The Copenhagen Microbrewery Cluster and its Influence on the Internationalization Process of the Individual Firm

(1)

The Copenhagen Microbrewery Cluster and its Influence on the

Internationalization Process of the Individual Firm

Master Thesis in (MSc) in Business, Language and Culture; Business and Development Studies

Author: Lukas Winter Student Number: 110235 Supervisor: Peter Gammeltoft Date of Submission: 16.05.2021

STU Count: 169.486

(2)

1

(3)

2 Abstract

The purpose of this research is the investigation of cluster activities of the microbrewery industry around Copenhagen. Specifically investigated will be the existence of cluster activities, the power of the cluster, as well as the internationalization process of the individual firm and the impact of cluster activities on this process. The underlying research question states:

To what extent do cluster activities occur in the microbrewery industry of the Copenhagen area, and how do they influence the individual firm in their internationalization process?

The research follows a theoretical framework consisting of the investigation of clusters, cluster power as well as the double diamond theory, supplemented by literature on theories concerned with network theory. Investigated was this topic with help of interviews conducted with three representatives of the local microbrewery industry in the Copenhagen area, as well as

supplementary data from secondary sources. During the analysis of the data, cluster activities supported the underlying theory in multiple instances. The classification of the microbrewery industry in the Copenhagen area is therefore valid. In context of the cluster power, the gathered information’s supported theory on cluster power in multiple instances. A valid definition of the cluster as a powerful working cluster, making use of cluster activities to their best potential was concluded. In terms of the sourcing of resources as well as knowledge, used in the daily operations by microbreweries, evidence was found of local as well as global sourcing. It was concluded that the need of international sourcing is due to a lack of local availability, specifically in terms of raw materials, as well as patent rights on resources and better price point of foreign suppliers. Due to this fact, relationships to foreign suppliers were formed and are constantly maintained. The research found further evidence of governmental support of the local microbrewery industry in multiple instances, through policies and financial reliefs. In terms of competing internationally, it became evident that the internationalization process is related to the size of the firm as well as their growth potential. As the Danish market is a small economy, microbreweries must serve as well the international market to increase the growth potential.

(4)

3

The production of beer has a long-lasting history. Already 7000 B.C. the ancient Chinese population practiced the art of brewing named “kui” at the time (J. J. Mark, 2011). Until today, beer is one of the most popular alcoholic beverages in society. Over the last decade we saw an increasing trend in the emergence of microbreweries all over the world. Known for their innovative skills, as well as most flavors created by these, a premium segment in terms of beer was established of the last years. Looking at the Danish craft beer industry, the number of registered microbreweries increased from 100 in 2013 to 180 in 2019 (Beer Statistic, 2014;

European Beer Trends Report, 2020). As it is common in multiple industries, certain location is attractive for economic processes. Due to this fact, multiple firms of similar economic practices can be found close to each other in certain locations. Examples therefore are the Silicon Valley in the United States, focusing on IT and microchip production, the financial sector in London or the Hollywood movie production industry (INC, 2021). Competition as well as collaboration allows firms, participating in cluster activities, to take advantage of the local environment in terms of knowledge sharing, innovation as well learning potential. As Copenhagen became known for its craft beer production worldwide, pioneered by Mikkeller who are found in multiple countries at the time of this research, this raises the question:

To what extent do cluster activities occur in the microbrewery industry of the Copenhagen area, and how do they influence the individual firm in their internationalization process?

In this research I will investigate the nature of microbreweries in the Copenhagen area. Do microbreweries interact with each other and what are the potential gains? The first question to answer in this aspect, is the existence of cluster activities in the first place. I therefore draft my first sub question the following:

SQ1: Is there evidence for cluster activities in the microbrewery industry in the Copenhagen area?

Whilst the existence of cluster activities will be the foundation of this research, a further aspect is the determination of the cluster power itself. It is therefore important to investigate cluster activities amongst firms in detail. Important factors in this context are interactions amongst microbreweries and their results, advantages as well as disadvantages in the market environment,

(8)

7 and the existence and connection of related industries. Furthermore, the difficulties of entering the cluster must be investigated. I therefore formulate the second sub question:

SQ2: To what extent, can the Copenhagen microbrewery cluster be defined as powerful?

As multiple firms participating in local cluster operate as well on the global market this raises the question, to what extent this is applicable towards the microbrewery industry around

Copenhagen. In detail it is to investigate why firms enter the global market as well as the support and gains the cluster provides during the internationalization process. I therefore formulate the third sub question:

SQ3: To what extent do cluster participant internationalize and how does the cluster impact this internationalization process.

In the following I will outline the Methodological approach underlying this research. Here will present the used methodology, the sources of data collection as well as limitations of this research. Further, I will present the analytical framework as well as theories used to answer the research question. The gathered data will than be presented and analyzed. Based on this analysis I will discuss the findings and outline their importance based on theories as well as real world example. I will end this research with concluding remarks as well as suggestions for further research.

(9)

8 2. Methodology

In the following chapter, I will present the methodological approach taken in this research.

Starting of I will present the philosophy of science underlying this research to clarify the approach taken in answering the research question. This will be followed by the presentation of the

approach, taken in the data collection. I will further outline in detail how the primary data

collection in form of interviews was approached. The chapter will end by listing the limitations of this research.

2.1 Philosophy of Science:

In the following section I will outline the philosophy of science followed in this research. At first, I will present the philosophies undertaken in this research. This will be followed by the approach taken to collect data as well as additional literature and theories. I will end this section, by outlining the limitations of this research project. The approach will be based on the model of the research onion, introduced by M. Saunders et. al. (2012). The research onion presents a step-by- step approach, analyzing the exact process and philosophy behind the data collection and analysis itself. The metaphor of the onion, therefore, consists out of five layers, determining the

philosophy, the approach, the methodological choice, as well as strategies and the time horizon taken, leading to the collection of data and the final analysis (M. Saunders et. al.; 2012). In the following I will outline the approach taken by me in approaching this research project.

The philosophy underlying this case study, is the epistemological approach of critical realism. This approach is taken to find the underlying structures leading to an observable sensation or

phenomenon (Ibid). Critical Realism is crucial in this research, since I will investigate the underlying structures leading to the cluster formation, as well as factors determining its power. Furthermore, I will investigate factors and opportunities, the cluster provides the individual firm in context of its internationalization process. As underlying structures, as well as goals and rules of the philosophy leading to the observable phenomenon, I will investigate these factors in depth in this research.

