Open innovation in Italian high-end fashion: an analysis of network tie formation by new ventures

Using a multiple case study of Italian high-end fashion, we analyze how new ventures pursue an open innovation by forming network ties to facilitate symbolic value propositions. We identify three strategies to form these ties: leverage of extant ties, Product exposure, and Entrepreneur exposure. Discussing the specificity of our empirical setting, we find that the identified strategies accommodate an industry context where market value is socially constructed and uncertainty is high. As a result, rather than being set by entrepreneurs, symbolic value propositions result from a mix of multiple diverse network ties. New high-end fashion ventures form these ties by applying strategies facilitating flexibility through open-ended search.


Introduction
Scholars and practitioners concur that open innovation plays a pivotal role in fostering the creation of new knowledge.Up to now, researchers in this field have mainly focused on high-tech industries and large incumbents.In contrast, we know comparatively less about how entrepreneurial ventures adopt open innovation and form network ties in other industries.
Entrepreneurial ventures in high-tech industries have functional value propositions, namely, offering superior product/service functions, availability, and lower prices (Chandler et al., 2014).For example, a value proposition can be a new functionality (e.g., curing a disease with a new drug; providing software that solves a user's need), the improvement of existing functionalities (e.g., enhancing the purchasing experience, enabling remote transactions via online booking or payment) or the provision of the same functionality at a lower price.High-tech entrepreneurial ventures typically understand which resources are critical for their value creation, who the providers of such resources are, and how to cope with the (alleged) tensions between value creation and value capture (see the "swimming with sharks' literature" for a discussion on this last topic).For instance, financial capital (Tian, 2012) and technology are critical resources in high-tech industries.Accordingly, firms in these industries will attempt to form ties with capital providers to raise money (e.g., Wang, 2016) and with technology providers (e.g., universities, research centers, and established technology firms) to improve their products and services (e.g., Clarysse et al., 2011;Dahlander & McFarland, 2013;Wadhwa et al., 2016).
Studies on entrepreneurial ventures in high-tech industries investigated their strategies for tie formation.Network ties are often formed based on extant ties (e.g., by connecting with friends of friends, Bowey & Easton, 2007;Engel et al., 2017;Hallen, 2008;Jonsson & Lindberg, 2013;Vissa, 2012).Since new ventures hold comparatively few of these, they face the strategic problem of efficiently forming new ties.Hallen and Eisenhardt (2012) identify four catalyzing strategies used by ventures in the Internet security industry to create network ties.Apart from using extant ties, these strategies involve casual dating, using proofs of quality, and pruning away uncommitted investors.
Despite their richness, the findings on new tie-formation by high-tech ventures are hardly generalizable to industries where new ventures have symbolic value propositions, which do not center on the functionality of a product but involve its acceptance and socialization by customers and gatekeepers, such as distributors, exhibitors, and tastemakers (Townley & Gulledge, 2015).In such a context, it is difficult to identify in advance the resources needed to create value, the providers of these resources, and the tensions between value creation and value capture.Moving from these premises, one may wonder whether firms with symbolic value propositions form network-ties through different strategies and use these ties for other purposes.However, research on this topic is still limited.
This paper seeks to remedy this gap by studying tie-formation in the high-end segment of the fashion industry in Italy (Jones et al., 2015;Verganti, 2008).We believe this is an ideal context for our study: consumers do not demand high-end 1 3 Journal of Industrial and Business Economics (2023) 50:849-875 fashion products because of their functional value; their value is socially constructed through consumers' interpretations (Hirsch, 1972;Hirschman, 1981).
Our research is based on a unique set of qualitative data collected from direct observations, key informant interviews, and participation in fairs and exhibitions (see Sect. 3 for future details).In so doing, we could grasp the motivations, attitudes, and behaviors of the agents involved in open innovation.These agents also include individuals and startups, an uncommon feature in datasets for studying open innovation.
First, we found that entrepreneurial ventures in the Italian high-end fashion (henceforth HEF) industry attach much importance to forging their symbolic value proposition.Second, they form ties through processes dissimilar to those highlighted in previous studies (e.g., Elfring & Hulsink, 2003).In addition to leveraging extant network ties, we identified two other strategies of tie formation that we labeled as Product exposure and Entrepreneur exposure.Third, to create value out of these ties, firms in the HEF industry prioritize open-ended search and continuous experimentation of ties rather than focusing on the efficiency of tie formation, as emphasized in the studies of high-tech ventures (Hallen & Eisenhardt, 2012).Fourth, we noted the importance of tie-formation flexibility in value creation through new ways of building symbolic value propositions.Finally, our results offer fresh insights into the tensions between value creation and value capture in HEF industries.

