The interplay between strategic design and market orientations in achieving new product advantage

In the past two decades, design has gained much attention among practitioners and scholars as a driver of innovation (Brown, 2008; Liedtka, 2015; Martin, 2009). Firms increasingly invest in design in their innovation processes as a source of added value (Nussbaum, 2004). Numerous articles published in the business press (e.g. Brown, 2008, 2009; Martin, 2009) and academic journals (e.g. Candi and Gemser, 2010; Gemser et al., 2011) explore the contribution of design to competitive advantage and business performance. Most of these studies address design as the aesthetic and symbolic dimension of products (Capaldo, 2007; Cillo and Verona, 2008; Dell’Era and Verganti, 2007, 2010). However, Gemser and Barczak (2020) elevate the discussion by noting that design is an important strategic/competitive tool for managers and a fruitful research area for scholars.

As the field matures, deeper perspectives on design are being investigated, looking at the area not only as an aesthetic driver of innovation, but as a strategic orientation entailing a new set of processes, mindsets, capabilities and organizational culture (Liedtka, 2020; Magistretti et al., 2022a; Verganti et al., 2021). Micheli et al. (2018) discuss the opportunity to elevate design to the strategic level, defining “strategic design” as designers’ ability to influence decisions and set the direction regarding an organization’s long-term sustainability and competitiveness, such as the development of a brand’s core values, positioning and the creation of new markets. Recent acquisitions of design agencies by major consultancies such as Accenture, Deloitte, IBM, KPMG and PwC demonstrate the increasing attention being paid to design by practitioners to lead design-driven strategy. The business press also provides numerous examples, such as BMW, Herman Miller and Nike, that highlight the strategic role of design in outperforming the market, specifically by elevating the design function to a more strategic orientation (Elsbach and Stigliani, 2018; Gemser et al., 2023; Gruber et al., 2015).

Strategic orientation is defined as the direction the firm pursues to create the behaviors that lead to continuous and superior business performance (Gatignon and Xuereb, 1997). Acknowledging the transformative role that design plays in shaping innovation, Cankurtaran et al. (2024, p. 9) introduce the concept of “design orientation” as “the organization-wide emphasis on connectivity, empathy, future focus and aesthetics to create value for users through innovative solutions that in turn address the firm’s competitive and identity needs.” This perspective underscores a growing recognition that design is no longer confined to aesthetics or incremental improvements in products and services but is instead becoming an integral orientation that informs how organizations interpret their environments, define opportunities to craft their long-term strategies. As several studies have shown (Borja de Mozota, 2002; Gemser et al., 2011; Hertenstein et al., 2005; Luchs et al., 2016; Luo et al., 2014; Simeone et al., 2017), the integration of design within strategy enables firms to align innovation with identity, establish differentiation in competitive markets and sustain long-term value creation.

The primary goal of this paper is to juxtapose this emerging concept of design orientation with more established strategic orientations. Prior research has explored various strategic orientations (Deutscher et al., 2016), including entrepreneurial orientation (Miles and Arnold, 1991), sales and production orientation (Pelham, 2000), learning orientation (Baker and Sinkula, 1999b) and technological orientation (Gatignon and Xuereb, 1997). However, the most dominant and widely studied is probably market orientation (Kohli and Jaworski, 1990; Narver and Slater, 1990). Marketing thinking in the 1990s perceived market orientation as the actions that firms take to implement a customer and competitor orientation, including the behaviors and organizational culture that support them (Deshpandé et al., 1993; Kohli and Jaworski, 1990; Narver and Slater, 1990).

While market orientation has long been established as a central strategic lens for firms, the idea of a complementary “design orientation” has only recently begun to attract scholarly interest, and still lacks in-depth theorization (Calabretta et al., 2008; Cankurtaran et al., 2024; Moll et al., 2007; Srinivasan and Lilien, 2018; Venkatesh et al., 2012). Although both orientations share certain similarities, they also exhibit relevant differences that warrant closer examination to understand their potential complementarities (Beverland, 2005; Henseler and Guerreiro, 2020; Luchs et al., 2016). Much like marketing, design is increasingly recognized as a critical driver of business success, particularly due to its capacity to enhance competitiveness and create differentiation in saturated markets (Hertenstein et al., 2013). Both design and marketing functions are positioned as strategic assets rather than operational add-ons, and numerous connections exist between them. Designers often draw upon marketing instruments and frameworks to guide their practices, while marketing-related content has become an integral part of many industrial design curricula, reflecting the growing convergence of the two disciplines in education and practice (Moore et al., 2000; Scheidt et al., 2020). Moreover, the tasks assigned to marketers frequently mirror those of designers: both aim to understand users, craft compelling value propositions and translate insights into offerings that resonate with customers.

These differences open a rich space for exploring how the two orientations might complement each other to strengthen innovation competitiveness. Market orientation typically emphasizes a systematic and relatively detached analysis of both expressed and latent customer needs, relying on structured methods to uncover patterns in consumer behavior. By contrast, design orientation highlights a more iterative, exploratory and user-involved process, engaging customers directly in the creation and refinement of offerings. These two logics suggest different but potentially complementary approaches to innovation, and their interplay raises important questions about the synergies that may emerge when firms attempt to combine them. Traditionally, design has often been treated narrowly, understood primarily as an aesthetic dimension that shapes the look and feel of products. However, this research adds to emerging scholarship which frames design as a strategic resource capable of enhancing business performance and securing competitive advantage, perhaps on par with concepts such as market orientation (Elsbach and Stigliani, 2018; Gemser et al., 2023; Gruber et al., 2015). Building on this perspective, our article seeks to address the following research question: How do strategic design and market orientations interact in achieving new product advantage?

In this research, we consider the creation of functional and emotional value as critical linkages between the application of design and/or market orientation and innovation outcomes. The theory of consumption values (Sheth et al., 1991a, 1991b) supports this view by examining the motivation for consumer consumption behavior through the evaluation of choices based on assessing the functional and emotional values of an offering compared to competing ones (Kotler and Armstrong, 2021). As Tanrikulu (2021) notes, numerous studies have interpreted consumption values as independent variables that influence various outcomes, while very few studies have examined their mediating role. In particular, there is limited research on how product value can help translate strategic orientation into new product advantage in search of useful insights.

In sum, we aim to (i) investigate the interplay between strategic design and orientations in achieving new product advantage and (ii) examine the mediating role of emotional/functional values in the relationships between strategic design/market orientations and new product advantage. Empirically, we apply a robust survey-based approach combining samples from three countries (USA, South Korea and Japan) that have established expertise in design and marketing. In so doing, our sampling illuminates the market and strategic design orientation dynamics beyond the confines of the typical single Western country context in prior studies. The results largely validate our conceptual model, supporting the mediating role of functional and emotional values in the relationships between strategic design/market orientations and new product advantage. The results also emphasize the need for an important shift in how most managers consider design, elevating its value as a potential strategic lever for many organizations.

