The Economics of Executive Tables: Signalling Theory, Status Goods, and Corporate Identity

While simple on the surface, executive tables represent an economic asset with much greater value than their immediate physical utility. In essence, a modern executive table is just a working surface—a place to store papers and files and organise stationery. However, many high-end executive desks can be priced well above average due to the way they convey information about their owner and the person who purchased them. Signalling theory posits how observable characteristics, such as an executive desk, communicates information that cannot be directly observed–an executive desk can convey the quality of that person or company’s skills or business acumen. 

Signalling becomes important when there is asymmetry in information where one party has certain information not readily available to the other. For example, new clients who enter an office for the first time have no idea of the profitability, leadership capability, or long-term stability of that company, but they may be able to infer their impression of the company from the layout of the office or from the construction of the furniture and equipment used in the office. These impressions may indicate success, professionalism, and organisational strength to them as a result of the combination of the high-quality executive desk and the high-end office environment.

The demand for executive tables is closely tied to the economic concept of status goods, as explained through Thorstein Veblen’s theory of conspicuous consumption. In contrast to regular goods, where a decrease in price will typically increase demand, there are status-oriented products whose value increases because they represent an individual or company's wealth or social status. In the case of an executive table, the product not only has functional value but also transcends that value based upon the message it conveys. This is the reasoning behind why a number of businesses will select furniture based upon its functionality, as well as its perceived excess. The executive desk allows an executive to complete the same duties as the premium executive table; however, there is a symbolic meaning associated with purchasing an executive table. The buyer acquires both a physical object and an identity.

The influence on this trend from the business environment is large. The overall market for office furniture was estimated to be above $60 billion in recent years and will likely continue to grow due to the investments being made by companies in workplace design, ergonomic solutions, and corporate environments. Changing views of what constitutes a "workplace" have created a shift in expectation for what the workplace offers; most notably, for the influence a workspace has on employee experiences, impressions of the company by clients, and establishing a corporate culture.

The rationale for investing in executive office furniture for many firms is the competitive advantage gained by competing for talent, credibility, and recognition in the employment and reputation markets. A well-designed executive office will help a company's efforts to draw in prospective employees, foster an investor's confidence, and build better relations with customers. It becomes a component of the company's intangible capital, non-physical assets that generate economic value.

An example of this can be found in the technology industry, where many companies use unique design elements in their workspace to establish a brand image. Companies, like Google, have made large investments in the design of their workplace to convey the values of innovation and creativity. The furniture selected in these office spaces is deliberate and serves to reinforce the companies' desired images, creating a recognisable culture for the organisation.

Another illustration would be the executive furniture market. The company MillerKnoll operates in a market where product design, reputation, and functionality help justify higher prices. MillerKnoll has reported revenues in excess of billions of dollars annually, providing a good indication that businesses are willing to invest in a premium executive product line that combines utility with design value.

From a business perspective, executive tables and organised workplace have both productivity gains and cost. Ergonomic furniture will provide greater organisation, therefore, a company will decide to invest in these items based on an expected return on investment that is greater than the additional expenses associated with these products.

However, it is also important to note that the act of purchasing superior executive office equipment can lead to wasting capital. Many firms purchase expensive executive office equipment as a status symbol, rather than to improve productivity. Therefore, a portion of this capital could have been redirected to other more productive investments.

The furniture industry has a notable differentiation within the marketplace. Furniture manufacturers may compete on more than just a price point. They compete on design, materials, customisation, sustainable practices, and brand reputation. Therefore, a wide variety of price points can be established for furniture, allowing for segments ranging from low-priced to high-end.

The idea that all executive tables symbolise markets and how they are shaped by both practical needs as well as by social behaviour, psychological perceptions, and cultural definition is an economic principle. An executive desk located in an office is an economic good, yet it also represents the notions of power and success and the corporate identity of the company it represents.