Product Design as a Core Competence in a Design-Oriented Industry

This paper proposes a holistic, resource-based strategy framework for design-oriented industries consisting mainly of small firms. It consists of three main concepts: (1) sources of competitive advantage, especially core competencies, (2) competitive advantage, and (3) competitive strategy. The idea behind the framework is that sources of competitive advantage form the competitive advantages of firms, and these together influence the choice of competitive strategies. The proposed framework was developed on the basis of interview results from the jewellery industry in Finland. A total of 44 small firms each employing less than 25 people were interviewed. Respondents felt that the two most important core competencies were in the area of manufacturing. They were the abilities to design and manufacture products of high technical quality and to offer a broad range of products and attractive models. For the jewellery industry, competitive advantage was largely achieved through various aspects of design. The competitive strategy type most employed was the differentiation-based strategy. The proposed framework should be of value in integrating some of the diverse research in this area and suggesting specific relationships that might be the focus of future empirical studies.