Recently, design has gained attention not only as an aesthetic driver of innovation, but also as an expanded set of practices, mindsets, capabilities and organizational culture constituting an alternative strategic orientation (D’Ippolito, 2014; Elsbach and Stigliani, 2018; Gruber et al., 2015). Specifically, the emergence of paradigms, such as human-centered design (Buchanan, 2001), participatory design (Sanders and Stappers, 2008) and design thinking (Brown, 2008; Dell’Era et al., 2020, 2025; Martin, 2009), have broadened our thinking about the strategic role of design from a niche focus in organizations to a novel and effective strategic orientation (Calabretta et al., 2008; Cankurtaran et al., 2024; Chen and Venkatesh, 2013; Moll et al., 2007; Srinivasan and Lilien, 2018). Design is increasingly promoted as an engine for innovation and leading user experiences (Gruber et al., 2015), digital transformation (Magistretti et al., 2021), organizational change (Liedtka, 2020) and strategic direction (Knight et al., 2020; Magistretti et al., 2022b; Verganti, 2017).

As design orientation research is scarce, a commonly agreed upon definition of the construct has yet to emerge. Moll et al. (2007, p. 862) conceive design orientation as a “strategic management approach based on the choice of design as a source of competitive advantage.” Calabretta et al. (2008, p. 380) define design orientation as “an organizational culture that promotes key behaviors for appropriate design management, which, in turn, leads to superior product design and enhanced market performance.” Alternatively, adopting a behavioral perspective, Venkatesh et al. (2012, p. 291), define design orientation as “an organizational vision [that] includes the set of conscious, reflective and creative ways of conceiving, planning and artful making of products and services that generate value for the customers and enable them to engage in their individual or social endeavors, whether these endeavors are utilitarian, functional, material, communicative, symbolic or experiential.” Srinivasan and Lilien (2018, p. 231) conceptualize design orientation as the “firm’s ability to implement the total product design concept, that is, to integrate functionality, aesthetics and meaning in its products.” This interpretation emphasizes the holistic nature of design, which seeks to blend utility, form and symbolic value into coherent offerings. More recently, Cankurtaran et al. (2024, p. 9) have advanced this definition by framing design orientation as “the organization-wide emphasis on connectivity, empathy, future focus and aesthetics to create value for users through innovative solutions that in turn address the firm’s competitive and identity needs.” In this sense, design orientation extends beyond product-level concerns to reflect a broader managerial philosophy that shapes strategy, culture and organizational behavior. Scholars have increasingly argued that design can serve as a defining characteristic of organizations and their strategic trajectories. Hatchuel et al. (2006) propose the term “design orientation” precisely to capture design-driven strategies, rules and cultural norms. Similarly, Candi (2016) demonstrates how heightened attention to design reshapes innovation processes, thereby redefining a firm’s competitive position. Beverland and Farrelly (2007) highlight that some organizations can be described as “design-led,” meaning that design principles permeate their culture and decision-making at all levels. Building on these insights, Cankurtaran et al. (2024) delineate four core emphases of design orientation – connective, empathetic, future and aesthetic – each reinforced by specific organizational behaviors: connectivity reflects shared beliefs about collaboration and integration across functions; empathy emphasizes adopting stakeholder perspectives and situating products within broader contexts of use; a future focus ensures that design contributes to sustained value creation and long-term competitiveness; finally, aesthetics is understood not merely as visual appeal but as a strategic resource through which firms can achieve distinctiveness and competitive advantage. We combine elements of these perspectives and define strategic design orientation as the degree to which design is viewed as an essential driver of NPD for the firm’s competitive advantage.

Building on the literature on strategic orientations, scholars highlight that firms embracing design as a central ethos tend to foster distinctive behaviors in the way they approach market challenges, mobilize resources and pursue value creation (Micheli et al., 2019; Noble, 2011; Varadarajan, 2017). As Luchs et al. (2016) emphasize that while strategic design and market orientations are both concerned with consumers, they emphasize different resources, capabilities, approaches and tools. For example, user-centered design (a design-driven perspective) and target market analysis (aligned with a market perspective) both look at customers, but through different lenses: the former explores human needs with the goal of creating empathy with users and their life contexts, while the latter focuses on consumer behavior and buying attitudes. Several authors have long noted the tension between designers and marketers whose relationship is often fraught with misunderstanding (Beverland, 2005; Micheli et al., 2012; Zhang et al., 2011). One core difficulty stems from their differing worldviews and epistemological foundations. As Srinivasan and Lilien (2018, p. 156) note, industrial designers are trained to view products holistically, perceiving attributes such as price, usability, quality and aesthetics as interdependent elements of a larger gestalt. By contrast, marketing researchers often rely on decompositional, rationalist approaches – such as statistical surveys – to isolate and analyze product features individually. Design research is rooted in a pragmatist paradigm, focusing on shaping possible futures and evaluating artifacts in terms of functionality and desirability (Henseler and Guerreiro, 2020). Marketing scholarship, in contrast, tends to be grounded in an empirical realist paradigm, seeking to explain and validate phenomena in the existing world. According to Heskett (2002), a common perception of the approach adopted by designers is different from the rational analysis and scientific rigor of business disciplines such as marketing. Drawing on Schein’s (1991) seminal work on organizational culture and Dougherty’s (1992) work on thought worlds, Beverland at al. (2016) suggest that designers and marketers differ in their normative beliefs about the firm and its environment, the temporal focus and the nature of truth and knowledge. Designers are commonly portrayed as egocentric, sensitive, intuitive, spatial, physical, visual and emotional artists who favor right-brain thinking (Leonard and Rayport, 1997). In addition, designers tend to be quite comfortable with the unknown and open to intuitive decision-making. In contrast, marketers tend to be less open to ambiguity and prefer to make analytical decisions based on facts and figures (Beverland and Farrelly, 2011; Björklund et al., 2020; Calabretta et al., 2017).

For these reasons, we focus on the combination of strategic design orientation and market orientation, aiming to clarify the interactive relationship between market-focused and design-focused approaches to creating product value. We examine the direct and interaction effects of strategic design orientation and market orientation on new product advantage, thereby extending prior research on the complementarities among strategic orientations (Baker and Sinkula, 2009; Hakala, 2011).

Narver and Slater (1990, p. 21) define market orientation as the “organizational culture that most effectively and efficiently creates the necessary behaviors for the creation of superior value for buyers and thus, continuous superior performance for the business.” This research stream conceptualizes market orientation along three main dimensions: customer orientation, competitor orientation and interfunctional coordination (Narver and Slater, 1990; Noble et al., 2002). Studies have examined the impact of market orientation on various aspects of business performance, demonstrating its superiority over alternative strategic orientations (Hult and Ketchen, 2001). As Slater and Narver (1998, 1999) note, there is conceptual and empirical evidence that a market-oriented culture promotes the creation of superior value for customers relative to competitors. More specifically, Henard and Szymanski (2001) show that market-oriented firms develop superior products with relative advantages over their competition. Langerak et al. (2004) support this view, finding that market orientation is positively related to product advantages in market testing, launch strategy and launch tactics. These views help to establish a baseline hypothesis at the product level:

