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International Journal of Business and Economics

International Journal of Business and Economics
Volume 2, No. 2

August, 2003
 
Advertising Intensity and R&D Intensity: 
Differences across Industries and Their Impact on Firm's Performance
 
Trina Larsen Andras
Department of Marketing, Drexel University, U.S.A.
 
Srini S. Srinivasan
Department of Marketing, Drexel University, U.S.A.
 
Abstract
To compete successfully in the market place, organizations optimally utilize their inputs and benchmark their key inputs and outputs against other successful firms. Two of the key inputs that organizations should effectively manage are marketing expenses and R&D expenses. In this research, we investigate a) if these two inputs systematically vary across consumer product and manufacturing product organizations, and b) if these two factors have an impact on firm's performance. We find that consumer product organizations have higher advertising intensity than manufacturing product organizations. However, manufacturing product organizations have higher R&D intensity than consumer product organizations. Findings of this research also reveal that advertising intensity and R&D intensity are positively related to firm profit margins.
 
Keywords:marketing expenditures, R&D expenditures, firm's performance.
 
JEL Classifications:M30, M31, M37.
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