STRATEGIES FOR BUILDING THE MARKET LEGITIMACY OF ENTREPRENEURIAL WINERIES IN A  NASCENT WINE REGION  By
 Kathleen
Sprouse
 
 
 
 
 
 
 
 
 
 
 
 
 A
THESIS
 Submitted
to

 Michigan
State
University
 in
partial
fulfillment
of
the
degree
requirements

 for
the
degree
of

 
 Agriculture,
Food
and
Resource
Economics—Master
of
Science
 
 2013 
 
 ABSTRACT  STRATEGIES FOR BUILDING THE MARKET LEGITIMACY OF ENTREPRENEURIAL WINERIES IN A  NASCENT WINE REGION  By  Kathleen Sprouse  New
wineries
operating
in
a
nascent
wine
region
need
strategies
to
build
market
legitimacy
and
 gain
access
to
resources
crucial
to
the
survival
and
growth
of
the
winery.
Since
most
wineries
in
 the
cool
climate
wine
region
are
less
than
10
years
old
and
produce
less
than
3,000
cases
 annually,
these
firms
struggle
to
attract
customers
and
sell
their
wine
outside
their
own
tasting
 room.
Through
surveying
113
wineries
in
Michigan,
Missouri
and
New
York,
an
overview
of
the
 current
management
and
marketing
strategies
were
captured
in
addition
to
defining
eight
 indicators
of
legitimacy
(the
percent
of
wine
a
firm
sells
through
formal
distribution
channels,
 obtaining
external
funding,
number
of
employees
hired,
breath
of
trading
network
and
having
 an
arrangement
with
a
tour
bus
company).
Through
bivariate
and
multivariate
analyses,
we
 found
strong
correlations
among
the
legitimacy
indicators
and
wineries'
management
and
 marketing
decisions.
The
key
strategies
recommended
in
this
thesis
for
new
wineries
is
to,
use
 more
vinifera
grapes,
increase
production,
apply
for
and
advertise
awards,
offer
food
products
 and
club
promotions,
have
a
gift
shop
and
utilize
social
media.
Since
new
wineries
often
lack
a
 performance
record,
our
results
show
indicate
that
new
wineries
are
not
at
a
disadvantage
in
 gaining
external
funding
compared
to
older,
more
established
wineries.
The
results
and
 strategies
are
beneficial
to
new
firms,
supporting
industries,
extension
efforts
and
academic
 research.
Finally,
the
findings
and
strategies
contribute
to
the
literature
on
legitimacy,
 developing
wine
regions
and
strategies
for
entrepreneurial
ventures
in
the
agri‐food
sector. 
 
 ACKNOWLEDGMENTS    
 This
plan
A
thesis
paper
is
dedicated
to
my
parents
for
their
all
support
and
encouragement.
A
 special
thank
you
to
my
three
sisters,
the
Kilies
Family,
the
Christopher
Family
and
all
my
 extended
family
and
friends
for
their
motivation
and
support.

 
 Thank
you
to
my
major
professor,
Brent
Ross,
Ph.D.,
for
sharing
his
knowledge
and
expertise,
 and
guiding
me
throughout
the
master’s
program.
I
want
to
thank
Dan
McCole,
Ph.D.,
for
 serving
as
a
committee
member
and
sharing
his
research
findings
and
experience
studying
 tourism
and
developing
wine
regions.
I
also
want
to
thank
Chris
Peterson,
Ph.D.,
for
serving
as
a
 committee
member
and
for
his
advice
and
help,
especially
regarding
my
legitimacy
indicators.
 Finally,
I
am
grateful
and
honored
for
the
opportunity
to
collaborate
with
these
experienced
 and
energetic
professors.
 
 A
special
thank
you
to
the
Michigan
Grape
and
Wine
Council
and
its
members,
as
well
as
the
 wineries
in
Michigan,
Missouri
and
New
York
who
participated
in
this
survey.
Their
help
and
 participation
was
greatly
appreciated
and
beneficial
to
the
future
of
the
cool
climate
wine
 region
as
well
as
agricultural
economics
research.
 
 Finally,
I
want
to
thank
all
of
my
friends
I
met
at
Michigan
State
University.
The
passion
and
 drive
among
the
students
in
the
Agriculture,
Food
and
Resource
Economics
department
was
 inspiring
and
motivating,
I
wish
you
all
the
best
in
your
future
endeavors.
 
 iii
 
 TABLE OF CONTENTS      LIST OF TABLES                  LIST OF FIGURES                  CHAPTER 1:  INTRODUCTION               CHAPTER 2:  LITERATURE REVIEW            Defining a “wine region”            Building a wine region            New grape varietals and wine blends         Building a market category            Developing a regional identity          Survival and growth require legitimacy        Defining legitimacy              Types of legitimacy              Regulative legitimacy            Normative legitimacy            Cognitive legitimacy              Key strategies used to achieve legitimacy        Conformance, “fitting in”, as a legitimacy strategy    Collaboration              Acting strategically, “standing out”, as a legitimation strategy  The individual               Organization                Environment                The process                  CHAPTER 3:  RESEARCH METHODOLOGY            Survey Instrument                Data Collection                Methodology                  Relationships                  CHAPTER 4:  RESULTS                 Descriptive Results                  Age of wineries            
 iv
     vii      xi      1                                                                                  8  8  9  13  14  15  16  17  19  20  20  20  21  22  24  24  25  27  27  28                      31  31  31  33  35              46  46  46                  
           Volume produced              Main ingredient or inputs used to produce wine       Types of grapes used in production          Procuring grapes              Procuring grapes through a contract         Custom crush services             How wine is bottled               Taste of wine                Price of the wine              Where the wine is sold            Distribution channels used to sell the wine         Promotional activities             Respondents’ view on how consumers perceive the region’s wine  INDIVIDUAL FIRMS              Organizational structure            Financed                Reason owners enter the wine business           Employees                Products and Services offered           Industry certifications             Awards                Respondents’ satisfaction with winery’s current performance  WINERY OWNER              Membership                Bivariate Results                Wine production              Employees                Full‐time, year round             Full‐time, seasonal employees          Part‐time employees              Prior experience of firm owner          Wine industry experience            Business experience              Grape production experience           Type of grape               Vinifera vitis                Hybrid grapes                Native American              Other                  Inputs used to produce wine           Grapes                 Grape juice                Bulk wine                Other                  v
                                                                                         46  49  51  53  54  57  58  59  59  61  62  67  69  69  69  69  71  73  74  75  76  76  77  78  80  80  83  83  84  85  87  87  88  88  89  89  91  91  92  92  92  93  94  94    Procuring grapes            Estate grown              Spot market contracts           Verbal (handshake) contracts         Written contracts            Winemaking              Wine sales              In‐state sales              Out‐of‐state sales            Percent of wine volume sold at the winery      Percent of wine volume sold direct to a liquor store    Percent of wine volume sold through distributors    Wine pricing              Price of wineries’ highest priced wine       Price of wineries’ lowest priced wine        Price of a wineries top selling wine        Awards              Wine competitions            Trade Press Award              CHAPTER 5: DISCUSSION AND CONCLUSION    APPENDICES              APPENDIX A            APPENDIX B              BIBLIOGRAPHY                                                96  97  97  97  98  98  101  101  103  106  107  109  110  111  112  112  113  113  114          124                          132  133  140    vi
                                     
                                               148    LIST OF TABLES      Table 1:
 Emerging Wine Region Statistics............................................................................. 2
   Table 2:
 Percent of Top Three Varietals Planted by State ..................................................... 4
   Table 3:
 Key development issues Australia faced ............................................................... 10
   Table 4:
 2012 Survey Response Rate .................................................................................. 32
   Table 5:
 Legitimacy variables ............................................................................................. 34
   Table 6:
 Type of grape and how it signals legitimacy.......................................................... 38
   Table 7:
 Number of Firms that use a Single or Combination of Main Inputs to Produce Wine      ............................................................................................................................. 49
   Table 8:
 Percent of Total Wine Volume Produced with Grapes, Grape Juice, Bulk Wine or  Other ........................................................................................................................ 51
   Table 9:
 Strategies use to Determine Contract Prices ......................................................... 55
   Table 10:
 Promotional Activities used by Wineries by State ............................................... 67
   Table 11:
 Financing Strategies used by Wineries, by State ................................................. 70
   Table 12:
 Products and Services Wineries Offer ................................................................. 75
   Table 13:
 Awards Won by Wineries in the Emerging Wine Region...................................... 76
   Table 14:
 Demographics of Winery Owners in the Emerging Wine Region by State ............ 78
   Table 16:
 Correlation Results with the Number of Years a Firm has Commercially Produced  Wine ......................................................................................................................... 82
   Table 17:
 Correlation Results of the Average Number of Full‐time, Year Round Employees.83
   Table 18:
 Correlation Results of the Average Number of Full‐time, Seasonal Employees.... 84
   Table 19:
 Correlation Results of the Average Number of Part‐time Employees .................. 86
   
 vii
 Table 20:
 Correlation Results of the Average Number of Years of Experience Owner has in  the Wine Industry, Grape Production and Business ................................................... 87
   Table 21:
 Correlation Results of Percent of a Firm’s Total Wine Production Made from  Vinifera Grapes ......................................................................................................... 89
   Table 22:
 Correlation Results of a Percent of a Firm’s Total Wine Production with Hybrid  Grapes ...................................................................................................................... 91
   Table 23:
 Correlation Results of a Percent of a Firm’s Total Wine Production Made with  native American Grapes ............................................................................................ 92
   Table 24:
 Correlation Results of the Percent of Firm that use Grapes as Main Input in     Wine ......................................................................................................................... 92
   Table 25:
 Correlation Results of the Percent of Firm that use Grape Juice as Main Input in  Wine ......................................................................................................................... 93
   Table 26:
 Correlation Results of the Percent of Firm that use Bulk Wine as Main Input in  Wine ......................................................................................................................... 94
   Table 27:
 Correlation Results of the Percent of Firm that use Other as Main Input in Wine 94
   Table 28:
 Contingency Table Between Using “Other” as a Main Input and Wineries having a  Large Trading Network .............................................................................................. 95
   Table 29:
 Correlation Results of Different Procurement Strategies Firms Use..................... 96
   Table 30:
 Two Sample T‐Test with Unequal Variances for Differences in Mean for Firms that  Outsource Winemaking............................................................................................. 99
   Table 31:
 Contingency Table Between Firms that Outsource Winemaking and Firms that  have an Arrangement with a Tour Bus Company ....................................................... 99
   Table 32:
 Contingency Table Between Firms that Outsource Winemaking and Firms that  Obtain External Funding...........................................................................................100
   Table 33:
 Correlation Results of the Percent of Winery’s 2011 Gross Revenue from Wine  Sales Only ................................................................................................................101
   Table 34:
 Correlation Results of Firms’ Percent of In‐State Sales .......................................102
   Table 35:
 Correlation Results of Firms’ Percent of Out‐of‐State Sales................................103
   
 viii
 Table 36:
 Correlation Results of Firms’ Percent of Total Wine Volume Sold through  Distribution Channels...............................................................................................105
   Table 37:
 Correlation Results of Firms’ Percent of Wine Volume Sold at the Winery .........106
   Table 38:
 Correlation Results of Firms’ Percent of Wine Volume Sold Direct to a Liquor     Store .......................................................................................................................107
   Table 39:
 Correlation Results of Firms’ Percent of Wine Volume Sold through    Distributors ..............................................................................................................109
   Table 40:
 Correlation Results of Firms’ Average Prices of their Highest, Lowest and Top  Selling Wines............................................................................................................111
   Table 41:
 Correlation Results of Firms that Won Awards from Wine Competitions ...........113
   Table 42:
 Contingency Table Between Firms that Won an Award from a Wine Competition  and Firms that have an Arrangement with a Tour Bus Company...............................114
   Table 43:
 Contingency Table Between Firms that Won an Award from a Wine Competition  and Firms that have Obtained External Funding .......................................................114
   Table 44:
 Correlation Results of Firms that Won a Trade Press Award...............................115
   Table 45:
 Contingency Table Between Firms that Won a Trade Press Award and Firms that  have an Arrangement with a Tour Bus Company ......................................................116
   Table 46:
 Contingency Table Between Firms that Won a Trade Press Award and Firms that  Obtained External Funding .......................................................................................116
   Table 47:
 Two Sample T‐Tests with Unequal Variances Results of Promotional Activities  Firms Use .................................................................................................................117
   Table 48:
 Chi‐Square Results of Promotional Activities Firms Use .....................................119
   Table 49:
 Contingency Table Between Firms that use Social Media and Obtain External  Funding ....................................................................................................................121
   Table 50:
 Two Sample T‐Tests with Unequal Variances Results of Products and Services  Firms Offer ...............................................................................................................122
   Table 51:
 Chi‐Square Results of Products or Services Firms Use ........................................123
   Table 52:
 Current Status of the Emerging Wine Region based on Easingwood (2006)   
 ix
     model................................................................................................................129
   Table 53:
 The continuous variables that correlated with the greatest number of legitimacy  indicators at the 1, 5, 10 percent significant levels....................................................134
   Table 54:
 The binary variables that correlated with the greatest number of legitimacy  indicators at the 1, 5 and 10 percent significant levels..............................................138      Table 55:
 The categorical variables (more than 2 groups) that correlated with the greatest  number of legitimacy indicators at the 1, 5 and 10 percent significant levels............140
                                                           
 x
 LIST OF FIGURES    Figure 1:
 Legitimacy Model of Emerging Firms Framework................................................. 36
   Figure 2:
 Average Number of Cases Produced by Wineries in 2011 .................................... 47
   Figure 3:
 Production in 2011 and Number of Years Firm has been Commercially Producing  Wine, R=0.60............................................................................................................. 48
   Figure 4:
 Percent of Total Wine Volume Produced with Various Inputs.............................. 50
   Figure 5:
 Percent of Total Wine Production with Different Grapes by State........................ 52
   Figure 6:
 Percent of Grapes Procured through Various Strategies by State......................... 54
   Figure 7:
 Length of Contracts used with Grape or Juice Suppliers by State ......................... 56
   Figure 8:
 Bottling Style by State ......................................................................................... 58
   Figure 9:
 Average Prices of Wine by State .......................................................................... 60       Figure 10:
 Percent of Total Wine Sales Sold Within the Wineries’ Home State, Outside their  Home State and Outside the U.S., by State................................................................ 62    Figure 11:
 Percent of Wine Volume Sold through Various Distribution Channels, by State . 64    Figure 12:
 Percent of Wine Volume Sold through Specific Distributions Channels by State. 65
   Figure 13:
 Production and Reason for Entering the Industry .............................................. 73
                of Contents  
 xi
 CHAPTER 1:  INTRODUCTION      In
the
last
decade,
more
grape
vines
have
been
seen
across
Michigan,
Missouri
and
New
York
 and
more
wineries
are
opening
their
doors
to
welcome
visitors
and
potential
customers.
 Michigan
and
New
York
are
often
referred
to
as
the
cool
climate
wine
regions
and
Missouri
as
a
 continental
wine
region,
but
together
these
states
are
part
of
a
relatively
undiscovered
wine
 producing
area.
Many
of
the
entrepreneurs
starting
these
wineries
were
once
farmers,
fruit
 growers
(including
grapes),
or
hobby
winemakers
in
search
of
a
business
opportunity
or
rural
 lifestyle
who
decided
to
start
a
commercial
winery.
Together,
this
burst
of
new
wineries
and
 vineyards
are
creating
a
rapidly
expanding
industry
leading
to
boosts
in
rural
development
and
 creating
opportunities
to
foster
the
growth
of
collaborative
industries
like
tourism.
However,
 the
majority
of
the
wineries
in
this
emerging
wine
region
are
less
than
10
years
old,
and
many
 of
the
grapes
that
grow
best
in
the
region
are
not
well
known
among
consumers
today,
 therefore
most
firms
struggle
with
the
“liability
of
newness”
(Stinchcombe,
1965)
as
they
 overcome
challenges
as
a
new
firm
but
also
as
a
firm
operating
in
an
emerging
industry.
Firms
 in
emerging
wine
regions
need
to
build
legitimacy
as
a
way
to
gain
access
to
resources
crucial
to
 the
firm
and
the
region’s
success.


 Wineries
in
emerging
wine
regions
struggle
to
access
distribution
channels.
In
a
preliminary
 study
done
in
2012
by
Michigan
State
University,
the
University
of
Missouri‐Columbia
and
 Cornell
University,
86
wineries
in
this
emerging
wine
region
were
surveyed,
and
wineries
 ranked
managing
distribution
channels
as
their
No.
1
marketing
challenge.

The
wineries
and
 
 1
 the
region
need
a
strategy
to
overcome
the
barriers
of
distributing
outside
their
tasting
rooms.
 Researching
the
wineries’
current
management
and
marketing
strategies
is
crucial
in
devising
a
 plan
to
help
overcome
the
wineries
and
region’s
shared,
top
three
challenges,
grape
 production,
winemaking
and
marketing.
Through
first
helping
the
firms
and
industry
build
 legitimacy,
wineries
can
leverage
legitimacy
as
a
resource
to
gain
access
to
more
resources
like
 distribution
channels,
skilled
employees
and
financing.