Academic researchers have long examined the relationship between design and competitive advantage (D’Ippolito, 2014; D’Ippolito et al., 2014; Hertenstein et al., 2005; Ravasi et al., 2012; Rindova and Petkova, 2007). In particular, scholars have assessed the extent to which design contributes to competitive advantage and firm performance, supporting the notion that design not only adds aesthetic value, but also positively influences broader financial and strategic outcomes (Gemser and Barczak, 2020). Dell’Era and Verganti (2007) note that design-oriented firms develop radically new product meanings by capturing emerging lifestyles, proposing innovations and new experiences that change the way people interact with products (Dell’Era and Verganti, 2011; Jepsen et al., 2014; Verganti, 2008). Design-oriented firms often have a strong brand identity, allowing customers to easily recognize their offerings (Karjalainen, 2004; McCormack and Cagan, 2004; Muller, 2001). Empirical evidence consistently shows that design-led firms outperform others across a range of product- and business-performance indicators (Bedford et al., 2006; Gemser et al., 2011; Hertenstein et al., 2001; Rich, 2004; Swan et al., 2005). Moreover, prior studies suggest that design exerts a significant and lasting effect on competitive advantage (Hertenstein et al., 2005; Roy, 1994). Taken together, these findings underscore design’s role not only as a source of differentiation, but also as a key contributor to long-term product advantage, which suggests:

While both market and strategic design orientations seem to positively influence important outcomes such as new product advantage (Langerak et al., 2004; Rindova and Petkova, 2007), the interplay between the two orientations is still rather unclear. More specifically, only a few studies have explored the relationship between market and strategic design orientations (Canto et al., 2021a, 2021b). As discussed, while they share commonalities (e.g. integrating a strong customer perspective into strategic thinking), they also use different philosophies and processes in the pursuit of superior products. While market orientation is often based on studies of consumer behavior and buying attitudes, strategic design orientation explores human needs with the goal of creating empathy with users and their life contexts (Henseler and Guerreiro, 2020).

The interactions between designers and marketers have been studied by several scholars, revealing fundamentally different but perhaps complementary mindsets and attitudes (Beverland, 2005; Micheli et al., 2012; Zhang et al., 2011). Beverland et al. (2016) highlight how designers and marketers differ in their normative beliefs about the relationship between the firm and its environment, the temporal focus and the nature of truth and knowledge. However, despite these differences there is nothing to suggest that these two orientations are mutually exclusive as it appears that both market orientation and strategic design orientation can create product value. The combination of these approaches may in fact offer a broader and more insightful perspective on creating superior product offerings than can one orientation alone. Simply put, strategic design orientation may be better at discovering latent customer needs (Sanders, 2002; von Hippel, 2005), while market orientation may be better at identifying expressed and apparent needs. Thus, their combination may allow firms to achieve a synergistic effect on new product advantage. Therefore:

While the roles of strategic design and market orientation as sources of competitive advantage and performance has been addressed in isolated and less comprehensive ways (e.g. Baker and Sinkula, 1999a; Deshpandé et al., 1993; Gemser and Barczak, 2020; Han et al., 1998; Hurley and Hult, 1998; Langerak et al., 2004), the intervening variables in the relationships between these orientations and new product advantage merit further investigation. In other words, while the relationships between market and strategic design orientations and new product advantage seem compelling, the mediating mechanism between them requires deeper consideration. We propose that product value (with functional and emotional dimensions) may be the key mechanism linking strategic orientations to new product advantage.

According to Sweeney and Soutar (2001), functional value can be interpreted as the utility derived from the product’s perceived quality and expected performance. As Noble and Kumar (2008, p. 446) note, utilitarian design focuses “on the practical benefits a product may provide. Functional value achieves differentiation through making products that simply work better in tangible ways.” Many companies seek competitive advantage over other offerings by relying on design as a means to enhance the functional elements of their products, including effectiveness, reliability, durability and safety. Gentile et al. (2007) highlight the functional value as the main driver of customer evaluation and perception of a new product in creating sustainable competitive advantage.

Emotional value can be defined as the utility derived from the feelings or affective states that the product evokes. Products create competitive advantage not only through the features they provide, but also the emotional meanings they convey. While product functions leading to functional value aim to satisfy the customer’s operative needs, product meanings linked to the emotional values aim to satisfy the customer’s emotional and socio-cultural needs (Csikszentmihalyi and Rochberg-Halton, 1981; Margolin and Buchanan, 1995). The ability of emotional value to determine the source of product advantage has been explored in recent studies (e.g. Gentile et al., 2007; Noble and Kumar, 2008). Today more than ever, products define their own presence not only through their features, but also through the emotional meanings attached to them (Dell’Era and Verganti, 2007).

Several scholars have demonstrated that market orientation enhances firm performance by creating superior value for customers relative to competitors (Deshpandé et al., 1993; Kohli and Jaworski, 1990; Narver and Slater, 1990). We believe this value can take both functional and emotional forms. This proposition is supported by Hult et al. (2005) who suggest that despite the extensive research conducted over the past three decades to understand the relationship between market orientation, customer value and performance, the impact of several value dimensions of product advantage requires further investigation.

Market orientation is based on continuous and proactive interaction with customers to understand their evolving needs (Atuahene-Gima et al., 2005; Han et al., 1998). These expressed needs often lead to the development of feature and performance elements in new products that are captured under the concept of functional value. Alternatively, a market orientation can lead a firm to understand its customers so well that it offers products that deeply resonate on an emotional level with passionate customers. Brady and Cronin (2001) capture this notion that market orientation increases the value of products and services as perceived by customers. Across both functional and emotional dimensions, it appears that market orientation can enhance the delivery of the firm’s product value (Gatignon and Xuereb, 1997; O’Cass and Ngo, 2011; Venkatraman, 1989), ultimately leading to new product advantage:

Several scholars have highlighted the strategic role of design in product differentiation (Cappetta et al., 2006; Pesendorfer, 1995) and its positive impact on business performance (Candi and Gemser, 2010; Dell’Era and Verganti, 2009; Roper et al., 2016). We believe this influence operates primarily through a value creation mechanism that can also leverage both functional and emotional dimensions. Design as a source of value creation and driver of innovation has been the subject of numerous studies since the mid-1980s (Fournier, 1991; Hirschman, 1986; Peterson et al., 1986). Specifically, the literature has highlighted the positive relationship of strategic design with business outcomes, such as competitive advantage (Candi and Gemser, 2010; Gemser and Leenders, 2001; Talke et al., 2009; Trueman and Jobber, 1998) and consumer response (Creusen and Schoormans, 2005).

Wrigley and Straker (2019) show that strategic design influences firm performance by improving the customer-product interface and perceived product value. According to Venkatesh et al. (2012), strategic design orientation enables conscious, reflective and creative ways of conceiving, planning and developing products and services, creating greater value for customers, not only at the functional level, but also at the emotional level. Similarly, Gemser et al. (2011) discuss the role of design in enhancing both product functionality and emotion. Based on prior research in axiology (Boztepe, 2003; Holbrook, 1999), Noble and Kumar (2008) identify three types of emotional values created by design: social (in achieving the consumer’s social goals such as social status), altruistic (seen as morally right, proper or good) and affective (in evoking emotions, such as exhilaration and nostalgia). While the emotional connection of design is perhaps better established, strategic design orientation should also benefit the functional value of new products. According to Bloch et al. (2003), well-designed products must meet consumer expectations in terms of their basic functionalities, only after which can they make choices based on visual newness and distinctiveness. Companies driven by a strategic design orientation have the tools (e.g. design thinking) to uncover even latent functional needs of consumers and to build products around them. Thus, these perspectives demonstrate the essential role of functional and emotional value in translating strategic design orientation into new product performance:

Figure 1 presents our research model and hypotheses, depicting the baseline direct relationship between market orientation (H1), strategic design orientation (H2), the interaction between market and strategic design orientations (H3) and new product advantage, and the mediating role of functional and emotional values in the relationship between market orientation (H4, H5)/strategic design orientation (H6, H7) and new product advantage.