With help of theories, which will be presented in the following chapter, I am planning on outlining

(10)

9 the underlying structures of the potential local microbrewery cluster to clarify and explain the observable phenomenon.

The approach taken in this research will be deductive. Based on a research question and supported by existing literature, I will examine the premise and the logic of the presented argument. The argument will be tested with collected data. Based on the results the theory is either false or proven (Ibid). As this research on clusters is based on phenomenon investigated multiple times, I will rely on existing theory in this matter. Based on the theories I will collect data which will be analyzed with help of the theory, leading to a result. By cross referencing the

gathered data theories are either valid or invalid, allowing me to answer the research question based on the analytical framework to the best extent possible.

The methodological choice of this research will follow the mixed method approach of data

collection. The data gathered for this research will therefore partially be from qualitative as well as quantitative nature (Ibid). Whilst the cluster research in this project will rely in most instances on qualitative data such as interviews and articles, the nature of cluster research requires

investigation of the spread of local microbreweries in Denmark, as well as well as the number of firms and statistical reports. Numerical data is specifically required in this research, to investigate trends of the industry over time. I therefore gain a better picture of the growth potential of the industry as well as the market development in the past, local as well as the global market demand and evaluations of the industry. Furthermore, it allows for a numerical definition of the

microbrewery industry.

The strategy followed in this research is in form of a case study. As I will investigate a real-life phenomenon, I will research the topic on a potential cluster activities of the Copenhagen microbrewing industry in its context. The goal of the research is, to gain deep knowledge of the context as well as the underlying processes. The outcome of the research is limited by the number of variables, data can be collected for. It is a common approach in case studies to triangulate, meaning the use of multiple different data collection techniques. The techniques used in this research are secondary data from multiple sources as well as primary data on form of semi

structured interviews which will be outlined in detail in the following sections and are typically for the use in case studies. Case studies can be constructed for single (critical) as well as multiple

(11)

10 cases. Specifically in the single case study, it is important to clearly define the phenomenon (Ibid).

As this research is concerned with the investigation of potential cluster activities of

microbreweries in the Copenhagen area, it is considered a single critical case study. This is due to the nature, that I will investigate a single phenomenon.

Since I will investigate a phenomenon at a static and not over a long period of time the research will be cross-sectional and taken over a period of one Semester (Ibid).

2.2 Data collection

In this research I will make use of primary as well as secondary data. Secondary data will be collected in form of books and articles from credible sources. Furthermore, I will use books and articles on theories on which I will base my theoretical framework. Next to this I will make use of data and statistics from credible sources, which will be required in the analysis. Sources of data will be publications and books found the library of the Copenhagen Business School as well as online articles and statistics. The gathering of primary data will be undertaken in the form of interviews with representatives of the local microbrewing industry in the Copenhagen area.

2.3 Semi Structured Interviews preparation

To start off the process of deciding on appropriate interviewees, I first investigated the spread of microbreweries in Denmark with a specific focus on activities of microbreweries in the

Copenhagen area. Furthermore, I decided to select microbreweries, at different stages of development, from newly founded to well established microbreweries. Having selected

microbreweries of interest, the potential interviewees were asked via mail exchange, if they would be interested in taking part in an interview. In the email, I outlined my personal background of education, as well as the purpose of this research. The microbreweries in question, were the Dry and Bitter Brewing Company, Flying Couch Brewing, Amager Bryghus, Slowburn Brewing Co-Op as well as TO Øl. Three of the breweries, namely Amager Bryghus, Slowburn brewing as well as the Dry and Bitter Brewing Company, agreed to participate in the interview whilst I did not get any

(12)

11 response from TO ØL and Flying Couch neglected the request with the reason of a tight production plan and time constraints.

Based on the analytical framework, I created an Interview guide (see appendix 1) consisting out of 21 questions. These were sent to the interviewees as an overview on the topics covered during the interview. The notion was added on the other hand, that questions can vary due to the concept of the interview being Semi-Structured. I decided on semi structured interviews, due to their nature of picking up on relevant topics, the interviewee touches upon during the interview, allowing me to explore areas I did not consider beforehand. Furthermore, semi structured interviews allow for a conversation like phenomenon between the interviewer and the interviewee (Ibid).

In the same mail I asked the participants as well if they would prefer a physical interview or over the online portal Zoom. Whilst A. Knage from Slowburn Brewing as well as S. Wagner from the Dry and Bitter Brewing Company agreed to a meeting in person, J. Storm from Amager Bryghus

preferred the interview to be conducted online.

2.4 The Interviews

At the day of the scheduled interview with A. Knage, she informed me that she was in contact with a person infected by the Covid-19 virus. For safety reasons we agreed to schedule an online

interview for the same day. Additional I asked S. Wagner if he would agree to safety precautions such as social distancing as well as wearing a mask before and after the interview, due to the pandemic of Covid-19. Both online as well as in person interviews were following the same structure. After an introduction, the interviewees were informed to answer only questions they feel comfortable answering. Furthermore, the interviewees were asked if I could record the interview. After the interview was conducted, I agreed with all the interviewees that follow up questions would be send via email and would be answered in written form. I further informed the participant they would receive a transcript of the interview.

(13)

12 2.5 Limitations

In this section I will outline the limitations of the project. First to mention is the time frame of one semester, limiting the research in the primary data collection. Whilst the possibility of

observations on sight were considered, the limited time frame would provide a lack in data accuracy. A further limitation at the time of this research is the currently ongoing pandemic of Covid-19, requiring multiple safety measures in conducting in person interviews. Additionally, the access to libraries for reading materials were limited during the time frame of this research, due to the lockdown.

(14)

13 3. Analytical Framework and Theory- The local and global benefit of Cluster activities

In this Chapter, I will at first introduce the analytical framework of this research. Here I will outline specifically in which order and for which purpose theories it will be used to investigate the

research question. The analytical framework is used in combination with the gathered data to analyze the phenomenon of potential cluster activities in the analysis section. Following I will outline the used theories in detail to grant a better perspective on the analytical approach taken.

