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The design paradox: the contribution of in-house and external design activities on product market performance

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  • Czarnitzki, Dirk
  • Thorwarth, Susanne

Abstract

This paper explores the contribution of design activities on product market performance of Belgian companies. While there is mounting evidence that design can be seen as a strategic tool to successfully spur sales of new product developments at the firm level, the topic of design innovation has not been linked to the open innovation concept yet. In this paper we empirically test whether design activities conducted in-house differ in their contribution to new product sales from externally acquired design. Using a large crosssection of manufacturing and service firms, we investigate the effects on sales of products new to the market and of imitation or significantly improved products of the firm. At first glance, we find the paradox that externally acquired design is not superior to in-house design activities. This effect is robust to several modifications of the model specification. As earlier literature on new technological developments in high-tech sectors, we argue, however, that external design may not affect the sales of market novelties as the "market news" may spill-over quickly to rivals through common customers and suppliers including external designers.

Suggested Citation

  • Czarnitzki, Dirk & Thorwarth, Susanne, 2009. "The design paradox: the contribution of in-house and external design activities on product market performance," ZEW Discussion Papers 09-068, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  • Handle: RePEc:zbw:zewdip:09068
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    Cited by:

    1. Stephen Roper & James Love & Priit Vahter, 2012. "The value of design strategies for new product development: Some econometric evidence," The Centre for Small and Medium Sized Enterprises Research Paper Series 114, Centre for Small and Medium Sized Enterprises, Warwick Business School, University of Warwick.
    2. repec:spr:scient:v:102:y:2015:i:1:d:10.1007_s11192-014-1427-z is not listed on IDEAS
    3. Bettina Peters & Rebecca Riley & Iulia Siedschlag & Priit Vahter & John McQuinn, 2018. "Internationalisation, Innovation And Productivity In Services:Evidence From Germany, Ireland And The United Kingdom," University of Tartu - Faculty of Economics and Business Administration Working Paper Series 108, Faculty of Economics and Business Administration, University of Tartu (Estonia).
    4. Livio Cricelli & Marco Greco & Michele Grimaldi, 2016. "Assessing The Open Innovation Trends By Means Of The Eurostat Community Innovation Survey," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 20(03), pages 1-30, April.
    5. Filippetti, Andrea, 2010. "Harnessing the 'essential tension' of design: The complex relationship between the firm and designer consultants," MPRA Paper 22002, University Library of Munich, Germany.
    6. repec:spr:scient:v:104:y:2015:i:3:d:10.1007_s11192-015-1628-0 is not listed on IDEAS
    7. Crass, Dirk & Schwiebacher, Franz, 2013. "Do trademarks diminish the substitutability of products in innovative knowledge-intensive services?," ZEW Discussion Papers 13-061, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

    More about this item

    Keywords

    Design; R&D; Collaboration; Open Innovation; Product Market Performance;

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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