To test the proposed model within the product development context, we conducted a cross-sectional survey of NPD project teams operating in manufacturing firms across three leading countries in product development: the USA, South Korea and Japan. These countries provide a compelling setting because their cultural and historical differences shape distinctive approaches to strategic orientation and innovation practices (Martinsons and Davison, 2007). Prior research highlights that US firms tend to excel in breakthrough research and rapid commercialization, emphasizing market opportunity and short-term performance metrics. In contrast, South Korean firms, influenced by the Chaebol system, often combine centralized authority with export-driven strategies, enabling them to scale rapidly while enhancing innovation capabilities beyond their traditional industrial cores (Deshpandé et al., 1993). Japanese companies have demonstrated strengths in applying technology to product development through consensus-based decision-making and strong customer orientation (Song and Parry, 1997).

Combining data from these three countries added robustness and generalizability to our findings. We chose these three countries for two reasons. First, they have shown their leadership in design and new product development as they have been ranked within top ten countries for receiving the three top design awards (i.e. Red Dot, iF design and IDEA awards) over the past ten years. Second, these three countries have been leaders in market trends and world trade as they have been ranked within the top five exporters and top ten importers of commercial goods over the past ten years.

The sample included firms that frequently engage in design NPD activities reflected in their strategic orientation. For the main study, we collected US data through an online cross-sectional survey of NPD project teams from US manufacturing firms ^[1] using an industry panel maintained by a well-known research company. We screened the initial subject pool to limit the sample to product or marketing managers involved in NPD activities and knowledgeable about product design, excluding those below the manager level to increase confidence that respondents had a broader perspective of interfunctional interactions and firm processes. As members of NPD teams, these managers also had a good understanding of the daily product- and design-related activities of the teams, as well as the culture of the organization.

We collected 205 qualified responses from US manufacturing firms. After removing 19 invalid responses, a total of 186 responses remained for further analysis. Although the research company does not provide response rate data due to the nature of the industry panel, the response rate for similar research settings is between 30% and 40%, according to the company blog ^[2]. We selected only participants from firms with revenues of at least $2m because our pretest interviews suggested that product managers in these firms are responsible for evaluating complex NPD activities and tend to appreciate the strategic characteristics of their firms. Respondents included product/project/design managers, senior marketing/product managers, directors and VPs of product marketing.

As an additional generalizability test, we administered the survey to similarly qualified managers in South Korea and Japan. As Nakata et al. (2018) recommend, we combined the samples from the three countries into a single data set for analysis based on apparent similarities in their product development approach. By using the pooled data from three countries after confirming the invariance, this study provides empirical evidence that the proposed relationships among the constructs transcend the limitations of studies that typically focus on a single Western country context.

We first developed the questionnaire in English, including existing measures for all constructs except strategic design orientation, which was constructed through the process described below. We then translated the questionnaire into Korean and Japanese using parallel and double translation methods to ensure consistency with the meanings in the original English survey (Douglas and Craig, 1983). The bilingual scholars clarified and rephrased any ambiguous terms to ensure conceptual and linguistic equivalence. To reduce the potential for selection and social desirability bias, informants were asked to select and report on the most recently developed new product for which their strategic business unit was responsible and that had been on the market for at least six months, regardless of its level of success (Im and Workman, 2004). Finally, we found no serious problems with multicollinearity in the data (all condition indices were less than 30 and the variance inflation factors less than 5, Belsley et al., 1980; Menard, 1995).

In South Korea, prior to the main field study, we conducted a pretest with 11 product and marketing managers involved in NPD activities including design, in manufacturing industries. After participating in the pretest survey, respondents were asked to explain any difficulties in understanding the survey questions or instructions to ensure the appropriateness of the survey administration and the translation of the measurement items into Korean. Minor problems in the translated language were identified and corrected. After finalizing the survey for the main study, students in two MBA programs were asked to forward the survey to product and marketing managers involved in NPD activities in their firms.

The two-stage sampling approach was an additional strength of the Korean data collection, as it helped mitigate any common method concerns. A senior-level marketing or product manager from each responding firm selected a new product and evaluated the dependent variable of new product advantage in the first survey. He or she then forwarded the second survey, including the remaining variables, to an internal product developer at a more junior management level. In this way, we collected 109 sets of responses from various manufacturing industries, greatly reducing common method bias concerns. Five service firms involved in the design of physical goods were included in the final sample. We removed two responses due to outlier issues, leaving a total of 107 responses, with an effective response rate of over 80%. The high response rate is achieved as the questionnaire was sent to managers with whom each MBA student had a close relationship.

In Japan, we collected data through a cross-sectional survey of a range of manufacturing firms. Through professional networks, we invited executives from 61 firms to participate in the survey. Each questionnaire was collected locally or by email in Tokyo. Similar to the Korean data collection, we used a two-stage sampling approach whenever possible. We asked a senior-level marketing or product manager and a junior-level designer to evaluate the two separate surveys of the dependent and independent variables and combined them into firm-level variables, reducing common method bias concerns. In other cases, a single executive completed the entire survey. The total number of responses was 109, of which 50 were from two informants and 59 from single informants. In testing the reliability of the Japanese data, we found no significant differences in evaluating the major constructs between the two types of respondents in support of no common method bias. Thus, the total usable sample for all three countries was 402.

As a new construct, a measure of strategic design orientation was needed. Details of all scales are provided in the  Appendix. The measure of strategic design orientation was created as part of a larger scale development effort (working paper masked for confidentiality), following the established procedures outlined in Brakus et al. (2009) and Kuehnl et al. (2019). The process was as follows.

Item pool generation. To begin the scale development process, we reviewed the adjacent conceptual literature on various strategic orientations and related scales with established psychometric properties. Next, we collected an initial item pool for strategic design orientation through two sets of interviews. The first set lasted an average of 90 min with 13 managers from a variety of industries. The second set involved an in-depth study of a single organization known for its award-winning designs in material handling equipment, where we interviewed 22 product development managers for an average of 60 min. These interviews were conducted on-site over several days. The interview protocol explored their opinions about the firm’s culture and strategic direction, particularly as related to design and marketing and their connections to product success. Many specific topics emerged from these interviews, such as approaches to product design and development and product-related outcomes, such as value and competitive advantage. Based on the themes from the literature review and both sets of interviews, the research team generated 14 initial strategic design orientation items.

Item reduction. Next, we attempted to reduce the item pool to create a more parsimonious measure. For this, we recruited 12 academics with expertise in design and innovation and provided each with an item generation guide that included a definition of strategic design orientation and notes and quotes from qualitative research to help them develop a rich understanding of the concepts at play. They were then tasked with reducing the item pool by identifying poorly fitting items, resulting in seven strategic design orientation items for empirical testing.

Market orientation is defined as “the organizational culture […] that most effectively and efficiently creates the necessary conditions for the creation of superior value for buyers and, thus, continuous superior performance for the business” (Narver and Slater, 1990, p. 21). We used this definition and Narver and Slater’s (1990) 15-item scale to reflect our more cultural focus on this construct. After removing two items with low item-to-total correlations, we used the remaining 13 items to assess three dimensions of market orientation, customer orientation, competitor orientation and cross-functional integration, to assess the firm’s overall market orientation.

