Know your competitors: Customer identity disclosure by competitors and a firm's production efficiency

Abstract

When planning production, a firm must consider internal factors and factors related to their competitors as well. We examine whether the disclosure of customer identity by competitors is associated with a firm's production efficiency. Using a sample of Chinese firms, we find that a firm's total factor productivity is positively related to the disclosure, suggesting that a firm benefits from knowing the identity of its competitors' customers. The effect is more salient when a firm belongs to a competitive industry or is a market leader, suggesting a firm may be able to optimize its productivity when the information is more critical to its business.