Design centrality, design investments and innovation performance: An empirical analysis of European firms

Abstract

This article provides new evidence on the relationship between design and innovation performance at the firm level. In particular, we integrate previous analyses of the link between design investments and innovation by considering the extent to which firms put design at the center of their business activities. Moreover, we distinguish between the effect of design on innovation and its effect on the success of innovation, as captured by firms' innovative turnover. The use of the European Innobarometer survey, covering a unique set of questions on the topic, allows us to test a set of hypotheses about these relationships on a large sample of firms. The results show that a firm's approach to design plays an important role in its propensity to innovate: the more central the role of design within a firm, the higher the likelihood it innovates. The same holds true when considering the share of turnover from innovation. However, sales associated with innovation do not increase linearly with design investments, as we find a positive effect only for firms investing intensively in design. Overall it emerges that the centrality of design is strongly associated with firms' innovation performance, while design investment per se has a more nuanced role.