3.1 The Analytical Framework

(Created by Author, 2021)

In this section I will clarify the analytical approach taken in this research. As a basic requirement to evaluate clusters in the Microbrewery industry in the Copenhagen area in the first place, is to find proof for the existence of cluster activities. Therefore, I will evaluate based on the basic

(15)

14 requirements towards clusters by Murray and Overton (2016). I will therefore, analyze, If the potential Copenhagen microbrewery cluster is fulfilling these. Whilst this approach will allow me to determine, if cluster structures can be found in the microbrewery industry, it will be a necessity, the analytical framework will build on. Following this step, I will further evaluate the power of the cluster. This will be undertaken with help of Rosenfelds (2007) set points of cluster effects,

allowing me to evaluate the power of the microbrewing cluster. Through the conducted interviews, I want to gain insights in potential strength as well as weaknesses the Copenhagen microbrewery cluster presents. I will determine key factors, used as catalyst for the cluster as well as the individual firm growth. Furthermore, I am planning on investigating, if competitive

advantage, presented by cluster participation are distributed equally amongst the firms, or if inequalities are presented. Whilst clusters require mutual interactions in multiple instance, I will investigate the importance of social capital in this context. Following this step, I want to evaluate opportunity factors, the specific firm gains out of local effects, by participating in the cluster, as well as global opportunities presented to the firm, with help of the double diamond approach (H.

C. Moon et. al, 1995). In the global context, I want to take a further step and research for proof of international established connections and networks for knowledge purposes by the individual firm or “Pipelines” as P. Maskell (2013) formulated it. As networking is included as a core aspect of multiple theories, the additional section on networking theory, will be used as an underlining factor, strengthening the understanding of gains through networking on a local as well as on a global scale. Since the microbrewery industry is globally competitive, I want to investigate if local advantages are sufficient to gain a competitive edge towards the competition. If that should not be the case, I want to determine key factors, that are gained through foreign relations and networks. The goal of the research will be twofold. On the one hand I want to determine factors improving the growth and the power of the local cluster, on the other hand I want to investigate more firm specific factors, contributing towards the individual growth as well as the

internationalization process.

(16)

15 3.2 Cluster Definition

Murray and Overton (2016) present in their research four basic requirements towards clusters:

1. Clusters are characterized by a spatial collection of related economic processes.

2. The local competition as well as collaboration are characteristics of political and economic relations underlining the structure.

3. Cluster participants are aware of their participation in the cluster and are engaging in some form of collaboration resulting in a contribution towards the cluster.

4. Both, innovation, and competition are required and reflect the clusters success.

(Murray and Overton, 2016)

A further aspect stressed by Porter (1998) are the importance of social factors, since they are an important aspect in binding the cluster together. According to him, strong relations contribute and an enhance the innovation process through the free flow of information and the exchange of value adding discoveries (Porter, 1998). This approach will be used in the research, to determine the existence of clusters in the microbrewery industry in the Copenhagen area. The gathered data will for this purpose be analyzed with help of the four requirements towards a cluster previously presented by Murray and Overton (2016).

3.3 Cluster Power

S. Rosenfeld (2007) stress the importance of clear cluster definition, since a loose definition such as the geographic collection of an industry in a certain location are called clusters, even if no apparent ties can be found connecting the firms together. Furthermore, Rosenfeld (2007)

distinguishes between three different types of clusters, namely working clusters, being self-aware and realizing their full potential, underachieving clusters where unexploited opportunities exist and potential clusters, checking some requirements but missing key conditions and/or inputs (S.

Rosenfeld, 2007). This raises the question, what determines the attributes a cluster should fulfill to be successful. Here Rosenfeld (2007) lists 12 factors contributing to a powerful cluster. Whilst not all requirements are usually met by a cluster, it still allows to evaluate the structure and their power.

(17)

16 Factors Contributing to Cluster Power Description

1. Research and Development capacity

Does the cluster have access to sophisticated R&D resource, contributing to its innovation as well as problem solving?

2. Knowledge skills

Are the required skills in form of labor force available to the cluster, in form of technical skills as well as industry and entrepreneurial skills?

3. Human Resource development

Does the cluster provide or have access to formal educational training in their field of occupation, that further contributes to organizational and technological changes?

4. Proximity of suppliers

Are suppliers as well as raw materials close by and easily accessible and to what extent is the cluster involved with local suppliers?

5. Capital Availability

Is startup capital as well as capital to exploit opportunities available? Do capital suppliers such as banks understand the industry and are the key players in the industry known?

6. Access to specialized services

Are private services in form of technology extension or export assistance available? Do firms have access to required outside sources such as accountants, lawyers, and consultants of any sort?

7. Machine and Tool Builder

Are companies that develop the tools and machines required in the industry used by other cluster member and did they develop a good relationship?

8. Intensity of Networking

Are there signs of good cooperation in the cluster on a regular basis, in form of knowledge or resource sharing a joint production and problem as well solving?

9. Social Infrastructure

Are there local business and civic associations in the area and are they interacted with regularly? Do informal networks of personal business contacts exist?

(18)

17 10. Entrepreneurial Energy

Are new businesses starting up lead by workers within the clusters as well as from the outside, joining the cluster?

11. Innovation

Are new businesses starting up lead by workers within the clusters as well as from the outside, joining the cluster?

12. Shared Vision and Leadership

Do cluster participants think of themselves as a joint system and share plans and goals?

Does a future vision exist and are their leaders in the cluster nurturing the joint efforts?

(Rosenfeld, 2007)

With help of S. Rosenfelds (2007) set criteria of a powerful cluster I will determine the strength of the potential microbrewery cluster, letting me determine what kind of potential cluster can be found. I will further investigate, what the key factors contributing to the individual firm are and if they differ to a certain extent to the cluster on a meso level.

3.4 Social Capital

Whilst the previous literature is inspecting the occurrence of clusters mainly on the meso level, it is important to inspect the individual gains for firms participating in the cluster. Social capital in context of ‘‘the sum of the actual and potential resources embedded within, available through, and derived from the network of relationships possessed by an individual or social unit’’ (Nahapiet and Ghoshal, 1998,; p.243) are according to Gretzinger and Royer (2013), important to consider due to their positive impact on the firms performance as well as in the context of value creation. As mentioned previously, the integration of knowledge is crucial for the firm’s growth potential as well as the gain of competitive advantages. Social capital in form of networks and ties is making it therefore possible, to gain excess to sources of knowledge as well as resources in the first place.

(19)

18 The theory of social capital is based on the findings of Putnam (1993) and Bourdieu (2000).

Putnam (1993) established in his theory on social capital three core components, namely trust, social norms and obligations, as well as social networks of citizens. Bourdieu (2000) on the other hand, names in the context of social capital his concept of “Habitus”. Habitus is according to him defined as reflexes and forms of behavior, a being acquires through the daily interaction with society and reflects their position within it.

In this research I will investigate the importance of social capital for the individual firm. As I already lined out in the previous sections, cluster are based on mutual interactions in between firm. In this context I will investigate what the importance and characteristics of social capital are, required in the microbrewery industry around Copenhagen. Specifically discussed will the theory be in context of the entrepreneurial skill requirements.

