Tapping into foreign markets : internationalisation of the craft beer industry from small open economies

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Many industries today are characterised by a small number of multinational enterprises (MNEs) dominating and controlling global markets. Whilst consolidation of their activities has resulted in the emergence of smaller firms occupying the market periphery, hostile attacks by large companies have violated the integrity of smaller actors. In order to reap premium prices, MNEs use their power to appear as producers of artisan, boutique, small-batch, local, organic, craft, hand-made or farm-to-table offerings. This issue raises a question about how smaller, resource-poor companies can internationalise and respond to attacks from larger players. Extant literature in the field of international business (IB) posits that smaller internationalising firms use traditional resources such as organisational capabilities, knowledge, networks and skilled managers to overcome risks and uncertainties. While IB research has provided valuable insights, these strategies are likely to fail when facing the power and economies of scale of large corporations. Despite the current development in global industries, we know little about how smaller actors, ill-equipped with resources, develop strategies beyond their firm-level advantages. To address these shortcomings, I redeploy the concept of legitimisation strategies in IB beyond its traditional definition of an adaptation to foreign country scripts. In particular, I apply the notion of market category membership-seeking strategies – activities of firms portraying their legitimacy as an affiliation in a favourable industry or market category. In this thesis, I examine internationalisation of the craft beer industry from four small open economies: Australia, New Zealand, Denmark and the Czech Republic. Employing the qualitative, multiple-embedded case study design, I find that craft breweries recombine the attributes defining their market category and delegitimise infiltration tactics of large producers by making their inauthentic products visible. By developing a model of competition for legitimacy during internationalisation, I contribute to the smaller firm internationalisation literature. I provide evidence about the power of smaller actors and their use of non-traditional resources to survive in foreign markets. This thesis also adds to the intersection of IB and legitimisation strategies by showing that smaller firms engage in deliberate manipulation of market categories across borders to benefit themselves over their rivals. In terms of contribution to practice, the research outcomes will serve as a guideline for industry and government bodies striving to create sustainable growth conditions and fair business environments for smaller beer producers.
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