Vadakkepatt, Gautham Gopal (2010-08). Essays on Firm Growth and Survival as a Fortune 500 Firm. Doctoral Dissertation. Thesis uri icon

abstract

  • In this dissertation, I develop frameworks and models capturing the effects of marketing capital and R and D capital on firm growth and sustained membership in the Fortune 500 cohort. Drawing on the resource-based view (RBV) of the firm and industrial organization theories, in the first essay, I develop hypotheses on the relationships among a firm's marketing capital, R and D capital, key firm-specific and industry-specific factors and survival as a Fortune 500 firm. I test these hypotheses using a proportional hazard model on a uniquely compiled large panel data set of manufacturing Fortune 500 firms over a 25-year period. The results show that while both marketing and R and D capitals have significant and direct positive associations with survival as a Fortune 500 firm, the moderating effects of industry growth on the relationships between marketing capital and survival as a Fortune 500 firm and between R and D capital and survival as a Fortune 500 firm is asymmetric. It is positive for marketing capital but negative for R and D capital. Thus, to retain firms' position on the Fortune 500 list, managers may want to consider investing more in marketing (R and D) when industry growth is high (low). In the second essay, I examine the effect of advertising capital and R and D capital, their complementarities, and their interactions with the environmental contingency factors of dynamism, munificence, and complexity on sales growth, profit growth, and market value growth. Using dynamic panel data analysis of 185 firms over an eight year period (2000-2007), I uncover a nuanced understanding of how advertising and R and D capital affect these performance measures. My results show that both R and D capital and advertising capital directly affect sales growth, but neither has a direct impact on profit growth. Furthermore, R and D capital has a direct impact on market value growth. I also find that while the interaction of advertising capital and R and D capital does not directly affect sales growth or market value growth, it has a positive direct impact on profit growth. Finally, I find that environmental contingencies matter. For instance, environmental dynamism negatively (positively) moderates the relationship between R and D (advertising) capital and sales growth.
  • In this dissertation, I develop frameworks and models capturing the effects of marketing capital and R and D capital on firm growth and sustained membership in the Fortune 500 cohort. Drawing on the resource-based view (RBV) of the firm and industrial organization theories, in the first essay, I develop hypotheses on the relationships among a firm's marketing capital, R and D capital, key firm-specific and industry-specific factors and survival as a Fortune 500 firm. I test these hypotheses using a proportional hazard model on a uniquely compiled large panel data set of manufacturing Fortune 500 firms over a 25-year period. The results show that while both marketing and R and D capitals have significant and direct positive associations with survival as a Fortune 500 firm, the moderating effects of industry growth on the relationships between marketing capital and survival as a Fortune 500 firm and between R and D capital and survival as a Fortune 500 firm is asymmetric. It is positive for marketing capital but negative for R and D capital. Thus, to retain firms' position on the Fortune 500 list, managers may want to consider investing more in marketing (R and D) when industry growth is high (low).

    In the second essay, I examine the effect of advertising capital and R and D capital, their complementarities, and their interactions with the environmental contingency factors of dynamism, munificence, and complexity on sales growth, profit growth, and market value growth. Using dynamic panel data analysis of 185 firms over an eight year period (2000-2007), I uncover a nuanced understanding of how advertising and R and D capital affect these performance measures. My results show that both R and D capital and advertising capital directly affect sales growth, but neither has a direct impact on profit growth. Furthermore, R and D capital has a direct impact on market value growth. I also find that while the interaction of advertising capital and R and D capital does not directly affect sales growth or market value growth, it has a positive direct impact on profit growth. Finally, I find that environmental contingencies matter. For instance, environmental dynamism negatively (positively) moderates the relationship between R and D (advertising) capital and sales growth.

publication date

  • August 2010