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Advertising Intensity and R&D Intensity: Differences across Industries and Their Impact on Firm's Performance

Author

Listed:
  • Trina Larsen Andras

    (Department of Marketing, Drexel University, U.S.A.)

  • Srini S. Srinivasan

    (Department of Marketing, Drexel University, U.S.A.)

Abstract

To compete successfully in the market place, organizations optimally utilize their inputs and benchmark their key inputs and outputs against other successful firms. Two of the key inputs that organizations should effectively manage are marketing expenses and R&D expenses. In this research, we investigate a) if these two inputs systematically vary across consumer product and manufacturing product organizations, and b) if these two factors have an impact on firm's performance. We find that consumer product organizations have higher advertising intensity than manufacturing product organizations. However, manufacturing product organizations have higher R&D intensity than consumer product organizations. Findings of this research also reveal that advertising intensity and R&D intensity are positively related to firm profit margins.

Suggested Citation

  • Trina Larsen Andras & Srini S. Srinivasan, 2003. "Advertising Intensity and R&D Intensity: Differences across Industries and Their Impact on Firm's Performance," International Journal of Business and Economics, College of Business and College of Finance, Feng Chia University, Taichung, Taiwan, vol. 2(2), pages 167-176, August.
  • Handle: RePEc:ijb:journl:v:2:y:2003:i:2:p:167-176
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    References listed on IDEAS

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    1. Michael E. Porter, 1992. "Capital Choices: Changing The Way America Invests In Industry," Journal of Applied Corporate Finance, Morgan Stanley, vol. 5(2), pages 4-16.
    2. GrahamJr., Roger C. & Frankenberger, Kristina D., 2000. "The Contribution of Changes in Advertising Expenditures to Earnings and Market Values," Journal of Business Research, Elsevier, vol. 50(2), pages 149-155, November.
    3. Gary Hufbauer, 1970. "The Impact of National Characteristics & Technology on the Commodity Composition of Trade in Manufactured Goods," NBER Chapters,in: The Technology Factor in International Trade, pages 145-231 National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Basma Sellami Mezghanni, 2010. "How Ceo Attributes Affect Firm R&D Spending? New Evidence From A Panel Of French Firms," Post-Print hal-00479532, HAL.
    2. Tjandrawinata, Raymond R. & Simanjuntak, Destrina Grace, 2012. "Factors affecting productivity of research-based pharmaceutical companies following mergers and acquisitions," MPRA Paper 42514, University Library of Munich, Germany.
    3. Juan Carlos Bou & Albert Satorra, 2014. "Univariate versus multivariate modeling of panel data," Economics Working Papers 1417, Department of Economics and Business, Universitat Pompeu Fabra.
    4. Wan-Chen Wang & Maria Manuela Santos Silva & Luiz Moutinho, 2016. "Modelling Consumer Responses to Advertising Slogans through Artificial Neural Networks," International Journal of Business and Economics, College of Business and College of Finance, Feng Chia University, Taichung, Taiwan, vol. 15(2), pages 89-116, December.
    5. repec:bla:jomstd:v:54:y:2017:i:3:p:304-339 is not listed on IDEAS
    6. repec:eee:jouret:v:93:y:2017:i:3:p:350-368 is not listed on IDEAS
    7. Chaudhuri, Kausik & Kumbhakar, Subal C. & Sundaram, Lavanya, 2016. "Estimation of firm performance from a MIMIC model," European Journal of Operational Research, Elsevier, vol. 255(1), pages 298-307.
    8. Bandyopadhyay, Arindam & Barua, Nandita Malini, 2016. "Factors determining capital structure and corporate performance in India: Studying the business cycle effects," The Quarterly Review of Economics and Finance, Elsevier, vol. 61(C), pages 160-172.

    More about this item

    Keywords

    marketing expenditures; R&D expenditures; firm's performance;

    JEL classification:

    • M30 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - General
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising

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