Tuesday 12pm, 27 September 2016


The Foundations of a Design-based Theory of the Firm

Andy Dong

Professor - University of Sydney


Scholars have traditionally theorized the existence of firms by assuming that products and services exist. Therefore, firms exist to minimize transaction costs associated with their production, take decisions on price, output, and resource allocation, or manage knowledge, as argued in influential theories of the firm. The continued emergence of firms that, even with few resources, existentially challenge well-resourced incumbent firms and industries speaks to the need for a strategic shift in managerial focus away from coordinating resources and processes toward producing valuable heterogeneity as the primary objective of the firm. In this talk, I will present a case that any explanation for the existence of a firm must include the notion of design. I will articulate the foundations for a design-based theory of the firm. Design provides the grammatical language of the firm, with framing, generative sensing, and prototyping elevated as guiding principles for the economic activities of firms. I will outline some implications of the theory on competitive advantage, the structure of firms, and their dynamic capabilities.


Professor Andy Dong's research addresses the central activity of engineering: the design of new products and services. He has been working hard to promote what he calls the behavioural school of design and its defining commitment to design practitioners as the object of study and productivity as a core principle underlying theory building. He is the Warren Centre Chair for Engineering Innovation and a former Australian Research Council Future Fellow. He is an Associate Editor for influential journals in design research such as Design Studies and the Journal of Mechanical Design. (And he's a Cal alumnus!)