Abstract:
When merging firms across large databases in the absence of common identifiers, text algorithms can help. I propose a high-performance fuzzy firm name matching algorithm that uses existing computational methods and works even under hardware restrictions. The algorithm consists of four steps, namely (1) cleaning, (2) similarity scoring, (3) a decision rule based on supervised machine learning, and (4) group identification using community detection. The algorithm is applied to merging firms in the Amadeus Financials and Subsidiaries databases, containing firm-level business and ownership information, to applicants in PATSTAT, a worldwide patent database. For the application the algorithm vastly outperforms an exact string match by increasing the number of matched firms in the Amadeus Financials (Subsidiaries) database with 116% (160%). 53% (74%) of this improvement is due to cleaning, and another 41% (50%) improvement is due to similarity matching. 18.1% of all patent applications since 1950 are matched to firms in the Amadeus databases, compared to 2.6% for an exact name match.