Aesthetic design and performance

Success factor

(service) References Potential role of aesthetic design Mitigating service

complexity de Brentani 1991, 2001

hide complexity through user

interface design to improve usability (Norman 2002, 2004)

Factors related to features

Customizability

Easingwood & Storey 1993;

Cooper et al. 1994; de Brentani 1995

look-and-feel to influence perception; implementation of custom features involving aesthetic design (Lavie & Tractinsky 2004) Factors related to isolating mechanisms

Differentiation Easingwood & Storey 1991; de Brentani & Cooper 1992

differentiation through aesthetic design (Gemser & Leenders 2001;

Hertenstein et al. 2005)

Uniqueness

Cooper & de Brentani 1991; de Brentani & Cooper 1992;

Easingwood & Storey 1993;

Storey & Easingwood 1998

uniqueness through aesthetic design (Gemser & Leenders 2001;

Hertenstein et al. 2005)

Difficult to imitate Cooper et al. 1994

design going beyond the surface and into the tacit level, which is not easily imitated (Cross 2004)

Innovativeness

de Brentani 1989, 1991;

Atuahene-Gima 1996; de Brentani & Ragot 1996;

Avlonitis et al. 2001

aesthetic design as an inspiration for innovation (Utterback et al. 2007) Product

superiority, value to customer

Cooper et al. 1994; de Brentani

& Ragot 1996; Storey &

Easingwood 1998

superficial means and holistic approach (Norman 2004)

also potentially play a role in marketing, particularly in communicating the value of services, meeting customer expectations and contributing to successful launch of new services. These derivations from the service innovation success factor research and the gap identified in this same research with respect to aesthetic design motivate the final research question.

Research on the relationship between design and performance was reviewed in a previous chapter and a summary is provided in Table 3.1. Although some of the research reviewed was performed in small-to-medium firms, none is specifically concerned with NTBFs. In their research of new product success and failure in small high-technology electronics firms, Yap and Souder (1994) found that technical and market uncertainties should be taken into account in determining innovation strategies and that small firms must adopt strategies different from those used by large firms. Although NTBFs are not small by definition, they do tend to at least start out small, so we can expect innovation strategies in NTBFs to be different from those of established larger firms. Hence, studying the relationship between aesthetic design and performance specifically in NTBFs is warranted.

Thus, the final research question seeks to explore the relationship between aesthetic design as an element of service innovation and performance in the specific context of NTBFs:

Q4. How is design as an element of service innovation in new technology-based firms related with firm performance?

Before moving on to a treatment of research methodology, the issue of performance needs to be addressed. As can be seen in Table 3.1, the most commonly used measures of performance in existing research on design and performance are measures of financial performance. This may be partly due to the convenience of using financial measures as they are objective and usually readily available (Venkatraman & Ramanujam 1986).

Using only financial measures of performance may not be sufficient, however.

Storey and Easingwood (1999) in their study of financial consumer services in the United Kingdom found that highly successful new services must produce multiple benefits, not just financial benefits. They suggest that half of the value derived from service innovation is derived from what they refer to as company benefits that include aspects such as attracting new customers, improving the

loyalty of existing customers, improving firm image and creating new opportunities. Storey and Kelly (2001), in their research on performance measures used by firms in various service sectors in the United Kingdom, found that the least innovative firms used financial measures of performance. Moderate innovators, or “fast followers”, used measures such as customer acquisition and retention, perceived product quality and customer satisfaction. What Storey and Kelly classified as truly innovative firms used a number of internal measures such as effects on the long-term viability of the firm, effectiveness of the service innovation process, speed of development and cost of development. Along the same lines, Cooper et al. (1994), in their research on financial service firms in Canada, identified three performance dimensions: financial performance, relationship enhancement and market development.

Referring back to existing research on success factors in service innovation we see a wide spectrum of performance measures used, see Appendix A. A comparison of the two sets of performance measures, for the design research and the NSD research, respectively, yields only two measures which are represented only in the design research. In the first place, ranking of factors influencing choice when purchasing was not represented as a performance measure in the NSD success factor research reviewed. In the second place, number of web site visitors was also unique to the design research, and actually is used in only two papers (Van der Heijden 2003 and Auger 2005), which specifically study web sites.

Using the ranking of factors influencing purchase decisions as a performance measure (Moody 1984; Rothwell & Gardiner 1984; Yamamoto & Lambert 1994) suggests a somewhat superficial view of aesthetic design as having mostly to do with first impressions and controlling perceptions. This is certainly one of the ways aesthetic design can be used, but as was discussed above in relation to the success factors in service innovation, aesthetic design can also be in a more holistic way which goes beyond the superficial.

The performance measures used in the NSD research and the research on design listed in Appendix A and Table 3.1, respectively, can be grouped into two broad categories, subjective measures and objective measures. This grouping is analogous to that identified by Agarwal et al. (2003) in their study of market orientation and performance in services.

Based on the above, focusing only on financial performance may be an over-simplification that can possibly yield misleading results. Thus, it is important to consider both subjective and objective measures of performance.

Studying the relationship between aesthetic design and performance is subject to some specific challenges. March and Sutton (1997) argue that there are too many factors that can influence performance, both internal and external to firms, to make it reasonable to consider analysis of relationships without taking into account intermediate factors and interactions between factors. A further weakness in this approach is that performance is generally a state that occurs at some time after the factors that influence it come into play. Therefore, research on the relationship between aesthetic design and performance needs to examine the two variables separated by a reasonable amount of time.

There are challenges of attributing success to a single factor, and especially one that is as difficult to define and measure as aesthetic design. Hence, a means for measuring aesthetic design is needed and multiple dimensions of performance should be considered with a time lag between inputs (aesthetic design) and outputs (performance). These challenges are addressed in the Methodology section that follows.

4 M ^ETHODOLOGY

The research is organized using a hybrid strategy involving case research and quantitative survey-based research. The reason for selecting a hybrid approach is that the research topic is under-researched and existing theory draws from at least two separate streams of research, namely research on design in new product development and performance on one hand, and research on service innovation success factors, on the other. Edmondson and McManus (2007) argue that a hybrid approach is a good methodological fit when theory is intermediate.

Eisenhardt (1989) suggests that iterative strategies are particularly appropriate for under-researched topics and a hybrid strategy involving more than one round of data collection using different methods provides opportunities for such iteration.

Figure 4.1 shows a depiction of the research strategy, which includes quantitative longitudinal survey-based research, case research and evaluations by expert panels. The data were collected over a period of about three years and analysis was ongoing from the time the first set of data was collected. This meant that early analyses could be used as input into strategies for later data collection. For example, the results of analysis of the first round of survey-based data were used to select subjects for the case research. In turn, the results of the case research were used to generate hypotheses which were tested using the longitudinal survey-based data.

As data collection and analysis progressed each of the research questions was addressed by the papers. Figure 4.1 provides an overview of the relationship between the various parts of the empirical research and individual papers. The relationships between the papers and the research questions (Q1, Q2, Q3 and Q4) are also shown in the figure.

Figure 4.1: Research strategy and use of data for individual papers.

It should be mentioned for the sake of the reader that there is considerable overlap between the material in this section and the methodology sections in the papers.