3.5 Networks and SME´s:

In this section of the research, the I will present insights gathered from different third-party sources on the topic of entrepreneurship and the importance of networks. Most Entrepreneurs will start of their career with a small to medium sized business (SME). One aspect of the nature of an SME, is the smaller amount of financial as well as human resources, which can generally be interpreted as a weakness of these firms. Especially challenging for these firms, is the

internationalization process due to changes in markets, institutional influences as well as fast market transformations. The lack of financial assets, is hindering SME´s in hiring professional support in the internationalization process, making it especially challenging. To compensate for challenges SME´s face, a crucial aspect is the establishment of networks (Rieckmann et. al, 2018).

In their research on the establishment of networks, Mac Garth and O´Tool (2013) state that the extent of networks developed by entrepreneurs varies depending on the entrepreneur’s ideas and values as well as the industry they want to operate in. It is on the other hand commonly

acknowledged, that it enables the entrepreneur with opportunities of having access to external resources (Forsgren et. al., 2015). It is commonly agreed open the vital effect, networks have in context of SME´s ability to be viable. This is due to the nature of these firms that the factor of survival is heavily dependent on knowledge, which is based on the requirement of resources

(20)

19 needed for such activities. A well-formed network structure allows the firm therefore, to gain access to resources needed (Naude et. al., 2014) Networks in this context can be established horizontally as well as vertical. Bischoff and Buchwald (2017) came in their research on this topic to the conclusion that especially in highly competitive markets, the establishment of horizontal networks can lead to a competitive advantage for the firm over their competition (Bischoff and Buchwald, 2017). Knowing the importance of Networks for Entrepreneurs starting an SME, it is important to consider in what way Networks are established in the first place.

Whilst Networks are a broad term to determine the success of SME´s in their growth and internationalization potential, since they include ties to every entity involved in the daily operations, a more specific approach towards the interrelationships with fellow firms in the industry are the occurrence of industry clusters. Industrial cluster are defined by the

interconnection of geographically close connected firms of a certain industry as well as their firms and suppliers. Participating firms in an industrial cluster allow them to gain a competitive

advantage in form of shared knowledge. Furthermore, it allows SME´s to increase their

productivity and drive innovation as well as the stimulation of new business in a specific industry (B. Christiansen, 2015).

Whilst networks can appear in a multitude of forms and connect the firm to any kind of stakeholder related entity, a more specific occurrence connecting firms is in form of clusters.

Porter (1998) defines clusters as the geographic collection of firms which are interconnected, operating in the same industry and rely on similar institutions.

Rosenfeld (2007) outlines distinctive key differences between networks and clusters. Whilst Networks allow the firm low-cost access to specialized resources, clusters attract specialized resources to a geographic location. Whilst clusters allow a multitude of firms to participate, the participation in a network is limited. Furthermore, networks are based on a contract whilst clusters are relying on social values such as trust in between participating firms. Whilst networks are purely based on cooperation, in the success of clusters relies on the duality of cooperation as well as competition, leading networks to have a common business goal whilst clusters have a joint vision (S. Rosenfeld, 2007).

(21)

20 Even though the theory on networks will not be used in its on context, it will be used as a

complimentary supplement in this research. As I outlined in the previous sections, Cluster theory is heavily dependent on the local interactions and network capabilities of firms. It is therefore

important to outline background information in context of networks. Specifically, I will rely on the outline theories in the cluster definition, in the determination of the cluster power, as well as in the double diamond theory I will introduce in the following section. Whilst the previous section on cluster will rely on network theory in the local context, the double diamond theory will make use of network theory in a global context as well.

3.6 The double Diamond Diamond

(H. C. Moon et. Al, 1995)

It is in the nature of clusters, that firms rely on mutual support, as soon as a cluster is forming.

Porter (1998) states on this matter, that cluster gain benefits from horizontal as well as upward and downward flows. If aggressive behavior such as rivalry can be found between two or more

(22)

21 participants in a cluster, it leads to consequence for all participants using bargaining power as well as related diversification. New entrants of a cluster have an important effect on the upgrading process, by stimulating different approaches of R&D as well as shared knowledge about possible new strategies, which can be posing opportunities to other cluster participants. This grants firms the diversity and eases the overcoming of limiting factors such as inflexibility, inward focus or the right positioning amongst rivals, which could otherwise lead to a slowed down upgrading process.

To clarify the existence and development of clusters Porter introduces the Diamond model, showcasing that the roots of productivity for competition lie in regional as well as national environments (M. Porter, 1998).

Explaining the growth potential of firms, by using local resources, Porter’s diamond model is not without its flaws. H. C. Moon et. al (1995) point out, that one of the major weakness of Porters diamond approach, is the focus on the local home base. Focusing only on the home market, whilst it might be a valid opportunity for major and established national markets, limits the opportunity of tapping in location advantages, foreign countries can provide. H. C. Moon et. al (1995) suggest therefore the approach of the further developed model named the double diamond approach.

Building on Porters diamond model, the double diamond accounts as well for opportunities foreign nations and locations can offer.

This allows firms, especially from smaller markets, to stay competitive in international industries, by using local as well as global advantages, allowing them to engage in economies of scale, risk reduction as well as learning. Whilst the global scale of the double diamond approach is fixed, the local determinations vary according to the countries size and competitiveness (H. C. Moon et. al., 1995).

The Diamond Model

The diamond model consists out of four main aspects:

1. Firm Strategy, Structure and Rivalry 2. Related and Supporting industries 3. Factor Conditions

4. Demand Conditions

(23)

22 Supplemented are those the aspects of governmental policies as well as chances presented to the firm through changes in the market environment. Whilst firm have great influence on the four aspects of the double diamond model, governmental as well as chance factors are out of their reach.

3.6.1 Firm Strategy, Structure and Rivalry

Porter (1998) defines these points in his book “Competitive Advantage of Nations” as the national condition governing the process of firm creation as well as how firms are managed and organized and the determining factors of the domestic rivalry. Therefore, every regional or national

environment differs in their approach of managerial system. The move towards global competition is depended on multiple aspects such as local rivalries or local market satisfaction, managerial attitudes, or the willingness and ability to learn new languages. Furthermore, an influencing factor are governmental policies on this matter. (M. Porter, 1998). Rivalry takes a crucial role in this matter as well in increasing firm’s competitive advantage. This due to the rivalries nature that it forces firms to cut costs, improve their quality and innovate to keep up with the competition and hold their competitive advantage (Mann and Byun, 2010).

