Industry classification

Industry classification or industry taxonomy is a type of economic taxonomy that organizes companies into industrial groupings based on similar production processes, similar products, or similar behavior in financial markets.

Sectors and industries

Industries can be classified in a variety of ways. At the top level, industry is often classified according to the three-sector theory into sectors: primary (extractive), secondary (manufacturing), and tertiary (services). Some authors add quaternary (knowledge) or even quinary (culture and research) sectors. Over time, the fraction of a society's industry within each sector changes.

Below the economic sectors there are many other more detailed industry classifications. These classification systems commonly divide industries according to similar functions and markets and identify businesses producing related products.

Industries can also be identified by product, such as: construction industry, chemical industry, petroleum industry, Automotive industry , electronic industry, power engineering and power manufacturing (such as gas or wind turbines), meatpacking industry, hospitality industry, food industry, fish industry, software industry, paper industry, entertainment industry, semiconductor industry, cultural industry, and poverty industry.

Market-based classification systems such as the Global Industry Classification Standard and the Industry Classification Benchmark are used in finance and market research.

ISIC

The International Standard Industrial Classification (ISIC) of all economic activities is the most complete and systematic industrial classification made by the United Nations Statistics Division.^[1]

ISIC is a standard classification of economic activities arranged so that entities can be classified according to the activity they carry out. The categories of ISIC at the most detailed level (classes) are delineated according to what is, in most countries, the customary combination of activities described in statistical units, considering the relative importance of the activities included in these classes.

While ISIC Rev.4 continues to use criteria such as input, output and use of the products produced, more emphasis has been given to the character of the production process in defining and delineating ISIC classes.

List of classifications

A wide variety of taxonomies is in use, sponsored by different organizations and based on different criteria.^[2]

Abbreviation	Full name	Sponsor	Criterion/ unit	Node count by level	Issued
ISIC	International Standard Industrial Classification of All Economic Activities	United Nations Statistics Division	production/ establishment	4 digits 21/88/238/419	1948–present (Rev. 4, 2008)
NAICS	North American Industry Classification System	Governments of the United States, Canada, and Mexico	production/ establishment	6 digits 17/99/313/724/1175 (/19745)¹	1997, 2002, 2012
NACE	Statistical Classification of Economic Activities in the European Community	European Community	production/ establishment	6 digits	1970, 1990, 2006
ANZSIC	Australian and New Zealand Standard Industrial Classification	Governments of Australia and New Zealand			1993, 2006
SIC	Standard Industrial Classification	Government of the United States	production/ establishment	4 digits 1004 categories	1937–1987 (superseded by NAICS, but still used in some applications)
ICB	Industry Classification Benchmark	FTSE	market/ company	10/20/41/114^[3]
GICS	Global Industry Classification Standard	Standard & Poor's, Morgan Stanley Capital International	market/ company	2-8 digits 10/24/68/154
UKSIC	United Kingdom Standard Industrial Classification of Economic Activities	Government of the United Kingdom			1948-present (2007)
TRBC	Thomson Reuters Business Classification	Thomson Reuters	market/ company	10 digits 10/28/54/136/837^[3]
SNI	Swedish Standard Industrial Classification	Government of Sweden
UNSPSC	United Nations Standard Products and Services Code	United Nations	Product	8 digits (optional 9th) (four levels)	1998 - present

¹The NAICS Index File^[4] lists 19745 rubrics beyond the 6 digits which are not assigned codes.

Besides the widely used taxonomies above, there are also more specialized proprietary systems:

FactSet's Revere, line-of-business, about 11,000 leaf nodes, acquired in 2013^[5]
IndustryBuildingBlocks, line-of-business about 15,000 leaf nodes
First Research taxonomy, used by Hoover's^[6]
WAND, Inc.'s Product and Service Taxonomy

Notes

References

Michael E. Porter (1980). Competitive Strategy. Free Press, New York. ISBN 978-0743260886.
Michael E. Porter (1985). Competitive Advantage. Free Press, New York. ISBN 978-0743260879.
Bernard Guibert, Jean Laganier, and Michel Volle, "An Essay on Industrial Classifications", Économie et statistique 20 (February 1971) full text

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[1] "United Nations Statistics Division - Classifications Registry". http://unstats.un.org/unsd/cr/registry/regcst.asp?Cl=27&Lg=1.

[2] Standard & Poor's, "What's an Industry" pdf

[nadig-3] 3.0 ^3.1 https://www.thomsonreuters.com/content/dam/openweb/documents/pdf/financial/trbc-methodology.pdf

[4] ttps://www.census.gov/eos/www/naics/2007NAICS/2007_NAICS_Index_File.xls

[5] ttp://www.factset.com/campaigns/revere

[6] First Research taxonomy at Hoover's

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