Marketing Activities, Strategic Competition, and Firm Value

Canadian Journal of Administrative Sciences, Forthcoming

34 Pages Posted: 26 Jan 2017

See all articles by Juyoun Ryoo

Juyoun Ryoo

Dongguk University

Jin Jeon

Dongguk University

Cheolwoo Lee

Ferris State University

Date Written: January 1, 2017

Abstract

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

Ryoo, Juyoun and Jeon, Jin and Lee, Cheolwoo, Marketing Activities, Strategic Competition, and Firm Value (January 1, 2017). Canadian Journal of Administrative Sciences, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2906141

Juyoun Ryoo

Dongguk University ( email )

26 Pil-dong 3-ga
Jung-gu
Seoul, Seoul 100-715
Korea, Republic of (South Korea)

Jin Jeon

Dongguk University ( email )

26 Pil-dong 3-ga
Jung-gu
Seoul, Seoul 100-715
Korea, Republic of (South Korea)

Cheolwoo Lee (Contact Author)

Ferris State University ( email )

119 South State Street, BUS 366
Big Rapids, MI 49307
United States

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