Marketing as an Investment in Shareholder Value

Hughes, M.; Hughes, P.; Yan, J.; Sousa, C.M.P.

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.

Citation

Hughes, M., Hughes, P., Yan, J., & Sousa, C. (2019). Marketing as an Investment in Shareholder Value. British Journal of Management, 30(4), 943-965. https://doi.org/10.1111/1467-8551.12284

• Journal Article Type: Article
• Acceptance Date: Dec 21, 2017
• Online Publication Date: Jan 25, 2018
• Publication Date: Oct 31, 2019
• Deposit Date: Jan 3, 2018
• Publicly Available Date: Jan 25, 2020
• Journal: British Journal of Management
• Print ISSN: 1045-3172
• Electronic ISSN: 1467-8551
• Publisher: Wiley
• Peer Reviewed: Peer Reviewed
• Volume: 30
• Issue: 4
• Pages: 943-965
• DOI: https://doi.org/10.1111/1467-8551.12284
• Public URL: https://durham-repository.worktribe.com/output/1341777