Journal of Political Economy· 2016Q1
Text-Based Network Industries and Endogenous Product Differentiation
- 2,124citations
- Q1SCImago
- 2016year
Short summary
New text-based measures of product similarity from 10-K filings reveal dynamic industry structures and show that firms actively differentiate their products through R&D and advertising.
AI-generated from the title and abstract; the full text is not read.
Key points
- Developed new time-varying product similarity measures using text analysis of 10-K filings.
- Generated dynamic industry structures with distinct, evolving competitor sets for each firm.
- Measures explain high competition discussions and industry changes after exogenous shocks.
- Firm R&D and advertising are linked to subsequent product differentiation from competitors.
AI-generated from the title and abstract; the full text is not read.
Abstract
We study how firms differ from their competitors using new time-varying measures of product similarity based on text-based analysis of firm 10-K product descriptions. This year-by-year set of product similarity measures allows us to generate a new set of industries in which firms can have their own distinct set of competitors. Our new sets of competitors explain specific discussion of high competition, rivals identified by managers as peer firms, and changes to industry competitors following exogenous industry shocks. We also find evidence that firm R&D and advertising are associated with subsequent differentiation from competitors, consistent with theories of endogenous product differentiation.
The authors' abstract, as published at the source. Journal of Political Economy, 2016 · DOI ↗
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Field: Strategy and Management
Strategy and ManagementBusiness, Management and Accounting