Strategic design orientation is defined as the degree to which product design is viewed as an essential driver of NPD and marketing for the firm’s competitive advantage. We used the new seven-item scale described above. Three items were removed during the initial cleaning due to low item-to-total correlations, leaving four items for further analysis.

Functional and emotional value. Both scales were derived from Sweeney and Soutar (2001). Functional value is defined as the degree to which product design provides utilities such as durability, performance, usability, ergonomics and timesaving, measured with three items after removing three items with low item-to-total correlations. In contrast, emotional value is defined as the degree to which product design provides benefits through enjoyable, fun, relaxed and pleasurable experiences. We used three items after removing one item with a low item-to-total correlation.

New product advantage is defined as the degree to which a product is perceived to offer productivity, reliability, functionality and durability relative to its major competitors (Li and Calantone, 1998). From Li and Calantone’s (1998) measurement scale, we used four items after removing three with low item-to-total correlations.

Control variables. Technology orientation is defined as a firm’s focus on acquiring a substantial technological background and using its technical knowledge to build a new technical solution to respond to and satisfy new user needs in the development of new products (Gatignon and Xuereb, 1997). We measured technology orientation using a five-item scale adapted from Gatignon and Xuereb (1997) and Han et al. (2001), after removing one item with a low item-to-total correlation. As control variables, we also used market turbulence, defined as the degree of change in market demand (Song and Parry, 1997) and technological turbulence, defined as the degree of technological change. We measured market turbulence using a four-item scale adapted from Jaworski and Kohli (1993) and Song and Parry (1997) and technological turbulence with a four-item scale adapted from Song and Montoya-Weiss (2001).

We validated the measurement scales for all the constructs in the model according to Churchill’s (1979) and Gerbing and Anderson (1988) recommendations. The final validation confirmed the composite reliability and Cronbach’s alpha for the constructs at above the acceptable threshold of 0.70, except for one control variable, market turbulence (see Table 1; Fornell and Larcker, 1981; Nunnally, 1978) with composite reliability of 0.69 and Cronbach’s alpha of 0.69, thus very close to 0.70. Therefore, the measurement scales have acceptable reliability. We conducted an exploratory factor analysis with varimax rotation and found that all measurement items loaded on the corresponding constructs without any cross-loading problems. We examined the correlations and descriptive statistics (Table 1). The signs of the bivariate correlations of all composite scales are consistent with the hypothesized relationships. The mean scores for the main constructs and the standard deviations indicate sufficient variability in the measures.

We used maximum likelihood (ML) estimation in a structural equation model using SPSS AMOS 28, estimating the confirmatory measurement model to assess the reliability and validity of the measurement scales using the combined sample (Table 2). We treated market orientation as a first-order factor, aggregating the measurement scales of customer orientation, competitor orientation and cross-functional integration, respectively. The measurement model with all the main constructs yielded the following fit indices: χ²/d.f. = 2.17, p < 0.01; standardized root mean square residual (SRMR) = 0.06; incremental fit index (IFI) = 0.93; Tucker Lewis index (TLI) = 0.92; comparative fit index (CFI) = 0.93; root mean square estimate of approximation (RMSEA) = 0.05. Although the chi-squared statistic is significant, the IFI, TLI and CFI are greater than 0.92 and SRMR and RMSEA lower than 0.08. These values indicate an acceptable fit of the data, in line with the literature (e.g. Browne and Cudeck, 1993; Hu and Bentler, 1999).

We also confirmed convergent validity by checking the average variance extracted (AVE) (Fornell and Larcker, 1981). In particular, the AVE of market orientation, strategic design orientation, functional value, emotional value and technological turbulence exceed the threshold value of 0.50, the cutoff criterion recommended by Fornell and Larcker (1981) (see Table 1). Although the AVE for new product advantage (0.49) is slightly below 0.50, all factor loadings of this construct are above 0.50. Another exception is the low AVE value (0.36) of market turbulence. We decided to keep this variable as all factor loadings are appropriate for estimation and it is used as a control variable with nonsignificant results. The results suggest that the measurement scales have acceptable convergent validity except for one control variable, market turbulence.

We also found that the AVE for each construct was higher than the highest sheard variance among other constructs in support of discriminant validity. Finally, the HTMT values across all constructs reported in the upper diagonal in Table 1 are below the 0.85 threshold (Henseler et al., 2015), thus confirming acceptable discriminant validity for all measurement scales.

Though we used data from dual informants in Korea and Japan, we examined the amount of common method variance and its effect on the correlations between the variables using a single unmeasured latent method factor approach with the pooling data of three countries (Podsakoff et al., 2003). First, we added a method factor loading all items to our confirmatory measurement model and obtained the following fit indices: χ²/d.f. = 1.78, p < 0.01; SRMR = 0.04; IFI = 0.96; TLI = 0.94; CFI = 0.96; RMSEA = 0.04. The inclusion of the method factor improves the overall model fit. However, the method factor accounts for only 13.29% of total variance, which is lower than the variance attributable to method factors reported in the five meta-analytic studies of common method variance that Podsakoff et al. (2012) reviewed, which ranged from 18% to 32%.

Second, we estimated the biasing effects of common method variance on the correlations between the variables. Following Baumgartner et al. (2021), we examined the differences between the estimated trait correlations with and without method effects. The method loading (μ) of each construct was the mean of the factor loadings of the method factor on the items of that construct. For the hypothesized relationship, trait correlation coefficients with and without method effects are all positive. This biasing effect is lower than the inflated trait correlation rates from 38% to 92% found in the meta-analysis by Podsakoff et al. (2012). Therefore, common method bias is not a serious concern in our analysis. We also examined common method bias by using only US data collected by single informants. In a single unmeasured latent method approach, the method factor accounts for only 7.53% of total variance. In addition, the biasing effects of common method variance are from −0.08% to 0.07%. Based on Podsakoff et al. (2012), we concluded that common method bias is not a serious concern in US data either.

Following Nakata et al. (2018), we combined the samples from the three countries (186 for the USA, 107 for South Korea and 109 for Japan) into a pooled sample to represent a cluster where design is considered a critical element for product development and success. Data pooling is considered appropriate because we examine endogenous organization-level variables, such as market and strategic design orientations, design orientation and new product advantage, (e.g. Troy et al., 2008).

Before proceeding with data pooling, we conducted a multiple-group confirmatory factor analysis to test for measurement invariance across the three countries. For the Korean and Japanese samples, our measurement model met the 5:1 ratio of sample size to parameter estimated. Following the recommendations of Bentler and Chou (1987), we estimated two submodels. One submodel includes the independent variables (strategic design and market orientations) and the mediator variables (functional and emotional values) and the other includes a dependent variable (new product advantage) and the control variables (technology orientation, market turbulence and technological turbulence). We examined measurement invariance using the following three steps (with a strict criterion of CFI > 0.01 or greater in model comparison; Cheung and Rensvold, 2002).

