Consumers’ strong preference for authenticity, especially in the realm of craft-based firms, is a well-established phenomenon. However, a recent investigation, featured in the Strategic Entrepreneurship Journal, offers a fresh perspective by delving into the unique elements that contribute to the credibility of authenticity within such enterprises.

Authored by Stanislav D. Dobrev from the University of Wisconsin-Milwaukee and J. Cameron Verhaal from Tulane University, the study scrutinises the challenges managers face in identity-centric markets as their businesses expand. Within craft industries, the authors observe that overt assertions of authenticity by producers yield little effect. Dobrev and Verhaal’s examination of the craft beer sector reveals that managers can harness three strategic assets to convey their firm’s identity convincingly: organisational resources, capabilities, and position.

Dobrev highlights the evolution of authenticity assessment, transitioning from a focus on individuals or objects to the realm of organisations. “So we need a theory that explains whether organisations can legitimately claim to be authentic and be perceived as such,” he asserts.

While the study underscores the significance and advantages of authenticity for producers, it also acknowledges the ambiguity surrounding the projection of an authentic identity that resonates with the audience. Contemporary consumers are characterised by a sense of cynicism towards brands, particularly about authenticity claims, which inherently contradict self-promotion. Consequently, the central inquiry revolves around the strategies employed by organisations to establish themselves as authentic entities.

The microbrewery and brewpub industry is one sector where the intertwined concepts of craft and authenticity are particularly prominent. Here, the driving force is the pursuit of beer production for its intrinsic value rather than mere profit generation.

To gather robust insights, the research team employed a rigorous methodology. They utilised data from a reputable website hosting reviews from craft beer enthusiasts. These reviews were then categorised based on authenticity definitions, generating a score for each beer review and subsequently for each brewery over a span of years. This comprehensive approach facilitated an examination of authenticity perceptions over time and enabled statistical analyses to determine predictors of perceived authenticity among consumers.

The study identifies three primary factors contributing to credible claims of authenticity. Firstly, organisational resources encompass the independence of a company’s ownership structure. Many successful craft producers engage in production alliances with larger entities to augment volume, potentially signalling a shift towards profit maximisation. Secondly, capabilities involve the diversity of beer styles produced. A focus on a single capability may imply profit-driven motives, as diversification often aligns with increased profitability. Lastly, position refers to third-party endorsements, where external entities validate the authenticity of a company. For instance, winning awards from independent bodies is an authenticity endorsement, bolstering the company’s credibility.

Dobrev elucidates the theory’s emphasis on three pillars crucial for organisations to maintain authenticity amid growth and success. Firstly, conveying a message consistent with the audience’s perception of authenticity is imperative. Secondly, the facets contributing to a company’s authenticity must be visibly demonstrated, as mere assertions may backfire. Lastly, authenticity claims must be credible, necessitating substantial investments and commitments to bolster credibility.

The study’s findings hold significant implications for managers in craft-based industries, providing a roadmap for navigating the delicate balance between authenticity and expansion. By understanding the nuanced interplay of organisational resources, capabilities, and positioning, managers can effectively cultivate and preserve authenticity in an evolving market landscape.

More information: Stanislav D. Dobrev et al, Organizational authenticity: How craft-based ventures manage authentic identities and audience appeal, Strategic Entrepreneurship Journal. DOI: 10.1002/sej.1496

Journal information: Strategic Entrepreneurship Journal Provided by Strategic Management Society