Symbolic value propositions and network ties
One of the defining features of an entrepreneurial venture is its value proposition.Ideally, the elements of the firm's business model (e.g., technologies and internal resources, distribution channels, and network ties) will be assembled to enact the value proposition (Zott et al., 2011), and the value proposition will differentiate a venture's products or services from those of competitors, making it competitive on its target market.
Entrepreneurial ventures in creative industries, in general, and those in HEF, in particular, are based on symbolic value propositions (Verganti, 2008).Whether found in the arts (as in the case of music, filmed entertainment, or publishing) or design (as in the case of fashion and architecture), the value of creative products is often understood to be based on a particular narrative or aesthetic (Jones et al., 2015).Such content is generated through innovations (Stoneman, 2010) undertaken by designers, artists, and cultural workers (Hesmondhalgh, 2019), who strengthen the symbolic (non-functional) value proposition.
Unlike the market value originated by a functional value proposition, the market value steaming a functional value proposition does not arise from the connection between product/service content and pre-existing standards or preferences.Products based on aesthetics or narratives are made distinct in the marketplace, and their value is socially constructed as consumers understand and interpret them (Hirsch, 1972).Often, consumers buy products to express their identity (Hirschman, 1981), gain social recognition, and signal status (Witt, 2010).Market value is, therefore, influenced not only by individual taste but also by the legitimation (and power) exerted by gatekeepers such as distributors, exhibitors, and tastemakers (Townley & Gulledge, 2015).Hence, in industries characterized by symbolic value propositions, it becomes even more essential to establish ties with other industry actors to increase the product's value.In these industries, ties are a resource acquisition channel and a cultural process of network identity formation and transformation (Jack, 2005;Daskalaki, 2010).In this respect, industry events, such as awards, backstage, and gala dinners, are essential for creating symbolic value through networking (Schulbler & Sydow, 2015).Because of this complexity, many creative products' market value is highly uncertain (Caves, 2000).On the one hand, entrepreneurs in these industries must socialize their products with the other industry actors.On the other hand, they need to identify those industry actors that may accelerate this process.This uncertainty may influence the entrepreneurs' tie-formation strategies, making those driven by efficiency, which the current literature describes, inappropriate.
The latter is divided into two main segments.The most prominent-high street (mainstream) fashion-is characterized by stylistic innovation.Each season, producers converge on dominant styles, and price-conscious consumers compare different producers' versions of the seasonal styles (Cappetta et al., 2006).This segment is dominated by mass production and marketing, and large high-street brands (e.g., Diesel, Banana Republic, Benetton, and Nike) compete on price and efficient distribution chains (Tran, 2010).In the smaller segment, high-end (luxury) fashion, products are more distinctive.Based on designers' stylistic identities, products typically incorporate significant elements of exclusive handwork and artisanship (Crane, 1997).Consumers value them because of their uniqueness and authenticity (Fionda & Moore, 2009) and the high status they convey; typically, they have high brand loyalty (Tran, 2010).High-end brands include flagship firms, such as Dior, Versace, Gucci, Armani, Dolce & Gabbana, Prada, and Burberry, reaping high margins by selling small volumes at high prices.

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Journal of Industrial and Business Economics (2023) 50:849-875 As of this study, the Italian fashion industry is worth 94 billion euros in turnover; it counts approximately 65,000 firms and 600,000 employees.1A historical location of the industry is the city of Milan.Along with Paris, London, and New York, Milan is one of the four 'world capitals of fashion' and hosts seasonal fashion exhibitions.The city has many showrooms (i.e., showcase ateliers open only to shop owners and experts who select apparel fitting a specific style).It is home to venues of symbolic prominence in the fashion industry, like the famous stores 10 Corso Como and Antonia and the central shopping area Quadrilatero della Moda.Besides Milan, other essential spots of the Italian HEP are the cities of Florence and Rome.Every year, Florence hosts Pitti Uomo, one of Italy's most prominent menswear fashion fairs, and several maisons have their headquarters in the heart of the city (e.g., Gucci, Salvatore Ferragamo, and Cavalli).Rome has emerged more recently as another lively center."Alta Roma" organizes events every year, including seasonal fashion weeks.
We undertake a multiple case study of the Italian HEF for two reasons.First, the Italian HEF has a high incidence of new ventures because of the continuous entry of startups attempting to establish their brands.Second, one type of these new ventures is purely based on symbolic value propositions: HEF design firms.Run by a single or a small team of designers, these firms only design and refine new models, outsourcing everything else, such as producing prototypes, manufacturing, distribution, and sales, to external partners.Compared to new ventures in high-tech industries, HEF design firms only require a little external funding.Rather than network ties to investors, they must establish ties to a range of other firms in a highly fragmented value chain.In addition to the design firms, the Italian HEF includes many specialized suppliers of garments and fabrics, international distributors, showrooms, independent shops, communication specialists, influencers, and specialized fashion media and press.
The following example of women's clothing will clarify the fragmentation of HEF.There are two annual product cycles: The summer-spring and the fall-winter collection.The cycle begins with a design firm sketching the pieces of clothing for the new collection on paper canvas.The sketches are first transformed into cutting patterns, and then, a tailoring firm sews the prototype dresses, worn by a model and refined in vivo.The design firm displays final prototypes at the seasonal exhibitions that occur twice a year. 2 Design firms present their collection at showrooms, professional fairs, or private events.Large ones may even be able to organize catwalks.If the firm is a new venture, it may work with showrooms to gain the attention of essential buyers and independent distributors in foreign markets.Buyers are industry experts who select apparel for important boutique shops, large department stores, or online marketplaces.Independent distributors choose apparel to trade in foreign markets3 either in their chain of shops or through local shop owners.The design firm collects orders in the months following the presentation and selects the models to develop into various sizes, colors, and fabrics for subsequent serial manufacturing.Serialization begins about two months after the presentation and requires the involvement of many manufacturers specialized in HEF.Luxury refinement requires that each type of garment, each production process, and, often, each fabric has its manufacturer.For example, the manufacturers specializing in trousers or jackets are usually not the same as those making knitwear.Manufacturers do not perform sewing; leatherwork requires other producers, and so on.Manufacturers are contracted on a single-project basis.They create samples to be checked and amended by the design firm and then schedule the lot production for a given date.The design firm will purchase and ship fabrics and other accessories directly to manufacturers.The first batches of products are ready to be picked up and shipped to the distributors and shops about five months after the presentation.

Analytical strategy
Our study design phase started in November 2013.Extant literature on network ties in entrepreneurship undermarked the tie-formation in the fashion industry.We set out to explore this further; given the scarcity of statistical sources and the importance of building intimate relationships with informants to obtain data, we chose to undertake a multiple-case study of the Italian HEF.
A case study design that does not compare across settings is inefficient for developing a theory on how the value propositions influence tie formation strategies.Consequently, our case study is explorative and aims at identifying examples (Yin, 2015).However, our study's in-depth focus on a particular context allows for understanding how the identified strategies relate to constructing symbolic value.In the discussion section, we compare the specificities of our setting to other settings and illustrate the potential general relevance of our findings, summed up in two propositions.

