THE APPLICATION OF DESIGN INNOVATION FOR 
INCREASING GEM SET JEWELLERY EXPORTS 
IN SRI LANKA 
..cJHAH* 
|MVEHS> I . OF MORATUWA, SRi LANKA 
MORATUWA 
Kariyawasam Kottawa Gamage Inoka Chamini Samarasekara 
108014K 
Thes i s submi t t ed in part ial f u l f i l l m e n t o f t he r e q u i r e m e n t s f o r the d e g r e e 
M a s t e r o f P h i l o s o p h y 
University of Moratuwa 
106137 
Department of Integrated Design 
University of Moratuwa 
Sri Lanka 
J T , OH /<? 
7 . - > / J ( o ^ q ) 
July 2013 f 0 0 / 3 7 
1 0 o i 3 7 
Postgraduate Studies Division 
Faculty of Architecture 
3 0 J U L 2013 
University of Moratuwa 
Sri Lanka. 
Declaration of the Candidate & Supervisor 
I declare that this is my own work and this thesis does not incorporate without 
acknowledgement any material previously submitted for a Degree or Diploma in any 
other University or institute of higher learning and to the best of my knowledge and 
belief it does not contain any material previously published or written by another 
person except where the acknowledgement is made in the text. 
Also, I hereby grant to University of Moratuwa the non-exclusive right to reproduce 
and distribute my thesis, in whole or in part in print, electronic or other medium. I 
retain the right to use this content in whole or part in future works (such as articles 
or books). 
The above candidate has carried out research for the Masters/MPhil/PhD 
thesis/Dissertation under my supervision. 
Date: • OT ; > o i 3 
Application of 'Design innovation' to increase gem set jewellery exports in Sri Lanka is the 
focus of this research. 
The vast discrepancy between country's resource capacity and its level of fabrication has 
inspired to conduct this research work. It was revealed during the study that the capability 
for further expansion of the jewellery industry lays mainly on Small and Medium 
Enterprises. Concurrently, lack of design innovation has been identified as a key constraint 
hindering the industrial competency and expansion. Thus, the approach of design innovation 
has been explored to maximize the gem set jewellery exports in Sri Lanka. 
The research methodology used was "mixed methods'. Multiple methods of data collection 
and analysis entailed to explore the research questions. The current circumstance of the Sri 
Lankan jewellery industiy in relation to the design led innovation was explored employing 
semi-structured, face-to-face interviews with a purposive sample. Data triangulation 
employed to increase the reliability and the validity. 
The triangulated data confirmed that most of the companies of leading and the medium 
categories successfully apply design innovation while the small sector lacks this approach in 
practice. It was revealed that the best approach to be succeeded through exports is the 
application of design innovation based on user centered design. It was suggested that in-
house design skill development, make available necessary information on user requirements 
and current global trends, international exposure can improve design innovation among the 
small sector. To attain the industrial goals, two major components need to be modified; the 
policy and the attitudes within the industry. In conclusion, approach of design innovation 
has been identified as the prominent avenue to develop the gem and jewellery industry in Sri 
Lanka. 
Key words: design innovation, gem and jewellery, exports, small and medium enterprises 
Dedication 
This thesis is dedicated to my parents 
for their love, endless support 
and encouragement 
iii 
Acknowledgements 
There are many who helped me in carrying out this research and completing 
my degree requirements in Postgraduate Degree of Master of Philosophy. I sincerely 
thank all of them for their encouragement and continuous help to complete this 
effort successfully. 
My sincere and heartfelt gratitude offers to my supervisor. Professor Nimal 
De Silva. for his enormous encouragement, guidance, and advice, which helped me 
to throughout the research process. Indeed, I very much appreciate his kindness that 
motivated me to work hard toward completing this research. 
My warmest and sincere gratitude presents to my co-supervisor Professor 
P.G.R. Dharmaratne, for his continuous and abundant support, encouragement and 
guidance provided me throughout the research process enormously. 
My exceptional thanks offers to Professor Roger I. Millar, the external 
progress review (PR) committee member, for his guidance, support and providing 
valuable comments throughout the research which helped me to think beyond the 
boundaries. 
My special gratitude offers to Mr. Ashan S. Amarasinghe, the industrial 
expert for progress review (PR) committee, for the valuable comments provided me 
to sharpen my knowledge on gem and jewellery industry in Sri Lanka. 
My sincere thanks offers to the responsible authorities of the University of 
Moratuwa and the Faculty of Architecture namely; the Vice Chancellor, Dean, 
Faculty of Architecture; Head, Department of Integrated Design; Head, Department 
of Architecture; Director, Postgraduate studies; Research Coordinators, Staff 
Development Centre, Technical officers and other related non academic staff, for 
their support throughout the academic process. 
