Browse > Article
http://dx.doi.org/10.11627/jkise.2016.39.4.026

The Financial Impact Generated by Shifts in Value Strategic Emphasis  

Hong, Kichul (Graduate School of Management Consulting, Hanyang University)
Park, Kwangho (Department of Business Administration, Hanyang University)
Publication Information
Journal of Korean Society of Industrial and Systems Engineering / v.39, no.4, 2016 , pp. 26-39 More about this Journal
Abstract
Korea's main manufacturing industries, which have led its economy for the past three decades, are faced with a serious downturn and loss of competitive advantages due to the current economic depression, China's rise, and the drop of oil prices. Korean business firms must adopt the paradigm shift in their value strategies, along with a government-led industrial restructuring in order to gain sustainable competitive advantages. Business firms allocate their limited resources between value creation and value appropriation, however, what effect does strategic emphasis on value creation versus value appropriation have on a business firm's financial performance? This paper empirically addresses this issue by examining the effect of shifts in strategic emphasis on stock return. Furthermore, this study examines appropriate choices of strategic emphasis to gain differential financial performance. The data set used in this regression analysis comes from the KISLINE database of NICE Information Service. The variables that form the basis of this analysis are stock return, ROA, and Strategic Emphasis [(advertising expenditures-R&D expenditures)/assets]. The interactive effect with situational factors regarding the firm and the type of technological environment in which the firm is operating was also analyzed. Our results show that investors acknowledge a shift of strategic emphasis as a sign of stock valuation. In comparison to US, Korean business firms have weak value creation capabilities in high-technology industries, and weak value appropriation capabilities in low-technology industries. This proves Korean firms are fast followers in the global market. Our findings suggest that Korean firms have to adopt a balanced value strategy, nurturing value creation and developing value appropriation for overcoming the current economic downturn and becoming a first mover in the dawn of "Industry 4.0."
Keywords
Value Strategy; Value Creation; Value Appropriation; Strategic Emphasis;
Citations & Related Records
Times Cited By KSCI : 2  (Citation Analysis)
연도 인용수 순위
1 Aaker, D.A., Measuring Brand Equity Across Products and Markets, California Management Review, 1996, Vol. 38, No. 3, pp. 102-121.   DOI
2 Anderson, J.C., Narus, J.A., and Rossum, W.V., Customer Value Propositions in Business Markets, Harvard Business Review, 2006, Vol. 84, pp. 90-99.
3 Asley, R., Granger, C.W.J., and Schmalensee, R., Advertising and Aggregate Consumption : An Analysis of Causality, Econometrica, 1980, Vol. 48, No. 5, pp. 1149-1167.   DOI
4 Bowman, C. and Ambrosini, V., Value Creation Versus Value Capture: Towards a Coherent Definition of Value in Strategy, British Journal of Management, 2000, Vol. 11, No. 1, pp. 1-15.   DOI
5 Brandenburger, A.D. and Stuart, Jr. H.W., Value-Based Business Strategy, Journal of Economics and Management Strategy, 1996, Vol. 5, No. 1, pp. 5-24.   DOI
6 Chandler, A.D., The Competitive Performance of U.S. Industrial Enterprises Since the Second World War, Business History Review, 1994, Vol. 68, No. 1, pp. 1-72.   DOI
7 Denison, E.F., The Sources of Economic Growth in the United States, New York : Committee for Economic Development, 1962.
8 Digital Times, Use the Mes to the Crisis Insensitivity, 2015-12-17, http://dt.co.kr.
9 Erickson, G. and Jacobson, R., Gaining Comparative Advantage Through Discretionary Expenditures : the Returns to R&D and Advertising, Management Science, 1992, Vol. 38, No. 9, pp. 1264-1279.   DOI
10 Gatignon, H. and Xuereb, J.M., Strategic Orientation of the Firm and New Product Performance, Journal of Marketing Research, 1997, Vol. 34, No. 1, pp. 77-90.   DOI
11 Golder, P.N., Historical method in Marketing Research with New Evidence on Long-Term Market Share Stability, Journal of Marketing Research, 2000, Vol. 37, No. 2, pp. 156-172.   DOI
12 Grant, R., The Resource-Based Theory of Competitive Advantage : Implications for Strategy Formulation, California Management Review, 1991, Vol. 33, No. 3, pp. 114-135.   DOI
13 Griliches, Z., R&D and Productivity, in Handbook of the Economics of Innovation and Technological Change, Paul Stoneman, Blackwell Publishers, Oxford England, 1995, pp. 52-89.
14 Kessides, I.N., The Persistence of Profits in U.S. Manufacturing Industries, in the Dynamics of Company Profits, Dennis Mueller, Cambridge University Press, 1990.