3.6.2 “Piplines” to foreign resources

Additional to knowledge acquired on the local market, firms have on the other hand the opportunity or in some cases even the need of acquiring knowledge through international channels. P. Maskell (2013) terms this approach as the establishment of “Piplines”. In this

approach, firms bridge geographical barriers and jointly develop an information channel allowing firms to learn beyond local borders. This allows firms a diverse approach in solving problems, see different preceptive powers as well as attitudes. Whilst the traditional would seem to be accessing foreign knowledges in form of the employment of foreign workforce, this approach is in many cases not desirable, due to financial as well as legal barriers. Maskall (2013) further highlights three challenges in accessing foreign knowledge:

1. Knowledge distortion 2. Determining the problem 3. Locating a source

(24)

23 Knowledge distortion refers to the problem of different incentives and cognitive frames in

between the knowledge producer and the knowledge receiver, leading to the risk that knowledge can become distorted, hence not desirable for the receiver.

Determining the problem is an often-overlooked incentive by the firm seeking knowledge. A firm to be clear and specific about what they are requesting. If the problem is not understood correctly and in detail, it will be challenging for a firm to communicate the required knowledge.

Locating a source is simply put, finding a suitable knowledge source, fulfilling the requirements of the firm´s previously defined problem.

Since many firms differ in their degrees of problem as well as source awareness, Maskell (2013) is pointing out four possible outcomes. Depending of their stage of awareness, firms either engage in contracts, technology scouting units, crowdsourcing, or participation in trade fairs (P. Maskell, 2013).

Source Awareness

(High if firm is aware of suitable firm providing the wanted knowledge/resource)

High Low

Problem Awareness (Is the firm aware of

the specific knowledge/resource

needed)

High

Contract agreements

“Pipelines”

Distributed online problem solving (Crowdsourcing)

Low Technology scouting units

Trade fairs

(P. Maskell, 2013)

(25)

24 The building of “Piplines” will be a key aspect in this research. As I will present in the following, the local advantage might not be sufficient to grant firms the competitive edge. It is therefore

important to investigate, how firms approach engagement to foreign sources of knowledge and resources. The microbrewery industry being competitive on a global scale, I want to investigate what connections are attractive for individual firms of the Copenhagen microbrewery cluster.

Through this approach I will determine, how networks and connections to foreign sources are approached and build in the first place, as well as potential common interest in certain locations.

3.6.3 Related and Supporting industries:

Related and Supporting industries are an important factor for firms to gain a competitive advantage. First to mention, is that a close access to resources eases the access to materials for the firm. This allows easy access to newly developed materials and is less time consuming (F.

Hagos et. al., 2018). On a global scale on the other hand, it is to mention that access to resources is possible from almost every nation, hence whilst it might be a time saving factor, an advantage in form of access is neglectable. More important is the building of close relationships to the supplier, allowing the exchange of information and the building of a close relationship. This grants the firm the competitive advantage to communicate need to the supplier and influence R&D. The

competitive edge gained by a firm through such relations, are supporting on a global as well as a local market (M. Porter, 1998). In these days it is unthinkable to find a successful industry without close ties to their suppliers (F. Hagos et. al., 2018).

3.6.4 Factor Conditions:

Porter (1998) defines factors of production as every aspect needed to compete in certain industry.

Especially important is the local factor endowment such as physical resources, knowledge resources, capital resources and the local infrastructure. A competitive advantage is gained through the availability of low-cost factors as well uniquely high-quality factors important to compete in the industry in question (M. Porter, 1998). To gain the competitive advantage, the pure existence of favorable factors for a firm is not enough. They must be used efficient and effective, which is more important than finding subsidies and costs. The more favorable factors

(26)

25 can be found local, the higher is the number of firms taking advantage, hence the competition in this location will increase (F. Hagos et. al., 2018).

3.6.5 Demand Conditions:

Porter (1998) stresses the importance of the home demand conditions, as a source to gain a national competitive advantage. The home demand is a dynamic influence, shaping possible innovations and improvements of the national firm. The home demand conditions are

characterized by three segments, namely the composition of the home demand, focusing on the needs of potential buyers; the size and growth potential of the home market, as well as channels through which national presences are transmitted to the international market (M. Porter, 1998).

The competitive advantage in context of buyer needs, are that local firms know the buyers need earlier on than the international competition, granting the local firm an advantage to prepare for international competition early on. The size and growth rate of the home market, influence on the one hand the market saturation, as well as advantages through investments stimulating the firm.

Furthermore, a larger number of buyers leading to better base conditions for innovation than a low amount of buyers, hence an increase in investment and growth in the home market will lead to a faster development in the home market (F. Hagos et. al., 2018). Porter (1998) is pointing out, that the quality of the home market supersedes the quantity of demand in the home market (M.

Porter, 1998)

3.6.6 Government and Chance:

Whilst Government and chance were not originally integrated in the Diamond Model, they are still from great importance. Originally not needed, in the explanation of cluster creation, they are factors that can influence the outcome. Governmental policies and regulations can contribute and ease the process in context of firm creation, encouraging joint ventures with foreign firms etc.

leading to a competitive advantage for the firm. Chance events on the other hand are out of control for the firm, but a change in the market allows the firm to restructure and reposition itself in the market, which can lead to a better competitive position. Chance factors of such include, political decisions of foreign governments, changes in the financial market as well as other

(27)

26 technical changes (F. Hagos et. al., 2018) Whilst Porters model relies in is assumptions on a

national system, he acknowledges, that the local aspect und the aspect of competitive advantage is in multiple ways more important (S. Rosnfeld, 2007)

Since this research project revolves around the microbrewing clusters in the Copenhagen area and therefore the Danish market, the double Diamond approach will be useful in two aspects. Whilst Porter´s diamond model will allow me to assess the local advantage microbreweries can rely on an contribute from, it is on the other hand to consider that the Danish market is compared to larger economies such as the United States, small. Considering as well that the microbrewing industry is competitive to some extent on a global scale, the double diamond approach will allow me to combine local as well as global opportunities for firms and cluster growth. In specific, I want to investigate to what extent, the local advantage is sufficient, as well as the need for foreign connections for the growth and power of the cluster itself and the individual firm. Furthermore, I will determine if key difference between contribution to the cluster as well as contribution to the individual firm exist.