Data collection
Our study counts four main phases of data collection, conducted from 2013 to 2017, with different purposes.
First, we wanted to identify dimensions of interest for the study: Design ventures, symbolic value propositions, and tie-formation strategies.To do so, we collected information from the many public sources specialized in HEF, like press, magazines, blogs, websites, and advertising.We watched videos of influencers, interviews with fashion designers, movies, documentaries, and designer biographies.This material was summarized and annotated.

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Journal of Industrial and Business Economics (2023) 50:849-875 Second, we needed to deepen our understanding of HEF design ventures and identify dimensions for deeper investigation: Network tie types, network partners, and modes of formation.Consequently, we engaged in direct observation by visiting ateliers, showrooms, incubators, fashion schools, international fashion fairs, professional exhibitions, and private parties.During these visits, we observed and talked extensively with HEF designers and other industry actors, such as tailors, manufacturers, buyers, showroom owners, fashion journalists and bloggers, and managers of fashion fairs and fashion schools.These talks were unstructured and were guided by general questions such as (e.g., to a buyer): Why are you attending this fair?Which new designers did you find interesting among those here today?Why? Did you already know these designers?How did you meet?These observations were subsequently annotated.
Third, we undertook nine studies of HEF design ventures to identify and analyze tie formation strategies and explore how these related to symbolic value propositions.These constituted embedded case studies in the Italian HEF (Yin, 2015).In line with the goal of our work, we choose a purposeful sampling method (Patton, 2002) aimed at including recent startup ventures that were owned and managed by designers and which were initially successful.To identify a suitable sample, we selected the case ventures from the AIDA-Bureau Van Dijk database, which provides detailed information on Italian firms. 4We used the 4-digit NACE code 7410 (Fashion design and industrial design) to identify ventures in the broader fashion industry.We restricted the sample to ventures that started not less than two and not more than five years before our study.This time window was sufficiently long to ensure that ventures had had opportunities to develop the business, yet their entry was sufficiently recent to ensure that respondents recalled events correctly (Huber & Power, 1985).This resulted in an initial list of 560 ventures.Within this list, we selected those operating in the HEF by focusing on ventures that had received attention from some experts of emerging talents.We focused on finalists of new fashiontalents prizes (e.g., "Who is on Next" by Vogue Italia and "Woolmark Prize) and on ventures led by designers selected by prestigious showrooms known for showcasing new brands in the HEF, like Spiga 2, Como 10, or Penelope.Besides providing an objective criterion to identify ventures operating in the HEF, our choice to focus on ventures that were reasonably 'in the spotlight' ensured that we avoided trivial cases of designers who lacked the minimum managerial abilities to start a business and semi-professional hobbyists.Moreover, this choice eliminated ventures that lacked sufficient quality to form ties regardless of strategic actions (Hallen & Eisenhardt, 2012).The list was validated by researchers in the fashion department at the university of some of the authors.By applying these criteria, we initially interviewed seven ventures.We interviewed two additional ventures to ensure generalizability and saturation (Merriam, 2009;Yin, 2015).Consistent with our purposeful sampling method and to enhance within-sample variation (Miles & Huberman, 1994), we identified these two additional ventures from the initial list of HEF ventures to add variety concerning venture success.We included one venture that had achieved indisputable industry success and one that, despite initial success, had failed and started liquidation.Including such case ventures was based only on the additional criteria that one was successful.At the same time, the other failed to reduce the concern for possible confirmation biases introduced by the authors.Among Italian HEF new ventures, virtually every new label is tightly linked to the name and work of one or few designers, such that, in this industry, designers are indistinguishable from the entrepreneurs, and often, the designer's name overlaps with the brand name.Designer entrepreneurs may work alone or in teams of two or more.Among teams, duos are common, where one entrepreneur is the designer, and the other is responsible for producing and commercializing the products.Altogether, we followed extensively four solo entrepreneurs and five teams of entrepreneurs (four couples and one trio).We undertook repeated interviews with interviewees almost evenly split between men and women (5 men and 4 women); their ages ranged from 29 to 45.The ventures produced men's and women's clothes (3 ventures), shoes (1 venture), bags (1 venture), sunglasses (1 venture), beachwear (1 venture), and other small accessories, such as computer bags or hats (2 ventures).The first interviews with the entrepreneurs were long and based on a semi-structured questionnaire.We asked for information about (i) the entrepreneurs' history and personal background, (ii) the emergence of the entrepreneurial intention, (iii) the design and manufacture of the products, (iv) the venture style, (v) the venture offer, (vi) the ties with upstream actors (suppliers), (vii) the ties with downstream actors (distributors and clients).Each topic comprised between 2 and 6 open-ended non-directive questions for a total of 23 questions.The questions were of three types (Patton, 2002): (i) Background questions, aimed at knowing the personal history of the entrepreneurs (e.g., Can you tell us about the most important steps of your formation as a designer before starting your firm?); ii) questions aimed at uncovering practices in specific circumstances (e.g., Tell us about the most salient circumstances/reasons/ people behind your decision to start your own business; How have you financially sustained your firm so far?), and iii) Opinion/value questions, aimed at assessing the respondents' views on relevant matters (e.g., Could you name what, in your view, are the three most important assets that an entrepreneurial venture like yours should possess to succeed?). 5 The entrepreneurs were first interviewed face-to-face between March and September 2014, either in their ateliers (in these instances, we also visited the working areas) or in our offices.Interviews lasted 45 min to 3.5 h; the audio was recorded and transcribed.Whenever allowed, we took pictures of the ateliers and exhibitions.Additionally, we tracked and documented the progress of the ventures over time and had three formal rounds of follow-up interviews with entrepreneurs in spring 2015, summer 2016, and spring 2017.
Fourth, to triangulate the findings from the nine ventures and potentially lend additional dimensions to them, we conducted extensive interviews with key informants from the industry.This activity started in the late spring of 2014; it unfolded in several rounds and parallel to the other activities until the spring 2017.This led us to interview over fifty actors operating in the Italian HEF, including manufacturers, 1 3 Journal of Industrial and Business Economics (2023) 50:849-875 pattern makers, buyers, tailors, incumbent firms, showroom owners, managers of fashion fairs and schools, journalists, bloggers, influencers, and incubator directors.The aim of collecting this information was twofold.We were interested in the ties the ventures held across the HEF and wanted to triangulate some data collected when interviewing entrepreneurs.To this end, we followed two sampling strategies.From the one end, we interviewed industry players at events, fairs, and parties, asking questions about emerging designers in general (e.g., What does a designer need to succeed?What are the difficulties?Which emerging designer do you consider under the spotlight and why?) and the case ventures specifically (e.g., What do you think about the designer firm?Which product do you remember of this designer?).
From the other end, we followed a snowball procedure (Patton, 2002).We asked entrepreneurs to introduce us to their acquaintances in the HEF, asking triangulation questions (e.g., How did you get in touch with this entrepreneur?Why did you choose to distribute for them?).These interviews varied from 15 min to 3 h each and were conducted by phone or face-to-face.Whenever we had permission, we recorded the interviews to be transcribed.We additionally triangulated our qualitative data as much as possible with data sources, such as press articles and web content.
Our data collection produced more than 94 h of original recordings, approximately 451 pages of transcriptions, and 127 original pictures and videos of places and events.Non-original materials (magazines, press articles, and scientific articles) totaled approximately 325 additional documents.We used NVivo ® to store the bulk of the qualitative data provided in formats compatible with this software.All other materials (e.g., books, movies) were stored separately.Table 1 lists the data collected through the interviews at the industry and venture levels.

