Brewery and Brauerei: The Organizational Ecology of Brewing

Abstract

Germans and Americans differ in their beer drinking habits and customs. The organizational structures of their brewing industries also differ: Germany is notable for the highly fragmented nature of its industry, which contains many more breweries than the larger American industry. Yet the historical evolution of the two brewing industries is remarkably similar. In both Germany and the U.S., the number of breweries grew slowly for a long period, then expanded rapidly in the late 19th century, and finally declined severely for almost a century. Intrigued by this common pattern, we attempt to explain long-term organizational change in the two industries using the ecological perspective on organizations. We focus on the organizational ecology model of density-dependent legitimation and com petition. Our tests use life history data on all breweries known to have operated in the U.S. and Germany during the period 1861 to 1988. We estimate and report specific tests of the density model using stochastic rates of organizational founding and mortality. The findings are generally supportive of the model and suggest that the organizational evolution of both the German and American brewing industries was density dependent.