Entry into new market segments in mature industries: endogenous and exogenous segmentation in the U.S. brewing industry

Abstract

I evaluate two processes, niche formation and resource-partitioning, that could independently account for the entry of firms into new market segments in mature industries. The niche formation argument focuses on environmental changes that promote the entry of new firms whereas the research-partitioning argument is based on the internal differentiation of a mature industry into subgroups composed of specialist and generalists. In other words, the niche formation and resource-partitioning accounts emphasize forces that are exogenous and endogenous to the industry, respectively. I attempt to resolve this theoretical tension by modeling the effects of niche formation and resource-partitioning together on the founding of firms in the microbrewery and brewpub segments of the U.S. brewing industry. I find that niche formation provides a better explanation for both microbrewery and brewpub foundings. In addition, I find limited evidence that the process of resource-partitioning is being played out again within the microbrewery segment of the industry. Implications for the evolution of organizational heterogeneity within industries are discussed. © 1998 John Wiley & Sons, Ltd.