Data coding and analysis
The three authors coded the data using the NVivo software.In the beginning, the authors worked separately, forming independent views, then jointly, confronting the emerging ideas, establishing a common understanding, deciding the needs of additional data, creating meaningful coding, and refining in a reiterated mode.In the data coding, we took a structured middle position between open and theory-determined coding (Dey, 1993) by allowing new empirical themes to arise and interact with extant constructs.The coding proceeded as follows.
First, we identified relevant data for describing what was intended as symbolic value in the HEF and how ventures acted to facilitate it.We kept an inductive approach in this identification, letting notions emerge from informants.Data included the description of the processes through which the entrepreneurs developed product ideas and the successes and hurdles encountered in realizing products that incorporated the desired value.Opinions and observations by manufacturers, distributors, and other industry actors regarding the value of these products were used for triangulation.We further identified relevant data for describing the progression of the studied ventures.As before, we let the measures of progression emerge from the informants, leading us to understand what a successful or unsuccessful startup is and the role of symbolic value propositions in the HEF.Moreover, we coded data regarding the recurrent difficulties reported by HEF entrepreneurs in the development of their ventures and in delivering symbolic value.Second, as the entrepreneurs' network ties to other players in the HEF emerged as critical in the prior step of data coding, we coded data concerning network ties.We focused on network ties: Why were they selected?How were they formed?What do they deliver, and how?We gave special attention to the entrepreneurs' strategies to establish these ties.We continued to refine the results by gathering and analyzing new data until we identified three resilient tie-formation strategies.
Third, we used extant theoretical constructs to understand the identified strategies.We used interpretative categories of the social network theory (e.g., tie strength) and entrepreneurship literature (e.g., efficiency in tie formation) to elaborate and progressively refine a framework that makes sense of the data.
Data collection and analysis were interdependent; the collection, coding, and interpretation continued as long as the theoretical analysis revealed new needs for empirical categorization and clarification.The work stopped when we reached saturation, and the data analysis appeared credible (Lincoln & Guba, 1985;Merriam, 2009).

Symbolic value propositions in the Italian HEF
Our study confirms that the central aim of new design ventures in the Italian HEF is to develop a symbolic value proposition.For a product to be commercially viable, designers must infuse it with a strong identity that a sufficient number of consumers appreciate and, ideally, breeds recognition and status effects.This does not mean equipping a product with an appealing exterior or aligning it with seasonal styles.It is often the opposite: Fashion designers precisely aim to distinguish their products from the dominant style.For example, a shoe designer (Venture 3) explained that he was aware that one of his products, which was comparatively similar to the dominant style, would have "ended up making the main windows of Italian shops."However, he turned down a request from a famous distributor for his shoe because this, although commercially advantageous, would have misrepresented his value proposition.He said: "The distributor wanted those shoes of ours.But [those shoes] were the ones that did not represent our brand.They showed our 'mood' the least.We wanted that distributor -but not with something that didn't represent us at that moment.[…] We turned the offer down and opted for a longer-term operation." For new ventures of designers in the Italian HEF, we identified two main dimensions of symbolic value propositions: product conspicuousness and product narrative.
As to product conspicuousness, designers usually choose one of their products and make it the focus of intense creative research.Appendix Figure 1 shows some examples of such products.
One of our interviewed designers focused on jackets; a second started by designing shirts, a third focused on swimwear, and a fourth on leather bags.The selected item is then replicated multiple times with minor improvements until it eventually conveys the unique creative message of the designer.A team of designers (Venture 8) described their product development process as follows: "We wanted to elaborate an idea, […] design iconic products.Our research was socio-political […], so we worked on the uniforms.Every kind of uniform, from the waitress to the cultural uniforms, like Enrico Berlinguer, Fidel Castro."The product became their 'design manifesto,' informing all their following creations, which were presented in multiple collections and made the team recognizable.A designer in another venture (Venture 4) called his signature bag "my product zero."Referring to his following collections, he said: "I decided to build a collection that was in some way wider but using the same strands of identity as my previous [product zero]."Another designer (Venture 5) said that some products are not fashionable; they are "timeless" because they do not only embody an aesthetic but a whole idea: "If you like them now, you will like them in five years because they are not linked to any trend."Repeatedly presenting the same product to consumers makes it more visible and recognizable, contributing to its symbolic status.One designer (Venture 9) described this as an "educational process [that] creates an imagination about the object that you are going to make."Another designer (Venture 6), specializing in men's and women's apparel, emphasized the importance of perseverance and consistency: "The first season they won't notice you, the second season they won't pay much attention, the third season the same, but the fourth they may.What is important is to keep product consistency." In addition to creating conspicuousness for one or several products, designers develop the second dimension of symbolic value propositions by extensively communicating with their consumers to combine multiple insights to form a consistent message.
One designer (Venture 7) explains: "Your brand needs to […] create an image of the object that you are going to make.If this is missing, the object gets stuck and cannot get through the masses".The narrative conveyed by the product needs to be unique and distinctive to the brand.Several interviewed designers described the process of creating a product narrative with words denoting identification and personal features.For example, one designer (Venture 4) said: "More than my firm, I longed to create my own identity.[…] I wanted to build a vision that was total and wholistic and would tell my identity at its best […]".Another designer (Venture 5) said: "For a designer, the maximum ambition is to express herself through her brand.Our product is like my son.[…] It is in my image and likeness.The market will come later.We always said to ourselves: "The market will come at some point."The designers described working on communicating product narratives as one of the most important goals of their venture.Upon realizing this was all that was needed, one designer (Venture 8) told us his puzzlement: "We mainly told a story.We described the elements that constituted our identity and recognized that people liked our story.They cared more about the story than about the look of the product […] I was shocked!Are people […] that eager for stories?"Another designer (Venture 3) said that this was very clear to him since the beginning of his venture, and for several years he did not even bother producing and commercializing: "We didn't give a damn about having products ready for selling.[…].We did only the display and communication [of our products].[…] Just that.The only things we produced were samples".

