Innovation and firms performance in the luxury goods industry. The role of trademarks.

In an increasingly changing environment, innovation is globally regarded as one of the most important drivers of sustainable competitive advantage, as it leads to product and process improvements, allows firms to grow more quickly, be more efficient and profitable than non-innovators. The main purpose of this study is to analyse whether there is a statistically significant relationship innovativeness and firm economic performance in the luxury goods industry, using the number of registered trademarks as major indicators of innovativeness. In an industry where more traditional IPRs provide weak and biased insights, trademarks are likely to be considered more reliable indicators of innovation. The survey is conducted on a sample including the three major actors in the industry, namely: LVMH Group, Kering SA and Compagnie Financière Richemont SA, and considers a time period that goes from 1985 to 2014, the last year for which financial data are available. For the purpose of this study, data have been collected following two different procedures. As far as concerns trademarks, data have been selected from the Office for Harmonization in the Internal Market (OHIM) database on community trademarks; while the financial data have been collected from Factset database. A multivariate linear regression analysis has been carried out through STATA in order to check the main working hypothesis, namely: a positive relationship innovativeness and firm performance, and two related ones: 1) the existence of a positive relationship between expenditure in innovation and firm performance, 2) the existence of a positive relationship between diversification and firm performance. Results demonstrated that the number of registered trademarks, as well as expenditures in innovation, have significant and positive effect on firm performance, but no evidence was found for a significant positive relationship between diversification and firm performance.