Firms and Markets that Profit from Investment in Design and Product Development: Fid-Bau Portal

Firms and Markets that Profit from Investment in Design and Product Development

Roy, Robin / Riedel, Johann / Potter, Stephen

This paper concerns a study which aimed to identify how returns from investments in design and product development vary with market and the long-term benefits of investment in product design and innovation. It builds upon an earlier survey of design and product development projects in small and medium-sized companies with government support for design, and focuses on the results of a follow-up survey of 42 firms and projects. Firms which had grown in turnover operated in growing markets and typically developed innovative or niche products; declining firms generally operated in static or declining markets and had many competitors. Fast-growing firms employed a significantly higher proportion of research, design and development staff, used external expertise for product development more often, and introduced new products more frequently than slow-growing firms. All growing firms had managers with a positive attitude towards design and innovation and increased their investment in RD&D during the recession; most in declining firms had a narrow and limited understanding of the contribution of design and had reduced investment. Since the earlier survey, performance, quality and price remain key factors in product competition, but there is evidence of price and delivery becoming more important. SME managers and designers are now aware that multiple factors should be considered when designing a product but probably not all firms were equally effective in ensuring these factors were taken into account. This supports previous research that business success and investment in design and product development are mutually reinforcing; poor financial performance and a failure to invest can lead to a