Advertizing, concentration and profitability in Malaysian manufacturing revisited: A simultaneous equation approach
The original Structure-Conduct-Performance (SCP) paradigm that postulates a unidirectional relationship between concentration, advertizing and profitability had been used as the theoretical framework for many empirical works in industrial organizations before the mid seventies. Thereafter, doubts ha...
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my.uum.repo.2172010-07-11T07:19:22Z http://repo.uum.edu.my/217/ Advertizing, concentration and profitability in Malaysian manufacturing revisited: A simultaneous equation approach Subramaniam, Shri Dewi Md. Nor, Nor Ghani Abdullah, Ahmad Zainuddin TS Manufactures The original Structure-Conduct-Performance (SCP) paradigm that postulates a unidirectional relationship between concentration, advertizing and profitability had been used as the theoretical framework for many empirical works in industrial organizations before the mid seventies. Thereafter, doubts had begun to surface over the unidirectional postulate and there is new theory suggesting simultaneous interdependence. Unfortunately, not only are Malaysian studies in this area few and far between (exhaustive literature review yields only three published studies namely, Gan and Tham, 1977; Gan, 1978; and Rugayah, 1992), they also failed to incorporate the more recent theoretical development on the simultaneity of effects. This paper revisits the SCP paradigm as applied to the relationship among concentration, advertizing and profitability by conducting an empirical test that allows for simultaneous interdependence among variables. A set of three equations was estimated using three stage least squares (3SLS). The results provide considerable support to the feed forward and feedback effects between the three variables. Advertizing intensity exerts a significant influence on profit and concentration in the industry and there exists a feedback effect running from concentration to advertizing intensity. This finding suggests that advertizing does have an anti-competitive impact on the industry and therefore has a direct bearing on competition policy analysis. Universiti Utara Malaysia 2004 Article PeerReviewed application/pdf en http://repo.uum.edu.my/217/1/advertising%2C_concentration_%26_profitability.pdf Subramaniam, Shri Dewi and Md. Nor, Nor Ghani and Abdullah, Ahmad Zainuddin (2004) Advertizing, concentration and profitability in Malaysian manufacturing revisited: A simultaneous equation approach. International Journal of Management Studies (IJMS), 11 (2). pp. 63-72. ISSN 0127-8983 http://www.ijms.uum.edu.my |
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TS Manufactures Subramaniam, Shri Dewi Md. Nor, Nor Ghani Abdullah, Ahmad Zainuddin Advertizing, concentration and profitability in Malaysian manufacturing revisited: A simultaneous equation approach |
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The original Structure-Conduct-Performance (SCP) paradigm that postulates a unidirectional relationship between concentration, advertizing and profitability had been used as the theoretical framework for many empirical works in industrial organizations before the mid seventies. Thereafter, doubts had begun to surface over the unidirectional postulate and there is new theory suggesting simultaneous interdependence. Unfortunately, not only are
Malaysian studies in this area few and far between (exhaustive literature review yields only three published studies namely, Gan and Tham, 1977; Gan, 1978; and Rugayah, 1992), they also failed to incorporate the more recent
theoretical development on the simultaneity of effects. This paper revisits the SCP paradigm as applied to the relationship among concentration, advertizing and profitability by conducting an empirical test that allows for simultaneous interdependence among variables. A set of three equations was estimated using three stage least squares (3SLS). The results provide considerable support to
the feed forward and feedback effects between the three variables. Advertizing intensity exerts a significant influence on profit and concentration in the industry and there exists a feedback effect running from concentration to
advertizing intensity. This finding suggests that advertizing does have an anti-competitive impact on the industry and therefore has a direct bearing on competition policy analysis. |
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Article |
author |
Subramaniam, Shri Dewi Md. Nor, Nor Ghani Abdullah, Ahmad Zainuddin |
author_facet |
Subramaniam, Shri Dewi Md. Nor, Nor Ghani Abdullah, Ahmad Zainuddin |
author_sort |
Subramaniam, Shri Dewi |
title |
Advertizing, concentration and profitability in Malaysian manufacturing revisited: A simultaneous equation approach |
title_short |
Advertizing, concentration and profitability in Malaysian manufacturing revisited: A simultaneous equation approach |
title_full |
Advertizing, concentration and profitability in Malaysian manufacturing revisited: A simultaneous equation approach |
title_fullStr |
Advertizing, concentration and profitability in Malaysian manufacturing revisited: A simultaneous equation approach |
title_full_unstemmed |
Advertizing, concentration and profitability in Malaysian manufacturing revisited: A simultaneous equation approach |
title_sort |
advertizing, concentration and profitability in malaysian manufacturing revisited: a simultaneous equation approach |
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Universiti Utara Malaysia |
publishDate |
2004 |
url |
http://repo.uum.edu.my/217/1/advertising%2C_concentration_%26_profitability.pdf http://repo.uum.edu.my/217/ http://www.ijms.uum.edu.my |
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