I am grateful for the University Research Fund for providing the research 
grant to complete this research successfully. 
My very sincere thanks to all the research participants related to the gem and 
jewellery industry in Sri Lanka, who spent their precious time sharing their 
iv 
experiences and providing required information, thus enriching me with extremely 
rich information to successfully carry out this research. 
I am highly appreciated and offer my gratitude to the National Gem & 
Jewellery Authority, Sri Lanka Export Development Board and Sri Lanka Gem and 
Jewellery Association for their special support proving to obtain required statistics 
and information to enrich my thesis. 
I thank all my colleagues to providing me support in numerous ways to 
complete this task successfully. 
I am highly gratifying my parents and all my family members, for their 
continuous support, encouragement and love, to fulfill this effort a success. 
My heartfelt and warmest gratitude offers my husband for his constant 
encouragement, support, patience and unconditional love extended to me during the 
studies and I want to express my special thanks to my little daughter for bearing the 
unbearable conditions. 
TABLE OF CONTENTS 
Declaration of the Candidate & Supervisor i 
Abstract ' ii 
Dedication iii 
Acknowledgements iv 
Table of Contents vi 
List of Figures xi 
List of Tables xiv 
List of Abbreviations xv 
List of Appendices xvii 
1. Introduction 1 
1.1 The research background 1 
1.2 Research gap 4 
1.3 The target audience 5 
1.4 Research questions 5 
1.5 Aim and objectives of the research 5 
1.6 Significance of the research 6 
1.7 Scope and the limitations of the study 6 
1.8 Structure of the thesis 7 
2. Literature Review 9 
2.1 Introduction 9 
2.2 Expansion of the gem and jewellery industry 10 
2.2.1 Possibility in expantion of the gem and jewellery 10 
industry in global context 
2.2.2 Possibility in expantion of the gem and jewellery 11 
industry in sri lankan context through value addition 
2.2.3 The potential in small and medium enterprises for 15 
industrial expansion 
2.2.4 Drivers to internationalization 18 
2.2.5 Main barriers to the internationalization 20 
vi 
2.3 Design 22 
2.3.1 Design process 23 
2.3.2 Design thinking 25 
2.4 Innovation ' 26 
2.4.1 Incremental and radical innovation 28 
2.4.2 Four quadrants of innovation 30 
2.5 Importance of design for innovation 31 
2.5.1 Design as an element of innovation 34 
2.5.2 The innovation pyramid 37 
2.6 Design driven innovation 41 
2.7 Design innovation 42 
2.7.1 User centered approach to design innovation 43 
2.8 Design innovation for the enterprise development 49 
2.8.1 Link between design, innovation and competitiveness 52 
2.9 Summary of the literature review and the conceptual framework 54 
3. Research Methodology 57 
3.1 Introduction 57 
3.2 The research design 58 
3.2.1 Research methods 58 
3.2.1.1 Selecting a sample 59 
3.2.1.2 The sample 60 
3.2.1.3 Research location 61 
3.3 Methods of data collection 61 
3.3.1 Available data 61 
3.3.2 Observation 61 
3.3.3 Interviews with a semi-structured questionnaire 62 
3.3.3.1 Rationale for selecting the semi-structured 62 
questionnaire 
3.3.4 Visual materials 62 
3.4 Triangulation 63 
vii 
3.5 Methods of data analysis 63 
3.5.1 Interpretation 64 
3.6 Ethical issues 64 
4. Gem and Jewellery Industry in the Global Context 65 
4.1 Introduction 65 
4.2 Structure of the global gem and jewellery industry 65 
4.2.1 The global gem industry 67 
4.2.1.1 Major gem producers in the world 68 
4.2.1.2 Major coloured gem markets in the world 70 
4.2.2 Global jewellery industry 71 
4.2.2.1 Key members of the global jewellery industry 72 
4.3 Global trends and patterns in jewellery production 74 
4.4 Global trends and patterns in jewellery consumption 76 
4.5 Future of the global gem and jewellery industry 82 
5. Gem and Jewellery Industry in the Sri Lankan Context 86 
5.1 Introduction 86 
5.2 The setting of the gem and jewellery industry in Sri Lanka 87 
5.2.1 The historical background 87 
