Business

Herron, Nancy L. The Social Sciences: A Cross-Disciplinary Guide to Selected Sources, 3rd ed. Greenwood Village, Colo. : Libraries Unlimited, 2002. pp.121-125

Business
Gary W. White
ESSAY 

Business administration and closely related disciplines probably generate more information sources than any other area in the social sciences. The demand by the business community for an array of types of information has driven the publication of print and electronic business resources to an all-time high. There are several recent trends that contribute to the need for data for a variety of purposes.

The United States experienced an unprecedented economic boom during the last ten years. Beginning in 1991, the U.S. economy enjoyed continued economic growth, lower inflation, and lower employment. In fact, consumer inflation in 1999 was only 1.9 percent, the lowest in thirty-four years, 1 and unemployment in November 2000 was below 4 percent. 2 The tremendous stock market boom was at the same time a significant cause of this prosperity as well as a reflection of the economic strength of the United States. As of spring 2000, Federal Reserve data showed that nearly 50 million households, roughly one-half of the United States, now have investments in the stock market. The corresponding growth of online trading and day trading is also significant. A recent report by Forrester Research showed that 26 percent of Americans trade stock online. 3 There has been a correspondingly high demand for information related to investing and other areas of business, such as company or industry information and news, as more and more Americans entered the stock market.

The business downturn that began in late 2000 and has extended into 2002 has brought a new urgency to the demand for business information, economic intelligence, and new paradigms of management.

The rise of the Internet during the 1990s revolutionized the world. In libraries, it changed the very core of information delivery. Business-related informational sites constitute a huge portion of the Internet. In addition to “democratizing investing,” because information is now readily accessible to everyone, the Internet also allows users unlimited potential in the search for information. The myriad of resources can, however, make these searches difficult. Other technological developments, especially those dealing with networking and communicating, further change how businesses operate and the nature of the informational needs of those seeking business information. The other impact of the Internet is the rise of Web-based businesses, or electronic commerce. E-commerce related ventures have contributed to the huge increases in the stock market as well as fundamentally changing how businesses operate and generate revenues. These trends, again, affect the need for informational resources in a variety of formats, especially electronic. To illustrate the impact of the Internet, one writer suggests that things are changing so fast that one business calendar year equals seven Internet business years. 5

The other major trend of the last decade is the globalization of business. The breakdown of political systems in some countries, coupled with advances in telecommunications and the Internet, have allowed companies to enter new markets at an unforeseen pace. The downside is that the United States is now affected by events in other countries, such as the Asian financial crisis of 1997-1998. 6 In terms of business information needs, globalization of business has created a growing demand for country information, market research, political and economic risk, and demographic data. An awareness of these ongoing trends is important in using and interpreting business information resources. In addition, the value of information is readily apparent to companies operating in today’s global environment. The ability to obtain and apply current information is directly tied to the ability to survive and succeed. The rapid growth and changing nature of business information products reflect this demand.

Functional areas of business
A basic understanding of the major functional areas of business is important in the provision of effective business reference services. The more knowledge one has about each of these areas, the more one increases the understanding of reference queries as well as the ability to locate appropriate sources of information. A summary of the scope of each function, including examples of typical information, follows.

Accounting is the basic system used to record and report data related to the operations and events that affect a company. Accounting data can be used by the management of an organization to plan, make strategic decisions, budget, and track performance. Accounting data are also useful to outside parties, including investors, creditors, and regulatory agencies. The financial data reported by a company to provide a measure of the profitability as exemplified by the income statement, which describes earnings or profits, and the balance sheet, which summarizes assets, liabilities, and shareholder equity. Financial accounting is sometimes referred to as the branch of accounting that provides those outside the organization with information, while managerial accounting refers to accounting data used by the owners and employees of a business.

Generally Accepted Accounting Principals (GAAP) are the rules and procedures used to record and report financial information. The Financial Accounting Standards Board (FASB) is an independent, non-profit organization that is the primary body determining financial accounting standards in the United States through the creation of new or modification of existing accounting principles. The main purpose of GAAP is to ensure that financial activities over time. Reference works related to GAAP and FASB are covered in this chapter.