15 Han, S.H., Chung, K.S., and Hong, S.P., Effect of Quality Management to Performance : Focusing Manufacturing Companies Awarding Korean National Quality Awards, Journal of the Society for Quality Management, 2014, Vol. 42, No. 4, pp. 729-746.
16 Chosun Ilbo, Korea's Economy is a Toothless Tiger in Winter, 2015-12-16, http://news.chosun.com.
17 Harrison, J.S., Hall, E.H., and Nargundkar, R., Resource Allocation as an Outcropping of Strategic Consistency : Performance Implications, Academy of Management Journal, 1993, Vol. 36, No. 5, pp. 1026-1051.   DOI
18 Kleinbaum, D.G., Kupper, L.L., Muller, K.E., and Nizam, A., Applied Regression Analysis and Multivariable Methods, Pacific Grove, CA : Duxbury, 1998, 3rd ed. pp. 115-117.
19 Lee, H.-W. and Baek, D.-H., The Effect of National Aid Programs to Small Business in Global R&D Cooperation Outcome and Global Business Activities, Journal of the Society of Korea Industrial and Systems Engineering, 2014, Vol. 37, No. 4, pp. 177-186.   DOI
20 Lei, D., Hitt, M.A., and Bettis, R., Dynamic Core Competencies Through Meta-Learning and Strategic Context, Journal of Management, 1996, Vol. 22, No. 4, pp. 549-569.   DOI
21 Levin, R.C., Klevoric, A.K., Nelson, R.R., and Winter, S.G., Appropriating the Returns from Industrial Research and Development, Brookings Papers on Economic Activity, 1987, Vol. 3, pp. 783-831.
22 Lumley, T. and Diehr, P., The Importance of the Normality Assumption in Large Public Health Data Sets, Annu, Rev. Public Health, 2002, Vol. 23, pp. 151-169.   DOI
23 Mizik, N. and Jacobson, R., Trading Off between Value Creation and Value Appropriation : the Financial Implications of Shifts in Strategic Emphasis, Journal of Marketing, 2003, Vol. 67, No. 1, pp. 63-76.   DOI
24 Maeil Business Newspaper, SeAh Steel, Solving Bad Factor, 2016-10-5, http://news.mk.co.kr.
25 Maeil Business Newspaper, Top 10 Conglomerates Sit on Record Cash Reserve, http://news.mk.co.kr.
26 Mansfield, E., Rapoport, J., Romeo, A., Wagner, S., and Beardsley, G., Social and Private Rates of Return From Industrial Innovation, Quarterly Journal of Economics, 1977, Vol. 91, No. 2, pp. 221-240.   DOI
27 Munhwa Ilbo, Korea's Crisis of Scientific and Technology, 2016-6-10, http://munhwa.com.
28 Park, B.-J., Statistics For Business and Economic Using MS Excel & ETEX, 4th ed. Sigmapress, 2013, p. 592.
29 Park, K.-H., A Balanced Value Strategy Framework for the Strategy Paradigm Shift, Journal of the Korea Management Engineers Society, 2015, Vol. 20, No. 1, pp. 111-146.
30 Park, S.-R. and Lee, Y.-H., Industry Competitiveness Analysis of Korea, Korea Economic Research Institute, 2009, pp. 2-226.
31 Peteraf, M.A., The Cornerstones of Competitive Advantage : A Resource-Based View, Strategic Management Journal, 1993, Vol. 14. No. 3, pp. 179-191.   DOI
32 Rob, K., Multiple Regression, Minitab Assistant White Paper, 2014.
33 Schumpeter, J.A., Capitalism, Socialism, and Democracy, New York : Harper and Row, 1942.
34 Seoul Economic Daily, WTO against US Anti-Dumping Duties on Korea Washer Makers, 2016-9-8, http://sedaily.com.
35 Woodruff, R.B., Customer Value : the Next Source for Competitive Advantage, Journal of the Academy of Marketing Science, 1997, Vol. 25, No. 2, pp. 139-153.   DOI
36 Solow, R.M., Technical Change and the Aggregate Production function, Review of Economics and Statistics, 1957, Vol. 39, No. 3, pp. 312-320.   DOI
37 Srivastava, R.K., Shervani, T.A., and Fahey, L., Market-Based Assets and Shareholder Value : A Framework for Analysis, Journal of Marketing, 1998, Vol. 62, No. 1, pp. 2-18.   DOI
38 Teece, D.J., Profiting for Technological Innovation : Implications for Integration, Collaboration, Licensing, and Public Policy, in the Competitive Challenge : Strategies for Industrial Innovation and Renewal, D. Teece, ed. Cambridge, MA : Ballinger Publishing Company, 1987.