Does Design Activity Stimulate Firm Productivity?

This paper investigates the influence of firms' design activity to total factor productivity using firm-level data from the Basic Survey of Japanese Business Structure and Activities and the Survey on Research Activities of Private Corporations. We adopt two approaches for calculating design activity. First, we regard registered design as a design activity. Second, we calculate design investment from the Survey on Research Activities of Private Corporations and estimate the relation between design activity and efficiency of design investment.

Firms who hold registered designs tend to hold patents. Furthermore, holding both registered designs and patents makes the firms more efficient. On the other hand, a second approach shows that a design strategy for adding value to their products, originality, and valuing the firm's brand is more efficient than for product differentiation. Adopting designers from outside of their firms and training designers from within the firms are also efficient. These results investigated Verganti (2009)'s design driven innovation which focuses on product innovation in the aspect of design.