Understand NAICS and SIC codes
U.S. Industries (and therefore the companies operating in those industries) are commonly classified according to two codes:
NAICS = North American Industry Classification System
SIC = Standard Industry Classification
- Codes are important because they act as standard/controlled language for industries. For example, "green technology" is a vague term that could refer to many industries, whereas NAICS code 221114 refers only to Solar Electric Power Generation.
- NAICS codes are newer and more specific than SIC codes.
- SIC codes are what companies must declare when they first file an S-1 with the SEC to be publicly traded on a stock exchange. Companies are not required to declare their NAICS code; it's optional at the discretion of the company.
- The Census Bureau is not permitted to release information about individual businesses, including industry classification. Many research firms ascribe NAICS codes to companies, but accuracy is not guaranteed.
- No code system is perfect. Codes might not entirely or accurately describe a company's product(s)/service(s), especially if:
- 1) a company operates in many lines of business (think of General Electric)
- 2) a company specializes in a niche product/service in a larger industry