The financial value of design management

Abstract

Background The non-financial values of design management in the perspective of business administration have actively been explored. However, the financial values of an effective design management have received relatively less attention. This paper seeks to find the economic evidence that design management contributes to increased corporate performance. Methods T statistics were conducted on twelve financial ratios spanning across four evaluation categories of financial health, activity, growth, and profitability with subjects of fifty companies that have formally been recognized for their successful practice of design management. Since these subjects belong to diverse industry sectors, their financial ratios were normalized with respect to their industry average using an industry-adjusted approach developed by the author. Results Current ratio, quick ratio, asset turnover ratio, and receivables turnover ratio of the design management effective companies were found to be significantly higher than their respective industry with a 0.05 confidence level. Furthermore, their revenue growth rate and operating margin were found to be significantly higher than their respective industry with a 0.1 confidence level. Conclusions An objective, statistical significance has been found that design management effectiveness contributes to financial stability and increased efficiency in asset management as well as to growing marketability and revenue generation.