(28)

27 4. The Microbrewery Industry:

In the following section I will outline insights on the microbrewery industry. Starting off with presenting a picture of the global development of microbreweries, I will further present insight on microbrewery clusters of multiple regions. I will present the microbrewery industry under a local scope, focusing on the development of the Danish microbrewery industry and finish the chapter with the introduction of the case companies of this research. This allows for a basic understanding of the industry.

4.1 The global beer market development

In the following I will outline basic information about the brewery industry as well as the microbrewery industry, first on a global followed by a European scale. A good indicator of the development of the brewery industry is to focus on the global annual output. Whilst the global beer production amounted to 1,3 billion hectoliters in 1998, the global beer output amounted to 1,9 billion hectoliters in 2019 (Statista, 2021). The Beer Global Market Report of 2021, valuated the global beer industry at 189 billion USD with an expected growth to 270 billion USD by the year of 2030 (Beer Global Market Report, 2021) In a survey conducted by Alltech, representing 209 countries, the craft beer brewing industry is accounting for 94% of the more than 19.000 breweries worldwide (New Food, 2017). Looking at the European market, the total output of breweries decreased from 408 million hectoliters in the year 2008 to 401 million hectoliters in 2019. Looking at the number of registered breweries in the EU increased from 3.280 in 2008, to 11.048 in 2019. Looking at the microbrewery industry, this number increased from 1.755

registered breweries in 2008 to 7.011 in 2019 (Beer Statistic, 2014; European Beer Trends Report, 2020). As this research is focused on clusters in the microbrewery industry around Copenhagen, I will outline international samples of clusters in the microbrewery industries in the following section.

4.2 International Microbrewery Clusters:

At this stage, the question raises, if the formation of clusters is a common occurrence in the Microbrewery industry. One answer to this question can be found by looking at the research

(29)

28 conducted on the geographical occurrence of clusters in the United States, by J. K. Carr et. al., (2019). In their research, the authors could identify multiple cluster regions in different

geographical radii. Already at the half mile mark multiple US brewery clusters could be identified led by Portland with 20 breweries. Extended to a ten-mile radius. Clusters up to 171 breweries could be identified (J. K. Carr et. al., 2019).

In a study on brewery industry clusters in and around London, Dennet and Page (2017) found multiple sources of evidence for the appearance of clusters. One important point to mention is the location size required due to the nature of the brewing industry, hence rental prices are an

important aspect to consider. Next to this, a determining factor are resources required for production such as quality water (J. K. Carr et. al., 2019). Furthermore, aspects beyond the traditional factors of production such as land, labor or capital must be considered. In the research on fictive clusters in the New Zeeland beer industry, Murray and Oland (2016) termed this fictive place, describing the use of terms “Invented” by the industry to under the aspect of producing and selling commodities. This can be in form of certain terminologies, connected by the consumer with products of high quality as well as other market enhancing typologies. In this context, they found all clusters to be fictive to a certain extent, either in their formation or continuation process (Murray and Oland, 2016).

A further aspect is the closeness to the customer such as restaurants and brewpubs, allowing direct sales resulting in pure profit. Another aspect concerning especially newly founded breweries joining a cluster are close sources of knowledge as well as shared equipment. Multiple evidence for this positive and supportive environment in the brewery industry can, according to the research, be found in the modern trend of brewery collaboration and the sharing of recipes. This phenomenon is due to the nature of “Economies of Cooperation” allowing the breweries “…the very real benefits afforded by sharing resources (including equipment, ideas, knowledge, workforce and customers) rather than competing with one another” (Dennet and Peng, 2017; p.450). A further communality of microbreweries, is the uneasy relationship with well-established breweries and their owned sub brands. Whilst these hold a large amount of market share, it is beneficial for Microbreweries to collaborate to extent their market share (Murray and Oland, 2016).

(30)

29 4.3 Microbreweries in Denmark

Whilst the previously presented literature shed light on the existence of clusters in the

microbrewery industry and the benefits breweries can gain by participating in the cluster, I will change the focus on the Danish brewery environment. According to the European Beer statistic from 2020, released by the association “Brewers of Europe”, Denmark is listed 12^th among European nations ranked by actively registered breweries, amounting to 212. Combined, these breweries produce 5,8 million hectoliters of beer in 2019 (European Beer Trends Report, 2020).

Looking at the spread of breweries in the Danish market, a clear gathering of breweries in the Copenhagen area can be found whilst there is only a small number of breweries in the rest of Denmark as a quick search on Google maps visualizes.

(Google Maps, Search term “Brewery”; 2021)

(31)

30 Whilst it is to acknowledge, that it is likely that not all breweries are registered over the google maps service provider, it still is a good indication of the brewery spread in the Danish market.

Even though, this accounts for all the breweries, I will change the focus towards the

microbreweries at this stage. Whilst multiple enthusiast sides connect the term microbrewery with the modern craft beer trends, this is not as sufficient criteria to define microbreweries, since more and more well-established larger breweries are engaged in the craft beer development. A more established and quantitative definition of Microbreweries. R. Black (2010) defines in

“Alcohol in Popular Culture: An Encyclopedia” microbreweries by their output. According to this, breweries are defined as microbreweries, if the annual output does not exceed 15.000 barrels amounting to 1,76 million liters (R. Black, 2010). Looking at the Danish market, the European Beer Statistic from 2020 lists 180 microbreweries, at the stand of 2019. Microbreweries are therefore accounting for the vast majority of registered breweries in Denmark with 81,2% (European Beer Trends Report, 2020). The rise and of microbreweries in Denmark can further be described, as a new phenomenon in the context of an increase in microbreweries over the last decade. Whilst the European Beer Statistic of 2014 estimated the amount of craft beer breweries around 100

registered entities, Denmark is accounting for an increase of 80 Microbreweries over the time frame of six years, amounting to 55,6% (Beer Statistic, 2014; European Beer Trends Report, 2020).

This raises the question what thrives this increase of popularity in microbreweries in Denmark?

This can be answered by narrowing down the focus towards the capital region of Copenhagen. C.

Andersen (2021) points out multiple aspects, why Copenhagen can be named the center of craft beer. This is due to the fact, that “Copenhagen Beer Lovers”, were European pioneers in

embracing the newly developed beer trends, such as in the United States, hence were familiar and drawn to the new styles of brewing. Whilst other counties in Europe such as Germany and the Czech Republic, known for the beers, are very patriotic, the “Copenhagen Beer Lovers” set their main interest in quality and variety of the beer instead of its origin. A further aspect is the

establishment of the Mikkeller brand in 2005 in the Nordic craft beer recognition. Whilst Carlsberg started developing Belgium style beers as early as 2000, they are still a brand, mainly known for the traditional beer styles, whilst Mikkeller devoted their firm to the craft beer revolution. (C.