Formation of network ties in the Italian HEF
Our study identifies the (main) partners with which entrepreneurial ventures in the HEF industry form network ties, thus shaping their open innovation strategies.Entrepreneurial ventures in HEF have limited capital needs; accordingly, our study identified no ties to external investors.By contrast, entrepreneurial ventures form ties with multiple partners, instrumental in building their symbolic value propositions.
The design firms initially focus on product conspicuousness, which requires realizing a high-quality product.Designers cannot do this alone but must establish multiple diverse ties with large and small value chain partners (e.g., manufacturers, suppliers, tailors, pattern makers, and other actors).These partners provide the specialized artisanship that designers lack.For instance, large-size garments require minor adjustments to the cutting patterns, and certain dyes or colors tend to shrink the fabric more than others or may alter the fabric's softness, requiring other minor adjustments.Handling these and similar details appropriately is essential for achieving the quality standards that HEF customers expect.
Many of these ties are long-term.This highlights the pivotal role of transaction costs in open innovation.One designer (Venture 8) who failed to establish a long-term tie with a suitable supplier described performing highly time-consuming product checks, piece by piece, before accepting delivery of a lot.Our study also shows the benefits of mutual commitment by long-term network partners.A team of designers specializing in knitwear (Venture 5) explained that they needed little capital to run their business.Their manufacturer produced samples for free in expectation of future job orders.After accepting customer orders, the designers took 20-50% as advance payment and used this cash to purchase the fabrics and materials needed to be shipped to the manufacturer.The manufacturer returned the products and agreed to be paid 30 days after delivery.The 30 days were sufficient to cash in the customer balance.In short, the manufacturer allowed the designers to run their ventures with no loans and modest out-of-pocket investments.A sunglasses designer (Venture 2) reported a similar approach, which was confirmed by other industry players we interviewed.
Several of the multiple diverse ties are also based on mutual trust.The interviewed designers described these ties as a relationship of mutual esteem and sometimes affinity and affection.Designers declared themselves willing to invest personally and emotionally in ties to suppliers.One designer of computer bags and accessories (Venture 1) said: "We feel especially fond of one supplier.They are a family firm […] based at a 40-min drive from here.We go there, check the production, and develop new products with them.Ultimately, we don't want to search for a new supplier, even if there might be others, perhaps more price-competitive because we have a good relationship […].They also have customers who are more important than us.But they like us.We are in their Top 3 in terms of affect."Another sunglasses designer (Venture 2) reported helping a supplier undergoing a crisis due to competition from an Asian manufacturer.He said that it would be more cost-effective for him to switch to the Asian manufacturer, but the tie he had with the local producer was one of mutual commitment and trust, and he was prepared to afford 1 3 Journal of Industrial and Business Economics (2023) 50:849-875 higher costs to endure it.We conclude that mutual trust can contribute to alleviating the tensions between value creation and value capture, which may arise in open innovation.Venture 1 is a case in point.The venture and its partner jointly contribute to value creation by co-development of the product; this likely enhances the product quality and attractiveness, resulting in high sales and satisfactory value capture for both partners.
Forming distinct ties with firms having a high market visibility shapes product narratives; we noticed that, in several cases, narrative elements emerged serendipitously from these ties.Ties to established firms with strong identities added meaning to products, which designers endeavor to communicate to develop a coherent narrative.We identified several distinct ties to suppliers with strong brands that contributed to product narratives.One example is a designer of sunglasses (Venture 2) who reported that their unconventional products were initially misperceived as "chips-bag gadget" sunglasses.A partnership with a famous German manufacturer of high-quality lenses added exclusivity to the product narrative: The sunglasses were now perceived to "combine craftmanship with innovation in a nostalgic tribute to the '80 s and '90 s culture".A designer of shoes (Venture 3) evoking pop culture was first misperceived by Japanese buyers as being targeted at the high street market.However, a partnership with an Italian manufacturer of luxury soles contributed exclusivity to the product narrative.A duo of designers specialized in women's apparel (Venture 9) reported that they struggled to find market acceptance.Their conspicuous oversized button-up jumpsuit that "pays tribute to the aesthetics and values of the nineteenth-century of the southern Italian society" was misunderstood by consumers.Still, a partnership with a famous manufacturer, considered an ambassador of southern Italian culture, donated authenticity to the product narrative.
We also identified that distinct ties to retailers with strong brands can contribute to product narratives.A designer (Venture 6) specialized in men's and women's apparel reported that initially, her product-characterized as conveying "the postmodern deconstruction and reconstruction of classic pieces of clothing"-confounded consumers.A partnership with a famous retailer in London was instrumental in changing her product narrative.The association with the retailer reshaped consumers' perceptions: Now, she was a renowned designer, and her subsequent collections were expected with great anticipation.
Finally, we found examples of how distinct ties to firms outside the fashion industry could feed into product narratives.A designer of leather bags (Venture 4) collaborated with a media production company on a short movie in which his conspicuous bag was depicted as a "space of transition that changes its shape and volume during the day."Premiered during a fashion show, the movie, according to the specialized press, enabled the designer to create a shared audience narrative.Likewise, a single distinct tie between a shoe designer (Venture 3) and a traditional circus troupe established a shared narrative during a fashion fair, evoking a "strong familiar dimension" of the product.
When contributing to building the product narrative, designers and their partners should reduce tensions between value creation and capture, which may even end the collaboration.For instance, collaborating with the media-producing company allowed Venture 4 to reach out to many customers; how did this increase the value capture for the media company?Clearly, it is easier for the balance between value creation and value capture between the two partners to arise in the long run.If the bag of Venture 4 succeeds in becoming a blockbuster, the media company will enlarge its audience simply because it provided an initial on-ramp to such an iconic product.

