Liability of newness suspended: The survival of multiunit new entrants in U.S. beer wholesaling

47 Pages Posted: 25 Sep 2018 Last revised: 30 Mar 2022

See all articles by Tunde Cserpes

Tunde Cserpes

Aarhus University, Department of Management

Date Written: March 29, 2022

Abstract

This paper focuses on an intermediary market segment and examines what happens to its incumbents and new entrants when there is a surge in the number of potential upstream partners. In the past thirty years in the U.S. beer industry, as the number of beer producers (i.e., brewers) proliferated, their intermediaries (i.e., wholesaler distributors) declined. This paper examines how under these conditions, two constraints, operating unit structure and historical competitive pressure effect the survival chances of new entrants and incumbent establishments. I use data on the population of U.S. beer distributors from the Longitudinal Business Database (1983–2013) and find that multiunit new entrants have better survival chances than multiunit incumbents. Furthermore, they are more likely to survive in areas where historical competitive pressure is high. I explain this finding via a social mechanism and show that in dynamic market contexts it is easier to create entirely new market ties than to change the old, socially embedded ones.

Keywords: entrepreneurship, strategy, competition, organizational failure, liability of newness

JEL Classification: L25, L26, L81

Suggested Citation

Cserpes, Tunde, Liability of newness suspended: The survival of multiunit new entrants in U.S. beer wholesaling (March 29, 2022). Available at SSRN: https://ssrn.com/abstract=3246656 or http://dx.doi.org/10.2139/ssrn.3246656

Tunde Cserpes (Contact Author)

Aarhus University, Department of Management ( email )

Fuglesangs Alle 4
Aarhus V, 8210
Denmark

HOME PAGE: http://mgmt.au.dk/

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