5.2.2 The structure of the gem and jewellery industry 92 
5.2.2.1 The industrial value chain 92 
5.2.2.2 The market profile 95 
5.2.3 The export sector of Sri Lankan gem and jewellery 96 
industry 
5.2.3.1 The discrepancy between the country's resource 101 
capacity and its level of fabrication 
5.2.3.2 Development of the gem and jewellery exports 103 
since 1978 
5.2.4 The organizations involved with the industry 106 
5.3 Strengths and opportunities of gem and jewellery industry of 111 
Sri Lanka 
5.4 Field study 01 115 
viii 
5.4.1 Research method 115 
5.4.2 Results and discussion 115 
5.4.3 Conclusions & recommendations 125 
6. Importance of Design Innovation for the Sri Lankan Context 126 
6.1 What is'design innovation'? 126 
6.2 Application of design innovation in the global context 126 
6.3 The global application of design innovation in to SMEs 127 
6.3.1 The SME sector in the global context 127 
6.3.2 Application of design-innovation for the 128 
continuous development in SMEs 
6.4 Characteristics of SMEs in developing countries 131 
6.5 The sector of small and medium enterprises in Sri Lanka 132 
6.5.1 The significance of the development in SME 133 
sector of Sri Lanka 
6.5.2 Constraints faced by the SME sector in Sri Lanka 134 
6.6 Setting of the SME sector in Sri Lankan jewellery industry 136 
6.7 Importance of design innovation for the jewellery SME sector 138 
in Sri Lanka 
7. Application of Design Innovation in Sri Lankan Jewellery Industry 139 
7.1 Introduction 139 
7.2 Field study 02 139 
7.2.1 Research method 139 
7.2.2 Data analysis 140 
7.2.2.1 Interview data 140 
7.2.2.2 Image analysis 175 
7.2.2.3 Observational data 186 
7.2.3 Major findings 191 
8. Methods of applying design innovation to increase gem set jewellery 194 
exports in Sri Lanka - Discussion, Conclusions & Recommendations 
8.1 Discussion 194 
8.2 Conclusions & recommendations 209 
References 212 
Appendix A: The Sample Questionnaire 221 
Appendix B: The Gem Beads from Ancient Sri Lanka 223 
Appendix C: Sri Lanka's Most Renowned Gemstones 226 
Appendix D: Traditional Jewellery of Sri Lanka 230 
x 
List of Figures 
Page 
Figure 1 Projected share of key markets for jewellery 10 
consumption (2015) 
Figure 2 Jewellery and gemstone exports from Asian 12 
manufacturing centers in 2000 
Figure 3 Creative design process 25 
Figure 4 Design thinking process 26 
Figure 5 Four quadrants of innovation 30 
Figure 6 The innovation pyramid 40 
Figure 7 The strategy of design driven innovation 41 
Figure 8 Process of human centered design 45 
Figure 9 IDEO design thinking approach 47 
Figure 10 IDEO design thinking approach 48 
Figure 11 Eric's design research firm business model 49 
Figure 12 The Danish design ladder 52 
Figure 13 Adapted from the Danish design ladder 53 
Figure 14 Conceptual framework 56 
Figure 15 The value chain of global gem and jewellery industry 66 
Figure 16 Retail mix of various jewellery segments (2005) 71 
Figure 17 Global jewellery trade (imports and exports) in 72 
USD billion 
Figure 18 Global jewellery production value in USD billion 73 
Figure 19 Geographic share of the global jewellery 77 
consumption (2005) 
Figure 20 Global jewellery consumption value in USD billion 77 
Figure 21 Projected share of key markets for jewellery 83 
consumption (2015) 
Figure 22 Projected share of various jewellery segments (2015) 85 
Figure 23 Beads from lbbankatuwa megalithic burial 88 
xi 
Figure 24 Gem exports value in percentage - 2010 98 
Figure 25 Gem exports value (% in variety vise)-2010 98 
Figure 26 Export statistics of blue sapphire vs. other gems (US$ Mn) 99 
Figure 27 Export percentage of blue sapphire vs. other gems in 2010 99 
Figure 28 Statistical data of the exports of gems and jewellery (US$ Mn) 101 
Figure 29 Proportion of the exports of gems vs. jewellery 102 
Figure 30 The progression of the total gem and jewellery exports 103 
from 1978 to 2011 (Rs. Mn.) 
Figure 31 The progression of gem exports from 1978 to 201 l(Rs. Mn.) 103 
Figure 32 The progression of jewellery exports 104 
from 1978 to 2011 (Rs. Mn.) 
