When Vision Collide: An Empirical Investigation of Design Status Misperceptions and Their Innovation Consequences

In product development organizations, the design department plays a crucial role in driving innovation and maintaining competitive advantage. The perceived status of the design department, as viewed by both the design manager and the CEO, significantly impacts product innovation performance. This study, grounded in person–supervisor fit theory, explores how alignment between the design manager’s and CEO’s perceptions of department status influences innovation outcomes. Specifically, we consider two types of department status: organizational and strategic. Different from the conventional view, which favors a perfect alignment between the design manager’s and CEO’s perceptions of department status, our findings indicate that misalignment in status perception negatively affects product innovation. That is, a design department contributes more to product innovation when its manager perceives the department’s status as lower than the CEO’s perception, rather than higher. However, we discover that the design department’s combinative capability can alleviate this negative effect. These results underscore the importance of managing perceptions within a product development organization and suggest that positioning the design department as a supportive rather than a core strategic function can enhance its contributions to the organization.