The Effect of Standardized Information on Firm Survival and Marketing Strategies

12 Pages Posted: 1 Apr 2007

See all articles by Christine Moorman

Christine Moorman

Duke University - Fuqua School of Business

Carl F. Mela

Duke University - Fuqua School of Business

Rex Yuxing Du

Duke University

Abstract

We argue that standardized information disclosure (information using a common format and uniform metrics) creates asymmetric opportunities for firms, which affects their strategies and survival. We test our predictions using a longitudinal quasi-experimental field study involving the Nutrition Labeling and Education Act of 1990 (NLEA) and focus on firm market share within a category as a key asymmetry. Findings indicate that, in general, the NLEA had no effect on firm responses. However, when accounting for firm differences, we observe that the NLEA led to: (1) an increase in small-share firm exits and (2) a greater increase in distribution for large-share firms. No concurrent increase in price by large-share firms following the NLEA was observed. We conclude by discussing the implications of these effects for firm strategy, the design of public policy, and theories regarding the impact of information on markets.

Keywords: Public Policy, Marketing Strategy, Competitive Strategy , Survival, Information Disclosure

Suggested Citation

Moorman, Christine and Mela, Carl F. and Du, Rex Yuxing, The Effect of Standardized Information on Firm Survival and Marketing Strategies. Marketing Science, Vol. 24, pp. 263-274, 2005 . Available at SSRN: https://ssrn.com/abstract=627643

Christine Moorman (Contact Author)

Duke University - Fuqua School of Business ( email )

United States
919.660.7856 (Phone)
919.681-6245 (Fax)

HOME PAGE: http://www.duke.edu/~moorman

Carl F. Mela

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States
919-660-7767 (Phone)

Rex Yuxing Du

Duke University ( email )

100 Fuqua Drive
Durham, NC 27708-0204
United States

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