Exploring Sustainable Business Model Transitions in the Luxury Fashion Industry in Emerging Economies
Abstract
ABSTRACT The luxury fashion and lifestyle sector is at a critical juncture, facing the dual challenge of achieving sustainability while maintaining differentiation from lower‐fashion segments. This research compiles the body of knowledge on luxury fashion, sustainability, and business models in emerging economies; pinpoints systematic and recurrent changes in the luxury fashion value chain; and creates a sustainable luxury business model that effectively incorporates emerging economies as consumer markets and value producers. Using a systematic meta‐narrative literature review approach, the study examines 644 peer‐reviewed publications on luxury, sustainability, business models, and developing economies that were published between 2000 and 2025. The luxury fashion industry's major trends and sustainability issues are identified through a descriptive study. The authors incorporate empirical insights from academic research and business interaction in growing Asian economies, guided by Schön's (1983, 1990) theory of reflective practice. The two main analytical frameworks used for business model building are value chain analysis (VCA) and stakeholder theory. The findings reveal a critical gap in existing luxury fashion literature, which predominantly positions emerging economies as low‐cost production hubs rather than strategic markets and stakeholders. The proposed business model demonstrates how stakeholder‐centric governance combined with value chain optimization can support sustainable value creation, balancing economic performance with social and environmental responsibilities. This research contributes theoretically by integrating stakeholder theory and value chain analysis into a unified framework for sustainable luxury fashion in emerging economies. Managerially, it offers strategic guidance for luxury firms seeking to innovate their business models by embedding sustainability into sourcing, production, and market development. Practically, the study emphasizes the importance of engaging emerging economies as co‐creators of value and as conscious consumers, thereby supporting long‐term resilience, legitimacy, and profitability in the global luxury fashion industry.