Finance is the field of business concerned with maximizing shareholder wealth through the effective management and use of various competing financial resources. Finance encompasses several basic components. Capital budgeting is an area of finance concerned with the cost of capital and the valuation of assets. The second area is corporate finance, which involves the study of finance as it relates to the individual firm. Included are such topics as making investments, acquiring capital, and managing daily cash flow. Money, banking and financial instruments, including stocks, bonds, and treasury securities, make up the third branch of finance.

Management refers to the coordination of all of an organization’s resources, including fixed assets such as property, financial, information resources, and human resources to meet the goals of the organization. Coordination of resources is achieved through planning, acquiring resources, organizing or allocating resources, and controlling. Over the years there have been numerous schools of thought and theories related to management. The most comprehensive definition views management as the integrative process by which individuals create, maintain, and operate an organization through the selection of a set of goals. The discipline is firmly grounded in the behavioral and social sciences, and information seeking in management reflects interest in research on topics such as strategic planning, motivation, job satisfaction, leadership and knowledge management.

Marketing is the business function concerned with getting the firm’s goods or services into the hands of the customer. It includes such activities as product life decisions (including new product information), consumer behavior, pricing, distribution, branding, selling, advertising, and public relations. The four variables that a company can control are known as the four Ps: product, place, promotion, and price. Market research may be the most information-intensive activity of the organization because it is the attempt to uncover critical factors related to new product development, target markets, competitor activities, size and characteristics of the of the market, pricing, and advertising. Most good market researchers are familiar with standard businesses reference materials that may provide information on topics ranging from the disposable income of households in a particular geographic location to the amount of money a competitor is spending on advertising. The section of this chapter entitled “Marketing, Demographics, and Advertising” covers the standard marketing reference materials.

Information is a key commodity that is crucial to the success of a company. However, it typically is not segmented into the various functional areas described above. Rather, information from these areas is integrated and viewed as a strategic resource essential to the entire organization. A single piece of information may be of use to those in various departments and levels of the organization. For example, demographic or economic data will be of interest to managers as well as those in product development and advertising.

Primary versus secondary information
We have already discussed the concept of information as a central, strategic commodity. Information can be further classified as either primary or secondary. Primary data are collected to fill a specific research need. For example, to solve a particular problem or answer some specific questions, a company may decide to collect data through a market research survey or by conducting an experiment. Secondary data consist of information that is collected for purposes other than the research need at hand. Internal secondary data are available within the organization in such sources as accounting statement, sales records, or other information on a company’s intranet. External secondary data are gathered from sources outside the organization, such as suppliers, competitors, customers, and libraries. If a company examines its sale records to gather demographic data about its customers, it is engaged in an examination of internal secondary information. If the same firm decided to conduct a literature search for information on consumers of products similar to their own, this material would also constitute external secondary data. The company is making use of data gathered by someone outside the company for reasons that are related to the company’s information need but were not specifically gathered for that company. This chapter deals exclusively with external secondary data sources available in business libraries.

Key business research concepts
Public and private companies
All companies are classified as either public or private. The differences between private and public companies have an enormous impact on the types of information that a company is required to disclose and that which is made available to the public. Privately owned companies are established either by an individual (single proprietorship), a small group of individuals (partnership), or a larger group of investors (closely held). The funds that are used to establish and operate private companies have been invested by individuals who hope to gain some profit from their investment. Because the company is wholly owned by these individuals, there are limited legal disclosure requirements. Laws governing corporations vary from state to state. Therefore, it is very difficult or impossible to find out what the earned income of the local corner store or gas station has been for the past year. The privately owned firm is simply not required to disclose any financial information to the public, so it usually does not.

Publicly owned firms are companies that are owned by shareholders. The Securities Act of 1933 and the Securities and Exchange Act of 1934 were enacted to oversee the formation and operations of publicly traded corporations, to protect the public from investor fraud, and to require that vital information be provided for public inspection. Public companies therefore publish annual and quarterly reports (among others) that contain financial statements that have been verified for accuracy by major accounting firms. The U.S. Securities and Exchange Commission (SEC) was established to provide oversight and to ensure that disclosure standards are followed by each publicly owned firm. Information from publicly traded companies is available to the general public and is therefore far easier to locate. Information supplied to SEC is used to create many standard business reference sources.

