Grown Local: Community Attachment and Market Entries in the Franconian Beer Industry

Abstract

Geographic communities are often thought to support new ventures, particularly when newcomers are able to replicate incumbents’ characteristics. This paper elaborates on the conditions under which geographic communities may hinder the action of newcomers. Particular attention is dedicated to the case in which incumbents’ identities build on community traditions and rely on strong connectedness with community inhabitants, as these factors are difficult for newcomers to replicate. We explore this question within the context of market entries in the Franconian microbrewery industry. The results of our empirical analysis confirm that geographic communities exert an unfavorable effect on the entry of new organizations when incumbents are deeply attached to the community. Conversely, when incumbents relate poorly to the community, residential stability within the community displays a positive effect on founding.