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Product Design and Financial Performance
Author(s) -
Guo Liang
Publication year - 2010
Publication title -
design management journal
Language(s) - English
Resource type - Journals
eISSN - 1948-7177
pISSN - 1942-5074
DOI - 10.1111/j.1948-7177.2010.00010.x
Subject(s) - profit (economics) , product design , product (mathematics) , business , competition (biology) , sample (material) , gross profit , economics , industrial organization , new product development , salient , marketing , microeconomics , computer science , ecology , chemistry , geometry , mathematics , chromatography , biology , artificial intelligence
This paper intends to offer useful complements to prior studies in the field by relating product design effectiveness to firms’ financial performance. Six hypotheses were proposed on this relationship and the moderating effect of particular industries. The hypotheses were then tested by six latent class regression models with a sample of 577 design award‐winning firms and 524 non‐winning firms selected from 34 countries and 46 industries. The findings provided compelling, worldwide evidence that product design consistently contributed to company financial performance. However, the effect varies with countries and industries. In Europe and North America, where firms have centuries‐long design traditions, mature product design has salient impacts on financial performance. In Asia‐Pacific and emerging countries, the contribution of product design to sales and gross profit becomes evident but does not yet have a significant impact on the bottom line. Design also helps firms escape price competition in industries that have not traditionally made use of it—not so much in “high‐design” industries. For industries that fall into the middle, product design strategy is more ambiguous.