In the first step, we estimated the two submodels and evaluated the model fit indices and the results support the configural invariance of the measurement scales (independent and mediator variables model: χ²/d.f. = 2.04, p < 0.01; SRMR = 0.08; IFI = 0.92; TLI = 0.90; CFI = 0.92; RMSEA = 0.05; dependent and control variables model: χ²/d.f. = 1.56, p < 0.01; SRMR = 0.06; IFI = 0.94; TLI = 0.92; CFI = 0.94; RMSEA = 0.04). In the second step, we tested the metric invariance. The differences in CFI between the configural model and the metric invariance model are below 0.01 for all major constructs in the model. Thus, metric invariance is supported for these variables, except for technological turbulence. In the final step, we tested for scalar invariance. The differences in CFI between the metric invariance model and the scalar invariance model exceed 0.01, thus the scalar invariance of our measurement scales is not confirmed. We then examined partial measurement invariance based on whether at least one measurement item is invariant across the countries (Steenkamp and Baumgartner, 1998), confirming the partial metric invariance of technological turbulence and the partial scalar invariance of the other variables, except for technology orientation. Based on the three-step invariance tests, we concluded that the data from the three countries could be pooled.

To test our hypotheses, we used hierarchical linear modeling (HLM) with restricted ML estimation. Before estimating the model with the main and interaction terms, we tested the null model. The interclass correlation coefficient is significant at the 1% level (ICC = 0.12), indicating that HLM is appropriate for the data. While multi-group analysis within structural equation modeling would have been ideal for comparing country-level differences, it was not feasible due to the limited sample sizes for South Korea and Japan. The country-level effects in the HLM are all significant at the 0.05 level. Table 3 presents the results of the HLM estimation. To address the robustness of the results, we cross-validated the findings from HLM (Table 3) by running regressions with country dummy variables (Table 4). Specifically, we ran a regression with country dummy variables to control country-level effects. We confirmed that the results from the regression with country dummy variables are consistent with those from the HLM, thus supporting the robustness of the results when controlling for country effects.

H1 and H2 posit that the market and strategic design orientations enhance new product advantage. The results show that market orientation has a positive effect on new product advantage (γ = 0.23, t = 3.96, p < 0.01), in support of baseline H1. The effect of strategic design orientation on new product advantage is not significant (γ = 0.06, t = 1.25, p = 0.21). Therefore, baseline H2 is rejected. H3 predicts that the interaction of market orientation and strategic design orientation is positively associated with new product advantage. The estimation results reveal that the interaction effect is significant (γ = 0.14, t = 3.08, p < 0.01), in support of H3. In addition, the interaction effect of market orientation and strategic design orientation on functional value is significant (γ = 0.21, t = 3.87, p < 0.01). The same interaction effect on emotional value is marginally significant at the 10% level (γ = 0.10, t = 1.68, p = 0.09). In testing the three control variables, the results show that market turbulence (γ = −0.02, t = −0.46, p = 0.65) and technological turbulence (γ = 0.01, t = 0.09, p = 0.93) do not significantly affect new product advantage, but technology orientation does (γ = 0.15, t = 3.42, p < 0.01).

We conducted a bootstrapping analysis and examined 95% confidence intervals (CI) to test the mediating effects of functional and emotional value using PROCESS Model 4 (Hayes, 2022). Table 5 summarizes the estimation results of the indirect effects. Control variables and the other focal independent variable were simultaneously included as covariates in the model. Following Hedges (1992), we used 2,000 bootstrap samples. H4 and H5 state that both functional and emotional values mediate between market orientation and new product advantage (Table 5). The 95% CI of the indirect effect of market orientation through functional value on new product advantage does not contain zero (ab = 0.08, 95% CI: 0.03, 0.14), indicating the existence of the mediating effect through functional value at the 5% level. The 95% CI of the indirect effect of market orientation through emotional value on new product advantage also does not contain zero (ab = 0.02, 95% CI: 0.01, 0.05), supporting the existence of the mediating effect of emotional value at the 5% level. Therefore, both H4 and H5 are accepted at the 5% level.

According to Baron and Kenny (1986), we examined whether functional and emotional values exhibited partial or full mediation. When we control the effects of the mediator variables, the positive direct effect of market orientation on new product advantage is significant at the 5% level (c’ = 0.17, t = 3.27, p < 0.05). Thus, the positive direct effect of market orientation on new product advantage remains significant at the 5% level (from c = 0.27, p < 0.01 to c’ = 0.17, p < 0.05) upon entry of the mediator variables. These results confirm that functional and emotional value partially mediate the relationship between market orientation and new product advantage (Baron and Kenny, 1986).

H6 and H7 predict that both functional value and emotional value mediate the relationship between strategic design orientation and new product advantage. Based on the estimation of the 95% CI using bootstrapping method, the indirect effect of functional value on the relationship between strategic design orientation and new product advantage (ab = 0.05, 95% CI: 0.01, 0.10) is significant at the 5% level, while that of emotional value is marginally significant (p < 0.10) at the 10% level (ab = 0.03, 90% CI: 0.01, 0.06, 95% CI: -0.001, 0.07). Our results also indicate that the mediating effect of functional value between strategic design orientation and new product advantage is significant at the 5% level, while that of emotional value is marginally significant at the 10%. H6 is supported at the 5% level, while H7 is marginally supported at the 10% level.

In exploring the nature of mediation effect (i.e. partial or full mediation), the direct effect of strategic design orientation on new product advantage was insignificant in the model without mediating variables (c = 0.04, p = 0.34). Based on Zhao et al.’s (2010) recommendation, this result does not invalidate the mediating role of functional and emotional value as the insignificant direct effect may be caused by omission of potential mediators. ^[3] After controlling functional and emotional design values simultaneously, strategic design orientation demonstrated a negative direct effect on new product advantage (c’ = −0.04, p = 0.37). Though it was not significant, it suggests the existence of both positive and negative omitted mediating effects in the relationship between strategic design orientation and new product advantage. Therefore, both functional and emotional design values can be considered to serve as partial mediators in the relationship between strategic design orientation and new product advantage.

Our research hypotheses are largely supported and offer several implications for theory and practice. More specifically, the direct effect of market orientation on new product advantage is supported (H1), whereas that of strategic design orientation is not (H2). Moreover, the interaction between market orientation and strategic design orientation is positively associated with new product advantage, thus supporting H3. Finally, the mediating roles of functional and emotional value are confirmed for both market orientation (H4 and H5) and strategic design orientation (H6 and H7).

Market orientation has been studied for over 30 years and is an established focus for successful business operations and profitability (Kohli and Jaworski, 1990; Narver and Slater, 1990). Market-oriented firms outperform on a wide range of business performance dimensions. We reaffirmed the market orientation-new product advantage relationship (Langerak et al., 2004; Slater and Narver, 1994) by demonstrating a positive relationship between market orientation and a less studied outcome, new product advantage. Only recently design has been conceptualized and proposed as an alternative strategic orientation (Elsbach and Stigliani, 2018; Gemser et al., 2023; Gruber et al., 2015). To the best of our knowledge, there are few studies that empirically investigate the potential synergies with market orientation, even though similarities and differences between strategic design and market orientations have already been identified theoretically (Beverland et al., 2016; Henseler and Guerreiro, 2020; Luchs et al., 2016). The novelty of the achieved results concern the complex relationship between design-focused and market-focused approaches to creating product value for consumers. In this regard, our study provides three main theoretical contributions.

