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Quality Signal Impacts on Firm Level Production: Evidence from the Beer Industry

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  • Mitch Kunce

Abstract

The intuitive nature of signaling theory in part helps explain its pervasiveness. The usefulness of a signal depends on the extent to which the signal corresponds with the sought after quality of the signaler. Herein, we examine a singular quality signal from the beer industry-winning a coveted Great American Beer Festival (GABF) medal. To provide an assessment of the quantitative impact of winning a GABF medal, this paper exploits a unique and expansive unbalanced panel of time-series, cross-section data from 1989-2012. Firm specific production changes are merged with the GABF medal winner database. Results from a two-way fixed-effects specification finds no significant relationship between winning a GABF medal or medals and changes in a brewery's output. Interestingly, it appears that the GABF quality signal applies more to the brewer than the brewery. JEL classification numbers: D12, L81, M31.

Suggested Citation

  • Mitch Kunce, 2021. "Quality Signal Impacts on Firm Level Production: Evidence from the Beer Industry," Business & Entrepreneurship Journal, SCIENPRESS Ltd, vol. 10(1), pages 1-2.
    • Handle: RePEc:spt:busent:v:10:y:2021:i:1:f:10_1_2
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    References listed on IDEAS

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    1. Elzinga, Kenneth G. & Tremblay, Carol Horton & Tremblay, Victor J., 2015. "Craft Beer in the United States: History, Numbers, and Geography," Journal of Wine Economics, Cambridge University Press, vol. 10(3), pages 242-274, December.
    2. Michael Spence, 2002. "Signaling in Retrospect and the Informational Structure of Markets," American Economic Review, American Economic Association, vol. 92(3), pages 434-459, June.
    3. Richard Friberg & Erik Grönqvist, 2012. "Do Expert Reviews Affect the Demand for Wine?," American Economic Journal: Applied Economics, American Economic Association, vol. 4(1), pages 193-211, January.
    4. Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 87(3), pages 355-374.
    5. Bagwell, Kyle, 2007. "The Economic Analysis of Advertising," Handbook of Industrial Organization, in: Mark Armstrong & Robert Porter (ed.), Handbook of Industrial Organization, edition 1, volume 3, chapter 28, pages 1701-1844, Elsevier.
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    More about this item

    Keywords

    Quality signals; production; information asymmetry.;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing

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