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Exploring the impact of strategic emphasis on advertising versus R&D during stock market downturns and upturns

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  • Sung, Jin Kyung
  • Park, Jimi
  • Yoo, Shijin

Abstract

A strategic emphasis on value appropriation to value creation framework has emerged as a growing area of research. However, whether such emphasis is effective in periods of different market trends remains an unexplored area of research. Among 287 firms in 17 industries listed on the New York Stock Exchange between 1980 and 2010, the authors found that strategic emphasis on advertising significantly decreases a firm's systematic risk when the stock market is experiencing a downturn (i.e., shielding stock returns in market downturns). Similarly, strategic emphasis on advertising significantly increases a firm's systematic risk when the market moves upwards (i.e., stimulating stock returns during market upturns). These results highlight that a strategic emphasis on value appropriation to value creation helps investor confidence recover during dark times and boosts it during good ones.

Suggested Citation

  • Sung, Jin Kyung & Park, Jimi & Yoo, Shijin, 2019. "Exploring the impact of strategic emphasis on advertising versus R&D during stock market downturns and upturns," Journal of Business Research, Elsevier, vol. 94(C), pages 56-64.
    • Handle: RePEc:eee:jbrese:v:94:y:2019:i:c:p:56-64
    DOI: 10.1016/j.jbusres.2018.09.018
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    2. Jian Xu & Feng Liu & You-hua Chen, 2019. "R&D, Advertising and Firms’ Financial Performance in South Korea: Does Firm Size Matter?," Sustainability, MDPI, vol. 11(14), pages 1-16, July.
    3. Som Sekhar Bhattacharyya & Praveen Nemana, 2024. "Effect of Demonetization on Advertising, Research & Development and Human Resource Intensities and its Impact on Firm’s Performance," Vision, , vol. 28(3), pages 361-373, June.
    4. Zhangsheng Jiang, 2020. "Can the Gap and Rating of Market Expectation Promote Innovation Input of China Manufacturers?," Sustainability, MDPI, vol. 12(5), pages 1-19, March.
    5. Tower, Annette P. & Hewett, Kelly & Saboo, Alok, 2021. "Reexamining the tradeoff between value creation and value appropriation: The role of internal organizational resources vs. External strategic international alliances," Journal of Business Research, Elsevier, vol. 123(C), pages 302-312.
    6. Feng, Cong & Patel, Pankaj C. & Xiang, Kexin, 2020. "The well-trodden path: Complementing market and entrepreneurial orientation with a strategic emphasis to influence IPO survival in the United States," Journal of Business Research, Elsevier, vol. 110(C), pages 370-385.

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