BUS501: Strategic Management

Background

In 1937, the Central Statistical Board established an Interdepartmental Committee on Industrial Classification "to develop a plan of classification of various types of statistical data by industries and to promote the general adoption of such classification as the standard classification of the Federal Government". The List of Industries for manufacturing was first available in 1938, with the List of Industries for nonmanufacturing following in 1939. These Lists of Industries became the first Standard Industrial Classification (SIC) for the United States.

The SIC was developed for use in the classification of establishments by type of activity in which they are primarily engaged; for purposes of facilitating the collection, tabulation, presentation, and analysis of data relating to establishments; and for promoting uniformity and comparability in the presentation of statistical data collected by various agencies of the United States Government, State agencies, trade associations, and private research organizations. The SIC covered the entire field of economic activities by defining industries in accordance with the composition and structure of the economy.

Since the inception of the SIC in the 1930's, the system was periodically revised to reflect the economy's changing industrial composition and organization. The last revision of the SIC was in 1987.

Rapid changes in both the U.S. and world economies brought the SIC under increasing criticism. In 1991, an International Conference on the Classification of Economic Activities was convened in Williamsburg, Virginia, to provide a forum for responding to such criticism and to explore new approaches to classifying economic activity. In July 1992, the Office of Management and Budget (OMB) established the Economic Classification Policy Committee (ECPC) and charged it with a "fresh slate" examination of economic classifications for statistical purposes. The ECPC prepared a number of issue papers regarding classification, consulted with outside users, and ultimately joined with Mexico's Instituto Nacional de Estadística, Geografía e Informática (now the Instituto Nacional de Estadística y Geografía) (INEGI) and Statistics Canada to develop the North American Industry Classification System (NAICS), which replaced the 1987 U.S. SIC and the classification systems of Canada (1980 SIC) and Mexico (1994 Mexican Classification of Activities and Products (CMAP)).

The dynamic nature of world economies continues to affect classification systems. The creators of NAICS agreed that the classification system should be reviewed every five years, and revised as appropriate to reflect the changing economies of the three countries. The U.S. statistical programs implemented NAICS for the first time in 1997. NAICS was revised in 2002, 2007, and 2012. This 2017 NAICS revision was undertaken to achieve one main goal – to modify or create industries to reflect new, emerging, or changing activities and technologies.

The impact of NAICS on various countries has brought about a renewed effort for additional convergence with the many industry classifications used throughout the world. Future revisions of NAICS will continue to strive for greater global comparability.

Source: U.S. Census Bureau, https://www.census.gov/naics/