| Abstract: | The purpose of this research is to investigate the conditions under which the use of aesthetic design as an element of new service development is likely to improve performance—more specifically, to empirically examine how aesthetic design can contribute to competitive advantage, resistance to imitation, and profitability, and how these contributions are moderated by the process of commoditization. Based on analysis of three rounds of longitudinal data collected one year apart in a population of new technology‐based firms, the findings are that aesthetic design as an element of new service development can contribute positively to competitive advantage, resistance to imitation, and profitability, but that the effectiveness of using aesthetic design to achieve these outcomes differs depending on the level of commoditization. Positive relationships are found between the use of aesthetic design and competitive advantage and profitability, respectively, when the level of commoditization is high. Furthermore, the positive relationship between aesthetic design and resistance to service imitation is stronger when the relative importance of aesthetic design in a firms' sector is low, that is, conditions under which aesthetic design is not already expected. This research suggests that practitioners should consider using aesthetic design to counteract commoditization when the markets in which they compete are characterized by ready access to services that meet customers' needs and expectations for features, performance, and reliability, and expectations for aesthetic design have not already become established. Furthermore, they should be aware that the use of aesthetic design may turn into a baseline customer requirement, implying that while attention to aesthetic design is necessary to compete it may cease to constitute a potential source of competitive advantage. |
