Marketing as an Investment in Shareholder Value

Date

2018-01-25

Advisors

Journal Title

Journal ISSN

ISSN

1045-3172
1467-8551

Volume Title

Publisher

Wiley

Type

Article

Peer reviewed

Yes

Abstract

We present resource-based and capability-based arguments of marketing investment intensity to offer a strategic view of marketing as an investment in shareholder value. We find that marketing investment intensity has a U-shaped quadratic effect on shareholder value creation (Tobin's q) that calls for marketing investment to be protected and increased, not surrendered. We show how marketing investments interact with investments in R&D, human capital and operations to reveal how strategic co-investments can alter the shareholder value of marketing. Finally, we show how competitive intensity and failings in the firm's investment productivity (its ability to convert investment expenditure into sales) point to malaise in the firm's own strategic architecture as a fault for perceived poor returns from marketing investments. Our findings suggest that marketing investment should not be scapegoated when its contributions to shareholder value are not as expected. When invested in strategically and in combination with other investments, marketing can unlock exciting improvements in shareholder value.

Description

The file attached to this record is the author's final peer reviewed version. The Publisher's final version can be found by following the DOI link

Keywords

Shareholder value, Tobin's Q, Marketing

Citation

Hughes, M., Hughes, P., Sousa, C. and Yan, K., Marketing and Shareholder Value, British Journal of Management, 30 (4), pp. 943-965

Rights

Research Institute

Centre for Enterprise and Innovation (CEI)