Figure 33 The percentage (100%) of gem exports vs. jewellery 105 
exports from 1978 to 2011 
Figure 34 The famous black prince ruby - a red spinel from 113 
Sri Lanka 
Figure 35 Kate Middleton's engagement ring 113 
Figure 36 Environment of a jewellery workshop (medium category) 174 
Figure 37 Environment of a jewellery workshop (small category) 175 
Figure 38 Two neck pieces from the "leaves collection' 176 
Figure 39 A neck piece from the 'invisible collection" 176 
Figure 40 Two products (a ring & a pair of hanging earrings) 177 
of respondent (E) 
Figure 41 Double ring design of respondent (B) 178 
Figure 42 Composite design of respondent (B) 178 
Figure 43 Composite design of respondent (B) 179 
Figure 44 Products (a bangle, necklace and a pendant) 179 
of respondent (D) 
Figure 45 Two rings (repondent J) 180 
Figure 46 A pendant (respondent H) 180 
Figure 47 A pair of cufflinks (respondent H) 181 
Figure 48 A hanging earring and a cocktail ring (Respondent F) 181 
xii 
Figure 49 Catalogue design 182 
Figure 50 Modified design 182 
Figure 51 Two rings for the German market 182 
Figure 52 A ring for the Chinese market 182 
Figure 53 A pendant (respondent K) 183 
Figure 54 Two pendant designs (respondent Q) 183 
Figure 55 A pendant design for the German market (respondent Q) 184 
Figure 56 A bangle design (respondent D) 184 
Figure 57 A bangle design (respondent Q) 184 
Figure 58 Cluster designs for rings (respondent N) 184 
Figure 59 A pendand design (respondent N) 185 
Figure 60 A ring design with two different colours (respondent P) 185 
Figure 61 FACETS Sri Lanka - 2012 186 
Figure 62 The SME Pavilion organized by the EDB for 187 
FACETS Sri Lanka-2012 
Figure 63 A line of similar designs of pendants 188 
Figure 64 Rival products from five different companies 188 
Figure 65 A bangle design 189 
Figure 66 Bracelets 189 
Figure 67 A pendant design 189 
Figure 68 A necklace 190 
Figure 69 A variety of jewellery pieces displayed at 191 
FACETS exhibition 
xiii 
List of Tables 
Page 
Table 1 Jewellery and gemstone exports from Asian manufacturing 11 
centers in 2000 (US$ million) 
Table 2 Export statistics of gem and jewellery industry in Sri Lanka 12 
Table 3 The segmentation of design as defined by selected authorities. 35 
Table 4 Major gem export countries during the last 4 years (value Rs. 97 
Millions) 
Table 5 Factors identified by the expert sample 116 
Table 6 Demographic data of the leading category 143 
Table 7 Export revenue (per annum) of the leading category 144 
Table 8 Involvement of the professional designers of the leading 145 
category 
Table 9 Awareness on current global trends of the leading category 145 
Table 10 Awareness on user requirements of the leading category 146 
Table 11 Awareness on new export markets of the leading category 146 
Table 12 Demographic data of the medium category 157 
Table 13 Export revenue (per annum) of the medium category 158 
Table 14 Involvement of the professional designers in the medium 159 
category 
Table 15 Awareness on current global trends of the medium category 159 
Table 16 Awareness on user requirements of the medium category 160 
Table 17 Awareness on new export markets of the medium category 160 
Table 18 Demographic data of the small category 166 
Table 19 Export revenue (per annum) of the small category 167 
Table 20 Awareness on current global trends of the small category 168 
Table 21 Awareness on user requirements of the small category 169 
Table 22 Awareness on new export markets of the small category 169 
XIV 
List of Abbreviations 
Abbreviation Description 
CAGR Compounded Annual Growth Rate 
CIS Community Innovation Survey 
DSI Department of Small Industries 
EDB Export Development Board 
EU European Union 
GBG Gem Bearing Gravel 
GDP Gross Domestic Product 
GJRTI Gem and Jewellery Research and Training Institute 
GTB Gem Trading Bank 
HCD Human Centered Design 
HNWI High Net Worth Individual 
ICA International Colored Gemstone Association 
IDB Industrial Development Board 
NEDP National Export Development Plan 
NGJA National Gem & Jewellery Authority 
OECD Organization for Economic Co-operation and Development 
PGI Platinum Guild International 
R&D Research & Development 
SGC State Gem Corporation 
SLGJA Sri Lanka Gem and Jewellery Association 
SLGJE Sri Lanka Gem & Jewelry Exchange 
xv 
SME Small and Medium Enterprise 
UCD User Centered Design 
UK United Kingdom 
USAID United States Agency for International Development 
USA United States of America 
TCI The Competitiveness Initiative 
TCP The Competitiveness Program 
WGC World Gold Council 
WTO World Trade Organization 
xvi 
List of Appendices 
Appendix Description Page 
Appendix-A The Sample Questionnaire 221 
Appendix - B The Gem Beads from the Ancient Sri Lanka 223 
Appendix - C Sri Lanka's Most Renowned Gemstones 226 
Appendix - D Traditional Jewellery of Sri Lanka 230 
XVI I