Andersen, 2021). Whilst they are located in more than 15 countries at the time of 2021, they stayed true to their mission of the craft beer establishment in Denmark. The prime example

(32)

31 therefore is the annual hosting of the Mikkeller Beer Celebration Copenhagen, an event where multiple representatives of international breweries and especially microbreweries coming

together and representing their products as well as new trends in the brewing industry (Mikkeller, 2021). A further example of the importance of Copenhagen as a hub for microbrewers is the annual Ølfestival, hosted by the organocation of the “Danish Beer Enthusiasts”. Whilst this festival is smaller in scale compared to Mikkeller, it is with a more local context in its brewery

representatives (Ale, 2021).

4.4 Introducing the companies:

In this section I will introduce the companies, interviewed to gather data with the goal to answer the question of this research. All the microbreweries are or around Copenhagen and the

interviews were conducted with the according representatives.

4.4.1 Slowburn

Slowburn brewing Co Op was founded in 2019 and is therefore representing a fairly young and small microbrewery in this research. Located in the rural area Hvidovre the brewery is based in the outskirts of Copenhagen. A. Knage as well as S. Erreni are the founding members of the brewery.

Whilst S. Erreni worked with multiple breweries previous the foundation of Slowburn, A. Knage came as well with background experience of the microbrewing industry, due to her work as a bartender and beer bottle shops. Already in the start, the brewery took a different approach to most companies, that eased their way of raising capital. By approaching private people related or interested in the industry, it allowed Slowburn to take multiple small loans. A. Knage (2021) clarified that this approach of raising capital eased the foundation of the microbrewery compared to the traditional approach of a bank loan. A. Knage said on theis matter:

“That was also you know, a project we had to do and it was quite fun. Because we also worked out the business model while doing it, because we had to pitch our idea to friends and family and people that we thought might be interested in the so how we did it was that we have taken like, like multiple small loans with people that we're excited about the project.” (A. Knage, 2021; p.5, Question 11)

(33)

32 Since brewing equipment is expensive and a large amount of capital is required previous the foundation, Slowburn managed to avoid the risk of being neglected a larger loan by the bank.

Furthermore, all participants of the smaller loans were interested not only in their final financial gain, but as well in the resulting product of the operation. This led to the win-win situation, Slowburn finds itself in now, by having easy access to capital, as well as good interest rates and privileges on the product for the loan providers. The brewery has further no obligations towards shareholders and can operate democratically within.

At the time of this research, the brewery is able to brew up to 600 liters of beer per batch leading to 18 kegs of beer in a 90 square meter areal. There business philosophy consists, off producing a wide variety of products, meaning many different styles of beer, whilst granting the best possible quality.

4.4.2 Dry and Bitter

The Dry and Bitter Brewing Company was founded in 2015 by the two partners S. Wagner and J.

Pollard. Whilst the bar Fermentoren as well as the Dry and Bitter brewery have a joint ownership by these two partners, S. Wagner is responsible for the brewery, whilst J. Pollard is managing the craft beer bar Fermentoren. Similar two Slowburn, the brewery is located in the outskirts of Copenhagen, in the rural area of Gørløse. Starting of as a brewing collective, the brewery experienced rapid growth over the last five years, with a consecutive growth of 20% annually, making Dry and Bitter a well-established microbrewery in the Copenhagen area. At the time of this research, the firm bought out all partners, leading to a full ownership off the brewery by Dry and Bitter. Whilst the brewery predominantly focuses on exports, it still has a consistent market share in Denmark. S. Wagner was already pre the foundation experienced in the microbrewery industry, thanks to his previously owned contract brewery crooked moon. Asked about their approach in raising capital to start of the brewery S. Wagner said:

“And we started with very little money and as buying shares of this collective and then had a certain set amount of tanks this case for which we then made a little bit of money, bought a couple new ones made a little bit of money. And it was very like bootstrapping, like finding like selling your own beer through your own bar kind of thing in order to raise the necessary capital.” (S. Wagner, 2021; p.7, Question 20)

(34)

33 Similar to Slowburn, Dry and Bitter took a different approach, by avoiding the traditional bank loan and buying shares of the beer collective instead. The distribution of their own product through their own bar, resulted therefore in a system of raising capital, to expand an invest into the brewery. The strategy of the brewery, to provide the best quality possible and creating a luxuries product is similar to Slowburns but on a larger scale.

4.4.3 Amager Bryghus

The Amager Bryghus brewery, located in the district of Amager in the city of Copenhagen is widely considered as one of the oldest Microbreweries in Denmark. Established in the year of 2007, the brewery counts to the well-established microbreweries in the Copenhagen area. Founded by the two partners J. Storm and M. V. Lundsbak, the brewery is currently serving the local as well as the global market. In an interview with J. Storm, he mentioned that the original idea of the brewery was to serve only the district of Amager in the city of Copenhagen. They realized on the other hand, that this approach would not be viable in the long term.

“And if you have smaller microbrewery that wants to be bigger than you have to look outside Denmark because Denmark is such a small country. Yeah, normally we sell around half of our production to outside Denmark. And I think that's probably one of our success. So, if you have a small brewery and don't think outside Denmark, you will probably have a hard time selling your beer.” (J. Storm, 2021; p.3, Question 9)

Contrary to Slowburn and Dry and Bitter, the foundation of Amager Bryghus took the traditional approach, by combining the saved financial assets of the two partners with a bank loan. Asked why they decided to take this approach, J. Storm (2021) mentioned as a key reason, that the brewery was founded before the financial crisis in 2008. According to him this eased the ability to get a bank loan approved tremendously, compared to the situation at the time of this research.

Whilst the brewery grew by a lot since the foundation in 2007, it maintained its size as well as its capacity of 4000 hectoliters per annum over the last four years. J. Storm (2021) mentions as well that the goal is still to grow. Whilst he saw potential of gaining new market share, the ongoing pandemic of Covid-19 made it hard to achieve this.

(35)

34

“We're hoping to sell more. Yeah. And yeah, I think if it's not because of Corona we have definitely brewing phobia. We have nearly not sold any cakes last year. Normally, we produce around 100,000 litres of kegged beer the year.” (J. Storm, 2021, p.1, Question 3)

Similar to the strategy of Slowburn as well as dry and bitter the goal of the brewery, is the production of a high-quality product that is brewed with passion.