 Even
though
these
states
are
not
often
associated
with
wine
making,
all
three
states
have
grape
 growing
and
winemaking
histories
that
date
back
past
the
last
century.
In
the
last
decade,
a
 national
increase
in
the
number
of
wineries
has
occurred.
Between
1999
and
2010,
the
number
 of
wineries
in
the
U.S.
rose
from
2,688
wineries
to
6,668,
with
the
majority
in
California
 followed
by
Washington,
Oregon
and
New
York.
Along
with
a
national
increase
in
the
number
 of
wineries,
a
few
states
emerged
to
form
a
new
wine
region,
boosting
local
agri‐tourism
and
 opportunities
for
economic
development.
In
the
last
decade,
Michigan,
Missouri
and
New
 York’s
wine
industries
grew
dramatically.
 Table 1: Emerging Wine Region Statistics  
 Response  Number
of
wineries
 Grape
acreage
(acres)

 Wine
Volume
(2009,
in
million
 gallons)
 Number
of
grape
growers
 Wine
grape
production
(in
tons)
 Wine
trails
 
 MICHIGAN  101
 Up
from
25
in
 2000
 14,200
 MISSOURI  88
 Up
from
31
in
 2000
 1,700
 NEW YORK  133
 Up
from
113
in
 2000
 37,000
 1.4
 1.1
 28.7
 711
 93,000
 7
 393
 5,200
 11
 1,438
 188,000
 8
 2
 Table 1: (Cont’d)  Wne
industry
economic
impact
 $790
million
 (in
2005)
 $1.6
billion
 $2.5
billion
   Note:
(1)
For
Interpretation
of
the
references
to
color
in
this
and
all
other
tables
and
figures,
 the
reader
is
referred
to
the
electronic
version
of
this
thesis.
(2)
All
data
is
current,
unless
 noted.
Sources:
U.S.
Department
of
Agriculture,
Alcohol
and
Tobacco
Tax
and
Trade
Bureau,
 Michigan
Grape
and
Wine
Industry
Council,
Missouri
Wine
and
Grape
Board,
and
New
York
 Wine
and
Grape
Foundation.
 
 Together,
Michigan,
Missouri
and
New
York
share
similar
climate
and
soil
characteristics
that
 are
unlike
other
wine
producing
regions
in
the
U.S.
Viticulture
expert
Paolo
Sabbitini
at
 Michigan
State
University
explains
that
today
wines
are
coming
from
all
over
the
world
and
 tasting
the
same.
Sabbitini
explains
that
unlike
established
regions
like
California
that
focus
on
 producing
the
same
wine
each
year
because
of
their
consistent
weather,
history
of
growing
 their
grapes
in
a
certain
way
and
producing
their
wine
the
same
way
as
well,
the
cool
climate
 has
established
a
different
focus.

 
 “In the cool climate we can play some with the game of the vintage effect, so every year    the wines are different because the weather is different. So, winemakers have the    chance to produce different wines every year and really work on the fact that there    are no Rieslings from 2010 that are completely the same as a Riesling form 2012.    Therefore, using that to build a recognition in the people that drink your wine with what  
 3
   they really want to test is the different vintages, and the climate of that year and to    really enjoy the fact that we [the cool climate region] are producing distinctive wines    every year,” Sabbitini said, viticulture expert at Michigan State University.   The
main
types
of
grapes
the
region
grows
are
in
descending
order
of
the
most
“cold
hardy”
 meaning
least
susceptible
to
the
winter
injury,
first
are
super
hardy
(i.e.
Frontenac,
St.
Croix,
 etc.),
second
are
native
American
grapes
(i.e.
Concord,
Niagara,
etc.),
third
are
hybrids
(i.e.
 Chambourcin,
Vidal,
etc.)
and
fourth,
and
the
most
susceptible
to
winter
injury,
are
Vitis
 vinifera
(Riesling,
Cabernet
Franc,
etc.)
grapes.
According
to
the
USDA,
from
1999
to
2011,
the
 percent
of
grape
bearing
acres
increased
17.8
percent
in
New
York,
Michigan’s
grape
bearing
 acreage
increased
21.4
percent
and
Missouri’s
grape
bearing
acreage
increased
113
percent.

 Table 2: Percent of Top Three Varietals Planted by State  
 MICHIGAN  MISSOURI  NEW YORK  Concord

 Norton
 Concord

 (64%)
 (19.3%)
 (59%)
 Niagara
 Vignoles

 Niagara
 (24%)
 (13%)
 (8.9%)
 Other
 Chambourcin

 Catawba
 (3.4%)
 (10%)
 (3.8%)
 Source:
U.S.
Department
of
Agriculture,
Michigan
State
University
Department
of
Horticulture
 The
region’s
cooler
seasonal
temperatures
often
produce
wines
that
are
unknown
to
most
 consumers
like
a
semi‐dry
Vignoles,
as
most
consumers
are
used
to
“Old
World”
wines
like
 chardonnay
or
merlot.
Therefore,
as
new
firms
work
to
survive,
they
also
find
themselves
 promoting
a
new
product
category.
Further,
the
shift
in
the
three
states’
development
as
a
 wine
region
comes
from
more
wineries
opening
as
well
as
advancements
in
viticulture
and
 
 4
 enology
practices
and
changes
in
the
climate
across
the
region,
like
more
wineries
being
able
to
 grow
more
Vitis
vinifera
(Mediterranean
climate)
grapes.
While
the
growth
is
dramatic,
new
 firms
still
struggle
to
survive.

 New
wineries
often
struggle
to
obtain
resources
crucial
to
the
firm’s
and
the
industry’s
future
 growth
and
success.
Previous
research
shows,
“that
new
firms
have
lower
chances
of
survival
in
 new
industries,
and
suggested
this
might
be
due
to
the
challenges
of
developing
and
 legitimating
a
firm,”
(Dobrev
and
Gotsopoulous,
2010;
Zuzul
and
Edmondson,
2010).
New
 wineries
in
the
cool
climate
region
must
build
legitimacy
to
gain
access
to
key
resources.

 According
to
Suchman
(1995),
legitimacy
is
a
generalized
perception
or
assumption
that
the
 actions
of
a
firm
are
desirable,
proper,
or
appropriate
according
to
some
social
system
of
 norms,
values,
beliefs
and
definitions.
Firms
can
acquire
or
enhance
the
level
of
legitimacy
they
 possess
through
different
strategic
actions.
Legitimacy
is
a
key
resource
that
allows
new
firms
 to
then
acquire
other
resources
like
external
funding
or
gain
access
to
various
distribution
 channels.
Finally,
building
legitimacy
and
gaining
access
to
key
resources
are
crucial
for
new
 venture
growth
(Moolhuijsen
and
Boudier‐Bakkerlaan,
2011).
However,
previous
research
also
 shows
that
often
the
industry
must
be
deemed
legitimate
before
firms
can
begin
legitimizing
 themselves
within
that
industry.
This
applies
to
the
cool
climate
wine
region
where
unlike
 established
wine
regions
like
Napa
Valley,
Calif.,
or
Bordeaux,
France,
new
firms
must
not
only
 collaborate
to
increase
the
legitimacy
of
the
emerging
wine
regions
but
also
as
a
key
step
in
 legitimatizing
their
own
winery.
“That
is,
entrepreneurs
can
legitimate
a
nascent
firm
and
 industry
simultaneously
by
relaying
a
consistent,
symbolic
story
about
the
value
of
the
industry
 
 5
 while
simultaneously
emphasizing
the
privileged
position
of
their
own
business,”
(Zuzul
and
 Edmondson,
p.
34).
Identifying
the
best
strategies
for
new
firms
and
the
industry
to
jointly
 obtain
and
build
legitimacy
is
a
crucial
issue
for
emerging
wine
regions
and
therefore
is
the
 focus
of
this
thesis.

 The
first
goal
of
this
thesis
is
to
survey
wineries
in
Michigan,
Missouri
and
New
York,
an
 emerging
wine
region,
to
produce
a
complete
analysis
of
the
current
status
of
the
region
 through
collecting
data
on
the
current
production
levels
and
techniques
used,
management
 decisions
being
made
and
marketing
strategies
used
by
the
wineries.
The
second
goal
of
this
 thesis
is
to
identify
key
determinants
of
legitimacy
for
new
firms
(i.e.
the
wineries)
operating
in
 a
new
industry
(i.e.
an
emerging
wine
region).
After
identifying
the
key
indicators
of
legitimacy,
 those
indicators
will
be
used
as
quantitative
measurements
to
analyze
how
the
management
 and
marketing
decisions
affect
the
individual
firm’s
ability
and
level
of
legitimacy
it
acquires
as
 well
as
the
legitimacy
of
the
overall
region.
Identifying
the
effects
of
the
wineries’
decisions
on
 legitimacy
is
crucial
information
that
can
translate
in
to
strategies
that
individual
firms
and
the
 industry
can
adopt.
In
addition,
showing
the
links
between
the
wineries
and
the
supporting
 industries
and
the
effects
that
those
links
have
on
the
individual
firms
as
well
as
the
region
can
 serve
as
a
key
resource
in
helping
formulate
the
collaboration
strategies
needed
in
the
region
 as
well
as
communicating
the
importance
of
collaborating.
Since
the
industry
is
new,
an
exciting
 opportunity
exists
to
guide
the
future
of
this
industry
into
a
successful
wine
region.

 Through
an
extensive
literature
review
on
legitimacy,
developing
wine
regions
and
collective
 behavior
strategies,
a
structured
and
semi‐structured
interview
instrument
was
developed
in
 
 6
 conjunction
with
Michigan
State
University,
the
University
of
Missouri‐Columbia
and
Cornell
 University
to
gather
data
needed
to
address
the
research
goals.
The
survey
was
used
to
 interview
winery
owners
in
Michigan,
Missouri
and
New
York
to
gain
an
understanding
of
the
 cool
climate
wine
region
as
an
industry
and
to
understand
the
status
and
behavior
of
the
 individual
firms
that
comprise
this
rapidly
growing
industry.
The
survey
analyzed
winery
 practices
for
input
procurement,
wine
production,
firm
structure
and
human
resources,
 distribution,
marketing
and
sales,
networking
and
financing
of
the
wineries.
Descriptive
analysis
 was
completed
as
well
as
conducting
quantitative
analysis
including
correlations,
t‐tests,
chi
 square
tests,
cluster
analysis
and
one‐way
ANOVAs
on
the
collected
survey
data
to
offer
 insights
about
the
overall
region
and
compute
comparisons
among
the
states.
The
empirical
 framework
of
this
thesis
was
adopted
from
and
expands
on
Zimmerman
and
Zeitz
(2002)
and
 Tornikoski
and
Newbert
(2007).

 The
first
section
of
this
thesis
reviews
the
previous
literature
on
legitimacy,
emerging
wine
 regions,
and
developing
new
product
categories.
The
second
section
describes
the
data
 collection
process
and
methodology
used.
The
third
section
encompasses
two
results
sections,
 a
detailed
overview
of
the
descriptive
findings
from
the
2012
survey
and
a
supporting
section
 that
conducts
correlations,
t‐tests
and
chi‐square
tests
to
detect
if
relationships
exist
between
 the
eight
legitimacy
indicators
and
a
variety
of
management
and
marketing
strategies
used
by
 the
firms.

 
 
 
 7
 CHAPTER 2:  LITERATURE REVIEW      Defining a “wine region”  A
wine
region
comprises
the
characteristics
of
the
soil,
climate
and
surrounding
environment.
 Previous
research
defines
a
“winescape”
from
just
the
attributes
of
a
grape
wine
region
and
as
 the
whole
region
and
all
its
attributes
(Peters,
1997,
Alebaki
and
Lakovidou,
2011).

Johnson
 and
Bruwer
(2007)
broaden
the
term
stating
a
wine
region
is
“a
held
perception
(or
belief)
 about
a
bounded
wine
area
space
that
is
usually
holistic
and
multidimensional
in
nature,
the
 elements
of
which
are
‘glued
together’
by
inter‐related
winescape
elements
and/or
the
people
 and
natural
and
physical
attractions
within
it,”
(Johnson
and
Bruwer,
2007,
p.
277).
Often
the
 decision
to
visit
a
wine
region
can
be
the
result
of
proximity
to
a
city
near
an
already
planned
 trip
destination
like
San
Francisco
and
Napa
Valley,
or
as
a
fun
activity
for
a
group
of
people
(i.e.
 a
bachelorette
party)
or
a
couple’s
getaway.
Overall,
I
find
most
wine
enthusiasts
or
people
visit
 a
wine
region
in
search
of
an
adventure
or
a
fun
activity
and
choose
the
wine
region
they
want
 to
visit
based
on
the
reputation
of
the
region,
suggestions
on
visiting
the
region
from
friends
or
 from
a
desire
to
sample
and
learn
about
wine.



 Getz
and
Brown
(2006)
developed
a
model
of
wine
destination
attractiveness
that
included
 three
main
features,
the
core
wine
product,
the
core
destination
appeal
and
the
cultural
 product.
The
main
components
of
the
core
wine
product
are
the
service
attributes,
the
staff’s
 knowledge
and
the
welcoming
of
visitors.
Interestingly,
the
authors’
wine
product
does
not
 
 8
 mention
many
of
the
“core”
features
often
associated
with
wine,
including
the
grape
varietal
 used
to
produce
the
wine,
the
wine’s
bottling
style
(i.e.
single
varietal
or
blend),
the
wine’s
 price
or
any
quality
measures.
The
core
destination
appeal
includes
“attractive
scenery,
 pleasant
climate,
moderately
priced
accommodation,
easy
to
obtain
information
and
well
 signposted
wine
trails,”
(Getz
and
Brown,
p.
155).
The
cultural
product
focuses
on
the
locality
of
 the
region,
“unique
accommodation
with
regional
character,
fine
dining
and
gourmet
 restaurants,
and
traditional
wine
villages,”
(Getz
and
Brown,
p.
155).

 More
simply
stated,
Bruwer
and
Lesschaeve
(2012)
tie
the
definition
to
the
consumer’s
 motivation
to
visit
a
wine
region
as
“impl[ying]
motivation
to
partake
in
an
intoxicating
 substance
(wine),
interaction
with
food
culture,
local
people,
and
pleasurable
leisure
activities,”
 (Bruwer
and
Lesschaeve,
p.
615).
Further,
understanding
that
visiting
a
wine
region
extends
 beyond
consumers
just
touring
wineries
and
vineyards
but
is
more
importantly
the
complete
 experience
of
the
surrounding
environment,
regional
culture,
local
wine
and
food,
and
scenery.
 I
believe
the
combination
of
the
geographical
location
of
the
region,
the
reputation
and
quality
 of
the
wine,
the
local
culture
and
the
organization
of
the
region
(i.e.
ease
of
traveling
in
the
 region
to
wineries
and
restaurants)
creates
a
well‐defined
wine
region.


 Building a wine region  Geoffrey
Beames
(2003)
identified
Bordeaux,
France,
Tuscany,
Italy,
and
Napa
and
Sonoma
 Valley,
Calif.,
as
successful
wine
destinations
because
each
region
appreciates
and
understands
 the
concept
of
wine
tourism.
Through
consciously
providing
facilities
for
wine,
food,
lodging,
 attractions,
other
activities
and
history
along
with
beautiful
scenery.
Further
supporting
the
 
 9
 importance
of
wine
tourism
for
an
emerging
wine
region,
Hall
et
al.
(2000)
identifies
individual
 wineries’
lack
of
investment
in
wine
tourism
as
a
key
issue.
Hall
et
al.
(2000)
finds
wine
tourism
 as
falling
second
or
third
to
other
activities
at
wineries
like
wine
making
(Beames,
2003).
 Through
interviews
with
industry
experts,
I
learned
that
wineries
and
wine
regions
do
not
focus
 enough
attention
on
adding
tourism
to
their
business
strategy.
Wine
regions
that
work
together
 to
create
easy
signs
to
navigate
the
region,
maps
to
help
guide
drivers,
mobile
apps
to
engage
 those
tech
savvy
visitors
or
collaborate
with
local
hospitality
and
services
are
losing
a
valuable
 opportunity.
People
search
for
authenticity,
which
can
mean
seeing
the
actual
grapes,
the
 physical
plant
and
the
staff
that
produce
the
wine
(Brown
and
Getz,
2005).
Finally,
tourism,
 visitors
and
cellar
door
sales
are
often
the
economic
bloodline
of
a
small
winery
yet
most
lack
 an
understanding
of
tourism,
marketing
and
service
standards.

 Beames
(2003)
highlights
Australia
as
a
key
example
of
a
wine
region
struggling
to
overcome
 key
development
issues.

 Table 3: Key development issues Australia faced  
 Australia’s
key
development
issues
 • Lacking
product
focus
 • Cottage‐industry
mentality
of
wine
tourism
 • Insufficient
inter‐industry
collaboration
between
the
wine
and
the
tourism
industry
 • Incomplete
tourism
experience
 • Lack
of
local
planning
and
development
consent
and
deficient
investments
funds
 However,
the
Australian
wine
industry
initially
found
success
in
producing
wines
of
consistent
 quality
yet
low
prices,
as
well
as
marketing
the
country
as
a
wine‐producing
region.
Now,
 Australia’s
strategy
has
shifted
from
low
cost
and
average
quality
wines
to
higher
priced
and
 
 10
 quality
wines,
“It
is
likely
that
Australian
wines
will
be
seen
as
more
sophisticated,
and
that
 these
more
up‐market
wines
will
appeal
to
a
wealthier
and
more
educated
market
—
people
 who
are
also
more
likely
to
be
international
tourists,”
(Beames,
p.
207).