First, while we do not find a direct effect of strategic design orientation on new product advantage, the empirical results show a significant interaction effect of market and strategic design orientations on new product advantage. This is an important relationship, suggesting that balancing design and market perspectives may ultimately lead to one of the best product outcomes. Although prior research has examined the tensions between market and strategic design orientations (Bruce and Cooper, 1997; Henseler and Guerreiro, 2020; Srinivasan and Lilien, 2018), integrating these two perspectives can ultimately yield superior product outcomes. Studies on strategic orientations suggest that such orientations, while conceptually and empirically distinct, are nonetheless highly interrelated (Baker and Sinkula, 2009). Building on this insight, scholars have described strategic orientations as complementary, in the sense that each enriches and completes the other (Hakala, 2011). Our empirical findings support this view, showing that the joint adoption of market and strategic design orientations produces an additive effect on new product advantages. As Schweiger et al. (2019) observe, strategic orientations are inherently interconnected when innovation are directed toward creating superior customer value and embedded in continuous improvement processes. In this light, market and strategic design orientations complement one another by engaging with the customer from different vantage points. Although both seek to understand users, craft compelling value propositions and transform insights into resonant offerings, market orientation additionally benchmarks competitors to emphasize differential value, while strategic design orientation broadens the focus to holistic experiences and emerging desires. This perspective extends the literature on firm-level complementarities (Porter and Siggelkow, 2008; Tanriverdi and Venkatraman, 2005): managing market and strategic design orientations effectively requires firms to move beyond isolated initiatives and systematically integrate them into new product development (Bloch, 2011; Zhang et al., 2011).

Second, the complementarity between market orientation and strategic design orientation is further evidenced by their distinct direct and mediated effects on new product advantage. Specifically, our results indicate that market orientation exerts both direct and indirect effects on new product advantage, whereas strategic design orientation influences outcomes only indirectly, through the mediating role of functional value as well as emotional value (though weak). Put differently, market orientation enhances new product advantage through multiple pathways – both by directly shaping product competitiveness and by indirectly reinforcing value creation. Strategic design orientation, in contrast, does not yield a direct effect but positively contributes through its strong emphasis on enriching the product value, especially functional value. This distinction underscores the complementary nature of the two orientations in achieving superior product outcomes. These findings resonate with prior studies emphasizing that strategic orientations can be highly interdependent yet distinct in their impact (Baker and Sinkula, 2009; Hakala, 2011). Market orientation is traditionally associated with systematic processes aimed at capturing customer needs – both expressed and latent – while also monitoring competitors and market dynamics to anticipate opportunities and threats (Narver and Slater, 1990; Jaworski and Kohli, 1993). In this way, it leverages a wide set of mechanisms to influence product advantage, ranging from structured market research to competitive benchmarking. Strategic design orientation, however, adopts a more interpretive and imaginative approach, focusing on user experiences, symbolic value and cultural shifts to craft meaningful innovations (Norman, 2004; Norman and Verganti, 2014; Verganti, 2009). By envisioning alternative product meanings and exploring emerging lifestyles, it primarily enriches the value that customers associate with new products. Taken together, the two orientations complement each other not only in terms of perspective, but also in terms of pathways: market orientation creates advantage through broad-based mechanisms of market analysis, while strategic design orientation contributes by intensively shaping product value propositions. This interplay reinforces the literature on complementarities in strategic orientations and highlights the importance of integrating diverse logics to enhance innovation performance (Porter and Siggelkow, 2008; Tanriverdi and Venkatraman, 2005).

Third, this study contributes to advancing the understanding of design-related issues and their implications for strategic motives, particularly within the stream of research on design-driven innovation (Verganti, 2009). Our findings suggest that design should be considered in a broader sense – beyond the traditional focus on product-level form and function – to encompass a deeper organizational role as a cultural dimension, a strategic priority and a central practice in innovation management. From an empirical perspective, our research model highlights the mediating role of functional and (marginally) emotional values in fostering new product advantage within a design-oriented culture. Our results also align with the emerging view of design as a strategic orientation; this shift has transformed how firms perceive design: no longer confined to professional designers, design principles are increasingly applied by managers across functions to guide strategic decision-making. According to Knight et al. (2020) “design-led strategy” implies the integration of design thinking principles into the core of strategic management practices. At the highest level, many organizations now embrace design not merely as a tool for innovation but as a lens for directing corporate strategy (Dalpiaz et al., 2016; Liedtka, 2020). More recently, scholars have even highlighted design as an alternative source of strategy-making itself (Rindova and Martins, 2021; Verganti, 2017). According to Liedtka (2000), strategy becomes a form of design because it requires synthesis, experimentation and the ability to imagine future possibilities. Magistretti et al. (2025) reinforces this view by showing that design is not merely a set of tools, but a broader logic that can inform how organizations think, act and create value across entrepreneurship, management and strategy. Design can operate through narratives that help actors shape intentions and make uncertain futures more meaningful. In this sense, strategy is not just analysis of what is, but the construction of what could be. Narratives, artifacts and collaborative reasoning all become strategic devices for turning abstract possibilities into shared direction (Rindova et al., 2009; Rindova and Martins, 2022).

Developing better products by focusing on customers and their needs (i.e. market orientation) has been a dominant mantra of strategic business thinking for decades. The increasing focus on design provides firms with new opportunities to create a competitive product advantage. Design practices, such as deep customer empathy, internal ideation, rapid prototyping, market testing and launch, enable firms to uncover potentially powerful market offerings. As our research demonstrates the link between strategic design orientation, functional and emotional values and new product advantage, managers would be well served to adopt at least some of the principles of strategic design orientation to guide their product development efforts. In addition, we show that strategic design orientation has an indirect effect on new product advantage through functional value and emotional value as imminent goals in the practice of product development.

From a managerial perspective, finding the right balance between market and strategic design orientations may represent the greatest challenge, as the two perspectives emphasize different mechanisms and time horizons. Market orientation privileges analytical processes such as structured data collection, segmentation and benchmarking; strategic design orientation instead privileges interpretive and imaginative processes such as framing, visualizing and prototyping. Some managerial decisions – such as the nature of customer involvement in product development – may differ substantially depending on which perspective dominates. Our empirical findings suggest that managers should view these orientations not as substitutes, but as complementary logics that, when effectively integrated, produce additive benefits. We therefore recommend striking a deliberate balance as a strategic priority. For example, managers can combine market research approaches (e.g. surveys, focus groups, conjoint analysis) with design-based approaches (e.g. ethnography, journey mapping, iterative prototyping and storytelling) to gain a more holistic understanding of customer behavior and aspirations. Such hybrid processes allow firms to couple the reliability of market evidence with the creativity of design interpretation, thereby fostering both relevance and resonance in new product outcomes. While contextual applications may vary across industries, the key point is that the managerial toolbox for understanding customers, their needs and value creation should be broadened to include both market and strategic design orientations.

Our study also suggests that a design focus is not simply about engaging in a set of design skills and techniques that can be easily adopted or discarded. Instead, it should be understood as a strategic orientation that transcends product development efforts and requires organizational commitment beyond individual projects or departments. Embedding strategic design orientation therefore entails fostering a company-wide design culture characterized by openness to experimentation, tolerance for ambiguity and empathy for users. Organization-wide training in design principles – such as problem reframing, visualization and iterative learning – is essential if design is to become a shared capability rather than a specialized function. Firms that successfully embed such a culture are better positioned to integrate design and market perspectives systematically, transforming design from a tactical tool into a strategic capability. In doing so, they can generate not only products that meet customer needs more effectively, but also offerings that create new meanings, emotional connections and enduring competitive advantage.

