abstract: This paper discusses the second phase of sustainability in the field of design and identifies the success factors of design innovation in the ethnic craft industry in northern Thailand. This study explored craftspeople’s capital, their means of developing it, and potential routes to sustainable development on the capital. The literature review examines three topics: (1) ethnic identity and craft; (2) northern Thailand and hill tribes; and (3) design thinking, vulnerability, and resilience. Empirical research was conducted with hill tribe craftspeople in northern Thailand. Seven types of capital—human, social, natural, physical, financial, cultural, and emotional capital—were identified through interviews and observation. Those types of capital indicated what the craftspeople wanted and needed. The key findings were as follows: First, social capital has a close relationship with both human capital and emotional capital, indicating that for craftspeople, networks and membership ensure knowledge and increase connections with friends and family. Secondly, emotional capital is affected by financial capital. Financial capital refers to the monetary resources used to achieve craftspeople’s livelihood objectives. The craftspeople required high order volumes to earn to more money and thus improve their economic condition; they experienced more stress when order volumes were low. Third, financial capital is not related to social and cultural capital. Graphs implied certain relationship among them, with the reasons varying depending on the individual craftsperson’s environment. A high level of social and cultural capital does not affect low financial capital, and vice versa. Finally, cultural capital directly influences emotional capital because the happiness of hill tribe craftspeople is related to their identity and dignity as craftspeople. / Dissertation/Thesis / Masters Thesis Design 2017