W2VPCA: A Machine Learning Method for Measuring Attitudes With Natural Language

Abstract

Company strategy influences many decisions in freight transportation. Behavioral models of company decision-making therefore could benefit from including strategy variables. However, strategy is difficult to observe and quantify. Attitudinal surveys of company executives can be used to collect measurements of latent strategy to use in quantitative models. However, surveys are costly and burdensome. Text mining methods to collect measurements overcome these issues somewhat, but typically require manual intervention and ignore the context of words, which can be problematic. This study introduces a new machine learning method to generate strategy measurement data from existing big text data. The new method, called W2VPCA, combines Natural Language Processing and Principal Components Analysis. W2VPCA produces measurement data that serve as quantitative indicators of latent strategy in behavioral models. W2VPCA is unsupervised, data-driven, and uses information on word context. We apply W2VPCA to generate measurements of latent strategies using readily available, large-scale text data: annual company reports. The empirical measurements are used successfully to associate two latent strategies, one focusing on distribution and the other on products, with truck fleet and distribution center outsourcing decisions. The main empirical outcome is that the W2VPCA measurements outperform Bag-of-Words measurements in a psychometric analysis of latent firm strategies. While this study focuses on freight behavioral models, W2VPCA may also have applications in behavioral modeling in other domains.