Capabilities Transformation from Design Firm to Own Branding: A Resource-based View

Abstract

Many Taiwan factories are upgraded from OEM to ODM and OBM. The development of Taiwan Industrial design is related to the development of OEM industry. In this development model, the smaller factories outsource to design firms to upgrade their design capabilities for better performance to obtain more manufacturing orders (ODM). That is to say, the design firms act as part of the manufacturing supply chain in Taiwan. Drawing on factory upgrade models in the literature, how can design firms in the manufacturing supply chain transform to own-branding based on their design capabilities? The targeted design firm in this study is a small design firm which is seeking to build up its own brand, from different industries. This research explores the capabilities transformation of the design firm using data collected by participant observation, analysis using the resourced-based view framework, factor analysis by exploratory factor analysis, and rechecking the resultant factors via confirmatory factor analysis.

The questionnaires for factor analysis were distributed to 133 customers who purchased the design firm’s products or visited its branches located in Taipei and Tainan, Taiwan. A five-point Likert scale was used to evaluate participant preferences for each question. Seven factors were identified using an exploratory factor analysis. The results showed positive responses from customers to these factors. Furthermore, a confirmatory factor analysis was used to verify the results of the exploratory factor analysis. The seven factors, which are important for design firms in Taiwan to transmit the product value to the consumers and to meet their needs, are product design creativity, patent barriers, product and brand identity, marketing communication, marketing positioning, distribution channel management, supply chain management for quality satisfaction, and sales team management. The research is expected to contribute to the literature on design firm transformation to own-brand business.