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Marketing Activities, Strategic Competition, and Firm Value
Author(s) -
Ryoo Juyoun,
Lee Cheolwoo,
Jeon Jin Q.,
Choi Hwanseok Winston
Publication year - 2018
Publication title -
canadian journal of administrative sciences / revue canadienne des sciences de l'administration
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.347
H-Index - 48
eISSN - 1936-4490
pISSN - 0825-0383
DOI - 10.1002/cjas.1471
Subject(s) - competition (biology) , strategic complements , value (mathematics) , position (finance) , profit impact of marketing strategy , marketing , function (biology) , industrial organization , quality (philosophy) , economics , strategic marketing , business , marketing strategy , microeconomics , return on marketing investment , finance , ecology , machine learning , computer science , biology , philosophy , epistemology , evolutionary biology
This study extends the prior literature on the effect of marketing activities on firm value by investigating whether the nature of strategic competition affects financial outcomes differentially. Using the competitive strategy measure (CSM), we show that marketing spending is beneficial (detrimental) to firm value when the firm is in strategic substitutes (complements) and the efficacy is a decreasing function of the degree of industry competition. The relative competitive position of a firm in the industry—whether it is a leader or a follower—matters in the quality and size of the effect of marketing spending. By bifurcating the nature of strategic competition into strategic substitutes and complements, we disentangle the dichotomous effects of marketing activities on firm value. Copyright © 2018 ASAC. Published by John Wiley & Sons, Ltd.