 A
key
development
issue
Beames
points
out
is
the
mentality
that
wine
tourism
is
still
a
“cottage
 industry”.
Further,
he
acknowledges
the
efforts
and
support
of
establishments
like
local
tourism
 offices
or
coordinated
marketing
efforts,
the
“main
problem
is
that
wine
tourism
has
simply
not
 been
embraced
by
the
rest
of
the
travel
industry,”
(Beames,
p.
208).
Another
study
on
wine
 tourism
in
Northern
Michigan
had
similar
findings.

 McCole’s
(2013)
research
on
the
Northern
Michigan
wine
region
revealed
that
wineries
value
 collaborating
with
other
wineries
and
organizations.
The
majority
of
the
wineries
felt
 collaborating
with
tourism
organizations
was
more
important
to
the
success
of
their
winery
 than
collaborating
with
other
wineries.
This
was
a
surprising
finding
in
my
literature
review,
 most
research
suggests
that
the
individual
wineries
do
not
often
collaborate
with
the
tourism
 industry
or
see
collaboration
with
others
in
the
region
as
an
important
business
strategy.
 However,
McCole’s
study
found
more
than
three‐fourths
(77
percent)
of
wineries,
in
regions
 like
Pennsylvania,
Virginia,
Missouri,
Texas
and
North
Carolina,
collaborate
with
destination
 marketing
organizations,
restaurants
and
bed
and
breakfasts,
73
percent
collaborate
with
 hotels
and
motels,
68
percent
with
tour
operators,
55
percent
with
retailers,
non‐grape
agri‐ tourism
and
recreation
providers,
and
50
percent
collaborate
with
other
food
and
beverage
 organizations
(McCole,
2013.
However,
when
the
tourism
organizations
were
asked
to
what
 extent
the
wineries
improve
the
tourism
destination
they
operate
in,
the
results
varied.
On
a
 
 11
 scale
from
one
to
30,
restaurants
rated
wineries’
impact
the
lowest
at
21.5,
followed
by
hotels
 and
motels
(22.0),
recreation
providers
(25.9),
tour
operators
(26.1),
bed
and
breakfasts
(28.5)
 and
destination
marketing
organizations
(30).

 While
some
of
the
tourism
organizations
do
not
feel
the
wineries
have
an
impact,
31
percent
of
 visitors
to
the
Northern
Michigan
region
said
the
wineries
were
very
important
in
their
decision
 to
travel
to
that
area.
Another
24
percent
of
respondents
said
visiting
a
winery
or
wineries
were
 somewhat
important
and
another
18
percent
said
visiting
the
wineries
was
the
only
reason
 they
decided
to
travel
to
that
area
(McCole,
2013).
The
study
also
revealed
demographic
and
 psychographic
information
about
wine
tourists
visiting
an
emerging
wine
region.

 McCole’s
(2013)
study
revealed
that
26
percent
of
tourists
who
visits
a
tasting
room
in
Michigan
 are
on
average
51
to
60
years
old
and
21
percent
are
21
to
30
years
old.
Additionally,
61
 percent
of
the
tourists
rate
their
own
knowledge
of
wine
in
general
as
“somewhat
 knowledgeable”,
while
21
percent
rate
themselves
as
“knowledgeable”.
I
believe
how
tourists
 view
their
knowledge
of
wine
as
an
important
finding
for
wineries
and
wine
regions
especially
 in
how
they
interact
with
consumers
and
the
branding
and
marketing
strategies
used.
Overall,
 McCole
(2013)
finds
that
facilitating
collaboration
among
wineries
and
the
region
is
important
 in
the
development
of
a
new
wine
region.

 Establishing
and
building
a
wine
region
requires
collaboration
among
a
variety
of
industry
and
 non‐industry
members.
Beames
(2003)
emphasizes
the
need
of
federal
and
state
governments
 to
make
rural
investments
attractive
to
investors,
banks
and
developers.
Moreover,
Beames
 (2003)
clearly
states
that
wine
tourism
needs
to
focus
on
understanding
how
it
aligns
with
or
 
 12
 connects
to
activities
in
a
regional
area
through
stating
that,
“Currently
the
term
‘new
product
 development’
to
a
wine
maker
would
probably
be
taken
to
refer
to
a
new
blend
or
type
of
 cork,”
(Beames,
p.
209).
Further,
Beames
(2003)
and
McCole
(2013)
both
emphasize
the
 importance
of
collaboration
among
wineries,
and
with
organizations
in
the
region
as
well
as
 understanding
how
to
offer
consumers
an
“experience”
when
visiting
their
winery
and
region.

 Mason
(2008)
is
careful
to
note
that
collaboration
is
key
for
a
new
wine
region
but
must
be
 strategic.
I
found
collaboration
to
consistently
be
supported
as
beneficial
and
crucial
for
wine
 regions
throughout
my
literature
review
and
interviews
with
industry
experts.
A
wine
and
food
 trail
should
be
structured
as
a
tourist
attraction
like
a
cultural
and
heritage
trail
and
less
like
a
 collaborative
marketing
tool.
A
wine
and
food
trail
should
be
“[…]
a
means
of
organizing
the
 visitor
experience
by
providing
a
purposeful,
interpreted
route
that
can
be
followed
by
foot,
by
 car,
bicycle
or
horseback
and
that
‘draws
on
the
natural
or
cultural
heritage
of
an
area
to
 provide
an
educational
experience
that
will
enhance
visitor
enjoyment,”
(Beames,
p.
3).
While
 emerging
wine
region
develop
and
new
wineries
open,
the
regions
are
also
often
operating
in
a
 new
product
category.

 New grape varietals and wine blends   Locksin
et
al.
(2006)
states
that
wine
is
a
very
different
product
because
of
the
great
number
of
 products
available
and
the
complexity
of
wine
itself.
To
understand
consumers’
purchase
 decision
of
wine,
the
study
analyzed
the
label
information
on
wine
by
using
a
market
share
 simulator
with
a
randomized
first
choice
algorithm
to
understand
how
consumers
use
major
 cues
when
purchasing
wine.
The
study
revealed
that
awards
had
the
greatest
effect
for
low
 involvement
consumers,
price
sensitivity
varies
between
low
and
high
involvement
consumers
 
 13
 and
brand
size
and
how
well
known
the
region
is
added
important
effects
and
changed
across
 price
points
(Locksin
et
al.,
2006).
Although
awards
were
shown
as
an
important
cue
for
 purchasing
wine,
many
contests
exist
and
often
are
costly
for
new,
small
wineries
to
enter.
I
did
 not
find
a
significant
number
of
studies
available
on
helping
determine
which
awards
are
the
 most
valuable
for
wineries
to
enter
or
which
awards
consumers
reference
the
most.
Along
with
 other
researchers,
the
paper
notes
that
the
reputation
of
the
producer
and
wine
traits
like
the
 vintage
or
region
from
which
the
grapes
were
sourced
and
the
grape
variety
are
significantly
 related
to
price
(Locksin
et
al.,
2006).

 Building a market category  Navis
and
Glen
(2010)
investigate
the
temporal
dynamics
among
legitimacy,
identity,
and
 entrepreneurship
to
create
an
encompassing
framework
that
analyzes
the
emergence
of
new
 market
categories
during
the
development
of
a
market
(Navis
and
Glen,
2010).
Establishing
a
 collective
identify
creates
a
basis
for
the
category’s
members
to
tailor
their
distinctive
identities
 within
the
category
and
ensuing
that
an
individual
organization
can
then
claim
its
individual
 identity
but
not
differentiate
itself
and
be
an
unrecognizable
member
of
that
category
(Navis
 and
Glen,
2010).
A
key
point
of
Navis
and
Glen
(2010)
is
“with
legitimation,
a
new
category
 requires
less
explanation;
as
a
result,
the
focus
of
metaphors
should
shift
from
describing
the
 category
to
describing
the
individual
organizations
and
their
distinctive
membership
in
that
 category,”
(Navis
and
Glen,
p.
443).
Through
a
qualitative
and
quantitative
research
study
with
 16
years
of
data
on
the
satellite
radio
industry,
Navis
and
Glen
found
in
the
emergence
period
 that
firms
claimed
collective
identities,
described
the
category
with
linguistic
framing
(using
 
 14
 analogies,
metaphors
or
similes
to
give
meaning
around
the
category)
and
announced
 affiliations
that
sanctioned
the
category
as
a
whole
(Navis
and
Glen,
2010).


 Developing a regional identity  Romanelli
and
Khessina
(2005)
argue
that
regions
need
a
strong
industrial
identity
and
can
do
 this
when
a
large
number
of
observers,
inside
and
outside
the
region,
discuss
key
features
of
 the
region’s
industrial
activity
(Romanelli
and
Khessina,
2005).
A
regional
identity
is
when
 residents
and
external
observers
are
aware
of
the
features
of
life
and
work
in
a
region,
like
 knowing
that
Michigan
produces
wine.
Building
a
regional
identity
then
allows
people
to
begin
 to
associate
an
activity
like
winemaking
with
a
region
therefore
leading
to
more
resources
 being
given
to
this
particular
industry
(Romanelli
and
Khessina,
2005).
This
concept
applies
well
 to
emerging
wine
regions,
if
a
consistent
message
is
relayed
among
all
observers
about
the
 important
features
of
the
region
and
the
wines
for
example,
then
outsiders
will
be
able
to
 distinguish
the
region
better
and
resource
gatekeepers
may
then
view
the
region
as
a
desirable
 investment.

 Further,
through
surveying
the
winery
owners
in
this
region,
we
seek
to
understand
how
the
 current
strategies
of
firm
owners
and
their
perceptions
of
emerging
wine
regions.
“Thus,
 regions
that
convey
a
strong
external
identity
are
more
likely
to
attract
greater
amounts
of
 resources
(e.g.,
from
tourism,
migration,
and
economic
investment),
than
regions
with
weaker
 identities,”
(Romanelli
and
Khessina,
p.
349).
Further,
the
authors
find
determining
the
 dominance
and
interrelatedness
of
the
cluster
as
important
aspects
of
regional
industrial
 identity.
 
 15
 Romanelli
and
Khessina
(2005)
classify
a
cluster
as
large
and
dominate
when
it
contributes
 significantly
to
the
economic
wealth
of
a
region.
Further,
smaller
clusters
are
those
that
 contribute
less
economic
wealth
to
a
region,
but
can
also
attract
attention
(potentially
through
 their
relationships
with
other
clusters
in
particular
dominant
clusters)
(Romanelli
and
Khessina,
 2005).
The
degree
of
dominance
of
a
cluster
is
determined
by
the
number
of
organizations
 proportional
to
employment
in
the
cluster,
therefore
a
high
number
of
organizations
with
a
 significant
proportion
of
the
residents
employed
by
those
organizations
indicate
the
dominance
 of
the
industry
cluster
(Romanelli
and
Khessina,
2005).
 
In
summary,
Romanelli
and
Khessina
(2005)
find
a
relationship
between
the
strength
and
focus
 of
a
region’s
industrial
identity,
with
both
having
a
strong
regional
industrial
identities
both
will
 attract
a
great
amount
of
resources
but
a
region
with
a
more
focused
identify
will
attract
more
 homogenous
resources
while
a
more
generalized
identity
will
attract
more
heterogeneous
 resources.
This
applies
well
to
this
emerging
wine
region,
if
the
region
associates
itself
with
one
 grape
varietal.

 This
emerging
wine
region
needs
a
flagship
varietal
like
Napa
Valley,
Calif.,
being
known
for
 cabernet
wine,
this
could
help
the
emerging
wine
region
gain
international
recognition,
attract
 attention
of
large,
national
distributors,
create
a
strong
regional
brand
that
newer
wineries
 could
leverage
legitimacy
from,
and
allow
wineries
to
more
easily
share
equipment
and
 knowledge
when
growing
a
similar
varietal.
In
addition,
building
a
strong,
regional
industrial
 identity
could
encourage
financing
agents
to
invest
in
the
region
and
individual
firms
as
well
as.

 Survival and growth require legitimacy  
 16
 Survival
is
the
most
recognized
effect
of
legitimacy
followed
by
growth,
efficiency,
profit,
size,
 liquidity,
success/failure,
market
share
and
leverage
(Zimmerman
and
Zeitz,
2002).
The
 commonly
recited
survival
rate
of
new
ventures,
reported
by
the
Small
Business
Association,
 consistently
shows
that
about
half
of
all
new
ventures
fail
in
the
first
five
years
of
operation.
 The
crucial
time
between
failing
and
succeeding
can
often
be
the
result
of
insufficient
resources
 (Shane,
2000).
Zimmerman
and
Zeitz
(2002)
identified
two
key
issues
for
new
firms,
resource
 acquisition
and
growth.

 New
ventures
can
overcome
their
lack
of
resources
through
engaging
in
activities
that
signal
 legitimacy.
Zimmerman
and
Zeitz
(2002)
identify
the
following
activities
as
legitimacy
building
 activities,
establishing
a
credible
management
team,
showing
industry
competence,
obtaining
 endorsements
and
certifications,
developing
a
network,
and
operating
as
a
low‐risk
venture.
 The
above
activities’
assistance
in
signaling
legitimacy
will
help
firms
obtain
more
resources,
 like
access
to
financing.
 In
this
literature
review,
the
goal
is
to
understand
the
importance
of
obtaining
legitimacy
to
 acquire
resources
and
encourage
growth
in
new
firms,
but
also
to
understand
the
challenges
of
 building
legitimacy
in
a
newly
developing
industry.
This
is
important
because
the
literature
 suggests
that,
new
firms
have
a
lower
chance
of
survival
in
a
new
industry
compared
to
an
 established
industry
and
is
suggested
to
be
the
result
of
challenges
in
developing
and
 legitimating
a
firm
(Dobrev
and
Gotsopoulos,
2010).
Further,
the
Zimmerman
and
Zeitz
(2002)
 argue
that
whether
a
firm
wants
to
grow
or
not,
legitimacy
is
necessary
in
obtaining
access
to
 resources.
First,
we
will
define
legitimacy,
the
types
and
strategies
often
used
to
build
 
 17
 legitimacy.
Next,
we
analyze
the
conformance
strategy
of
obtaining
legitimacy
in
detail.
Then,
 look
at
Gartner’s

(1985)
framework
of
how
a
new
venture
is
established
and
how
Tornikoski
 and
Newbert
(2007)
applied
Gartner’s
framework
to
entrepreneurs’
decision
to
conform
or
act
 strategically
to
build
legitimacy.

 Defining legitimacy  Measuring
legitimacy
must
first
be
explicitly
addressed.
In
Suchman’s
1995
article,
he
described
 the
studies
on
legitimacy
preceding
his
article
as
falling
in
two
categories,
strategic
and
 institutional
legitimacy.
He
describes
previous
literature’s
definition
of
strategic
legitimacy
as
 having
a
managerial
perspective
that
focuses
on
how
organizations
“manipulate
and
deploy
 evocative
symbols
in
order
to
garner
societal
support,”
(Suchman,
p.
572).
Whereas
 institutional
legitimacy
has
a
more
broad
view
that
analyzes
the
ways
that
sector‐wide
 structuration
dynamics
can
generate
cultural
pressures
that
exceed
an
organization’s
control.
 Hargreaves
(2003)
explains
simply
that
the
strategic
school
emphasizes
behaviors
and
values
 and
the
institutional
school
emphasizes
symbols
and
cognitive
processes.
Suchman’s
(1995)
 broad‐based
definition
sought
to
combine
the
institutional
and
strategic
school
(Hargreaves,
p.
 1).

 Suchman’s
often
quoted
(1995)
definition
refers
to
legitimacy
as,
“a
generalized
perception
or
 assumption
that
the
actions
of
an
entity
are
desirable,
proper,
or
appropriate
within
some
 socially
constructed
system
of
norms,
values,
beliefs,
and
definitions,”
(Suchman,
p.
574).
He
 continues
by
saying
that
legitimacy
is
resilient
to
particular
events
yet
dependent
on
a
history
 of
events
meaning,
an
organization
can
stray
from
societal
norms
but
still
remain
legitimate.

 
 18
 Suchman
(1995)
also
states
that
legitimacy
is
possessed
objectively
yet
created
subjectively.
For
 the
emerging
wine
region
this
means
that
firms
who
often
use
strategies
to
obtain
legitimacy,
 like
planting
more
vinifera
grapes,
which
can
be
objectively
measured
like
acres
planted,
 however
how
resource
gatekeepers
view
the
winery’s
decision
to
plant
more
vinifera
grapes
is
 subjective.
Meaning,
resource
gate
keepers
may
value
a
winery’s
decision
to
produce
more
 wine
using
vinifera
grapes
or
value
the
awards
a
winery
has
applied
for
and
won,
but
their
 opinion
is
subjective
and
often
more
difficult
to
objectively
measure.
Understanding
how
 legitimacy
is
possessed
and
created
is
an
important
concept
and
conveying
that
to
wineries.