Network tie formation strategies in the Italian HEF
While network ties are crucial for forging symbolic value propositions in the Italian HEF, the studied designers generally found it challenging to form these ties.When asked about the significant barriers to success in the HEF, most designers mentioned network tie formation and shared numerous anecdotes to support this observation.One designer (Venture 7) said: "I made several attempts before finding someone who answered my needs.Nobody was willing to produce for me."Another designer of women's and men's apparel (Venture 6) said: "When I needed another manufacturer, I relied on two people I met just one month before, who claimed they wanted to help me.So, when I asked, they introduced me to a new manufacturer.Everything seemed ready to start, but in the end, the manufacturer retracted."A showroom manager described this common predicament among new HEF design firms: "You should see these poor designers […] nobody cares.They try and try again.It is like a gentleman courting a very sophisticated woman." We identified three strategies that are used to form network ties.These are listed in the third column of Table 2.The distribution of these strategies across our nine case ventures is shown in Table 3.
The first strategy was to leverage extant ties, such as existing acquaintances or "friends of friends."One designer reported leveraging a tie to a former schoolmate, a manager at an important manufacturing firm.Another designer noted asking a friend whose father was a manufacturer.In ventures 2, 6, and 7, leveraging extant ties contributed to product conspicuousness and product narrative.For ventures 2 and 8, we found that the ties formed through this strategy were of limited importance in developing a symbolic value proposition.The reason is that the extant ties were inadequate or sufficient to fulfill the firm's needs.This strategy may hamper the effectiveness of open innovation in terms of value creation and capture.Several Journal of Industrial and Business Economics (2023) 50:849-875 mechanisms limit the diversity and the width of networks built out of extant ties (e.g., the so-called small word phenomenon).Lack of diversity limits the number of perspectives that combine in the value creation stage, thus reducing its effectiveness; a narrow network hampers the attraction of new customers, thus being detrimental to value capture.These two phenomena are interlinked:, the lower the value creation, the lower the value capture.
The second tie formation strategy was product exposure.In the Italian HEF, there are many events, including large and small professional exhibitions-fashion fairs, fashion shows, catwalks, and showroom openings during the fashion weeks, which attract industry actors worldwide.A prominent fashion fair usually hosts approximately two thousand designers and is visited by about 24 thousand buyers and 36 thousand industry experts.Milan hosts at least eight large industry fairs every year. 6oreover, the three other fashion capitals (New York, Paris, and London) host their fashion weeks at least twice a year.Every fair has a specific focus and may target the general market or industry segment.For instance, White7 targets highly innovative emerging designers, while TheOneMilano8 targets established brands with an ornate style.While such events allow HEF designers to mingle with other players in the HEF, such interaction only leads to forming new ties if product exposure is successful.For example, one designer (Venture 6) reported that she could establish a tie with an essential mentor during a fair because her product was in line with the aesthetics of this mentor.Another designer (Venture 1) told us a Hong Kongbased independent distributor saw their product in Paris during a fashion fair.The proximity of the designer's conspicuous product to the distributor's symbolic value proposition inspired the distributor to offer to sell the designer's product in Asia.A manufacturer we encountered during a fashion fair provides another example: He was "contacted every day by a new designer who pretended to have a great idea."He rejected most such offers: "Designers don't understand that I work only if I share their aesthetic vision."Applying product exposure as a tie formation strategy, HEF designers can establish multiple distinct ties with suppliers, manufacturers, distributors, and buyers contributing to product conspicuousness.For example, one designer (Venture 9), in an event held during the Milan Fashion Week, formed a new tie with a fabric supplier, another with a manufacturer, and a third one with an artist who specialized in handmade decorations.These network partners provided specialized artisanship to elevate the firm's conspicuous product.HEF designers must devote time and energy to fashion events to benefit from product exposure.For instance, one designer (Venture 8) told us: "The important thing of fairs is to have a walk around the pavilions and tell your story [to all the people meet]."Another (Venture 4) stressed the importance of creating awareness [about their product] by engaging in extensive storytelling with everyone who stopped at their stand during a fashion fair.A third designer (Venture 8) emphasized the importance of circulating one's message among the maximum possible number of showrooms.
The third tie-formation strategy of new design ventures in the Italian HEF is entrepreneur exposure.Designers expose themselves to potential network partners through freelancing, undertaking paid design jobs for established firms in the HEF (e.g., improving extant designs and innovating the range of products).Our interviews show that this practice is widespread across the Italian HEF and comprises various arrangements.Sometimes, the freelancing agreement entails developing just one or a small number of items.Sometimes, the freelance designer creates a limited series of articles (i.e., a capsule).While some freelancing arrangements last for just one season, others last for years.Often, designers simultaneously engage in several freelancing contracts.For instance, one of our interviewed designers (Venture 3) reported having three ongoing freelancing arrangements while setting up his new venture.Apart from the fees, freelancing allows the designer to learn about different audiences and markets.The freelancing agreement itself may constitute a network tie contributing to the designer's product narrative: While some freelancing arrangements are kept confidential by contract, others are advertised to the public, 1 3 Journal of Industrial and Business Economics (2023) 50:849-875 and designed items may even carry the freelancing designer's name. 9Working for an established fashion brand lets Designers broadcast their style and identity.For example, one distributor said: "Look at the volume of this dress.I see from a kilometer distance that this is from [designer's name]".Furthermore, freelancing may help form new ties with suppliers, manufacturers, etc.Several designers indicated they had established ties with suppliers of the HEF brands they had freelanced for.For instance, one designer (Venture 4), freelancing for a very prestigious Italian brand, reported that he-in his venture-used the same leather manufacturer that produced for his employer.Another (Venture 1) created a strong tie with a fabric supplier they met while working on a capsule collection for an Italian urban-wear label.Because established firm suppliers are usually trusted and of high quality, entrepreneur exposure is a valuable strategy for forming the network ties needed to realize conspicuous products.
Noteworthy, Product exposure and Entrepreneur exposure may backfire.Indeed, the more insiders of the HEF see the product and talk with its designer, the more the likelihood of imitation, which brings severe consequences on value capture.

