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Abstract. Many researchers report that American Customer Satisfaction Index relates significantly and positively to firm value. The purpose of this paper is to examine whether such relation holds in the emerging markets such as Korea. Our preliminary OLS analysis reports that Korean customer satisfaction is irrelevant to firm value. Quantile regressions, applied for further analysis, report that customer satisfaction can be detrimental to firm value if the firm is enjoying the higher kind of value. These results undermine efforts, on the theoretical level, to establish Customer Satisfaction Index as a consolidated firm-value indicator; furthermore, managerial efforts to boost up firm value by managing customer satisfaction lose ground in the emerging markets. This study also corroborates Reinartz and Kumar's (2002) marketing insight that to satisfy customers, make them loyal, is trivial for profitability and firm value in Korea perspective. The practical implication of our finding is that the relation between customer satisfaction and firm value becomes more ambiguous, especially when it is considered in the emerging market contexts. It also provides management with a fresh new insight that they should take prudence when they increase expenses on customer satisfaction since it turned out to be not a "panacea".

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With regard to research and development (R&D), corporate finance tends to be too broad, whereas marketing tends to be too specific. Using the marketing–finance interface, new R&D expenditure variables are constructed to reflect industry rivalry by incorporating industry-year median and standard deviation. Market competition and customer satisfaction are also included in the regression. Dynamic generalized-method-of-moments regressions based on US data provide subversive results. Sales and cash flow, which are reported in prior literature to be associated with R&D investment, were insignificant. Leverage, known as detrimental to investment in intangible assets, such as R&D, contributed to rivalrous and strategic R&D investments. Of course, high market-to-book ratios encourage such R&D investments. However, in high-tech industries, market competition absorbs all other influences on R&D, though the impact of market competition on R&D is negative. We also expect that while high customer satisfaction in the product markets could broadly serve as a suppressor to R&D, it can also serve as a driver for young and high-tech firms.

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