Understanding the relationship between advertising spending and happiness at the country level

Understanding the Coevolution of Ad Spend by Media Channel and Retail Format Sales at the Country Level: A Multicountry Examination

“…First, we contribute to the GTCR literature, which provides a theoretical foundation for understanding country-level market competition under the advertising as information paradigm (Dickson 1992; Griffith, Lee, and Yalcinkaya 2022). Specifically, we advance the theoretical specificity of the GTCR by delineating the advertising media channels (i.e., traditional [nondigital], digital, and mobile) and retail formats (i.e., brick and mortar, e-commerce, and m-commerce) reflected in modern retailing.…”

“…We contend that sellers, as a whole, work to operate efficiently and effectively and select advertising media channels and retail formats that are appropriate to the environmental context; consumers, as a whole, source products from the most efficient and effective media channels and retail formats. Under the GTCR, advertising is argued to be an information source (Dickson 1992: Griffith, Lee, and Yalcinkaya 2022), enabling retail sales via an efficient market mechanism. Advertising contributes to inducing consumer interest and converting information-seeking consumers into buyers (Hu, Du, and Damangir 2014) in the short term and to the long-term success of sellers within a competitive environment (Bahadir and Bahadir 2020).…”

“…Institutional economics categorizes these structures as formal (rules, laws, constitutions) and informal (norms of behavior, conventions, and self-imposed codes of conduct) institutions. Griffith, Lee, and Yalcinkaya (2022) argue that its introduction into the GTCR is appropriate, as both theories make the same basic assumption—that is, firms within a country are profit maximizers and are willing to take advantage of opportunities afforded by the environment. To isolate the association between changes in ad spend by media channels and changes in retail format sales, we follow Griffith, Lee, and Yalcinkaya, who employ Davis and North's (1970, p. 133) definition of the institutional environment as “a set of fundamental political, social, and legal ground rules that govern economic and political activity.” We briefly discuss each of these elements, beginning with two elements of the formal institutional environment (i.e., political and regulatory institutions) and then the informal institutional environment (i.e., social institution).…”

“…Data for political and regulatory institutions were drawn from the Heritage Foundation Economic Freedom Index. The index, used in aggregate or in relation to one of its four specific dimensions, is used in the literature (e.g., Graafland and Noorderhaven 2020; Griffith, Lee, and Yalcinkaya 2022; Stephan, Uhlander, and Stride 2015). The change from the previous year's score in a political institution was operationalized as the rule of law.…”

“…Second, what universal associations between changes in ad spend by media channels and changes in retail format sales are found across country markets? By applying Dickson's (1992) general theory of competitive rationality (GTCR; which provides a theoretical foundation for understanding country-level market competition under the advertising-as-information paradigm; Dickson 1992; Griffith, Lee, and Yalcinkaya 2022) and drawing on prior works in international marketing examining ad spend at the country level (e.g., Bahadir and Bahadir 2020; Kim 2020), the current study extends the literature by exploring the association of changes in ad spend across media channels (i.e., nondigital, digital, and mobile) and retail format sales (i.e., brick and mortar, e-commerce, and m-commerce) at the country level and across countries. Through this effort, we make several contributions to international marketing practice and theory.…”