 Zimmerman
and
Zeitz
(2002)
further
define
legitimacy
as
(1),
a
social
judgment
of
 appropriateness,
acceptance,
and
desirability,
and
(2)
as
a
key
resource
for
new
ventures
in
 gaining
access
to
resources
and
for
future
growth.
Moolhuijsen
and
Boudier‐Bakkerlaan
(2011)
 support
Zimmerman
and
Zeitz’s
definition
and
add
that
the
legitimacy
process
is
“repeated
 again
and
again
whereby
feedback
loops
continuous
change
strategic
actions,
legitimacy
and
 resources
acquired
what
ultimately
result
in
various
growth
rates,”
(Moolhuijsen,
p.
27).
Three
 types
of
legitimacy
have
been
defined
and
are
still
referred
to
and
used
in
current
research.

 Types of legitimacy  Suchman
(1995)
defined
three
types
of
organizational
legitimacy
strategies:
pragmatic
 legitimacy,
moral
legitimacy
and
cognitive
legitimacy.
Similarly,
institutional
literature
refers
to
 those
three
external
sources
of
legitimacy
as:
sociopolicitical
regulatory,
sociopolitical
 normative,
and
cognitive
legitimacy.

 Regulative legitimacy  
 19
 First,
regulative
legitimacy
can
be
derived
from
“regulations,
rules,
standards,
and
expectations
 created
by
governments,
credentialing
associations,
professional
bodies,
and
even
powerful
 organizations
(such
as
those
manufacturing
companies
requiring
their
suppliers
to
have
some
 sort
of
"quality"
certification),”
(Zimmerman
and
Zeitz,
p.
418).
The
main
idea
of
regulative
 legitimacy
is
to
show
the
firm
is
operating
lawfully
and
fairly.
Finally,
obtaining
regulative
 legitimacy
often
indicates
to
stakeholders
that,
“the
new
venture
is
acceptable
to
the
various
 regulatory
agencies,
even
when
little
is
known
about
how
effective
the
rules,
regulations,
 standards,
and
expectations
are
in
meeting
the
desired
ends,”
(Zimmerman
and
Zetiz,
p.
419).
 The
second
type
of
legitimacy
is
normative
legitimacy.

 Normative legitimacy  Normative
legitimacy
derives
from
the
norms
and
values
of
society.
Zimmerman
and
Zeitz
 (2002)
state
profitability,
fair
treatment
of
employees,
endorsements
and
networking
as
 examples
of
norms
and
values
that
aid
in
gaining
access
to
resources
while
also
emphasizing
 the
important
role
of
networks,
both
internal
and
external
to
the
firm.
Networks
help
“aid
the
 survival
of
the
new
venture
by
providing
credibility,
contact,
and
support
for
the
entrepreneur;
 building
a
positive
image
of
the
new
venture;
and
facilitating
access
to
resources
(Ostgaard
&
 Birley,
1996;
Westhead,
1995;
Zhao
&
Aram,
1995),
(Zimmerman
and
Zetiz,
p.
419).

The
third
 type
of
legitimacy
is
cognitive
legitimacy.
 Cognitive legitimacy  Cognitive
legitimacy
derives
from
following
the
goals
and
activities
that
are
deemed
 appropriate
and
desirable.
Johnson,
Dowd
and
Ridgeway
(2006)
describe
cognitive
legitimacy
 
 20
 as
deriving
from
the
occurrence
of
comparable
organizational
actors
that
then
provide
 templates
for
organizational
structures
and
actions.
Cognitive
legitimacy
can
be
obtained
 through
“endorsing
and
implementing
methods,
models,
practices,
assumptions,
knowledge,
 ideas,
realities,
concepts,
modes
of
thinking,”
that
are
all
widely
accepted
to
signal
that
an
 organization
is
acceptable
and
desirable
(Zimmerman
and
Zeitz,
p.
420).
Along
with
the
 different
types
of
legitimacy,
three
strategies
are
often
referred
to
in
building
legitimacy.
 Key strategies used to achieve legitimacy  Firms
typically
seek
these
three
types
of
legitimacy
through
the
following
strategies
proposed
 by
Suchman
(1995):
conformance,
selection
and
manipulation.
Zimmerman
and
Zeitz
(2002)
 propose
creation
as
an
additional
strategy
because
of
new
ventures’
development
of
new
 government
rules
or
regulations,
norms,
values,
and
models
that
may
shock
society
but
 ultimately
cause
change.
 Zimmerman
and
Zeitz
(2002)
describe
the
four
strategies.
Conformance
applies
when
a
firm
 “follows
the
rules”,
when
a
firm
does
not
question,
change
or
violate
the
social
structure.
 Selection
focuses
on
finding
a
desirable
environment.
Manipulation
focuses
on
innovating
 and/or
leaving
a
prior
practice
but
is
the
most
difficult
for
ventures.
Creation
involves
 developing
societal
rules,
norms,
values,
beliefs,
models,
etc.,
and
is
the
most
strategic
of
all
the
 strategies.

 Zuzul
and
Edmondson
(2012)
stress
the
importance
of
managing
both
the
external
and
internal
 journeys
and
identifying
the
ways
they
conflict
may
be
the
essential
challenge
in
growing
a
new
 business
in
a
nascent
industry.

For
example,
wine
regions
are
often
associated
by
the
grape
 
 21
 that
wineries
in
the
region
predominantly
produce,
therefore
if
the
wineries
in
the
region
are
 producing
all
different
varietals,
this
can
be
more
difficult
for
consumers
to
establish
an
 association
with
that
region.
Clercq
and
Voronov
(2009)
address
entrepreneurs’
decision
to
 conform
or
transform
while
acknowledging
the
resulting
pressure
to
obtain
legitimacy.
 Deciding
to
“fit
in”
or
“stand
out”
is
a
difficult
decision
for
entrepreneurs.
“The
ultimate
 challenge
for
entrepreneurs
is
to
cope
with
the
simultaneous
demands
to
use
methods,
 procedures,
or
technology
that
are
somewhat
consistent
with
existing
practices
and
produce
 outcomes
that
are
innovative
enough
to
warrant
the
generation
of
unexploited
economic
profit
 in
their
domain
of
activity
(Atuahene‐Gima
2005;
Suchman
1995;
Dowling
and
Pfeffer
1975),”
 (Clercq
and
Voronov,
p.
404).
Based
on
Bourdieu’s
theory
of
practice
in
examining
 entrepreneurs’
success
of
resource
acquisition
in
a
power‐ladden,
socially
embedded
process,
 Clercq
and
Voronov
(2009)
add
to
the
entrepreneurship
literature
through
analyzing
 entrepreneurs’
need
to
fit
in
and
stand
out.
The
authors
argue
that
the
ability
to
fit
in
signals
 that
someone
is
serious
and
understands
the
field’s
rules
therefore
making
them
a
trustworthy
 recipient
of
resources
(Clercq
and
Voronov
2009;
Lounsburg
and
Glynn
2001;
Ring
and
Van
de
 Ven
1994).
While
the
ability
to
stand
out
shows
the
entrepreneur
has
something
novel
or
 previously
unexploited
in
the
particular
business
field
therefore
resources
given
to
the
 entrepreneur
will
likely
produce
superior
returns
(Gartner
2003;
Clercq
and
Voronov,
p.
407).
 Conformance, “fitting in”, as a legitimacy strategy  
Conformance
literally
means
an
organization
that
is
in
compliance
with
the
demands
and
 expectations
of
an
already
established
social
system.
Again,
because
most
new
ventures
do
not
 
 22
 have
the
resources
or
established
legitimacy
initially,
the
new
ventures
are
likely
to
follow
or
 adapt
to
the
industry’s
current
rules,
norms,
values
and
models
(Zimmerman
and
Zeitz,
p.
422).
 Suchman
and
Zimmerman
and
Zeitz,
recommended
two
steps
that
new
ventures
can
take
to
 gain
legitimacy,
first
is
changing
the
firm
itself
and
second,
changing
its
environment
and
other
 organizations
within
that
environment
(Suchman,
1995)
(Zimmerman
and
Zeitz,
2002).

 Conformance
is
often
the
recommended
strategy
for
a
new
venture
that
plans
to
operate
in
a
 well‐established
industry.
Zimmerman
and
Zeitz
(2002)
stated
that
generally
new
ventures
have
 little
power
and
few
resources
to
challenge
the
established
social
structure.
Further,
 conformance
involves
the
least
amount
of
external
change
relative
to
the
other
three
 legitimacy
strategies
making
the
strategy
the
easiest
to
execute
as
well.

 Further,
Gartner
(1985)
describes
the
creation
of
a
new
venture
through
a
framework
of
four
 dimensions:
the
individual(s)
who
started
the
new
firm,
organization
meaning
the
kind
of
firm
 started,
the
environment that
surrounds
and
influences
the
new
firm
and
finally,
the
new  venture process
in
terms
of
the
actions
the
individual(s)
took
to
start
the
firm.
Further,
Gartner
 argues
that
all
four
dimensions
must
be
analyzed
to
understand
organizational
emergence.

 Tornikoski
and
Newbert
(2007)
applied
Gartner’s
framework
and
contend
that
the
likelihood
of
 a
nascent
organization
forming
is
a
function
of
whether
the
firm
“(1)
possesses
those
 characteristics
deemed
credible
by
the
society
in
which
it
operates,
or
‘conforming
legitimacy’;
 and
(2)
engages
in
activities
aimed
at
convincing
external
audiences
that
the
organization
is
 operational,
or
‘strategic
legitimacy’,”
(Tornikoski
and
Newbert,
p.
312).
Now
a
more
detailed
 
 23
 look
at,
similar
to
Tornikoski
and
Newbert’s
(2007)
paper,
that
applies
Gartner’s
framework
to
 analyze
a
nascent
firm’s
decision
to
conform
or
act
strategically
in
its
search
to
build
legitimacy.

 Collaboration  Collaboration
has
been
widely
studied
and
recognized
as
a
crucial
strategy
for
an
emerging
firm
 and
industry.
Getz
and
Brown
(2006)
state
that
collaboration
is
necessary
in
creating
the
wine
 tourism
experience
and
while
wineries
are
the
main
attraction,
they
cannot
stand
alone.
Hall
et
 al.
(2000)
finds
the
lack
of
inter‐industry
collaboration
among
the
wine
and
tourism
regions
is
 the
resulting
lack
of
three
factors
(1)
the
relative
infancy
of
wine
tourism
which
leads
to
poor
 communication
of
information
and
research
regarding
wine
tourists
and
wine
tourism,
(2)
not
 as
important
to
the
individual
winery,
and
(3)
wine
makers’
lack
of
experience
with
tourism
 (Beames,
p.
209).
In
attempting
to
offer
consumers
a
complete
experience,
Beames
(2003)
 stresses
the
importance
of
local
councils,
businesses,
restaurants,
lodging,
wineries
and
 activities
operators
in
a
developing
region
to
work
together
and
ultimately
bring
prosperity,
 employment
and
growth
to
rural
areas.

 Acting strategically, “standing out”, as a legitimation strategy  Legitimacy
can
increase
when
new
ventures
take
strategic
actions
(Zimmerman
and
Zeitz,
 2002).
Zimmerman
and
Zeitz
(2002)
find
that
new
ventures
can
use
a
combination
of
the
four
 strategies
but
when
growth
or
survival
is
potentially
compromised,
manipulation
may
be
 needed.
Tornikoski
and
Newbert
(2007)
describe
activities
that
new
firms
can
do
to
 demonstrate
resource
combination
behavior
when
focused
on
using
and
transforming
those
 resources
that
they
possess
or
have
an
impact
on
production.
Zimmerman
and
Zeitz
(2002)
 
 24
 describe
improvising
activities
like
starting
marketing
efforts,
opening
a
bank
account
and
 projecting
financial
statements
as
behaviors
that
affect
legitimatizing
new
firms.

 The individual   Gartner’s
(1985)
first
dimension
is
the
individual,
the
person(s)
who
started
the
firm.
Baron
and
 Markman
(2000)
argue
that
a
having
a
high
level
of
social
capital
can
often
help
entrepreneurs
 gain
access
to
venture
capitalists,
potential
customers,
information
and
markets.
The
authors
 note
that
a
high
level
of
social
capital
can
be
built
on
a
favorable
reputation,
relevant
previous
 experience,
and
direct
personal
contacts.
Further,
Baron
and
Markman
(2000)
state
that
 entrepreneurs
can
increase
their
social
skills
through
training
and
that
an
increase
in
social
skills
 will
likely
lead
to
more
success
and
social
capital.

 Baron
and
Markman
(2003)
then
analyzed
the
importance
of
social
competence
and
its
role
on
 a
firm’s
financial
success.
In
their
study,
two
groups
of
entrepreneurs,
one
in
the
cosmetics
 industry
and
one
in
the
high‐tech
industry,
completed
a
questionnaire
about
their
social
 competence
as
an
individual.
Next,
a
third
group
of
entrepreneurs
were
surveyed
but
to
 increase
the
validity
of
the
entrepreneur’s
self
reporting,
Baron
and
Markman
had
someone
 who
knows
the
entrepreneur
well
rate
their
social
competence.
Then,
the
researchers
linked
 the
data
through
parallel
and
factor
analysis
to
their
firm’s
financial
success
through
averaging
 the
firm’s
income
from
several
years.
Social
perception,
how
one
accurately
perceives
others,
 was
the
only
variable
that
was
positively
linked
to
financial
success
in
both
groups,
(Baron
and
 Markman,
2003).
Additionally,
social
adaptability,
the
ability
to
adapt
to
a
wide
range
of
social
 situations,
was
related
to
financial
success
for
entrepreneurs
in
the
cosmetics
industry,
and
 
 25
 expressiveness,
the
ability
to
appropriately
express
emotions
and
feelings,
was
linked
to
the
 same
success
for
entrepreneurs
in
the
high‐tech
industry.
 Previous
literature
focuses
on
varying
aspects
of
the
individual
entrepreneur’s
role
in
a
nascent
 firm.
Packalen
(2013)
formulates
a
framework
that
analyzes
how
an
organization’s
initial
 legitimacy
and
its
proceeding
ability
to
obtain
resources
are
derived
from
the
interaction
 among
specific
characteristics
of
a
founder’s
background.
Through
simultaneously
analyzing
the
 industry
status,
entrepreneurially
relevant
demographic
characteristics
and
social
capital
the
 author
finds
that
one
type
of
capital
may
reduce
the
dependence
on
or
need
for
others.

 Van
de
Ven
et.
al
(1984)
paper
studied
14
U.S.
courseware
companies
in
1983
to
understand
 the
factors
that
influence
the
startup
success.
The
survey
found
that
startup
success
and
 company
stage
of
development
are
positively
related
to
a
broad
set
of
skills
and
expertise
of
 the
entrepreneur,
explained
further
by
how
the
entrepreneur
of
a
small
business
must
often
 act
as
main
brain
and
agent.
In
addition,
the
education
level
of
the
entrepreneur
is
strongly
and
 positively
correlated
with
company
development
yet
prior
experience
in
small
business
was
 negatively
related
to
the
stage
of
development
(Van
de
Ven
et.
al,
1984).
Additionally,
this
 survey
revealed
that
start‐up
success
was
positively
correlated
with
the
founding
team’s
 education
and
experience.
Tornikoski
and
Newbert
(2007)
state
that
a
nascent
organization’s
 legitimacy
maybe
in
part
determined
by
the
collective
ability
of
its
founding
team
or
its
 organizational
capital.

 Finally,
in
Kundu
and
Katz
(2003)
study
of
47
born‐international
small
and
medium
sized
 businesses
used
Katz
and
Gartner
(1988)
framework
and
found
that
resources,
most
 
 26
 importantly
the
human
capital
of
the
owner
was
significant
in
predicting
the
exchange
of
their
 dependent
variables,
exports
(Brush
et.
al,
2008).


 Organization  Van
de
Ven
(1984)
describes
the
organizational
approach
as
looking
at
the
overall
network
of
 people
involved
in
the
creation
of
an
organization
and
“examines
the
series
of
events,
planning
 processes,
and
structural
forms
that
emerge
to
mobilize
collective
action,”
(Van
de
Van,
p.
88).
 As
Zimmerman
and
Zeitz
(2002)
argue
that
ventures
can
project
desirability
through
 highlighting
the
management
team’s
credentials
and
industry
competence.
Further
stated,
 without
conforming
to
institutionalized
expectations
like
possessing
a
management
team
with
 significant
education
and
professional
experience,
a
nascent
organization
may
struggle
to
gain
 access
to
resources
necessary
for
operating
(Tornikoski
and
Newbert,
2007).

In
addition,
to
the
 individual
and
the
organization,
the
environment
that
venture
emerges
in
is
important
to
 consider.
 Environment  The
environment,
its
growth
rate,
level
of
competition
or
demand,
can
all
affect
the
ventures
 that
operate
within.
Schumpeter
(1934)
described
entrepreneurs
in
an
emerging
industry
as
 having
to
change
the
current
equilibrium
by
assembling
factors
of
production
in
novel
ways
to
 create
“new
combinations”.
Examples
of
that
could
include
exploiting
a
new
source
of
supply
or
 technology,
developing
a
new
product,
or
tapping
a
new
market
(Low
and
Abrahahsmon,
1997).
 Additionally,
Low
and
Abrahamson
(1997)
note
that
in
an
emerging
industry,
the
key
challenge
 
 27
 is
achieving
legitimacy,
through
building
cooperative
relations
with
legitimated
forms
adds
 credibility.

