2013 Reports

Does Embeddedness Reduce Innovation and Differentiation? Evidence from the Japanese Microbrewery Industry

Ahmadjian, Christina; Edman, Jesper

While strategic management scholars and institutional theorists regularly debate the merits of organizational differentiation and innovation vs conformity and embeddedness, few studies have sought to empirically investigate how these seemingly opposing forces impact each other. Drawing on both qualitative and quantitative data, we contribute to closing this research gap by exploring how post-entry embeddedness impacted innovation and survival among de-novo and de-alio entrants into the Japanese microbrewery industry. Our findings indicate that post-entry embeddedness has contrasting effects, reducing overly non-conformist strategies among de-novo entrants, but enhancing non-conformity among de-alio entrants. These results indicate how institutions can serve as enablers of innovation, rather than constraints, through their dissemination of standards, norms and industry practices.