(36)

35 5. Analysis- The Copenhagen Microbrewey Cluster

In the following sections I will present the gathered data from primary as well as secondary sources. With help of the previously outlined theories, the presented data will be analyzed. As a first step I will try to answer the question of the existence of microbrewery cluster in the

Copenhagen area. This will be followed by an analysis of the cluster power. I will than evaluate the importance of social capital in the industry. Lastly, I will evaluate the Firm Strategy, Structure and Rivalry, Related and Supporting industries, Factor Conditions and Demand Conditions with help of the double Diamond approach including the local as well as the global dimension. Specifically in context to foreign ties, I will evaluate how microbreweries establish networks and connections, as well as the importance of maintaining them.

5.1 Microbrewery cluster of the Copenhagen area

As outlined previously by Murray and Overton (2016) there are four main aspects defining the existence of a cluster:

1. Clusters are characterized by a spatial collection of related economic processes.

2. The local competition as well as collaboration are characteristics of political and economic relations underlining the structure.

3. Cluster participants are aware of their participation in the cluster and are engaging in some form of collaboration resulting in a contribution towards the cluster.

4. Both, innovation, and competition are required and reflect the clusters success.

(Murray and Overton, 2016)

5.1.1 Spatial Collection of Related Economic Processes

To ensure that this research is investigating related economic process, the following findings will be based on firms clearly classified as microbreweries. The primary data gathered stems from multiple microbreweries of different size and age. Located the furthest from the center of

Copenhagen is the Dry and Bitter Brewing Company in Gørløse (Dry and Bitter, 2021). The distance from Copenhagens center of 35km will be significant for the following, since it will be used as the radius of cluster activities in and around Copenhagen (Gooogle Maps, 2021).

(37)

36 (Google maps, Search term: “Microbrewery”; 2021)

To underline the spatial validity of cluster potential of microbreweries in the Copenhagen are, map above lists 12 Microbreweries, in a radius of less than 10 km radius around the center of

Copenhagen. In terms of the related process, next to their classification as microbreweries, the interviews conducted clearly show further evidence of related economic processes such as in sales, purchases and production. The interviews with Dry and Bitter, Slowburn as well as Amager Bryghus, all mention the basic brewing requirements.

“So we started with a lot of used equipment and purchasing some new stuff like lab equipment and a few new tanks and stuff” (A. Knage, 2021, p.1, Question 1)

Next to the basic technical equipment, the similarities of economic processes can be found in the raw materials, such as hops, yeast, and barley, which are used by all interviewed companies, since they are a necessity for the beer production.

(38)

37 5.1.2 The local competition as well as collaboration are characteristics of political and economic relations underlining the structure.

Political and economic relations in terms of local competition and collaboration was evident in multiple instances during the conducted interviews. In terms of the local microbrewery industry, all interviewees mentioned a friendly and supportive relationship towards their competition. A.

Knage (2021) describes the local microbrewery as a family like structure. In terms of political structure, it was evident throughout the interviews, that there is a hierarchical structure, in terms of supporting each other, not meaning inequality, but in terms of knowledge sources. J. Storm (2021) as partial owner of Amager Bryghus, mentions during the interview the role of the well- established microbrewery as a go to source in terms of knowledge on the industry. This can be in terms of equipment, questions of production as well as information about the supply of raw materials. The supportive structure is especially evident during collaborations. All interviewees agreed to collaborations, being an important source of knowledge and learning potential. S.

Wagner (2021) is pointing in this context once more the political aspect as it is in certain cases a wishful outcome to specifically target breweries with higher profile, making it again evident that there is a certain hierarchy structure. A. Kange (2021) further mentions the economic aspect of branding through collaborations. By producing a beer in joint efforts, it allows to touch upon a bigger market size, as customers of both participants are exposed to the product. Especially for smaller and upcoming microbreweries, this type of branding is important to get recognized in the industry. A. Knage (2021) furthermore mentions a certain number of unwritten rules during the interview:

“And people discuss, you know, what other people do what other breweries do and there is a kind of, like, unwritten rule book about how you communicate, you know, like, if there's a

misunderstanding about someone taking the same name as one of your peers and naming their peers that name and, or, like, yeah, that you don't shit talk each other.” (A. Knage, 2021; p.3, Question 5)

This statement once again shows evidence of a political structure, underlining the local

microbrewery community in form of an unwritten rule set. As it seems, according to A. Knages (2021) statement, the goal of those rules, is to guarantee a fair and polite competition amongst the microbreweries. Lastly to mention is the economic aspect of the sale of resources amongst

(39)

38 breweries. As it became evident throughout the interviews, that certain raw materials such as hops, are hard to come by. The local microbreweries, therefore, help each other by providing less accessible resources to microbreweries, in accessing these. Packaging equipment is as well sold amongst breweries in times of shortages.

5.1.3 Cluster participants are aware of their participation in the cluster and are engaging in some form of collaboration resulting in a contribution towards the cluster.

At the time of this research over 15 Microbreweries are listed in the greater capital area (Untapped, 2021). For the purpose of this research, it is important to investigate, how

microbreweries interact with each other. One way of interaction is in form of collaboration. In the microbrewery industry, collaborations usually involve a joint development of a new beer recipe.

This joint development traditionally happens at one location, meaning one microbrewery is hosting the brewers of a fellow microbrewery of their choice. M. Pomranz (2017) states in his article “How Are Collaboration Beers Really Made?” that the first approach to a collaboration, happens in many cases on beer festivals, again underlining the importance of events of these sorts for the industry. After the exchange of contact information’s, the brewers typically discuss the style of beer for the joint development before engaging in the actual production on sight. Whilst it might seem like a pure product-based engagement at first, the use of collaborations for breweries are twofold. Next to the newly developed brew, it allows the participant to engage in intensive knowledge exchange over a longer period, compared to the traditional exchange on beer festivals (M. Pomranz, 2017). At this point the question arises, if collaboration of these sort is a common phenomenon in the industry. A. D Alonso et. al. (2017) investigated the collaboration

phenomenon amongst craft beer breweries. According to their finding over 90% of the questioned craft beer breweries stated, that they engaged in collaborations in the past. The research further presents multiple motives of engaging in collaborations:

1. Beer quality improvement

2. Increase the basic knowledge about beer recipes and equipment.

3. Increase the knowledge about the operations of fellow breweries.

4. Increase the number of styles of the beer selection.

(A.D. Alonso et. al., 2017)

The Copenhagen Microbrewery Cluster and its Influence on the Internationalization Process of the Individual Firm