Selling your soul to the devil? The importance of independent ownership to identity distinctiveness for oppositional categories

• Date: 01 December 2020
• Author: Annelore Huyghe,David W. Williams,Blake D. Mathias
• Published date: 01 December 2020
• DOI: http://doi.org/10.1002/smj.3180

RESEARCH ARTICLE

Selling your soul to the devil? The importance

of independent ownership to identity

distinctiveness for oppositional categories

Blake D. Mathias

1

| Annelore Huyghe

2

| David W. Williams

3

1

Kelley School of Business, Department

of Management and Entrepreneurship,

Indiana University, Bloomington,

Indiana, USA

2

Cass Business School, University of

London, London, UK

3

Haslam College of Business, Department

of Management, University of Tennessee,

Knoxville, Tennessee, USA

Correspondence

Blake D. Mathias, Kelley School of

Business, Department of Management

and Entrepreneurship, Indiana

University, Bloomington, IN 47401.

Email: bdmathia@iu.edu

Abstract

Research Summary: Oppositional categories emerge

in direct ideological opposition to incumbent mass pro-

ducers. In doing so, these oppositional categories, espe-

cially craft-based ones, emphasize their size (small),

ownership (independence), and production methods

(traditional) as important identity codes—critical for

maintaining their distinctiveness from the incumbent

category. However, we lack theoretical insights into

how oppositional category members respond as (for-

mer) members defect by joining the incumbent cate-

gory they challenge and ideologically oppose.

Therefore, taking an identity lens, our study explores

the following research question: As members sell to

incumbents,how do the remaining members of the oppo-

sitional category attempt to maintain the distinctiveness

of the collective identity? Our findings reveal incum-

bents' acquisitions of oppositional members open the

opportunity to elevate the importance of ownership

(independence) as a distinctive identity code.

Managerial Summary: Craft categories often emerge

by opposing large, dominant corporations. This David

versus Goliath mentality helps establish distinct differ-

ences between the two groups of firms. However, as

owners of the craft organizations grow and sell (to the

opposition), this can erode the core attributes that orig-

inally made the craft category distinct. We find that as

craft brewers sold their breweries to mass producers it

Received: 3 December 2018 Revised: 9 April 2020 Accepted: 27 May 2020 Published on: 23 June 2020

DOI: 10.1002/smj.3180

2548 © 2020 John Wiley & Sons, Ltd. Strat Mgmt J. 2020;41:2548–2584.wileyonlinelibrary.com/journal/smj

did just that—led to considerable confusion in what

constitutes a “craft brewery.”However, the craft

brewing collective rallied together to identify “indepen-

dence”as the core feature of craft brewers—one that

cannot be bought or copied by the opposition—in

hopes they can maintain their distinctiveness from

mass producers.

KEYWORDS

craft beer industry, craft-based organizations, market categories,

oppositional identity, qualitative methods

1|INTRODUCTION

In many industries,the goal of the small is to get bought out by the big.When I think

of the entrepreneurs behind craft brewing companies,this goal is antithetical to their

personal credos and is of no interest. Paul Gatza, The New Brewer

An extensive body of research emphasizes the importance of a distinctive identity in emer-

gent market categories (see Durand & Khaire, 2017; Vergne & Wry, 2014). Collective identity—

a shared understanding of “who we are”and “what we do”among members—is instrumental

to new market categories, helping them to differentiate themselves from existing categories and

to attain legitimacy (Navis & Glynn, 2010; Wry, Lounsbury, & Glynn, 2011). Through the estab-

lishment of inclusion criteria or identity codes, market categories demarcate rules of conduct for

members of the category to which they must conform (cf. McKendrick & Carroll, 2001; Verhaal,

Hoskins, & Lundmark, 2017). Identity codes help establish distinctiveness for categories and

can be based on characteristics of producers, products, or a combination of both (Hannan,

Polos, & Carroll, 2007). The distinctiveness of the collective identity is particularly relevant to

oppositional categories, or those categories formed in direct ideological opposition to the existing

dominant logic embodied by incumbents (Hsu & Grodal, 2020; McKendrick & Hannan, 2014;

Verhaal, Khessina, & Dobrev, 2015).

