Marketing Activities, Strategic Competition, and Firm Value
Canadian Journal of Administrative Sciences, Forthcoming
34 Pages Posted: 26 Jan 2017
Date Written: January 1, 2017
This study extends 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 the 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.
Keywords: Marketing; Strategic Competition; Strategic Complements; Strategic Substitutes; Tobin’s q
JEL Classification: M30; L10; L25
Suggested Citation: Suggested Citation