Technology Complexity and Firm Performance: The Moderating Effect of Design Innovation




Design innovation, Technology complexity, Structural diversity, Patent analysis, Resource-based theory


In today’s highly competitive markets, firms can no longer ensure competitive advantage through the development of highly complex technologies or differentiation based solely on technological and functional factors. Simultaneously, there is growing recognition that design and aesthetic factors can contribute to firms’ competitive advantage and profitability. Hence, this study examines the effects of design innovation, captured by formal design registration, on firms’ financial performance. We investigated the relationship between technology complexity, design innovation, and firm performance to unveil design innovation’s role in exploiting complex technologies. Our main hypothesis is that design innovation positively moderates the negative effect that technology complexity yields on firm performance. We used a unique dataset that aggregates all patent data published by US-headquartered publicly-traded firms to the parent company level. We combined this with firms’ financial information and design patent data from the Computat and PATSTAT databases based on their matching firm identifier. Focusing on 1,765 US firms from 1980 to 2015, we calculated firm-level technology complexity based on the structural diversity of technologies. The results confirmed our hypotheses. This study contributes to firms’ resource-based view by recognizing design as a strategic resource that firms can utilize to gain a competitive advantage and by discovering design innovation’s role in generating economic profits.

Author Biography

Kyeungoui Kim, Handong University

Keungoui Kim is an assistant professor at AI Convergence Institute, Handong Global University in South Korea. He received his Ph.D. in Economics from Seoul National University and was a postdoctoral researcher at Université Paris-Saclay and University College Dublin. His research interests are technology innovation and convergence, artificial intelligence, and data science.