 Low
and
Abrahamson
(1997)
state
that
when
an
industry
is
in
a
growth
phase,
competition
is
 low
because
some
form
of
the
entrepreneur’s
venture
or
product
already
exists
and
some
 degree
of
legitimacy
has
been
achieved.
Therefore,
entrepreneurs
can
prevail
against
the
 competition
by
recognizing
a
new
form
or
moving
quickly
to
capture
a
significant
piece
of
that
 potential
(Low
and
Abrahamson,
1997).

 Finally,
in
a
mature
industry,
competition
is
intense
and
businesses
compete
based
on
“superior
 execution,
local
market
knowledge,
or
by
adopting
state‐of‐the‐art
technology
and
business
 practices,”
(Low
and
Abrahamson,
p.
444).
Strong
ties
to
an
individual
industry
are
needed
in
a
 mature
industry,
however,
identifying
the
determinant
of
success
become
easier
(Low
and
 Abrahamson,
1997).

 The process  Behavior
influences
how
firms
obtain
legitimacy,
more
specifically
increasing
the
actual
or
 potential
compliance
to
institutionalized
expectations.
According
to
Tornikoski
and
Newbert
 (2007),
new
firms
can
strategically
build
legitimacy
through
at
least
three
key
types
of
behavior,
 improvising,
resource
combination
and
networking.
First,
improvising
behavior
is
used
when
 firms
try
to
make
their
firm
look
like
a
more
functioning,
established
firm,
even
if
they
are
not.
 Delmar
and
Shane
(2004)
highlight
that
during
the
early
months
of
a
new
venture’s
creation,
 most
firms
cannot
be
evaluating
their
historical
performance
because
that
data
may
not
exist
 therefore
external
stakeholders
make
their
decisions
based
on
their
perceptions
of
the
new
 
 28
 firm’s
legimacy,
(Delmar
and
Shane,
2004).
Often,
“the
result
of
this
‘impression
management’
 tactics
is
that
these
external
parties
are
likely
to
respond
to
the
nascent
organization
‘as
if’
it
 were
an
existing
organization
by
granting
them
access
to
these
resource,”
(Schlenkler,
1980)
 (Tornikoski
and
Newbert,
p.
318).
Further,
the
authors
describe
improvising
behaviors
as
doing
 tactics
that
are
similar
to
existing
firms
like
creating
a
business
plan,
lobbying,
advertising,
event
 sponsorship
or
conducting
scientific
research,
however
often
impression
behavior
is
simply
 creating
an
impression
or
illusion
that
the
firm
is
fully
operational
therefore,
not
producing
 tangible
outputs
unlike
the
second
type
of
behavior.
Further,
“good
story
telling
is
useful
to
 obtaining
legitimacy
because
stories
are
evaluated
on
their
internal
coherence
rather
than
on
 external
validation,”
(Fisher,
1985)
(Delmar
and
Shane
2004,
p.
390).
Finally,
the
goal
of
these
 different
perception
tactics
is
to
convince
others
that
the
new
firm
is
functioning
and
moving
 forward.

 Resource
combination
is
the
second
type
of
behavior
used
to
build
legitimacy.
This
type
of
 behavior
focuses
on
developing
outputs
like
products
or
services
to
“provide
resource
 gatekeepers
with
a
tangible
assessment
of
whether
or
not
the
nascent
organization
is
actually
 capable
of
doing
what
it
is
organized
to
do,”
(Tornikoski
and
Newbert,
p.
319).
Delmar
and
 Shane
(2004)
find
firms
that
obtain
inputs
like
raw
materials
are
less
likely
to
disband
than
 other
firms.
Further,
the
authors
find
firm
survival
to
increase
in
relation
to
the
timing
it
takes
a
 new
firm
to
complete
the
new
product
development
process.


 The
third
behavior
is
networking,
which
Tornikoski
and
Newbert
(2007)
state
as
an
important
 method
in
building
legitimacy
because
it
enable
nascent
organizations
to
actually
manipulate
 
 29
 the
environment
and
change
external
parties’
perception
of
their
firm.
In
support,
Delmar
and
 Shane
find
generating
social
relationships
early
in
the
firm’s
development
with
its
potential
 customers
as
important
and
a
way
to
learn
about
the
firm’s
customers’
needs
and
demands
and
 to
utilize
their
customers’
social
network,
(Shane
and
Delmar,
p.
396).
Further,
the
authors
find
 that
firms
that
network
with
potential
funders
through
early
in
the
firm’s
development
process
 asking
potential
financiers
for
funds
significantly
reduce
the
likelihood
that
the
firm
will
fail.
 Finally
Tornikoski
and
Newbert
(2007)
emphasize
that
firms
who
network
and
interact
with
 resource
gatekeepers
will
increase
the
opportunities
to
convince
those
parties
that
their
new
 firm
is
legitimate
and
therefore
increasing
the
likelihood
that
the
new
firm
will
obtain
access
to
 those
parties’
resources.

                         
 30
 CHAPTER 3: RESEARCH METHODOLOGY      Survey Instrument  A
semi‐structured
survey
instrument
was
used
to
gather
data
on
this
emerging
wine
region.

 The
survey
questions
analyzed
the
individual
firm
and
the
industry
activities
through
eliciting
 responses
on
management
practices
such
as
procurement,
production,
marketing
practices,
 industry
collaboration
and
innovativeness,
as
well
as
management
challenges
and
constraints.
 The
survey
is
comprised
of
63
questions.
The
survey
was
pre‐tested
with
a
subset
of
wineries
 and
researchers
from
the
three
states
then
revised
before
the
being
emailed
to
winery
owners.
 Finally,
this
survey
instrument
will
be
relevant
to
the
academic
and
practioner
communities.

   Data Collection  
 We
surveyed
winery
owners
and
managers
to
collect
primary
data
on
the
wine
industry
in
 Michigan,
Missouri
and
New
York.
Beginning
in
April
and
May
2012,
the
survey
was
first
sent
to
 318
wineries:
88
in
Michigan,
116
in
Missouri
and
114
in
New
York.
The
data
was
collected
as
 part
of
an
inter‐collegiate
project
among
Michigan
State
University,
the
University
of
Missouri‐ Columbia
and
Cornell
University
to
study
an
emerging
wine
region
in
those
Universities’
states.

 
 The
questionnaire
was
converted
for
Online
use
through
the
Internet‐based
survey
tool
Survey
 Monkey
(SurveyMonkey.com).
An
email
with
a
link
to
the
survey
was
first
sent
to
the
winery
 
 31
 owners.
In
the
email
as
well
as
on
the
first
page
of
the
survey
was
information
to
legitimize
the
 study
and
encourage
participation
through
describing
the
Universities
involved
in
this
research
 project,
the
purpose
of
project,
the
survey’s
content,
the
confidentiality
of
the
survey
and
 respondents’
rights
to
voluntarily
participate
in
the
survey.
In
addition
to
collecting
surveys
 through
Survey
Monkey,
in
June
and
July
2012
field
visits
were
made
to
visit
winery
owners
and
 conduct
in
person
interview
using
the
same
survey.
In
total,
88
wineries
in
Michigan,
116
 wineries
in
Missouri
and
114
wineries
in
New
York
were
contacted
to
participate
in
the
study.

 
 The
surveys
completed
Online
and
through
the
different
modes
were
then
loaded
directly
into
 Microsoft
Excel
for
analysis.
“The
use
of
two
or
more
survey
modes
in
a
single
data
collection
 effort
raises
the
possibility
of
improved
response
rates
being
achieved,”
(Dillman
et
al.,
p.
16).

 Table 4: 2012 Survey Response Rate  States surveyed  Michigan
 Missouri
 New
York
 All
states
 
 Surveys collected  40
 40
 33
 113
 
 Surveys sent  88
 116
 114
 318
 
 
 
 
 
 
 
 
 32
 Response rate (%)  45%
 42%
 29%
 36%
   Methodology    The
following
methodology
was
used
to
statistically
analyze
the
data,
(1)
descriptive
statistics
 (2)
correlations
(3)
t‐tests
(4)
chi‐square
tests
and
(5)
ANOVA
tests
(analysis
of
variances).
The
 data
was
cleaned
in
Microsoft
Excel
and
the
bivariate
analysis
was
done
in
STATA.

 
 The
statistical
analysis
performed
on
the
data
was
divided
in
two
parts.
First
a
descriptive

 analysis
on
the
current
status
of
the
emerging
wine
region
and
the
individual
firms
(i.e.
the
 wineries)
is
presented
to
provide
an
overview
of
the
current
management
and
marketing
 practices
used.
The
descriptive
analysis
also
includes
comparisons
among
the
three
states.
The
 second
part
of
the
results
provides
a
quantitative
analysis
of
the
market
legitimacy
of
wineries
 in
the
emerging
wine
region,
examining
strategic
management
and
marketing
decisions
made
 by
wineries
and
the
eight
legitimacy
indicators.
The
bivariate
analyses
result
in
differing
 findings,
and
were
selected
based
on
the
types
of
data
collected
from
the
survey
including,
 continuous,
binary
and
categorical.
Correlations
were
run
between
two
continuous
variables
 and
describe
the
strength
and
direction
(positive
or
negative)
between
the
two
variables
of
 interest.
Independent
two‐sample
t‐tests
were
run
between
binary
and
continuous
data,
the
 results
analyze
the
means
of
two
different
variables
and
whether
the
difference
between
the
 means
is
significant.
Please
note,
all
t‐tests
were
initially
tested
for
equality
of
variance
 assumption,
for
those
that
violated
this
assumption
Welch’s
test
was
then
run
to
correct
for
the
 violation.
Chi‐square
tests
were
run
when
two
binary
variables
were
present
or
a
binary
and
 
 33
 categorical
variable
were
being
studied.
This
test
results
highlight
the
differences
among
groups
 and
whether
the
differences
are
by
chance
or
are
related.
Finally,
the
following
results
are
 highlighting
these
types
of
bivariate
analyses
between
the
legitimacy
indicators
and
the
 strategic
management
and
marketing
strategies
used
by
wineries
in
the
region
were
conducted.
 
 All
of
the
strategic
management
and
marketing
decisions
were
tested
against
all
eight
of
the
 legitimacy
indicators,
which
are
based
on
research
by
Zimmerman
and
Zeitz
(2002),
Tornikoski
 and
Newbert
(2007)
and
Delmar
and
Shane
(2004).
From
the
literature,
the
indicators
 previously
noted
or
used
to
measure
signals
of
legitimacy
are
hiring
an
employee,
making
a
sale
 and
obtaining
external
funding.
Adding
to
those
measures,
this
thesis
extends
the
previous
 research
and
adds
variables
to
help
signal
legitimacy
and
measuring
those
indicators
specifically
 for
the
emerging
wine
region.
Listed
in
the
table
below
are
the
variables
used
to
signal
 legitimacy
and
the
variables
were
measured
based
on
data
from
a
2012
survey
of
Michigan,
 Missouri
and
New
York
wineries.

 Table 5: Legitimacy variables  Legitimacy variables  How measured  Full
time,
year
round
employees
 Full
time,
seasonal
employees
 Percent
sold
through
liquor
 stores
 Percent
sold
through
restaurants
 Nominal
scale
–
actual
number
used
 Nominal
scale
–
actual
number
used
 %
of
total
wine
volume
sold
through
liquor
 stores
 %
of
total
wine
volume
sold
through
 restaurants
 Percent
sold
through
distributors
 %
of
total
wine
volume
sold
through
 distributors
 Arrangement
with
tour
bus

 Dichotomous
variable
–
Yes
counted
 
 34
 Signals of   legitimacy  +
 +
 +
 +
 +
 +
 Table 5 (Cont’d):   Large
trading
network
 Obtained
external
funding
 Created
dichotomous
variable
from
an
 +
 ordinal
scale
with
a
score
of
four
to
seven
on
 a
scale
of
one,
being
interacts
with
few
 trading
partners,
and
seven
being
interacts
 with
large
number
of
trading
partners.
 Dichotomous
variable
–
Includes
those
that
 +
 use
external
funding
or
a
combination
of
 self‐financing
and
external
financing
   Relationships  Through
reviewing
the
literature
and
doing
in‐depth
interviews,
we
learned
the
importance
of
 the
volume
of
wine
a
firm
can
produce
and
how
this
affects
a
firm’s
ability
to
gain
access
to
 certain
resources.
“To
establish
a
reputation
it
is
necessary
to
have
a
certain
size,
a
certain
 critical
mass.
Critical
mass
delivers
shelf
space,”
(Easingwood,
p.
8).
Further,
Ling
and
Lockshin
 (2003)
found
smaller
wineries
(producing
less
than
2,500
tonnes)
charge
more
for
their
wines
 (and
consumers
are
presumably
willing
to
pay
more)
than
for
wine
from
larger
sized
wineries
 (producing
more
than
10,000
tonnes).
Taplin
and
Breckenridge
(2008)
however
note
that
large
 wineries
can
increase
the
quality
standards
for
grape
growing
since
in
the
initial
years
they
 were
most
likely
forced
to
procure
their
grapes
locally
to
meet
their
firm’s
production
needs.
 This
concept
applies
well
to
the
emerging
wine
region,
understanding
the
effects
of
large
and
 small
wineries
in
a
wine
region
area,
like
improving
the
skills
of
grape
growers,
educating
local
 financers
and
engaging
the
community.

 
 
 
 
 35
 Figure 1: Legitimacy Model of Emerging Firms Framework              Analyzing
the
age
of
the
wineries
can
serve
as
an
important
characteristic
to
compare
the
 states
and
individual
firms
to
each
other
and
analyze
against
legitimacy
indicators
like
 distribution
and
breath
of
trading
network.
Current
research
does
not
offer
conclusive
findings
 on
how
the
age
of
the
winery
affects
the
winery’s
brand,
reputation
or
product,
as
shown
 through
Ling
and
Lockshin’s
(2003)
paper
that
found
unequal
price
behaviors
according
to
the
 vintages
of
the
wine.
Through
reviewing
the
literature,
a
significant
number
of
studies
focus
on
 studying
what
effects
correlate
or
affect
the
price
of
wine
however
few
studies
seek
to
 understand
the
key
factors
affecting
a
winery’s
start‐up
and
growth.
Leading
us
to
our
first
 relationship
and
interest
of
study.

 
 36
 Relationship
1:
The
relationship
between
the
number
of
cases
a
winery
produces
and
the
 number
of
years
a
winery
has
been
commercially
producing
wine
will
both
have
strong,
positive
 correlations
with
all
eight
legitimacy
indicators.
 Torniskoski
and
Newbert
(2007)
found
through
analyzing
human
capital,
that
managerial
 experience
related
to
many
emergence
factors
yet
industry
experience
and
having
a
college
 degree
were
unrelated
to
whether
a
firm
emerges
(makes
a
sale,
obtains
external
funding,
 etc.).
However,
the
authors’
study
does
suggests
that,
“Engaging
in
improvising
and
resource
 combination
behavior,
potential
customers,
employees,
and
financiers
may
perceive
the
 nascent
organization
to
be
legitimate
and,
in
turn,
be
more
willing
to
enter
into
resource
 exchanges
with
them,”
(Torniksoski
and

Newbert,
p.
313).

 
 However,
through
previous
literature,
we
learned
that
during
the
start‐up
phase
and
 sometimes
for
a
few
years
most
wineries
do
not
have
any
employees,
“In
many
cases,
the
 owner
is
the
only
full‐time
employee
and
assumes
multiple
roles
such
as
the
viticulturalist,
 mechanic,
chemist,
farm
laborer,
purchasing
officer,
and
salesperson,”
(Edwards,
p.
14).
 Therefore,
employing
individuals
serves
as
a
strong
legitimacy
estimator
indicating
that
a
firm
 has
surpassed
the
initial
start‐up
phase.
 
 Finally,
we
want
to
analyze
human
capital
because
of
links
to
other
interesting
variables
like
a
 winery’s
trading
network,
in
which
Webb
et
al.
(2009)
found
a
significant
link
between
a
winery
 owner’s
personal
network
and
the
access
the
firm
obtained
to
information,
employees,
 suppliers
and
customers.
In
addition,
Taplin
and
Breckenridge
(2008)
found
winemakers
from
 
 37
 large,
established
wineries
often
assume
leadership
positions
in
grape
growing
organizations
 and
extend
their
knowledge
to
improve
the
quality
standards
and
industry
efficiencies.
 Therefore,
we
think
wineries
that
have
credible,
established
owners,
winemakers,
grape
 growers
or
tasting
room
staff
will
lead
to
strong,
positive
correlations
with
all
eight
legitimacy
 indicators.

 Relationship
2:
Human
capital
will
have
a
strong,
positive
association
to
all
eight
legitimacy
 indicators.
 Thode
and
Maskulka
(1992)
studied
geographic
origin
and
the
location
of
a
critical
ingredient(s)
 in
a
product.
Through
applying
this
concept
of
“place‐based”
marketing
which
is
a
way
of
 identifying
a
consumer
product
with
a
geographic
location,
however,
results
showed
that
a
 marketing
strategy
alone
cannot
match
vineyard‐designated
wines
and
grape
varietals
to
the
 soil,
often
this
depends
more
on
how
important
consumers
think
relating
place
and
grapes
is.

