In the last decade, design innovation has gained increasing prominence in the marketplace, with a growing number of firms innovating not only through technology but also through novel product forms (i.e., design).
However, while the effect of technological innovation on product sales is a heavily studied topic, a defining theory of how design innovation influences product sales is still missing. This paper provides demand- and
supply-side theories to formulate a set of coherent hypotheses about the effect of design innovativeness, i.e., the degree of novelty in a product’s design, on sales’ evolution over time. The hypotheses are tested in two different samples. In the first, car models introduced in the United States from 1978 to 2006 (for a total of 2,757 model-year data) are analyzed. In the second, motorcycle models introduced in the United States from 1980 to 2008 (for a total of 2,847 model-year observations) are analyzed. I find that design innovativeness diminishes initial sales’ status but increases sales’ growth rates. Furthermore, design and technological innovativeness have a negative interaction effect on sales’ initial status, but a positive effect on sales’ growth rates. Finally, brand strength and brand advertising expenditures worsen the negative effect of design innovativeness on initial sales’ status, but boost its positive effect on sales’ growth rates.