Brand value creation: Analysis of the Interbrand-Business Week brand value rankings

Brand value has become an important corporate performance metric, as can be observed from the close following of the annual Top 100 Brand Values ranked by brand consultancy firm Interbrand and reported in Business Week. In this study, we employ a simultaneous equations model to examine the non-linear influence of lagged advertising, marketing promotions and R&D expenses on brand value after controlling for net income and lagged brand valuation. We infer that these lagged expenses yield diminishing returns to brand value. The effect of R&D expense is the weakest, possibly because it is confounded with the advertising and promotional effects. Differences across industry segments or country base are not statistically significant.