When conducting company research, the first step must always be to establish whether a firm is public or private. If it is public and traded on one of the stock exchanges or over-the-counter (a computerized network of security dealers), it will always be possible to gather financial information about that company. The major stock exchange in the United States is the New York Stock Exchange and the major over-the-counter is the NASDAQ (National Association of Securities Dealers Automated Quotation system). There is also likely to be considered commentary on the company’s prospects or performance provided by analysts and the business press. Researchers can thus find information through annual reports and other SEC filings or through indexing and abstracting services covering the business literature. Sources are described more fully in this chapter under the “Company Information” and “Indexing, Abstracting, and Full-Text” sections.

On the other hand, finding information on the privately owned local company will require completely different tactics. It may be necessary to interview suppliers, competitors, or customers to begin to assess its financial health. Frequently one must rely on industry data as the only reliable secondary source of information available in published format. One other point to bear in mind is that some companies (e.g., banks, public utilities, insurance companies) belong to industries that are regulated by state or federal government agencies. Sometimes these companies are private or subsidiaries of other companies and are not selling stock on the open market. However, they are still required to disclose financial information. A number of the standard business directories listed in this chapter enable the researcher to determine the legal status of a company.

Corporate parents, subsidiaries, and affiliates
Research on public companies can be confusing because a large company can be a parent company (a company that owns or controls another company); a subsidiary (a company owned or controlled by another company, i.e., the parent company); or an affiliate (a company that has an owner at less than 50 percent). Sometimes researchers are also interested in specific divisions or internal units of a company, or joint ventures, which are businesses in which two or more companies own ownership.

The large numbers of mergers and acquisitions over the past decade has had a major impact on the strategy a researcher must use to locate information on a firm. The concept of parent and subsidiary is important with regard to public companies because such companies are legally required to disclose financial information at the parent level. This means that it is sometimes difficult to determine the exact financial status of a subsidiary corporation or to determine how subsidiary performance is affecting the corporation’s overall performance.

Although parent companies are not required to report the segment income of their subsidiaries, many frequently do. The important point to bear in mind is that the information search must initially focus on the parent company if one is attempting to find information about a company that is a subsidiary of another. This chapter presents a number of reference tools that can assist in determining parent and subsidiary relationships as well as other business relationships between companies.

Industries
An industry is a group of companies that are involved in the same type of business. For example, American Airlines and United Airlines are both companies that operate in the air transportation industry. When conducting research on a company, it is also important to gather information on the industry in which it operates. Industry research provides insight into the performance of the specific company in relation to the other companies in the industry. Until recently, industries were classified by a system known as the Standard Industrial Classification (SIC) system. This system, developed by the Office of Management and Budget of the U.S. federal government, assigns four-digit codes to each industry. This system, in place for over fifty years, has recently been replaced with the North American Industrial Classification System (NAICS). The six-digit NAICS code will provide more specific industry classifications. In addition, NAICS includes over 350 industries, including many service and technology industries, not classified by SIC. The “Industry” section of this chapter covers the SIC and NAICS systems in more detail and covers the standard reference sources for conducting industry research.

Business periodical literature
For those conducting research, it is critical to have an understanding of the distinctions among trade, popular, and scholarly journals. Trade journals are typically published for a specific industry and are produced primarily for practitioners in that industry. Many trade journals are published by professional trade associations for a particular industry. Examples are Advertising Age, Air Transport World, Supermarket News, and Chemical Week. Many of these journals publish important information about the industry that may be difficult to locate elsewhere.

Popular business titles are those titles available at newsstands. They are aimed at a mass audience and are typically distributed on a national basis. These titles provide coverage of the major events and trends affecting businesses, as well as articles on specific companies or individuals. Examples are Business Week, Forbes, Fortune, Inc., and Money. Many of these titles publish reference information, such as the Fortune 500 or Business Week’s ranking of business schools.

Timeliness of information is essential to meet the needs of researchers and those in the business community. An awareness of the scope and structure of the business periodical literature is necessary to have a good overview of how to conduct research and find information. The indexing and abstracting services section of this chapter are important tools to navigate the business periodical literature.

In organizing and outlining the most important guides, handbooks, encyclopedias, dictionaries, and other reference sources, arrangement can be either by format (e.g., handbook) or by type (e.g. company information). However, business information sources generally fall into both types of categories. Thus, this chapter is arranged by dual fashion. The result is that users will have a good overview of major business reference sources by type and by format. However, sources are not duplicated.

The sources presented in this chapter will provide the business researcher with a good overview of the basic business reference sources that are found in most libraries. A familiarity with these sources and the information they provide will aid any librarian serving those with business-related questions.