“Revealing the Essence of Reading: Understanding Corporate Identity Through Reading Habits” – A recent study spearheaded by the Complexity Science Hub (CSH) delves into the intricate relationship between the amount of information firms absorb and their size by scrutinising the online reading behaviours of millions of companies around the globe.
The study likens how companies process information to the functioning of biological organisms, where information is not merely absorbed but also transmitted and transformed to guide decision-making. Eddie Lee, a co-author of the study from CSH, notes the similarity in dynamics but with a twist in scale. He observes that more considerable organisations process information more adeptly and encounter pronounced challenges in coordinating this vast amount of data.
Researchers at CSH have meticulously analysed a broad dataset capturing the reading habits of employees from countless firms over a fortnight. This dataset includes interactions with prominent publications such as The Wall Street Journal, Bloomberg, and Forbes and niche platforms like ITCentral Station and Questex. Eddie Lee remarked on the significance of this analysis, highlighting it as a pioneering deep dive into the dataset that uncovered novel patterns within the knowledge economy.
The concept of ‘economy of scale’ is redefined in the context of information consumption. The findings published in the Royal Society Open Science journal suggest that as firms grow, the volume of information they consume increases disproportionately. This indicates that larger firms consume more information per unit of capital, sales, or headcount than their smaller counterparts, presenting a fresh perspective on organisational efficiency and knowledge consumption.
Despite their efficiency, large firms are not without their operational woes. They often need help with coordination issues, which can lead to unnecessary repetition and redundancy in the information they consume. Lee points out that beyond a certain size threshold, the redundancy becomes apparent as large firms tend to cover a more comprehensive array of news without necessarily gaining new insights. This broad but shallow approach contrasts with the expected benefits of labour specialisation, suggesting that specialisation in reading does not necessarily curtail the demand for diverse information.
Moreover, the study illuminates how deviations from average reading habits correlate with financial metrics. Lee explains that firms which consume information more extensively than what is typical for their size often see better future returns and valuations, underscoring the monetary value of strategic information consumption. The correlation extends to innovation and the diversity of economic activities, with co-author Alan Kwan from the University of Hong Kong noting strong links between diverse reading patterns and innovative outputs.
Eddie Lee concludes with enthusiasm about the study’s broader implications, stating that the insights into how firms handle information could provide profound implications for understanding their operational dynamics and financial health. This pioneering research offers a window into the strategic importance of reading within the corporate sphere, suggesting that a firm’s reading habits are not just a routine activity but a significant indicator of its identity and future success.
More information: Edward Lee et al, Information consumption and firm size, Royal Society Open Science. DOI: 10.1098/rsos.240027
Journal information: Royal Society Open Science Provided by Complexity Science Hub