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The Effect of Standardized Information on Firm Survival and Marketing Strategies

  • 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)

Registered author(s):

    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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    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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