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This paper posits that differences in corporate governance structure partly result from differences in institutional arrangements linked to business systems. We developed a new international triad of business systems: the Anglo-American, the Communitarian and the Emerging system, building on the frameworks of Choi et al.

A formal definition of cultural industries is developed following four distinct features of cultural goods: (a) oversupply, (b) quality uncertainty, (c) network effects and (d) demand reversal. Drawing on economic and socio‐psychological notions of ‘network’, increasing returns and social contagion effects are distinguished. Increasing returns may govern the adoption of standards when choices are binary, social contagion explains the diffusion of cultural goods when choices are multiple. Together, the four structural features delineating cultural industries account for curious competitive dynamics prevalent in cultural markets, such as the notorious 10 : 90 proportionality (under which 10% of cultural goods account for 90% of the market), causal ambiguity about the reasons for success, and the formation of fashions. Six managerial recommendations are advanced, focusing on a criticial circulation point triggering self‐sustaining diffusion patterns. Finally ‘project‐based enterprises’ and ‘network forms of governance’ are identified as the organizational forms most suited to the dynamics of the cultural markets.

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ABSTRACT. One of the greatest problems facing luxury goods firms in a globalizing market is that of counterfeiting. The purpose of this paper is to analyze the different types of counterfeiting that take place in the fashion industry and the ethical issues raised. We argue that the problem partly lies in the industry itself. Copying of designs is endemic and condoned, which raises several ethical dilemmas in passing judgment on the practice of counterfeiting. We analyze the ethical issues in a number of different types of counterfeiting encountered in the fashion industry. We conclude with some observations on the general implications for ethics in intellectual property rights.