved competitive advantages. In the innovation system information is obviously a major input. How the information and knowledge moves this system of mutually interrelated actors is thus of vital importance in the innovation studies. I have further argued that power is of fundamental importance if one wants to analyse the relational dynamics in an innovation system. Power is a complex concept, and there is a plethora of different definitions and ways to analyse it. In this paper power has been operationalised through the use of the concept gatekeepers. The power dynamics in the gatekeeping function has been tied to process of information diffusion. I have maintained that knowledge and information is not evenly distributed; there are key players in knowledge diffusion. These players have been labelled gatekeepers and are pivotal at the nodes of pipelines as well as central in the topography of local buzz. Gatekeepers plays the role as mediators of external communication. The fashion industry has been used to exemplify the intersections between knowledge and power. Fashion is a knowledge intensive industry and it is possible to identify gatekeepers at different geographical levels From what has been said previously it appears that knowledge is power, but power does also give access to knowledge. The case of gatekeepers in the world of fashion illustrates this. 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