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Selling Out: The Inauthenticity Discount in the Craft Beer Industry

Management Science, Forthcoming

28 Pages Posted: 23 Jun 2015 Last revised: 24 May 2016

Justin Frake

University of Maryland, Robert H. Smith School of Business, Students

Date Written: December 11, 2015

Abstract

This paper investigates why audiences devalue organizations that behave inauthentically. One explanation is that inauthenticity leads to lower perceptions of product quality. This stems from the audience's doubt of an inauthentic actor's capability and commitment to produce high quality goods. Another explanation is that audiences discount the symbolic value -- or what the good represents -- of goods from inauthentic actors. I empirically test each of these mechanisms in the craft beer industry. First, I exploit exogenous variation in consumers' knowledge of craft brewers' inauthentic identity (whether they are owned by a corporate brewer) to empirically demonstrate an inauthenticity discount. Next, I decompose audience evaluations to show that knowledge of a producer's inauthenticity does not have a statistically significant impact on evaluators' sensory experience of the product, but that it does affect audience evaluations of the product's symbolic value.

Keywords: authenticity, symbolic goods, evaluations, on-line reviews, mergers, acquisitions

Suggested Citation

Frake, Justin, Selling Out: The Inauthenticity Discount in the Craft Beer Industry (December 11, 2015). Management Science, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2620918 or http://dx.doi.org/10.2139/ssrn.2620918

Justin Frake (Contact Author)

University of Maryland, Robert H. Smith School of Business, Students ( email )

College Park, MD
United States

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