Loro Piana: Success or Surrender?

Family businesses are complex ecosystems driven by emotions, legacy, and strategic decisions.

A perfect example? Loro Piana, the Italian luxury brand specializing in cashmere and vicuña wool. Founded in 1924 and led by the Loro Piana family for generations, the company followed a stewardship model until it sold 80% of its shares to LVMH in 2013.

But how do family business theories apply to this case?

The Three-Circle Model: Family, Business, and Ownership

Tagiuri & Davis (1978) identified three overlapping spheres that define family businesses:

Family: The business remained family-run for almost a century.
Business: Global expansion while preserving craftsmanship and quality.
Ownership: Selling to LVMH enabled growth while maintaining brand identity (Davis & Tagiuri, 1989).

Lesson: The model helps define roles and manage transitions without conflict.

Figure 1: Skilled workers of the “Lora” woolen factory (late 1900s)

Stewardship and Intangible Resources: The Key to Success

According to the Resource-Based View (RBV) (Barney, 1991), family businesses thrive by leveraging unique resources. Loro Piana capitalized on:

Heritage & Know-how: Direct control over sourcing, from Mongolian cashmere pastures to Italian mills.
Strategic relationships: Exclusive agreements with vicuña wool suppliers, securing an ultra-luxury product.
Sustainable innovation: Development of The Gift of Kings, the finest merino wool in the world (Loro Piana, 2021).

Lesson: Successful family businesses don’t just rely on tradition; they innovate while staying true to their values.

Paradoxes and Succession: The LVMH Decision

Family businesses face a constant paradox: tradition vs. change (Ward, 2004).

Loro Piana struggled with succession, lacking a ready third-generation leader. Selling to LVMH ensured future growth while maintaining the brand’s heritage.

Lesson: Family businesses must proactively plan (like a succession plan or a genogram) for succession to avoid conflict and ensure continuity.

Figure 2: News of Loro Piana's acquisition by LVMH (2024)

But the real debate is:

Does selling to a corporate giant like LVMH represent a bold strategic move or the end of a family legacy?

References:

Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99-120.
Davis, J. A., & Tagiuri, R. (1989). The influence of life-stage on father-son work relationships in family companies. Family Business Review, 2(1), 47-74.
Gersick, K. E., Davis, J. A., Hampton, M. M., & Lansberg, I. (1997). Generation to Generation: Life Cycles of the Family Business. Harvard Business Press.
Italy Segreta (2024). 5 Life Lessons from 100 Years of Loro Piana. [Online] Available at: https://italysegreta.com/5-life-lessons-from-100-years-of-loro-piana/
Loro Piana (2021). The Gift of Kings: The World’s Finest Wool. [Online] Available at: www.loropiana.com
The VOU (2024). Loro Piana's Acquisition by LVMH: Company Merger Explained. [Online] Available at: https://thevou.com/blog/loro-piana-lvmh-company-merger/
Ward, J. L. (2004). Perpetuating the Family Business: 50 Lessons Learned from Long-Lasting, Successful Families in Business. Palgrave Macmillan.

1 Comment

Entrepreneurial Learning

Apr 07

@Mariavittoria, Really thoughtful structure and use of key theories—love how you brought in the paradox of tradition vs. change. But I felt the post leaned more toward summary than debate. It would be great to see more of your own voice—what you think about the LVMH sale. Also, some sources felt more promotional than credible—maybe bring in a peer-reviewed example too?