Despite these contributions, our study has some limitations. In particular, the data analyzed are cross-sectional and longitudinal data may be needed to fully assess the proposed relationships across the product development process and product lifecycle. The selection of a new product that has been on the market for at least six months may be affected by potential biases. Specifically, respondents may tend to select successful products rather than failures. In addition, we examined a limited number of antecedents. Other variables worth investigating include alternative strategic orientations, such as entrepreneurial orientation (Miles and Arnold, 1991) and sales and production orientation (Pelham, 2000), as well as alternative mediating variables between strategic orientations and new product advantage. Potential mediating variables may relate to strategy characteristics (e.g. dedicated human resources), process characteristics (e.g. cross-functional integration) or product characteristics (e.g. creativity, Evanschitzky et al., 2012; Henard and Szymanski, 2001; Im and Workman, 2004).

There are also opportunities for different methodological applications to study these phenomena. Rather than the perceptual approach we adopt, future research could use a behavioral approach to explore these relationships in depth through laboratory and field experiments. Secondary data may also be an option, such as combining the coding of archival documents with actual product performance data to determine the influences of strategic orientation (e.g. Noble et al., 2002). Alternative firm-level objective outcomes such as profit and return on assets could also be considered as dependent variables. Some of these new perspectives would help address the limitations of our study, such as the lack of objective performance data. An additional avenue for future research is to examine how artificial intelligence (AI) reshapes the balance between market orientation and strategic design orientation. Future studies could investigate whether AI strengthens market orientation by detection of expressed needs through analytics, while transforming strategic design orientation by enabling faster prototyping, simulation and the exploration of latent needs and future scenarios.

Despite these limitations, it is hoped that this work has shed light on the interplay between market/strategic design orientations and functional/emotional value in predicting new product advantage as a product outcome, thus motivating others to develop future studies. In summary, this research uses multiple steps, a multinational sample and methodological variations (such as a dual-informant survey approach, HLM and PROCESS Model 4) to robustly evaluate our research model, which is largely supported. We demonstrate the interconnectedness of market and strategic design orientations and the mediating effects of functional and emotional values on new product advantage. The theoretical underpinnings and the links between strategic design and market orientations highlight the need for further research. For example, market orientation research needs to consider product aesthetics, functionality and empathy with consumers toward design, while design research should consider customer needs and market trends. The interplay of these forces needs to be better understood to extend our study. We hope that future research will expand these efforts and delve more into the impact of design, particularly on previously studied marketing phenomena and outcomes.

Measurement scales (all items measured with seven-point Likert-type scales; items marked* were deleted from the final analysis)

Market orientation, fromNarver and Slater (1990):

• Our business objectives are driven primarily by customer satisfaction. (CusO1)

• We constantly monitor our level of commitment and orientation to serving customers’ needs. (CusO2)

• Our strategy for competitive advantage is based on our understanding of customers’ needs. (CusO3)

• Our business strategies are driven by our beliefs about how we can create greater value for customers. (CusO4)

• We measure customer satisfaction systematically and frequently.* (CusO5)

• We pay close attention to after-sales service.* (CusO6)

• Our salespeople regularly share information within our business concerning competitors’ strategies. (ComO1)

• We rapidly respond to competitive actions that threaten us. (ComO2)

• Top management regularly discusses competitors’ strengths and strategies. (ComO3)

• We target customers where we have an opportunity for competitive advantage. (ComO4)

• We freely communicate information about our successful and unsuccessful customer experiences across all functional areas. (CFI1)

• We freely communicate information about our successful and unsuccessful customer experiences across all business functions. (CFI2)

• All of our business functions are integrated in serving the needs of our target markets. (CFI3)

• All of our managers understand how everyone in our business can contribute to creating customer value. (CFI4)

• All functional groups work hard to thoroughly and jointly solve problems. (CFI5)

Strategic design orientation, newly developed:

• Product design is considered an essential competitive weapon in our business. (SDO1)

• We consider all elements of design are essential in achieving competitive advantage. (SDO2)

• Design is an important element in our new product marketing briefs. (SDO3)

• Superior product design is vital in distinguishing ourselves from the competition. (SDO4)

• In our company, designers are a critical part of the new product development effort.(SDO5)

• Strong design is the most important driver of our new product development process.*

• We maintain a strong focus on design is needed throughout the new product development process.*

Functional value, adapted fromSweeney and Soutar (2001) andDelgado-Ballester and Sabiote (2015)

With regard to the design of specific products, you consider …:

• Product design makes the product long-lasting. (FV1)

• Product design helps the product achieve the best performance among its competitors. (FV2)

• This product is ergonomically designed. (FV3)

• Safety was given high importance while designing this product.*

• Product design will allow users to save time by using it.*

• Product design helps achieve consistent quality.*

Emotional value, adapted fromSweeney and Soutar (2001) andDörnyei and Lunardo (2021):

With regard to the design of specific product, you consider …

• The user should enjoy the design of the product. (EV1)

• The product design should lead the user to have fun while using it. (EV2)

• The users of the designed product should feel relaxed about using the product. (EV3)

• Using the designed product should be a pleasurable experience for the user. (EV4)

• The product design is elegant.*

New product advantage, adapted fromLi and Calantone (1998)

Compared with other competing products in your industry, please evaluate the selected product in terms of the following characteristics …:

• Productivity (the extent to which the product increases a customer’s work efficiency). (NPA1)

• Reliability (the extent to which the product is free of errors). (NPA2)

• Functionality (the extent to which the product meets customers’ functional needs). (NPA3)

• Durability (the extent to which the product lasts longer than competing products). (NPA4)

• Compatibility (the extent to which the product is compatible with existing products).*

• Ease of use (the extent to which the product is easy to learn and/or use).*

• Variability of features (the extent to which the product has many additional features).*

Technology orientation, adapted fromGatignon and Xuereb (1997) andHan et al. (2001) and Jeong et al. (2006):

• We use sophisticated technologies in new product development. (TO1)

• Our new products always include state-of-the-art technology. (TO2)

• We systematically scan for new technologies inside and outside the industry. (TO3)

• We reinvest significant portions of profit in R&D. (TO4)

• We uses the latest technologies in new product development.*

• Our products are consistently on the leading edge of industry standards.*

Market turbulence, adapted fromJaworski and Kohli (1993) andSong and Parry (1997):

• Demand and customer tastes are difficult to forecast in this market. (MT1)

• Determining future customer desires is a huge challenge in this business. (MT2)

• We have a high degree of customer turnover. (MT3)

• The relative strength of various competitors is always changing in this business. (MT4)

Technological turbulence, adapted fromSong and Montoya-Weiss (2001):

• The rates (speed and pace) of changes in the technology used in this project were very unpredictable. (TT1)

• The technology used in this project was changing rapidly. (TT2)

• The changes in R&D technology for this project were very unpredictable. (TT3)

• It was very difficult to predict where the technology used in this product will be in the next two–three years. (TT4)