   Relationship
3:
Firms
with
a
greater
percentage
of
vinifera
grapes
and
grapes
procured
from
 their
own
estate
will
have
a
strong,
positive
association
with
all
eight
legitimacy
indicators.

 Table 6: Type of grape and how it signals legitimacy  Legitimacy Signals  Estate grown  grapes  Full‐time,
year
round
employees
 +
 +
 Full‐time,
seasonal
employees
 +
 +
 %
of
total
wine
volume
sold
to
liquor
stores
 +
 +
 %
of
total
wine
volume
sold
direct
to
restaurants
 
 Vinifera grapes  +
 +
 38
 Table 6 (Cont’d):   %
of
total
wine
volume
sold
through
distributors
 +
 +
 Arrangement
with
a
tour
bus
company
 +
 +
 Obtained
External
Financing
 +
 +
 Large
Trading
Network
 +
 +
 Note:
All
associations
are
anticipated
of
having
a
p‐value
less
than
5
percent.
The
+
sign
 indicates
those
variables
are
positively
correlated
with
a
legitimacy
indicator,
‐
indicates
those
 variables
are
negatively
correlated
with
a
legitimacy
indicator.
   Wineries
that
use
a
high
percentage
of
vinifera
grapes
in
their
total
wine
production
will
 positively
link
with
the
signals
of
legitimacy.
Wineries
that
use
hybrid
grapes
are
less
likely
to
 positively
signal
legitimacy.
Bruwer
and
Johnson
(2005)
identified
grape
variety,
style,
region
 and
country
of
origin,
peer
influence,
food
pairings
and
price
as
strongly
influences
on
 consumers’
purchasing
decision
of
wine.

   Through
analyzing
how
firms
procure
their
grapes,
through
their
own
vineyard,
spot/cash
 markets,
verbal
(handshake)
agreements
or
written
contracts
may
offer
insight
on
the
 development
of
the
individual
firms
and
the
overall
region.
Taplin
and
Breckenridge
(2008)
 found
through
surveying
firms
that
larger
wineries
are
adding
more
detail
specifications
to
 contracts
and
working
with
growers
throughout
the
season
to
educate
them
and
maintain
a
 dialogue.
Further,
the
authors
find
this
behavior
influences
the
efficiency
and
product
quality
of
 a
region’s
wine
and
increases
the
network
of
knowledge,
which
ultimately
supports
how
the
 trust
building
institutions
that
local
government
agencies
and
industry
organizations
operate.
 
 39
 Finally,
Fernandez
Olmos’
(2010)
study
on
the
implications
of
buying
and
growing
decisions
on
a
 vineyard’s
performance
showed
that
a
widespread
belief
exists
that
sourcing
strategies
have
 significant
direct
effects
on
performance
but
their
paper
found
that
was
not
true.
Therefore,
we
 want
to
test
using
our
study’s
legitimacy
indicators
if
a
potential
relationship
exists
with
the
 procurement
strategy
a
winery
uses.

 
 Relationship
4:
Wineries
that
procure
their
grapes
from
their
own
estate
or
through
a
written
 contract
will
have
a
strong,
positive
correlation
with
the
eight
legitimacy
indicators.

 One
of
the
most
important
choices
for
an
agrarian
firm
manager
is
the
decision
to
integrate
or
 outsource
one
or
more
stages
of
the
production
process
(Fernandez
Olmos,
2010;
Butler
and
 Carney,
1983;
Leiblein
et
al.,
2002;
Díez‐Vial,
2007).
Trejo‐Pech
(2011)
interviewed
12
winery
 owners
in
Baja,
Calif.,
to
determine
if
the
region
qualifies
as
a
wine
cluster.
Through
this
study
 the
researchers
noted
that
most
of
the
time
wineries
in
the
area
hire
enologists
while
other
 firms
outsource
enology
services
because
in
Baja
many
winery
owners
feel
there
is
either
no
 enological
technology
development
occurring
or
that
the
technology
or
services
are
insufficient.
 As
researchers
weigh
if
Baja
is
a
developing
region,
this
indicates
that
emerging
wine
regions
 may
face
a
similar
situation.
Through
determining
the
percent
of
wineries
that
are
outsourcing
 their
winemaking
as
well
as
the
potential
effects
that
this
management
decision
has
on
the
 industry
is
important.

 Relationship
5:
Firms
that
outsource
their
winemaking
have
a
strong,
positive
correlation
with
 obtaining
external
funding,
having
a
large
trading
network
and
all
the
distribution
channels.

 
 40
   O’Neill
et
al.
(2002)
found
that
a
significant
majority
of
the
Australian
wine
industry
consists
of
 medium
and
small
wineries
that
predominantly
sell
through
their
cellar
door.
The
paper
 suggests
that
for
the
Margaret
River
Valley
alone,
cellar
door
sales
account
for
34
percent
of
 wineries’
sales
revenue
and
15
percent
of
the
wineries
in
the
region
say
cellar
door
sales
 account
for
80
percent
of
their
sales
revenue.
This
applies
to
this
emerging
wine
region
because
 the
majority
of
the
wineries
are
new
and
producing
a
small
number
of
cases
each
year
 therefore
understanding
the
effects
of
their
management
and
marketing
decisions
on
where
 they
sell
their
wine
is
crucial
in
helping
wineries
make
decisions
and
how
to
realign
them
better
 to
gain
access
to
other
resources
like
different
distribution
channels
and
help
the
wineries
build
 their
future
plans.

   Relationship
6:
Firms
that
derive
a
high
percentage
of
their
gross
revenue
from
wine
sales
have
 a
strong,
negative
correlation
with
all
three
distribution
channels,
having
a
large
trading
 network
and
obtaining
external
funding.

   Research
shows
that
most
new
wineries
sell
the
majority
of
their
wine
at
their
winery,
through
 their
tasting
room,
gift
shop,
restaurant
or
through
events
at
their
winery.
For
wineries
seeking
 to
grow,
extending
their
wine
sales
beyond
their
cellar
doors
is
crucial.
We
want
to
analyze
 what
management
and
marketing
decisions
help
wineries
increase
their
sales
through
other
 distribution
channels
and
understand
if
differences
exists
between
wineries
that
sell
a
high
 majority
through
their
tasting
room
and
those
that
sell
a
high
percentage
through
other
 channels.
 
 41
 
 Relationship
7:
Firms
that
derive
a
high
percentage
of
their
gross
revenue
from
wine
sales
will
 have
a
strong,
positive
correlation
with
hiring
full‐time
employees
and
having
an
arrangement
 with
a
tour
bus
company.
   An
overwhelming
number
of
studies
researched
the
pricing
of
wine
in
relation
to
consumers’
 view
on
wine’s
quality
as
well
as
how
consumers
view
a
winery,
the
type
of
grapes
used
and
the
 overall
region.
We
instead
what
to
understand
if
how
a
winery
prices
their
wine
relates
to
a
 winery
obtaining
resources.
Understanding
if
relationships
between
charging
a
higher
amount
 for
their
wine
and
whether
that
relates
to
the
firm
obtaining
external
funding,
or
selling
their
 wine
to
restaurants
versus
distributors?
As
Meijer
Grocery’s
wine
buyer
Mark
Esterman
noted,
 retailers
often
use
price
as
an
indicator
of
quality
because
they
know
many
of
their
customers
 do.
Therefore,
considering
price
is
an
important
aspect
to
understanding
the
effects
of
a
 winery’s
management
and
marketing
decisions
on
their
firm’s
strategy.
 
 Relationship
8:
Firms
that
charge
more
for
their
wine
have
a
strong,
positive
correlation
with
 the
legitimacy
indicators.
 Winning
an
award
is
often
a
goal
of
many
wineries
and
a
signal
to
consumers
that
a
winery
is
 producing
a
high
quality
product.
Often
awards
can
build
a
winery
or
region’s
reputation
quickly
 on
a
global
level.
Gaining
recognition
from
an
outside
party
that
is
already
deemed
legitimate
is
 a
key
concept
and
strategy
for
firms
to
obtain
legitimacy,
and
often
entering
a
wine
 competition
can
help
firms
do
that.
Lima
(2000)
tested
a
variety
of
wine
competitions
to
see
 
 42
 which
competition
measures
a
wine
quality
the
best
and
the
effects
of
winning
for
a
winery.
 The
results
found
that
winning
certain
competitions
is
associated
with
a
higher
price
for
the
 winning
wine
and
a
higher
quality
given
to
that
wine.
Further,
an
important
consideration
 noted
by
the
authors
are
consumers,
they
often
place
a
high
value
on
awards
and
use
the
 awards
as
signal
for
quality.
This
leads
to
an
important
point
to
study,
not
only
what
correlates
 with
winning
an
award
but
what
type
of
award
is
most
important,
leading
to
potential
 recommendations
for
winery
owners
as
what
type
of
competition
to
enter,
since
often
entering
 a
competition
is
costly
for
a
winery
financially
and
in
of
their
time.

 
 Also,
attending
competitions
can
be
a
way
to
network
with
other
legitimate
bodies.
Pereira
and
 Goldsmith
(2013)
note
that,
“These
professional
associations
not
only
establish
norms
and
 reflect
changes
over
time,
but
may
also
serve
as
a
legitimating
body,”
(Pereira
and
Goldsmith,
 p.
11).
In
support,
Webb
et
al.
(2009)
found
entrepreneurs
that
belonged
to
trade
or
business
 organizations
as
well
as
community,
political,
religious
and
alumni
organizations,
were
 positively
related
to
a
firm
progressing.

 Relationship
9:
Firms
that
have
won
awards
have
a
strong,
positive
correlation
with
the
 legitimacy
indicators.




 Marketing
and
building
a
brand
is
highly
stressed
for
new
firms
to
strategize
and
consistently
 maintain.
Further,
branding
is
highly
important
for
a
region.
Understanding
what
types
of
 media
correlate
with
a
winery’s
strategy
is
highly
important
as
a
preliminary
study
done
by
 Michigan
State
University,
University
of
Missouri‐Columbia
and
Cornell
University
conducted
in
 
 43
 this
emerging
wine
region
indicated
that
marketing
is
the
No.
3
challenge
for
the
individual
 wineries
and
the
region.
 
 Relationship
10:
Firms
that
use
promotional
activities
will
have
a
strong,
positive
correlation
 with
all
eight
legitimacy
indicators.

 Offering
a
variety
of
products
and
services
relates
to
a
winery
being
able
to
provide
the
 complete
“experience”
for
consumers.
Nowak
and
Newton
(2006)
stress
that
a
winery
must
 have
enough
staff
to
handle
high
volumes
of
people,
otherwise
not
enough
staff
can
be
 detrimental
to
a
winery
and
highly
disappointing
for
the
consumers.
The
authors
stress
 however
that
offering
consumers
a
positive
experience
at
their
winery
can
lead
consumers
to
 have
an
increased
perception
of
the
wine’s
quality,
a
greater
repurchase
intent
and
an
overall
 stronger
commitment
to
the
winery’s
brand.
This
experience
at
the
winery
is
what
Esterman
 often
looks
for
when
deciding
whether
or
not
to
sell
a
winery’s
products,
he
finds
consumers
 that
have
already
had
that
“experience”
at
winery
leads
them
to
demand
that
wine
and
already
 have
a
connection
that
he
does
not
have
to
work
on
building.

 
 Further,
firms
that
work
include
working
with
the
media
in
their
marketing
strategy
can
often
 obtain
attention
from
local,
national
or
international
media.
This
is
important
strategy
for
both
 the
individual
wineries
and
the
regions
since
the
press
often
benefits
both.
This
emerging
wine
 region
has
been
highlighted
in
the
media
through
stories
like
USA
Today’s,
“6
great
American
 wine
regions,”
which
showcases
the
Finger
Lake
regions
in
New
York
and
the
Leelanau
 Peninsula
in
Michigan,
and
another
USA
Today
article
titled,
“Exploring
Missouri
Wine
Country.”

 
 44
 In
addition
to
articles
discussing
what
cool
climate
wine
are
like,
many
articles
highlight
the
 economic
benefits
of
the
wine
industries
in
these
regions
like
Metrofocus’
article,
“Pour
New
 York?:
The
Economics
of
New
York
State
Wines,”
or
St.
Louis
Post‐Dispatch’s
article,
“With
108
 wineries,
is
Missouri
tapped
out?”
or
the
Traverse
City
Record‐Eagle’s
article
“Wine
is
a
star
in
 Michigan
economy.” Relationship
11:
A
strong,
positive
correlation
exists
between
offering
all
of
the
products
and
 services
and
the
eight
legitimacy
indicators.

   
 
 
 
 
 
 
 
 
 
 
 
 
 
 45
 CHAPTER 4:  RESULTS      Descriptive Results  Age of wineries  The
average
winery
in
this
emerging
wine
region
has
been
in
business
for
almost
a
decade
(9.87
 years).
The
value
is
measured
by
the
first
year
the
winery
began
commercial
wine
production
 until
2012.
The
median
value
is
six
years,
which
is
lower
than
the
average
but
can
be
explained
 by
the
dramatic
range
in
wineries’
establishment
with
the
oldest
winery
in
the
survey
operating
 for
91
years
to
almost
half
(46.9
percent)
of
the
wineries
sampled
who
have
been
in
business
 less
than
five
years.
About
13
percent
of
the
wineries
in
the
region
have
been
operating
for
one
 year
or
less
(N=113).
Finally,
on
average,
Michigan
wineries
have
been
commercially
producing
 wine
for
11.95
years,
Missouri
for
9.42
years
and
New
York
for
7.91
years.

 Volume produced            
 46
 Figure 2: Average Number of Cases Produced by Wineries in 2011  14.0
 11.8
 12.0
 Number of Cases in Thousands  10.0
 8.0
 6.0
 4.0
 COMBINED
 MICHIGAN
 6.8
 MISSOURI
 5.1
 3.2
 NEW
YORK
 2.0
 0.0
   The
average
number
of
cases
being
produced
by
a
single
winery
in
this
emerging
wine
region
is
 6,910
in
2011.
The
survey
results
indicate
Michigan
produces
the
most
cases
of
wine
(11,834
 cases)
followed
by
Missouri
(5,089
cases)
and
New
York
(3,185
cases).

 The
median
shows
a
lower
production
value
of
1,500
cases
for
the
region
than
the
average
at
 6,910
cases.
The
difference
in
the
mean
and
median
values
can
be
explained
by
the
wide
range
 of
production
levels
occurring
in
each
state.
Michigan
has
the
most
dramatic
range
with
the
 mean
(11,834
cases)
being
more
than
five
times
the
amount
of
cases
produced
as
the
median
 indicates
(2,236
cases).
The
maximum
number
of
cases
produced
by
a
single
winery
in
the
state
 was
138,416
cases
while
the
minimum
one
winery
produced
was
240
cases.
The
significantly
 lower
median
highlights
the
large
range
indicating
that
a
few
major
wineries
are
producing
the
 majority
of
the
state’s
wine.
This
is
a
current
characteristic
of
this
emerging
wine
region,
that
a
 
 47
 few
large
wineries
are
producing
more
than
100,000
cases
while
the
majority
of
the
wineries
 are
producing
significantly
less.


 Finally,
of
the
wineries
surveyed,
about
half
(51.3
percent)
said
their
wine
production
increased
 from
2008
to
2011.
While
9.73
percent
said
their
production
decreased
and
20.4
percent
said
 their
production
had
remained
stable
during
that
time.
Among
the
58
respondents
that
 increased
their
wine
production,
the
average
increase
was
68.7
percent.
However,
the
median
 suggests
the
percent
increase
is
closer
to
25.5
percent.
Only
seven
of
the
11
respondents
 whose
production
decreased
stated
the
actual
percent
decrease,
which
average
to
be
a
2.45
 percent
decrease
from
2008
to
2011.



 Figure 3: Production in 2011 and Number of Years Firm has been Commercially Producing  Wine, R=0.60  150,000
 Number
of
Cases
Produced
 125,000
 100,000
 75,000
 50,000
 25,000
 0
 0
 
 10
 20
 30
 48
 40
 50
   Main ingredient or inputs used to produce wine   The
survey
asked
respondents
to
select
the
main
input
or
ingredient
used
to
produce
their
 wine:
grapes,
grape
juice,
bulk
wine
or
other.
An
overwhelming
87
percent
of
the
region
uses
 grapes
as
the
main
input
in
producing
wine
(N=112).
“Other”
was
selected
as
the
second
most
 common
input,
followed
by
grape
juice
and
finally
bulk
wine.
While
the
question
asks
for
the
 main
input
or
ingredient
individual
firms
use
to
produce
wine,
more
analysis
was
required
to
 understand
the
responses
since
most
owners
selected
multiple
inputs.
The
chart
below
shows
 the
inputs
and
combinations
of
inputs
that
the
owners
use
to
produce
wine.

