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The Effect of Standardized Information on Firm Survival and Marketing Strategies

Author

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  • 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)

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.

Suggested Citation

  • Christine Moorman & Rex Du & Carl F. Mela, 2005. "The Effect of Standardized Information on Firm Survival and Marketing Strategies," Marketing Science, INFORMS, vol. 24(2), pages 263-274, September.
    • Handle: RePEc:inm:ormksc:v:24:y:2005:i:2:p:263-274
    DOI: 10.1287/mksc.1040.0094
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    4. S. Duvaleix-Tréguer & A. Hammoudi & L. Rouached & L.G. Soler, 2012. "Firms' responses to nutritional policies," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 39(5), pages 843-877, December.
    5. n/a, 2012. "Commentaries and Reply to "Unintended Nutrition Consequences: Firm Responses to the Nutrition Labeling and Education Act" by Christine Moorman, Rosellina Ferraro, and Joel Huber," Marketing Science, INFORMS, vol. 31(5), pages 738-755, September.
    6. Wuyts, Stefan & Dutta, Shantanu, 2008. "Licensing exchange—Insights from the biopharmaceutical industry," International Journal of Research in Marketing, Elsevier, vol. 25(4), pages 273-281.
    7. 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;International Association of Public and Non-Profit Marketing, vol. 5(2), pages 89-116, December.
    8. Steven M. Shugan, 2007. "—Causality, Unintended Consequences and Deducing Shared Causes," Marketing Science, INFORMS, vol. 26(6), pages 731-741, 11-12.
    9. Wuyts, S.H.K. & Dutta, S., 2008. "Licensing exchange : Insights from the biopharmaceutical industry," Other publications TiSEM 79c0c1a5-b48c-4de2-aa6f-6, Tilburg University, School of Economics and Management.
    10. Christine Moorman & Rosellina Ferraro & Joel Huber, 2012. "Unintended Nutrition Consequences: Firm Responses to the Nutrition Labeling and Education Act," Marketing Science, INFORMS, vol. 31(5), pages 717-737, September.
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    13. 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.
    14. 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.
    15. Asirvatham, Jebaraj & McNamara, Paul E. & Baylis, Katherine R., 2010. "Did Implementing Nutrition Labeling and Education Act (NLEA) of 1990 Improve Diet?," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61660, Agricultural and Applied Economics Association.
    16. 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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    18. Sophie Hieke & Christopher L. Newman, 2015. "The Effects of Nutrition Label Comparison Baselines on Consumers' Food Choices," Journal of Consumer Affairs, Wiley Blackwell, vol. 49(3), pages 613-626, November.
    19. Gerard J. Tellis & Joseph Johnson, 2007. "The Value of Quality," Marketing Science, INFORMS, vol. 26(6), pages 758-773, 11-12.

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