Eppa Rixey

2024 Providence, Rhode Island

Abstract: The rapid expansion of the craft beer industry over the last 25 years in the US required state-level policy changes which have largely been ignored. Popular business models like brewpubs and taprooms provide significantly greater profitability by selling directly to consumers, but both were explicitly or practically illegal in all 50 states prior to 1982. Efforts by craft brewers to legalize direct sales were complicated by powerful incumbents supporting the status quo, and yet forty years later over 3,418 brewpubs and 3,838 taprooms operate in the US. This project explores this regulatory and market transformation through a historical, comparative analysis of six states with a similar range of attributes but very different regulatory and industry outcomes. Existing theories suggest that coordinated, collective actions via a trade association may explain the success of craft breweries seeking regulatory changes. Using a combination of interviews, fieldwork, and unique archival data on both successful and unsuccessful policy change efforts, the present study argues that collective action and cohesion via a trade association is often insufficient to change firmly institutionalized regulations. Each state in this study had a functioning trade association representing most craft breweries, but sustained regulatory influence was observed only in states where a full-time executive director brokered a long-term alliance with a state-wide interest group outside the industry. This alliance led to beneficial changes in regulations for craft brewers but also limiting concessions that aligned with the goals of the alliance partner. Concessions to promote other state interests, such as agriculture or tourism, enabled policy change and reoriented the state-level trajectory of alcohol regulations.

2024 Providence, Rhode Island

Abstract: How do small, resource-constrained entrepreneurial firms overcome regulatory constraints despite opposition? Existing research suggests small and medium enterprises (SMEs) need to collaborate with similarly positioned competitors to contend with incumbents advocating for the status quo. This article uses archival and interview data on craft breweries in one state to identify a different approach, shifting from state-wide lobbying to developing legitimacy with locally embedded regulators. Through engagement in public hearings and collaborative experimentation with local regulators and stakeholders, individual craft breweries developed and relied on local legitimacy to prompt city-based regulators to intervene repeatedly to alleviate state-level regulatory constraints on new business models. This paper describes ten local legitimacy strategies by which craft brewers individually promote perceptions of their alignment with local community interests and motivate city-based regulators to assault state-level restrictions on taprooms in 2013 and on beer gardens from 2017 to 2022. By demonstrating how individual SMEs impact state-level regulation through local action, this study extends our understanding of nonmarket strategy to both smaller firms and municipal interactions. Potential limitations of this localized, discretionary approach to regulation are also explored, including the potential for discrimination. Even in a mature industry with well institutionalized, multi-level government regulations, powerful incumbents opposing changes, and minimal technological change, individual small businesses reshaped the regulatory environment of an entire state through local actions.