Knowledge, Technology & Policy

, Volume 22, Issue 4, pp 241–258 | Cite as

How Do Institutional Actors in the Financial Market Assess Companies’ Product Design? The Quasi-rational Evaluative Schemes

  • Jaakko AsparaEmail author
Original Paper


While various strategic business issues related to product design have been explored by academicians and practitioners, one issue has largely been ignored: how do financial markets assess and evaluate companies’ product design? The purpose of this article is to examine this issue, especially when it comes to the assessments and evaluations made by the most essential actors of contemporary financial markets: investment analysts and institutional investors. I develop propositions concerning the product design-related evaluative schemes and heuristics used by the financial market actors in evaluating companies as investment opportunities. I illustrate my propositions with examples from, e.g., the mobile phone industry as well as with interview excerpts from interviews with investment analysts and institutional investors. Propositions are provided both for assessments of companies’ individual end products (‘design as the end product’ perspective) and for assessments of companies’ design capabilities (‘design as a capability’ perspective). In essence, the propositions highlight that the evaluative schemes used by financial market actors are partly rational, yet involve biases and are likely to lead to overvaluation and undervaluation of certain kinds of product designs by certain kinds of companies. Thus, even from the perspective of profit-maximization, many of the evaluative schemes of the financial market actors are, at most, quasi-rational. Moreover, the evaluative schemes of the financial market actors may motivate company managers to pursue certain kinds of product design rather than others—and may even lead to self-reinforcing (vicious or virtuous) circles of certain kinds of product designs being advocated.


Strategic design Design strategy Financial market Investors Investment analysts 



The author is indebted to research assistant Bo-Axel Blomberg for conducting interviews quoted in the article. The author also wishes to thank Jenny and Antti Wihuri Foundation for obtaining a grant for research related to the topic of the article.


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© Springer Science+Business Media B.V. 2009

Authors and Affiliations

  1. 1.Helsinki School of Economics HSEHelsinkiFinland

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