PRINCIPAL-AGENT PROBLEMS AND STRUCTURAL CHANGE IN THE ADVERTISING INDUSTRY

NOTES AND REFERENCES

• J. K. Galbraith, The Affluent Society, Houghton Mifflin, New York, 1958; V. Packard, The Hidden Persuaders, Longmans London, 1957. For a useful discussion, see M.A. Utton, The Political Economy of Big Business, Martin Robertson, 1982, ch. 4; and for a pioneering attempt by an economist to bring some psychology to bear in this area, see S.C. Littlechild, ‘Controls on advertising: an examination of some economic arguments’, Journal of Advertising, 1, 1982, pp.25–37.
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• Notably, R. Dickinson, A. Herbst and J. O'Shaughnessy, ‘Marketing concept and consumer orientation’, European Journal of Marketing, 20, 1986, pp.18–23.
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• E. F. Fama, ‘Agency problems and the theory of the firm’, American Economic Review, 70, 1980, pp.971-83; O. Hart and B. Holmstrom, ‘The theory of contract’, in T. Bewley (ed.), Advances in Economic Theory, Cambridge University Press, Cambridge, 1987.
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• G. J. Stigler, ‘A note on block booking’, in G. J. Stigler (collection), The Organization of Industry, Irwin, Homewood, IL, 1968; W.J. Adams and J.L. Yellen, ‘Commodity bundling and the burden of monopoly’, Quarterly Journal of Economics, 92, August 1976, pp.475-98; and W. M. Cready, ‘Premium bundling’, Economic Inquiry, 29, January 1991, pp.173–9.
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• W.J. Baumol, J.C. Panzar and R.D. Willig, Contestable Markets and the Theory of Industrial Structure, Harcourt Brace Jovanovich, San Diego, 1982.
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• P. E. Earl, ‘Normal cost versus marginalist models of pricing: a behavioural perspective’, Journal of Post Keynesian Economics, 13, Winter 1990-91, pp.264–81.
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• These examples come from R. Olins, ‘Selling with star billing’, Sunday Times, 17 June 1990, Arts section, p.9.
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• D. Lodge, Nice Work, Penguin Books, Harmondsworth, London, 1989, pp.220–4.
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• J. Ferry, ‘Cutting Saatchis down to size’, Australian Business, 7 February 1990, pp.52–7.
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• ibid., p.54.
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• The proof of the pudding; a survey of the advertising industry’, Economist, 9 June 1990, pp.15–16.
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• See N. Shoebridge, ‘How ad dollars make Mitchell a media power’, Business Review Weekly, 8 June 1990, pp.86-9, esp. 89.
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• Hill Holliday's strategy is detailed in ‘Japan's careful move upmarket’, Car Magazine, September 1989, pp.36, 41.
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• Economist, ‘Elegant Nippon’, 8 December 1990, pp.71.
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• Economist, 9 June 1990, op. cit., p.4.
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• In The Australian Way, May 1990.
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• See D. Browne, ‘Agencies make a splash’, Australian Business, 14 March 1990, pp.52-6, esp. 56.
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• Ferry, op.cit., p.56.
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• See L. Marks and P. Kleinman, ‘The rise and rise of Saatchi and Saatchi’, Australian Business, 14 October 1987, pp.76-9, esp. 77.
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• T. Levitt, ‘The globalisation of markets’, Harvard Business Review, May-June 1983, pp.92–102.
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• See ‘Berkeley Square takes on Madison Avenue’, Economist, 17 September 1989, pp.21-4, esp. 24.
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• Even McDonald's experienced difficulties in gaining adherence to its philosophy when it sought to expand from its home base: see J. J. Love, McDonald's: Behind the Arches, Bantam Books, New York, 1986, ch.17.
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• For a discussion of the philosohical problems that arose when Omincom tried to merge its local Needham operation with the Sydney agency Magnus Nankervis and Curl, see T. Boreham, M. Davis, S. Hely and N. Shoebridge, ‘The frenzy to grow bigger’, Business Review Weekly, 16 June 1989, pp.93-8, esp. 96.
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• See p.76 of ‘The Saatchi brothers retreat’, Economist, 9 December 1989, pp.75-6, esp. 76.
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• See Boreham op.cit.; ‘Move over Arthur’, Economist, 22 November 1986, pp.68-70; M. Magnet, ‘Saatchi and Saatchi will keep gobbling’, Fortune International, 23 June 1986 pp.43-6; and D. O'Reilly, ‘Advertising's double speak’, Management Today, November 1986, pp.76-7, 144.
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• O'Reilly, ibid., p.76.
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• For an example of the latter involving the Westpac Banking Corporation and Westpac Life, see A. Boyd, ‘Westpac manager broke confidences’, Australian Financial Review, 14 March 1991, p.19.
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• Magnet, op.cit., p.46.
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• O'Reilly, op.cit., p.77.
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• Economist, 17 September 1989, op.cit., p.22. However, this seemed to ignore both the fact that Midland's troubles were largely due to non-performing Latin American loans, and the possibility that they could simply have sought to convince Midland to pay for their expertise. Given this, and the ‘Ponzi financing’ methods they used to build up their empire, it is no wonder that the Bank of England decided that they were not “fit and proper to own a bank” — a verdict which caused their share price to tumble and brought their acquisitions programme to a halt. See Ferry, op.cit., pp.55–7.
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• Economist, 9 December 1989, op.cit.; ‘The flight of Icarus’, Economist, 16 March 1991, pp.67-8, 72.
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• Economist, 9 June 1990, op.cit., p.13.
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• P. E. Earl, Monetary Scenarios: A Modern Approach to Financial Systems, Edward Elgar, Aldershot, 1990, pp.180–1.
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• Economist, 9 June 1990, op.cit., p.13.
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• Economist, 17 September 1989, op.cit., p.24.
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• Advertising's big bang’, Economist, 28 January 1989, pp. 61-2; Economist, 9 June 1990, op.cit., p. 17.
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• Shoebridge, op.cit.
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• Quoted in ibid., p.86.
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• Economist, 28 January 1989, op.cit., pp.61–2.
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• Stigler, op.cit., 1968, p.165.
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• Economist, 9 June 1990, op.cit., p. 14.
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• Shoebridge, op.cit., p.86.
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• ibid, p.89.
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• See R. Simpson, ‘Going for brokers’, Marketing, 5 January 1989, pp.35-6, esp. 35.
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• J. Hearne, Advertising Management, Nelson, Melbourne, 1987, pp.10–11.
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• Economist, 9 June 1990, op.cit., p.14.
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