Open-ended search in network tie formation in the Italian HEF
It is a notable finding that design ventures in the Italian HEF conduct periods of open-ended search when creating their symbolic value propositions.While the designer typically decides the identities and product visions that underline a product's conspicuousness in the first stage of the venture, the subsequent formation of network ties to manufacturers and suppliers is subject to trial and error: Since exante information is scarce, designers must try several options before figuring out which ones offer the suitable specialized artisanship and quality levels.During the search process, designers also learn about new materials, production methods, techniques, and product languages they did not know before.For example, one designer (Venture 9) said: "With [name of partner firm], I learned [the language] of the New York market."Another designer (Venture 1), after discovering some fabrics produced by a manufacturer, decided to make some changes to her product.A third (Venture 6) reported that she decided to design a new collection centered on woven products after discovering a specific woven work.
Imperfect information also hampers finding suitable partners with a strong, established identity that can contribute to product narratives.Furthermore, since it is difficult to predict the narratives that may result from combining the brands of established partner firms with the product conspicuousness and communication efforts made by the designer, the potential success of these single distinct ties in creating a value proposition is also subject to trial and error.
Hence, network ties creating product conspicuousness and those contributing to product narratives were formed during open-ended search processes.Several HEF designers undertook a sequential search: Establishing one network tie after the other and searching for the most suitable partners.Such ties might be short-lived, tested, and abandoned to find better ones.A fashion journalist described this dynamic: "The story of [the bag designer] is highly illustrative.[…] He was looking for a supplier who produced leather using the traditional method.He rejected many producers before finding the right one."In the same vein, a designer of men's and women's apparel (Venture 8) said: "We started to have problems.[…] We found a very good modelist, but she had always done menswear, and she was less effective with womenswear […] so we sought for another one".Another team of designers (Venture 5) required that none of their knit products be cut since they felt this conferred a conspicuous product look.They initiated and then abandoned multiple collaborations with suppliers before they could identify one capable of doing this.
Some HEF designers also undertook a parallel search.Creating an abundance of simultaneous network ties saves time in identifying the most suitable partners.One entrepreneur said engaging with multiple network partners in parallel was her way "to find the right person."Another, referring to the need to identify the right communication specialists, told us, "[…] we immediately looked for new contacts, and we tried to establish as many relationships as possible".
Although open-ended search may be the trump card for forging HEF entrepreneurial ventures' value proposition, it shows several drawbacks from an open innovation perspective.First, engaging in many contacts worsens the aforementioned risk of imitation, which drains value capture.Second, the trial-and-error process in tie-formation is time and resource-consuming for designers.Third, unlike in the case of leveraging extant social ties, open-end search may bring too much diversity and coordination costs that may jeopardize value creation.

Tie formation flexibility
Leveraging our reach dataset, we found that new HEF ventures formed network ties through strategies facilitating open-ended sequential and parallel searches for new ties.Two strategies-product exposure and entrepreneur exposure-enabled the configuration of networks with long-lasting and short-lasting ties.Such open-ended inquiry for network ties aligns with the perspective of experimentation in creative industries (Lorenzen & Frederiksen, 2005): Given demand uncertainty, new products must be developed and tested on the market and-since product development is project-organized using external partners-each experiment with product value also entails an experiment with the network ties creating this value.Some ties are successful, some not, and new ones must be constantly formed.Stakeholders facilitate tie formation in creative industries such as filmmaking and music, e.g., agents and casting bureaus.In creative industries like fashion, entrepreneurs instead use tieformation strategies such as those we identified for the Italian HEF.

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Journal of Industrial and Business Economics (2023) 50:849-875 In entrepreneurship research on network tie formation strategies of new ventures, Hallen and Eisenhardt (2012) emphasize efficiency.A tie formation strategy is efficient when it "(1) results in a completed tie, (2) is secured with relatively little time and effort, and (3) yields ties with desired partners" (p.35).By contrast, flexibility, rather than efficiency, does matter in our empirical setting.Many HEF ventures' ties were meant to be short-lived.Only longitudinal studies will tell which ties were successful and what value they created.Even the most successful distinct ties of HEF ventures emerged from open-ended experiments.Thus, an allegedly good partner for a HEF venture is not known ex-ante and may change occasionally.Forming ties is an ongoing effort with no end.Sequential search for new ties also encompassed dismantling old, obsolete ties, and parallel search involved creating an abundance of ties to save time.While our empirical examples deal with the context of the HEF, they will likely be of growing relevance for other industries.The rise of open innovation drives firms to open-ended external search for new knowledge (Greul & West, 2017) and is likely to make flexibility in tie formation increasingly important.Accordingly, proposition 1 (P1) states that: P1: To shape their symbolic value proposition, new ventures should rely on flexible, rather than efficient, tie formation strategies.