 Table 7: Number of Firms that use a Single or Combination of Main Inputs to Produce Wine  Input  Number of  wineries  Grapes
 38
 Grape
 juice
 2
 Bulk
wine
 0
 Other
 Input  Grape
 Combinations  juice
 Grapes
 Bulk
 wine
 Other
 12
 7
 20
 Grape
juice
 ‐
 3
 0
 Bulk
wine
 ‐
 ‐
 1
 7
     Finally,
seven
wineries
use
a
combination
of
three
inputs,
grapes,
grape
juice
and
bulk
wine.
Six
 wineries
use
grapes,
grape
juice
and
other.
Two
wineries
use
grapes,
bulk
wine
and
other.
 While,
four
wineries
use
all
of
the
inputs
listed,
grapes,
grape
juice,
bulk
wine
and
other
to
 produce
their
wine.
In
summary,
the
majority
of
wineries
in
the
emerging
wine
region
produce
 their
wine
with
only
grapes
(42
percent),
another
38.4
percent
use
two
inputs,
while
13.4
 percent
use
three
inputs
and
3.6
percent
use
four
inputs
(N=112).
 
 49
 The
survey
then
asked
winery
owners
about
the
percentage
of
total
wine
volume
produced
 from
grapes,
grape
juice,
bulk
wine
and
other.
In
this
emerging
wine
region,
69.3
percent
of
 wineries
use
grapes,
16.2
percent
use
other,
8.4
percent
use
grape
juice
and
6.1
percent
use
 bulk
wine,
(N=109).
Through
analyzing
the
states,
the
greatest
difference
is
in
the
“other”
 category,
where
27.4
percent
of
Michigan
wineries
use
other,
11.7
percent
of
Missouri
wineries
 and
7.6
percent
of
New
York
wineries,
(N=109).
The
next
significant
difference
exists
in
the
 states
that
use
grapes
as
their
main
input,
76.2
percent
of
Missouri
wineries
use
grapes
as
the
 main
input
in
their
wine
compared
to
71.2
percent
of
New
York
wineries
and
62.8
percent
of
 Michigan
wineries,
(N=109).
The
chart
below
shows
the
percentage
of
total
wine
volume
 produced
from
different
inputs.
 Figure 4: Percent of Total Wine Volume Produced with Various Inputs  100%
 90%
 80%
 70%
 60%
 COMBINED
 50%
 MICHIGAN
 40%
 MISSOURI
 NEW
YORK
 30%
 20%
 10%
 0%
 Grapes
 
 Grape
juice
 Bulk
wine
 50
 Other
 
 Table 8:  Percent of Total Wine Volume Produced with Grapes, Grape Juice, Bulk Wine or  Other     COMBINED  MICHIGAN  MISSOURI  NEW YORK  Grapes
 86.6%
 90.0%
 92.3%
 75.8%
 Grape
juice
 31.3%
 17.5%
 40.5%
 39.4%
 Bulk
wine
 21.4%
 25.0%
 20.5%
 18.2%
 Other
 36.6%
 57.5%
 30.8%
 18.2%
 
 Types of grapes used in production  The
varieties
of
grapes
grown
in
the
U.S.
fall
in
to
three
major
categories:
European
varieties
 often
called
vinifera,
native
American
and
French/American
hybrids.
The
majority
(41.6
 percent)
of
the
wine
produced
in
this
emerging
wine
region
is
from
hybrid
grapes
(i.e.
Seyval
 blanc,
Chardonel,
etc.).
The
second
most
popular
type
of
grapes
used
by
27.6
percent
of
the
 wineries
are
vitis
vinifera
(i.e.
Chardonnay,
Riesling,
Pinot
Noir,
etc.)
followed
by
(15.9
percent)
 using
native
American
varietals
(i.e.
Concord,
Catawba,
etc.)
and
lastly
“other”
types
(13.4
 percent).
Wineries
that
selected
other
were
asked
to
specify,
responses
included
juice
(not
 including
grape
juice),
grape
concentrate,
apple
cider,
honey,
cherries,
apples,
berries,
black
 currant,
pecans,
pumpkin,
peaches
and
other
fruits.
 
 
 
 
 51
 Figure 5: Percent of Total Wine Production with Different Grapes by State  60%
 50%
 40%
 COMBINED
 30%
 MICHIGAN
 MISSOURI
 20%
 NEW
YORK
 10%
 0%
 Vinifera
 Hybrid
 Naxve
 Other
   Unlike
New
York
and
Missouri,
Michigan
produces
the
majority
(42.4
percent)
of
its
wine
using
 vinifera
varietals.
Whereas,
only
8.6
percent
of
Missouri
and
32.6
percent
of
New
York’s
 production
are
from
vinifera
varietals.
Additionally,
Michigan
also
has
the
highest
(22.5
 percent)
of
its
production
that
is
made
from
“other”,
which
could
mean
the
state
produces
 more
wines
made
from
fruit
(i.e.
cherry
wine).
Finally,
of
the
three
states
Michigan
also
uses
 the
least
amount
of
native
American
varietals
(5.1
percent),
Missouri
uses
almost
five
times
 that
amount
(29
percent)
and
New
York
uses
more
than
twice
Michigan’s
amount
(13.0
 percent).


 The
majority
of
Missouri’s
wine
is
made
from
hybrid
grapes
(55.3
percent)
followed
by
native
 American
varietals
(29
percent),
vinifera
(18.5
percent)
and
other
(7.1
percent).
The
majority
of
 
 52
 New
York’s
wine
is
also
made
with
hybrid
varietals
(42.1
percent)
followed
by
vinifera
grapes
 (32.6
percent),
native
American
grapes
(13.0
percent)
and
other
(9.8
percent).


 Procuring grapes  The
survey
asks
winery
owners
for
the
percent
of
grapes
they
procure
through
their
own
 vineyards
(estate
grown),
spot
or
cash
markets
as
needed,
through
verbal
(handshake)
 contracts
or
through
written
contracts.
In
the
emerging
wine
region,
half
of
the
wineries
 procure
their
grapes
from
their
own
vineyard,
(N=106).
Another
29.1
percent
use
verbal
 (handshake)
contracts,
10.7
percent
use
written
contracts
and
6.23
percent
acquire
grapes
 through
spot
or
cash
markets,
(N=106).
While
the
majority
of
wineries
predominantly
rely
on
 their
own
vineyards
to
procure
grapes,
the
percentages
in
each
state
vary.

 
 
 
 
 
 
 
 
 
 53
 Figure 6: Percent of Grapes Procured through Various Strategies by State  70.000
 Perecent
of
grapes
 60.000
 50.000
 40.000
 COMBINED
 30.000
 MICHIGAN
 MISSOURI
 20.000
 NEW
YORK
 10.000
 0.000
 Estate
grown
 Spot/cash
 Verbal
 market
 (handshake)
 Wriyen
 contract
 Procurement
strategy
   Missouri
wineries
procures
57.4
percent,
the
highest
percent,
of
grapes
from
their
won
 vineyards,
compared
to
Michigan
who
procures
50
percent
and
New
York
who
procures
the
 least,
41.9
percent.
The
second
greatest
difference
among
the
states
is
between
those
that
use
 written
contracts,
Michigan
procures
19.6
percent
of
its
grapes
through
written
contracts,
New
 York
gets
10.6
percent
through
written
contracts
and
Missouri
gets
2.9
percent
through
written
 contracts.

 Procuring grapes through a contract      
 54
 Table 9: Strategies use to Determine Contract Prices  Response  COMBINED  MICHIGAN  MISSOURI  NEW YORK  Market
Prices
 60.5%
 50.0%
 66.7%
 70.0%
 Negotiated
with
 supplier
 Set
by
winery
 Set
by
supplier
 Other
 0.0%
 0.0%
 0.0%
 0.0%
 11.6%
 20.9%
 7.0%
 22.2%
 16.7%
 11.1%
 6.7%
 20.0%
 6.7%
 0.0%
 30.0%
 0.0%
 
 The
survey
asked
those
winery
owners
that
use
contracts
to
select
from
one
of
the
following
 options
of
how
the
contract
price
is
determined,
based
on
market
prices,
negotiated
with
the
 supplier,
set
by
the
winery,
set
by
the
supplier
or
some
other
method
(which
they
were
asked
 to
write).
In
total,
43
wineries
acknowledged
using
one
of
these
methods,
we
expected
a
higher
 percentage
of
wineries
to
use
some
type
of
contract.
Consistent
across
all
three
states,
the
 most
common
method
used
to
set
contract
prices
is
basing
the
prices
on
the
market
prices,
70
 percent
of
New
York
wineries
follow
this
method,
66.7
percent
of
Missouri
wineries
and
50
 percent
of
Michigan
wineries.
None
of
the
owners
cited
negotiating
with
the
supplier
as
the
 method
they
use
to
determine
contract
prices
however,
20.9
percent
of
contract
in
the
 emerging
wine
region
are
set
by
the
supplier.
New
York
has
the
highest
percentage
of
contracts
 with
prices
set
by
suppliers
followed
by
Missouri
with
20
percent
and
Michigan
with
16.7
 percent.
A
key
difference
among
the
states
is
the
percentage
of
contract
prices
that
are
set
by
 the
winery.

 The
greatest
difference
among
the
states’
methods
of
setting
the
contract
prices
are
those
 wineries
that
use
contracts
where
the
firm
itself
sets
the
price.
Overall,
contracts
with
prices
set
 
 55
 by
the
wineries
accredit
for
11.6
percent
of
the
contracts.
However,
in
New
York
none
of
the
 wineries
set
the
contract
prices
while
22.2
percent
of
Michigan
wineries
and
6.7
percent
of
 Missouri
wineries
set
the
prices.
Further,
wineries
use
year
to
year
and
multiple
year
contracts.

 Figure 7: Length of Contracts used with Grape or Juice Suppliers by State  90.0%
 Percent
of
contract
types
used
 80.0%
 70.0%
 60.0%
 COMBINED
 50.0%
 MICHIGAN
 40.0%
 MISSOURI
 30.0%
 NEW
YORK
 20.0%
 10.0%
 0.0%
 Year
to
Year
 Mulxple
Years
   Next,
the
survey
asked
the
firms
that
outsource
their
winemaking
for
the
exact
percentage
of
 their
wine
production
that
is
outsourced.
The
average
percent
of
the
region’s
wine
production
 that
is
outsourced
is
12.4
percent,
(N=112).
Consistent
with
the
number
of
wineries
in
each
 state
that
outsource
some
of
their
winemaking,
Michigan
has
the
greatest
number
of
wineries
 that
outsource
some
part
of
their
winemaking
and
of
those
wineries
the
average
percent
of
the
 firm’s
wine
production
they
outsource
is
20.4
percent,
(N=40).
Again,
in
New
York
24.2
percent
 of
wineries
outsource
their
winemaking,
and
the
average
amount
of
the
firms’
wine
production
 
 56
 they
source
is
7.3
percent,
(N=32).
Finally,
Missouri
has
the
fewest
number
of
wineries
that
 outsource
some
part
of
their
winemaking
(17.5
percent),
and
the
average
percent
of
the
firms’
 wine
production
they
outsource
is
8.7
percent,
(N=40).
An
important
finding
from
the
percent
 of
the
wineries’’
production
that
they
outsource
is
the
range.
In
all
three
states,
the
range
of
 the
percent
that
the
wineries
outsource
varies
from
zero
to
100
percent,
however
only
four
 wineries
in
the
region
outsource
100
percent
of
their
winemaking.

 Custom crush services  In
the
emerging
wine
region,
16.8
percent
of
the
wineries
produce
wine
for,
or
rent
their
 facilities
or
equipment
to
other
wineries
doing
custom
crush,
(N=113).
None
of
the
wineries
in
 Missouri
do
custom
crush,
(N=40),
however
11
wineries
in
New
York
offer
custom
crush
 services
or
rent
their
equipment
to
other
wineries,
(N=33)
and
eight
Michigan
wineries
also
 offer
these
services
and
equipment,
(N=40).

 Next,
25
responses
indicate
that
wineries
in
the
region
account
custom
crush
services
as
19.2
 percent
of
their
firms’
gross
revenue.
The
range
shows
that
some
firms
only
account
custom
 crush
services
at
1
percent
of
their
gross
revenue
while
one
firm
account
this
service
as
90
 percent
of
its
gross
revenue.
In
analyzing
the
percent
of
gross
revenue
the
states
derive
from
 their
custom
crush
services,
New
York
firms
on
average
account
28
percent,
(N=10),
followed
 by
Michigan
who
accounts
13.6
percent,
(N=8),
and
Missouri
who
accounts
13
percent,
(N=7).
 However,
the
median
values
suggest
the
average
percent
of
gross
revenue
wineries
earn
from
 custom
crush
differ
from
the
means.
For
Michigan
and
Missouri,
the
median
predicts
the
 
 57
 average
percent
closer
to
15
percent
and
for
New
York,
the
median
suggests
the
state’s
average
 percent
is
lower
than
the
mean
and
closer
to
10
percent.

 How wine is bottled   Wine
is
most
commonly
bottled
as
a
straight
varietal
(i.e.
merlot,
vignoles,
etc.)
or
as
a
blend
of
 varietals.
A
winery’s
decision
on
how
to
bottle
their
wine
is
often
the
result
of
many
factors,
like
 showcasing
a
certain
varietal’s
characteristics,
a
shortage
in
grape
supply,
a
marketing
decision
 or
the
wine
maker
or
owner’s
personal
preference,
etc.

The
majority
(45.2
percent)
of
the
wine
 produced
in
the
emerging
wine
region
is
bottled
as
a
grape‐specific
varietal
wine
(N=112).
 While
34.1
percent
of
the
region
bottles
their
wine
as
a
blend
and
another
18.1
percent
bottles
 their
wine
as
“other”,
(N=112).

 Figure 8: Bottling Style by State  60%
 50%
 40%
 COMBINED
 30%
 MICHIGAN
 MISSOURI
 20%
 NEW
YORK
 10%
 0%
 Varietal
 
 Blend
 Other
 58
   Missouri
bottles
the
most
wine
(51.3
percent)
as
a
varietal,
New
York
even
less
(43.7
percent)
 and
finally
Michigan
(40.2
percent).
Similarly,
Missouri
has
the
highest
percentage
bottled
as
a
 blend
among
the
three
states
(38.2
percent),
then
New
York
(33.8
percent)
and
finally
Michigan
 (30.3
percent).
However,
among
the
three
states,
Michigan
bottles
significantly
more
wine
as
 “other”
(27
percent)
compared
to
New
York
which
bottles
about
16.3
percent
and
Missouri
 who
bottles
less
than
a
half
of
that
amount
as
“other”
(10.6).

 Taste of wine  The
survey
asked
winery
owners
to
describe
how
their
winery
decides
to
produce
the
taste
of
 their
wine.
A
seven‐point
scale
is
used
with
one
being
producing
wine
that
tastes
similar
to
 what
consumers
are
familiar
with
to
seven
being
the
winery
focuses
on
producing
wine
that
has
 a
novel
taste
compared
to
what
consumers
are
familiar
with.
On
average,
wineries
in
the
 emerging
wine
region
describe
their
firms
as
a
4.3
on
the
seven‐point
scale,
meaning
firms
 produce
wine
that
is
neither
familiar
nor
novel
relative
to
what
consumers
have
tasted.
Across
 the
states,
the
score
is
quite
similar,
New
York
wineries
describe
the
wine
they
produce
as
 slightly
more
novel
(4.6),
compared
to
Michigan’s
score
of
4.4
and
Missouri’s
score
of
4.1,
 (N=106).
While
New
York
and
Michigan’s
scores
are
the
most
similar
and
slightly
higher
than
 the
scale’s
neutral
value
of
4,
the
medians
in
both
states
are
higher
than
the
means,
at
a
value
 of
5.0.
Finally,
all
of
the
states
share
the
same
large
range,
with
scores
ranging
from
one
to
 seven.



 Price of the wine  
 59
 The
surveyed
asked
respondents
the
average
retail
price
of
their
highest,
lowest
and
top
selling
 wines.
On
average,
the
price
of
wineries
in
this
region’s
highest
priced
wine
is
$25.32
and
the
 lowest
price
is
$11.16.
The
average
retail
price
of
wineries’
top
selling
wine
is
$14.10.

 Figure 9: Average Prices of Wine by State  $35.00
 $30.00
 $25.00
 $20.00
 $15.00
 $10.00
 $5.00
 $0.00
 COMBINED
 MICHIGAN
 MISSOURI
 Highest
 Lowest
 Top
 Priced
 Priced
 Selling
 Wine
 Wine
 Wine
 NEW
YORK
 
 Michigan
was
the
only
state
whose
highest
and
lowest
priced
wines
fell
outside
the
region’s
 range
with
Michigan’s
highest
price
wine
being
14.1
percent
($29.48)
greater
than
the
region’s
 average
($25.32)
and
the
lowest
priced
wine
being
5.4
percent
($10.55)
less
than
the
region’s
 lowest
priced
wine
($11.16).
Finally,
the
range
of
Michigan’s
highest
priced
wine
had
the
 greatest
range
among
the
states
with
the
minimum
being
$10
and
the
maximum
at
$85.

 Unlike
Michigan,
the
range
of
Missouri’s
lowest
and
highest
priced
wines
was
within
the
 region’s
range.
The
average
retail
price
for
Missouri’s
highest
priced
wine
is
$21.35,which
is
 15.7
percent
lower
or
$4
less
than
the
region’s
average
price.

The
average
retail
price
of
 Missouri’s
lowest
wine
is
$11.53,
which
is
3.2
percent
higher
than
the
region’s
average
price.
In
 summary,
the
prices
of
Missouri’s
wine
are
lower
than
the
region’s
average.

