Selling, General, and Administrative Expense (SGA)-Based Metrics in Marketing: Conceptual and Measurement Challenges

Ptok, Annette, Rupinder P. Jindal, and Werner Reinartz (2018), “Selling, General, and Administrative expense (SGA)-Based Metrics in Marketing: Conceptual and Measurement Challenges,” Journal of the Academy of Marketing Science, Forthcoming

71 Pages Posted: 24 May 2018 Last revised: 12 Oct 2018

See all articles by Annette Ptok

Annette Ptok

Independent

Rupinder Paul Jindal

Milgard School of Business

Werner J. Reinartz

University of Cologne; University of Cologne

Date Written: May 1, 2018

Abstract

Many studies use variables from the Compustat database to measure various marketing constructs, yet no clear guidelines detail which metrics correspond with which constructs. Justifications rest mainly on the ready availability of easy-to-use measures that seem related to a particular construct. As a result, various metrics have been utilized to capture the same construct, and the same metric, such as selling, general, and administrative expenses (SGA), has been applied to capture vastly different constructs. But using SGA inappropriately can lead to biased estimates, questionable support for the hypotheses, and potentially misleading implications for research and practice. To test the validity of SGA for multiple relevant marketing and sales constructs, this study gathers data on benchmark variables from alternative data sources and applies a multitrait-multimethod (MTMM) approach. Results show that in general, SGA has been applied too liberally in marketing contexts; SGA is an appropriate operationalization only for some constructs. This article provides guidelines for the proper conceptualization and operationalization of marketing constructs.

Keywords: Validation, Content Validity, Construct Validity, Selling, General, and Administrative Expense (SGA), Compustat, Marketing–Accounting Interface

JEL Classification: M31, M37, M10

Suggested Citation

Ptok, Annette and Jindal, Rupinder Paul and Reinartz, Werner J. and Reinartz, Werner J., Selling, General, and Administrative Expense (SGA)-Based Metrics in Marketing: Conceptual and Measurement Challenges (May 1, 2018). Ptok, Annette, Rupinder P. Jindal, and Werner Reinartz (2018), “Selling, General, and Administrative expense (SGA)-Based Metrics in Marketing: Conceptual and Measurement Challenges,” Journal of the Academy of Marketing Science, Forthcoming , Available at SSRN: https://ssrn.com/abstract=3177212

Annette Ptok

Independent ( email )

Rupinder Paul Jindal (Contact Author)

Milgard School of Business ( email )

Tacoma, WA 98402
United States

Werner J. Reinartz

University of Cologne ( email )

Albertus-Magnus-Platz
Cologne, 50923
Germany

University of Cologne ( email )

Albertus-Magnus-Platz
Cologne, 50923
Germany

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