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The Effect of Standardized Information on Firm Survival and Marketing Strategies

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Author Info

  • Christine Moorman

    ()
    (Fuqua School of Business, Duke University, Box 90120, Durham, North Carolina 27708)

  • Rex Du

    ()
    (Fuqua School of Business, Duke University, Box 90120, Durham, North Carolina 27708)

  • Carl F. Mela

    ()
    (Fuqua School of Business, Duke University, Box 90120, Durham, North Carolina 27708)

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    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 we 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.

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    File URL: http://dx.doi.org/10.1287/mksc.1040.0094
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    Bibliographic Info

    Article provided by INFORMS in its journal Marketing Science.

    Volume (Year): 24 (2005)
    Issue (Month): 2 (September)
    Pages: 263-274

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    Handle: RePEc:inm:ormksc:v:24:y:2005:i:2:p:263-274

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    Related research

    Keywords: public policy; marketing strategy; competitive strategy;

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    Cited by:
    1. George Zinkhan & Cara Peters & Candice Hollenbeck, 2008. "Do empirical studies address the objectives of the nutrition labeling and education act: a review and synthesis relevant for marketing academicians," International Review on Public and Nonprofit Marketing, Springer, vol. 5(2), pages 89-116, December.
    2. Caldeira, Monica & Sottomayor, Miguel & Souza Monteiro, Diogo M., 2011. "Portuguese Retailers’ Motivations to Adopt Front of Pack Nutrition Labels: A Qualitative Analysis," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 109189, Agricultural and Applied Economics Association.
    3. Sanjeev K. Routray, 2006. "Two Kinds of Activism: Reflections on Citizenship in Globalising Delhi," Working Papers id:463, eSocialSciences.
    4. Lee, In Hyeock & Rugman, Alan M., 2012. "Firm-specific advantages, inward FDI origins, and performance of multinational enterprises," Journal of International Management, Elsevier, vol. 18(2), pages 132-146.
    5. Theoharakis, Vasilis & Vakratsas, Demetrios & Wong, Veronica, 2007. "Market-level information and the diffusion of competing technologies: An exploratory analysis of the LAN industry," Research Policy, Elsevier, vol. 36(5), pages 742-757, June.

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