The crucial role of network ties in shaping symbolic value propositions
We found that while new HEF ventures undertook core design tasks in-house, they involved other and more established firms in shaping their value proposition.In other words, they pursue an open innovation strategy by incorporating new techniques and design possibilities learned from their suppliers and capturing the value steaming from their network partners with established brands.The value creation and capturing enabled by network partners align with the sociological literature on creative industries.Here, the success of artists and creative firms depends on their network ties to gatekeepers who influence what is appreciated in the market (Townley, 2015).In cultural economics, Potts et al. (2008) recently conceptualized creative industries as 'social network markets' where both production and consumption decisions are "dominated by information feedback over social networks rather than innate preferences and price signals" (p.170).While this perspective may not perfectly fit commercially mainstream corporations with symbolic value propositions, the ventures we studied were indeed influenced by their network partners.In some cases, such partners were also instrumental in how the ventures' value propositions became known and successful among consumers.
Extant entrepreneurship theory acknowledges that new ventures often adjust their value proposition (Wirtz et al., 2010) but suggests that network partners have a much less influential role.These are conceived as responding to value proposition adjustments rather than providing impetus.Investors evaluate value propositions to decide whether finance ventures (Hallen & Eisenhardt, 2012) and suppliers are contracted to fulfill them, not to influence how ventures envision them (Zott et al., 2011).Our study challenges this view.Furthermore, they are relevant for other industries where firms rely on symbolic value propositions (e.g., the movie industry, cultural industries, and haute cuisine).Accordingly, we expect more and more new ventures to adjust their value proposition by adopting an open innovation approach.They engage in a wise selection of their (flagship) partners.It is not uncommon that these partners are established firms, which are pivotal in value creation and capture due to their resource abundance.In sum, we propose: P2: New ventures may involve established firms in forging and adjusting their symbolic value proposition.

Conclusions
In line with the open innovation perspective, this paper investigates how tie-formation strategies contribute to forging the symbolic value proposition of new ventures.We find that the network ties were formed through processes dissimilar to those proposed by previous studies (e.g., Elfring & Hulsink, 2003).In addition, to leverage extant network ties, we identified two significant tie formation strategies: 'Product exposure and 'Entrepreneur exposure.'In this industry, new ventures pursue openended searches and continuous experimentation of ties to increase the possibility of finding ties that increase a new venture's value.We propose the 'Tie formation flexibility' concept based on this finding.Finally, by investigating tie formation in an industry where firms have symbolic value propositions, we identify new ways through which symbolic value propositions are built and highlight how new ties contribute to their creations.
The paper adds to the open innovation literature by deepening extant knowledge on tie-formation (Chung et al., 2023;Piezunka & Dahlander, 2019;Small & Adler, 2019;Scheidgen & Brattstrom, 2021).Our explorative study of the Italian HEF highlights that new ventures rely on tie-formation strategies focusing on open-ended experimentation rather than efficiency.This is consistent with the specificity of our setting, where new ventures' value does not depend on access to specific resources (e.g., financial capital) but is the result of an open innovation process of value creation and capture that is based on the socialization of the product within the market.With the increasing importance of symbolic value and open innovation approach in many industries, tie-formation strategies resembling the ones we exemplified here will likely be of increasing relevance.

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Journal of Industrial and Business Economics (2023) 50:849-875 Our work has limitations; this opens avenues for future research.First, the study of the implications of tie formation flexibility vis-à-vis tie formation efficiency will benefit from quantitative analysis.Second, our qualitative approach does not shed light on how the nature of value propositions may influence tie-formation strategies.Indeed, we do not compare firms with symbolic value propositions and those with functional value propositions.However, the richness of the case study data facilitates the discussion of the mechanisms underlying the observed tie-formation strategies.Third, we need to be aware of the technological, structural, and institutional specificities of the HEF, with which the tie formation strategies we have identified are aligned (Bowey & Easton, 2007).Whether product exposure is valuable outside the HEF depends on industry features.For instance, how many industry and social events are held?How accessible are they to entrepreneurs?Whether the entrepreneur exposure is valuable in other industries relates to the technology and the degree of specialization and subcontracting in those industries.Is the phenomenon less salient without such features?What other elements play a role?Fourth, our study describes the pre-COVID scenario.Whether structural changes affected the HEF industry or whether the strategies described in this paper were adjusted to consider changes in the industry remains an open question for future research.Finally, we must learn more about symbolic value propositions.We highlighted two dimensions of symbolic value propositions and exemplified some tie-formation strategies associated with such dimensions.We welcome new studies enlarging the analysis scope by uncovering additional dimensions of symbolic value propositions and other strategies.
These caveats withstanding, we are confident that the paper brings implications for practitioners and policymakers.Entrepreneurs in the HEF may find our findings germane to support the tie formation process and may define their open innovation strategies moving from our results.Our main contribution to practitioners is having highlighted the existence of novel strategies to form new ties.Entrepreneurs interested in launching a new firm in the HEF should start by analyzing their extant social ties and then select the most appropriate strategies to form new ties.Policymakers should be aware of our results when they develop new policies to sustain entrepreneurs in the HEF.Most fundamentally, propagating freelancing and project work and favoring further ventures' participation in social happenings will facilitate tie-formation.Finally, this study provides policymakers the tools to design policies for fostering entrepreneurship in creative industries.These industries constitute approximately 5% of the world economy (UNCTAD, 2018) and have economic spillovers to many sectors (Cunningham & Potts, 2015).

Table 1 .
Overview of data sources

Table 2
Summary of findings

Table 3
Tie formation strategies and symbolic value propositions in the nine embedded case studies X= product exposure; Y=entrepreneur exposure; Z=existing social ties