Oppositional categories have become increasingly prevalent in today's economy, such as in

the energy (Sine, Haveman, & Tolbert, 2005), food (Durand, Rao, & Monin, 2017; Weber,

Heinze, & DeSoucey, 2008), and beverage (Frake, 2017; McKendrick & Hannan, 2014) indus-

tries. In such categories, the category's distinctive collective identity—an oppositional iden-

tity—forms around authenticity claims and hinges to counter-mainstream codes that challenge

incumbent practices (Carroll & Swaminathan, 2000; Rao, 2009). Oppositional market categories

rely on an ideological differentiation between groups—through claims challengers make against

specific, alleged ill-doing incumbents (Verhaal et al., 2015). In doing so, emergent oppositional

categories often use discourse to establish their identity codes, thereby framing the incumbent

category as a common enemy they collectively contest, such as with a “David”versus “Goliath”

narrative (Liu & Wezel, 2015; Pozner & Rao, 2006).

As a result of this sharp ideological distinction, current theory posits “a strong oppositional

identity ought to slow the flow of defections and stabilize the coexistence of the two [categories']

MATHIAS ET AL.2549

interpretations”(Negro, Hannan, & Rao, 2011, p. 1454). However, members of numerous oppo-

sitional categories have defied these expectations as they defected by selling to conglomerate

incumbents, including food (e.g., Ben and Jerry's sale to Unilever), personal care (e.g., Burt's

Bees to Clorox), and hygiene (e.g., Tom's of Maine to Colgate-Palmolive). These acquisitions

conflict with existing explanations of defections and oppositional categories. Indeed, so far,

scholars have primarily focused on the incumbent category responding to a successful opposi-

tional category by borrowing or copying codes that drive their success (Rao, Monin, &

Durand, 2005). Yet, these imitation strategies only involve incumbents (i.e., outsiders), which

are deemed inauthentic imposters as they lack the distinctive oppositional identity and thus

pose little long-term threat to the oppositional category (Carroll & Swaminathan, 2000; Pólos,

Hannan, & Carroll, 2002).

In contrast to imitations, oppositional category members selling to incumbents challenge

the continued existence of the oppositional category. This is because these actions are aided by

internal forces—they involve prior members of the oppositional category (i.e., insiders)—and

can endanger the distinctiveness of the oppositional identity. Maintaining a distinctive collec-

tive identity vis-à-vis the incumbent category is critical to prevent confusion among audiences

and thus to protect the durability of the oppositional category (Lo, Fiss, Rhee, & Kennedy, 2020).

However, we lack theoretical insights into how oppositional category members respond as (for-

mer) members defect by joining the incumbent category they challenge and ideologically

oppose. Therefore, taking an identity lens, our study explores the following research question:

As members sell to incumbents,how do the remaining members of the oppositional category

attempt to maintain the distinctiveness of the collective identity?

We address this question through an inductive, longitudinal field study of the U.S. brewing

industry. We chose the craft brewing industry because despite being known to possess a strong

oppositional identity (Mathias, Huyghe, Frid, & Galloway, 2018; Verhaal et al., 2015), craft

brewers (oppositional category members) have engaged in a flurry of defections by selling to

the mega breweries (incumbents)—largely initiated by Goose Island's 2011 sale to AB InBev.

These actions are particularly problematic in the craft brewing category, since the category cen-

ters around three oppositional identity codes—size (smallness), ownership (independence), and

production methods (traditional)—that stand in direct contrast to incumbents (Carroll &

Swaminathan, 2000; Mathias et al., 2018; Verhaal et al., 2017). In addition, study investigating

postacquisition responses of audiences substantiated that these events ought to be a vital con-

cern for the craft brewing category (Frake, 2017).

Our work shows that an increasing number of oppositional category members selling to

incumbents led to two characteristic and entwined processes. First, incumbent buyouts did not

alter the oppositional identity codes, but prompted shifts in the code centrality, or relative

importance of the identity codes. Specifically, the oppositional category shifted from an empha-

sis on the product-based codes (i.e., craft beer) to the producer-based codes (i.e., craft brewer)

over time as they recognized that members selling to incumbents raised the importance of und-

erscoring their independence—rendering ownership the most central (i.e., important) identity

code of the oppositional category. Interestingly, whereas Lee, Hiatt, and Lounsbury (2017) show

that the meaning of “organic”shifted from producer to product, we uncover the opposite for

“craft”and theorize why this occurs. Second, we extend identity research as it relates to market

categories by introducing the notion of co-opting. Co-opting denotes the actions taken by out-

siders to an oppositional category to adopt identity codes of that category for their own advan-

tage. We find that in contrast to imitation strategies—driven by external forces only—

acquisitions of oppositional category members represent an effective strategy to co-opt

2550 MATHIAS ET AL.