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...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
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UUM Press
2004-12-01
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| Series: | International Journal of Management Studies |
| Online Access: | https://e-journal.uum.edu.my/index.php/ijms/article/view/9176 |
| _version_ | 1797943102504173568 |
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| author | Shri Dewi Subramaniam Nor Ghani Md. Nor Ahmad Zainuddin Abdullah |
| author_facet | Shri Dewi Subramaniam Nor Ghani Md. Nor Ahmad Zainuddin Abdullah |
| author_sort | Shri Dewi Subramaniam |
| collection | DOAJ |
| description | 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 feedforward 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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| first_indexed | 2024-04-10T20:19:04Z |
| format | Article |
| id | doaj.art-936cab3fbf0b40bfa4edb31e19becf9f |
| institution | Directory Open Access Journal |
| issn | 2232-1608 2180-2467 |
| language | English |
| last_indexed | 2024-04-10T20:19:04Z |
| publishDate | 2004-12-01 |
| publisher | UUM Press |
| record_format | Article |
| series | International Journal of Management Studies |
| spelling | doaj.art-936cab3fbf0b40bfa4edb31e19becf9f2023-01-26T03:15:20ZengUUM PressInternational Journal of Management Studies2232-16082180-24672004-12-01112Advertizing, Concentration and Profitability in Malaysian Manufacturing Revisited: A Simultaneous Equation ApproachShri Dewi Subramaniam0Nor Ghani Md. Nor1Ahmad Zainuddin Abdullah2Fakulti Ekonomi Universiti Utara MalaysiaFakulti Ekonomi Universiti Kebangsaan MalaysiaFakulti Ekonomi dan Pengurusan Universiti Putra MalaysiaThe 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 feedforward 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. https://e-journal.uum.edu.my/index.php/ijms/article/view/9176 |
| spellingShingle | Shri Dewi Subramaniam Nor Ghani Md. Nor Ahmad Zainuddin Abdullah Advertizing, Concentration and Profitability in Malaysian Manufacturing Revisited: A Simultaneous Equation Approach International Journal of Management Studies |
| title | 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_short | 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 |
| url | https://e-journal.uum.edu.my/index.php/ijms/article/view/9176 |
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