Author(s)

K. S. Sujit, B. Rajesh Kumar

Institute of Management Technology, Dubai, UAE.

Advertisement and R & D expenditures are often considered as strategic variables which add value to the firm. During recession these expenses are often been compromised due to various reasons by the firms. This sometimes proves out to be costly for the firms in long run as they fail to catch up even after recession is over. Firms while taking these decisions often ignore the interaction effect of these variables with other variables in affecting profitability. This paper aims to show that Advertisement and R & D activities have moderated other variables in positively affecting performance especially during recession. Hence, firms must take into consideration the interaction effects of R & D and advertisement intensities with other important variables.

R & D Expenses, Advertising Expenses, Interaction Effects, Recession, Profitability

Sujit, K. and Kumar, B. (2016) Impact of Discretionary Expenditures on Profitability during Recession: Evidence from Manufacturing Sector in India. Theoretical Economics Letters, 6, 376-387. doi: 10.4236/tel.2016.63042.