Drivers of cross-national variation in advertising spending: A longitudinal analysis of the effects of freedom and foreign direct investment

• Economies differ in size of ad spending market.
• Analysis indicated that the freedom and FDI have significant effects on ad spending.
• Environmental factors are crucial for understanding ad spending to national markets.
• Advertisers need to come up with creative advertising strategies to target markets with high income and high degree of political freedom.

We examine the effects of freedom and foreign direct investment on ad spending. We also assess possible differential effects of foreign direct investment (FDI) on ad spending across economies with different income levels. We employed random effect time-series cross-sectional (TSCS) models linear in parameters for fifty economies using annual data from Euromonitor and other sources for the 2000–2013 period. We found that freedom and FDI have significant effects on ad spending. A theoretical contribution of this study to the literature consists in showing that macro-level environmental factors such as political freedom and FDI are crucial for understanding how firms allocate their ad spending to national markets. It also shows that the effect of FDI on ad spending is more salient in low income economies than in high income economies.

Chinese Abstract本文将研究自由度和外国直接投资对广告支出的影响。我们也将评估外国直接投资 （FDI） 广告支出的差异性影响，对比位于不同收入等级的经济体。我们对50个经济体2000年-2013年期间的年度数据进行了随机的时间序列和横断面分析，数据源于欧睿 （Euromonitor） 和其他来源。我们发现自由度和外国直接投资对广告支出有显著影响。本研究的理论贡献包括：表明自由度和外国直接投资等宏观环境因素对理解企业如何在各国市场分配广告支出有关键影响。它还表明外国直接投资在低收入经济体对广告支出的影响比在高收入经济体的影响更显著。