Despite luxury brands' efforts to incorporate sustainable development into their branding and product design, studies have shown inconclusive evidence about consumers' reaction towards such efforts. This study investigates how consumption values (i.e. the need for exclusivity, conformity, and hedonism) affect consumers' acceptance of luxury brands' sustainable efforts. It adopts a cross-cultural framework by analysing two countries, namely China and the UK, which differ substantially in some of Hofstede's cultural dimensions, namely power distance, individualism, and indulgence. Using the structural equation modelling in analysing 677 survey responses from actual luxury goods' consumers in the two countries, we suggest that hedonic needs drive consumers' purchase intentions in China and the UK. We find that the need for exclusivity in sustainable luxury items is negatively related to consumers' purchase intentions in China, while the need for conformity is positively related. In contrast, these effects are reversed in the UK. Our study implies the need to align the marketing of sustainable luxury with consumption values of consumers to reflect the cultural differences. In theorizing sustainable luxury research, this study provides a deeper understanding of value perceptions pertaining to luxury product consumption and sustainability.
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We examine whether portfolios of U.S. stocks can mimic foreign index returns thereby providing investors with the benefits of international diversification without investing directly in assets that trade abroad. We study 7 developed markets and 8 emerging markets over 1975-2013. Portfolios of U.S. stocks are constructed out-of-sample to mimic these international indices using a range of domestically available assets. We show that investors can gain considerable exposure to foreign indices using domestically traded stocks. Results indicate increases in exposure to the foreign market are strongest when emerging markets are mimicked.Our out-of-sample portfolio choice analysis shows that for most cases mimicking portfolios can be a good substitute for direct foreign investment. Hence, a possible explanation for the high proportion of domestic stocks held by investors and fund managers is that such assets are sufficient to provide much of the benefits of international diversification without directly investing abroad.
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