Why Firms Spend the Way They Do on Individual Functions: A Proposed Multi-Layer Theoretical Framework to Explain Marketing Spending Levels
55 Pages Posted: 10 Dec 2016
Date Written: November 1, 2016
Functional efforts cannot succeed and firm performance will not reach their objectives without proper spending levels. A diverse range of theories have been employed to explain such spending on individual functions, but less focus has been on attempting to account for these theories in a single framework. A literature review across different fields of business and 20 managerial interviews were conducted to develop a 4-level conceptual framework to integrate such diverse theories. Primarily focusing on marketing, and employing both primary data collected by the author and secondary data the author merged from five secondary datasets, the results show that resource dependency theory appears to be the most powerful theory in explaining individual functional spending levels while institutional and contingency theories are also important to include and should act as moderators between RDT and individual functional spending. Theoretical and managerial implications of the conceptual model and its empirical results are further discussed.
Keywords: resource allocation, marketing strategy, functional spending, hierarchical linear modeling
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