The impact of nutrition label regulation on firm marketing action and performance in china

Abstract

Although considerable research has been conducted on the impact of nutrition labeling in the economically developed world, there has been relatively little attention to the impact of such programs in developing economies. In 2013, China implemented the Food Nutrition Labeling Act (FNLA), requiring that more standardized information be provided on the packaging of food items. The focus of the current study is the impact of the standardized information disclosure requirement on firms in China, the world’s biggest developing economy. In particular, the authors examine the effect of this law on firms in terms of marketing responses (e.g., advertising, R&D, corporate social responsibility) and sales, using a longitudinal, quasi-experimental field study. Findings indicate that, in general, the FNLA has had a positive effect on advertising and R&D investment but a negative effect on donations. When accounting for firm size as an asymmetry, we observe that the FNLA has led to a greater increase in advertising for large firms and a greater increase in sales for small firms.