 
 60
 In
New
York,
the
average
retail
price
of
the
state’s
highest
and
lowest
priced
wines
were
the
 closest
of
the
three
states
to
the
region’s
averages.
The
average
retail
price
of
New
York’s
most
 expensive
wine
was
only
23
cents
lower
than
the
region’s
average
and
the
State’s
lowest
priced
 wine
was
just
31
cents
higher
the
region’s
average.
However,
the
range
of
New
York’s
lowest
 price
wine
was
the
greatest
among
the
states,
with
a
minimum
price
recorded
at
$8
and
 maximum
price
of
$40.

 The
retail
price
of
the
region’s
top
selling
wine
is
$14.10.
New
York
commanded
the
highest
 retail
price
of
$14.72,
14.2
percent
above
the
region
average.
Additionally,
compared
to
 Michigan
and
New
York,
New
York
has
the
greatest
range
among
its
top
selling
wine
with
prices
 ranging
from
$8
to
$40.
Next
is
Missouri,
the
average
retail
price
of
the
state’s
top
selling
wine
 is
$13.93,
1.2
percent
less
than
region
average.
Finally,
the
retail
price
of
Michigan’s
wine
is
the
 lowest
among
the
three
states,
selling
for
$13.78,
which
is
2.3
percent
lower
than
the
region
 average.

 
Where the wine is sold  On
average,
96
percent
of
wineries
in
the
emerging
wine
region’s
sales
are
from
within
the
 winery’s
home
state,
(N=111).
This
finding
was
expected
since
most
wineries
sell
a
high
portion
 of
their
total
sales
volume
at
their
winery.
Missouri
wineries
credit
96.6
percent
of
their
total
 wine
sales
from
in
state
sales
(N=40),
New
York
sells
96.4
percent
in
state
(N=31)
and
Michigan
 sells
94.7
percent
in
state
(N=40).
 
 
 61
 Figure 10: Percent of Total Wine Sales Sold Within the Wineries’ Home State, Outside their  Home State and Outside the U.S., by State  100.0
 Percent
of
total
wine
sales
 90.0
 80.0
 70.0
 60.0
 MICHIGAN
 50.0
 MISSOURI
 40.0
 NEW
YORK
 30.0
 20.0
 10.0
 0.0
 In‐state
 Out‐of‐state
 Outside
U.S.

   On
average,
wineries
credit
4.1
percent
of
their
total
sales
from
out
of
state
(N=111).
However,
 the
median
value
is
0.1
for
region
indicating
that
only
a
few
wineries
are
selling
wine
outside
 their
home
state.
A
lower
median
value
explains
the
higher
median
value
of
99.9
percent
for
in‐ state
sales
again
reemphasizing
that
only
a
few
wineries
in
the
region
are
selling
wine
outside
 their
state
and
therefore
the
majority
of
the
region
only
sells
wine
within
their
home
state.
 Contrary
to
in‐state
sales,
Michigan
has
the
highest
percent
of
its
total
wines
sales
from
out
of
 state
(5.2
percent,
N=40),
compared
to
New
York
who
sells
3.5
percent
of
its
total
wine
sales
 outside
the
state,
(N=31),
and
Missouri
who
sells
3.4
percent
outside
the
state,
(N=40).

 Finally,
on
average,
0.1
percent
of
the
total
wine
sales
in
the
region
are
from
outside
the
U.S.,
 (N=111).
Only
four
of
the
wineries
surveyed
sell
wine
outside
the
U.S.,
accounting
for
the
 
 62
 average
value
of
0.1
percent
of
total
wine
sales
for
the
region
sold
outside
the
U.S.
Two
 wineries
in
Michigan
and
two
wineries
in
New
York
sell
wine
outside
the
U.S.,
all
four
of
the
 wineries
account
out
of
the
country
sales
as
one
to
two
percent
of
their
firm’s
total
wine
 volume
sales.

 Distribution channels used to sell the wine  Survey
respondents
were
given
a
list
of
eight
distribution
channels
that
they
potentially
sell
 their
wine
through
including
at
their
winery,
a
liquor
store,
a
restaurant,
a
farmer’s
market,
 through
direct
shipment,
through
a
distributor,
at
festivals
or
community
events,
or
other.
An
 overwhelming
majority
of
the
wine
in
the
emerging
region
is
sold
at
the
wineries.
The
almost
 three
quarters
(73.9
percent)
of
the
region
that
sells
their
wine
directly
at
the
winery
is
 consistent
with
another
finding
that
shows
a
significant
number
of
wineries
that
have
gift
shops
 or
a
restaurant
in
addition
to
their
tasting
room
to
sell
their
products
on
site.

 
 
 63
 Figure 11: Percent of Wine Volume Sold through Various Distribution Channels, by 90%
 80%
 70%
 60%
 50%
 40%
 30%
 20%
 10%
 0%
 COMBINED
 MICHIGAN
 MISSOURI
 NEW
YORK
   An
overwhelming
99
percent
of
the
region’s
wineries
have
a
tasting
room,
(N=113).
Three
 quarters
of
the
wineries
have
a
gift
shop,
and
a
fourth
have
a
restaurant.
Along
with
sales
from
 the
tasting
room,
65
percent
of
the
wineries
said
they
are
able
to
host
events
like
weddings
and
 receptions,
which
creates
another
opportunity
for
the
wineries
to
market
and
sell
their
wine
at
 their
winery.
Sixty‐one
percent
of
the
wineries
expect
to
increase
the
percent
of
wine
volume
 they
sell
at
their
winery
from
2012
to
2015.

 The
second
most
common
distribution
channel
for
wine
from
the
emerging
wine
region
is
sold
 through
a
liquor
store.
Although
only
7.7
percent
of
wineries
sell
directly
to
a
liquor
store,
half
 of
the
wineries
expect
to
increase
the
percent
of
their
wine
volume
they
sell
to
liquors
stores
in
 the
next
three
years.

 
 64
 The
third
most
common
distribution
channel
utilized
by
wineries
in
the
emerging
wine
region
is
 selling
through
distributors.
Of
the
110
owners
that
responded
to
this
question,
selling
through
 a
distributor
accounted
for
7.4
percent
of
their
wine
volume
sold.
Seven
of
the
110
wineries
sell
 more
than
50
percent
of
their
wine
through
distributors.
In
the
next
three
years,
35
wineries
 (31.3
percent)
expect
to
increase
the
volume
of
wine
they
sell
through
distributors.

 Percent
of
wine
volume
sold
 Figure 12: Percent of Wine Volume Sold through Specific Distributions Channels by State  12%
 10%
 8%
 6%
 4%
 MICHIGAN
 2%
 MISSOURI
 0%
 NEW
YORK
   Then,
the
region’s
percentages
dropped
to
less
than
3
percent
sold
through
the
remaining
 channels:
2
percent
at
farmers
markets,
2.3
percent
to
restaurants
and
1.6
percent
at
festivals
 or
community
events.
In
the
next
three
years,
17
percent
of
wineries
expect
to
increase
the
 percent
of
wine
volume
they
sell
at
farmers
markets,
half
of
owners
expect
the
percent
of
wine
 volume
they
sell
to
restaurants
to
increase
and
30
percent
of
respondents
expect
to
increase
 
 65
 the
percent
of
wine
volume
they
sell
at
festivals
or
community
events,
(N=112).
Finally,
selling
 wine
through
direct
shipments
was
the
lowest
used
channel
of
the
wineries
with
only
1.4
 percent
of
wineries
using
this
method.
However,
39.3
percent
of
wineries
noted
they
expect
 the
percent
of
wine
sold
as
direct
shipments
to
increase,
(N=112).

 When
analyzing
the
differences
in
states,
Missouri
and
New
York
sell
more
wine
through
a
 liquor
store
than
Michigan.
The
average
percent
the
region
sells
through
a
liquor
store
is
7.7
 percent:
Missouri
sells
9.9
percent,
New
York
sells
8.8
percent
and
Michigan
sells
4.7
percent.
 While
the
average
percentage
of
wine
sold
at
a
farmers
market
is
2
percent,
the
average
 percent
Michigan
and
Missouri
sell
is
0
percent
while
New
York
sells
7.1
percent
of
its
wine
 through
this
channel.
The
third
most
varied
category
among
the
states
is
the
percent
sold
 through
a
distributor.
On
average,
the
region
sells
7.4
percent
through
distributors:
Michigan
 sells
the
most
at
8.9
percent
followed
by
Missouri
at
7.1
percent
and
New
York
at
5.9
percent.
 Finally,
another
notable
range
among
the
states
is
the
“other”
category
in
which
the
region’s
 average
is
2.9
percent
yet
Michigan
has
5.2
percent,
Missouri
2.4
percent
and
New
York
0.9
 percent.


 Finally,
18.8
percent
of
wineries
in
the
emerging
region
plan
to
reduce
the
percent
of
their
wine
 volume
sales
“at
the
winery”,
(N=112).
This
was
a
surprising
finding,
we
anticipated
more
 wineries
seeking
to
increase
sales
beyond
their
winery
in
the
next
three
years,
because
the
46.9
 percent
of
the
region’s
wineries
have
been
operating
for
less
than
five
years,
therefore
 expanding
beyond
the
tasting
room
may
not
currently
be
reasonable
or
accessible
for
these
 new
wineries.
Next,
9.82
percent
of
wineries
plan
to
decrease
the
percent
of
wine
they
sell
to
 
 66
 “other”
in
the
next
three
years,
(N=112).
Then,
7.14
percent
of
wineries
anticipate
decreasing
 the
volume
of
wine
they
sell
directly
to
liquor
stores,
(N=112).
Finally,
in
the
remaining
five
 categories,
less
than
7
percent
of
wineries
anticipate
decreasing
their
wine
volume
sales
 through
those
channels.

 Promotional activities   Table 10: Promotional Activities used by Wineries by State  Response  COMBINED  MICHIGAN  MISSOURI  NEW YORK  Arrangements
with
tour
or
bus
 companies
 33.9%
 52.5%
 12.5%
 37.5%
 Promotions
for
returning
 customers
 50.9%
 52.5%
 45.0%
 56.3%
 Customer
database
 71.6%
 67.5%
 68.4%
 80.6%
 Club
promotions
 41.1%
 35.0%
 35.0%
 56.3%
 Website
 99.1%
 100.0%
 100.0%
 96.9%
 Newsletter
 54.5%
 50.0%
 57.5%
 56.3%
 Social
media
 87.4%
 85.0%
 87.2%
 90.6%
 Volume
discounts
 96.4%
 97.5%
 100.0%
 90.6%
 Other
 13.4%
 22.5%
 5.0%
 12.5%
 
 The
survey
asked
winery
owners
to
select
all
of
the
promotional
activities
that
their
winey
uses,
 including
an
arrangement
with
a
tour
bus
company,
promotions
for
returning
customers,
a
 customer
database,
club
promotions,
a
website,
a
newsletter,
social
media,
volume
discounts
 or
other.
The
most
popular
promotional
activity
used
by
firms
in
the
emerging
wine
region
is
 
 67
 the
utilization
of
a
website,
99
percent
of
wineries
have
a
website,
(N=112).
Secondly,
96
 percent
of
wineries
offer
volume
discounts,
(N=112).
In
the
region,
87
percent
of
wineries
use
 social
media
like
Facebook
and
Twitter,
(N=111).
Seventy‐two
percent
of
wineries
have
a
 customer
database,
(N=109).
However,
only
51
percent
of
wineries
offer
promotions
for
 returning
customers
or
offer
club
promotions,
(N=112).
With
almost
three
fourths
of
the
 wineries
maintaining
a
customer
database,
we
anticipated
the
percentage
of
wineries
that
offer
 promotions
for
returning
customers
and
offer
club
promotions
to
be
closer
to
the
percentage
 of
wineries
that
have
a
customer
database
since
most
likely
those
two
activities
require
using
a
 customer
database.
Finally,
54
percent
of
wineries
use
a
newsletter,
however
we
are
unsure
 how
the
newsletter
is
distributed,
by
email
or
mail,
and
how
often
the
newsletter
is
sent
out,
 (N=112).
Next,
34
percent
of
wineries
have
arrangements
with
tour
bus
companies,
(N=112).
 Then,
the
least
used
promotional
activity
used
is
“other”,
which
only
13
percent
of
wineries
said
 they
use,
(N=112).

 Comparing
the
states
among
the
promotional
activities,
the
most
significant
difference
among
 the
states
are
the
wineries
that
have
arrangements
with
tour
bus
company.
In
Michigan,
53
 percent
of
wineries
have
an
arrangement
with
a
tour
bus
company,
37.5
percent
of
New
York
 wineries
have
an
arrangement
and
13
percent
of
Missouri
wineries
have
an
arrangement
with
a
 tour
bus
company,
(N=112).
The
second
greatest
difference
among
the
states
is
in
between
the
 wineries
that
offer
club
promotions,
56.3
percent
of
New
York
wineries
offer
club
promotions,
 and
35
percent
of
wineries
in
Michigan
and
Missouri
offer
club
promotions,
(N=112).
The
third
 important
difference
is
between
the
wineries
that
use
some
“other”
promotional
activity,
23
 percent
of
Michigan
wineries
report
using
this
“other”
promotional
activities,
12.5
percent
of
 
 68
 New
York
wineries
use
“other”
promotional
activities
and
5
percent
of
Missouri
wineries
use
 “other”
activities,
(N=112).

 Respondents’ view on how consumers perceive the region’s wine  Winery
owners
found
consumers’
familiarity
with
wine
from
the
region
to
be
neither
unfamiliar
 nor
highly
knowledgeable.
Given
a
seven‐point
scale
with
a
one
being
customers
are
unfamiliar
 with
wine
from
the
owner’s
region
to
seven
being
consumers
are
likely
to
be
highly
 knowledgeable
about
wines
from
the
owner’s
region,
the
average
of
the
107
respondents
was
 3.71.
The
almost
neutral
score
was
consistent
among
all
three
states.
Similarly,
111
winery
 owners
rated
consumers’
degree
of
knowledge
and
familiarity
with
their
specific
winery’s
 products
or
winery
as
a
4.13
on
the
same
seven‐point
scale.

 INDIVIDUAL FIRMS  Organizational structure  The
majority
(58.9
percent)
of
the
wineries
are
organized
as
limited
liability
companies.
The
 second
most
common
type
of
firm
is
a
closely
held
organization
(17.0
percent)
and
the
third
is
a
 sole
proprietorship
(11.6
percent).
Only
8.03
percent
of
the
region’s
wineries
are
organized
as
 partnerships
and
another
3.57
percent
operate
as
some
“other”
type
of
organization
like
an
 estate,
trust
or
cooperative.
Finally,
a
few
of
the
wineries
in
the
emerging
wine
region
are
 publically
traded.

 Financed  
 69
 Half
of
the
wineries
in
the
emerging
wine
region
are
self‐funded
by
the
owner,
(N=113).
While
 another
43.36
percent
of
the
owners
self‐financed
their
winery
in
addition
to
receiving
external
 funding.
The
remaining
7.08
percent
of
the
wineries
only
use
external
funding.
Missouri
has
 more
wineries
that
are
self‐financed,
60.0
percent,
compared
to
Michigan
with
42.5
percent
 and
New
York
with
45.5
percent.
However,
zero
of
the
Missouri
wineries
surveyed
report
only
 using
external
financing,
unlike
the
two
other
states.
In
Michigan,
five
respondents
(12.5
 percent)
only
use
external
financing
to
support
their
winery
and
in
New
York
even
less,
only
 three
respondents
(9.1
percent).
In
summary,
the
majority
of
the
wineries
in
the
emerging
 region
are
self
financed
by
the
owner
(49.6
percent)
and
43.4
percent
of
wineries
are
funded
by
 a
combination
of
external
funding,
like
a
bank
loan,
and
the
owner’s
investment,
(N=113).

 Table 11: Financing Strategies used by Wineries, by State  Response  COMBINED  MICHIGAN  MISSOURI  NEW YORK  Self
financed
 49.6%
 42.5%
 60.0%
 45.5%
 Externally
 financed
 7.1%
 12.5%
 0.0%
 9.1%
 Both  43.4%
 45.0%
 40.0%
 45.5%
 
 To
further
explain
the
wineries’
financing,
the
survey
asked
the
owners
to
state
the
percent
of
 their
self
worth
they
invested
in
their
winery.
Of
the
103
responses,
the
average
winery
owner
 invested
45.5
percent
of
their
net
worth
in
their
winery.
The
median
suggests
the
percentage
is
 50.0
percent
and
the
mode
is
50.
Finally,
the
range
across
all
of
the
states
varies
from
0
to
100
 percent.
New
York
respondents
have
the
highest
average
percent
invested
in
the
wineries
 (56.97
percent),
followed
by
Missouri
(42.85
percent)
and
Michigan
(38.0
percent).
However,
 
 70
 the
median
value
of
New
York’s
average
percent
is
8.53
percent
higher
than
the
mean,
while
 Michigan’s
median
is
7
percent
lower
and
Missouri’s
median
is
7.85
percent
is
lower
than
their
 respective
states’
means.
Another
question
asked
respondents
to
rate
external
funders’
 familiarity
with
the
wine
business
in
their
region.

 The
survey
asked
respondents
about
external
funders’
(i.e.
banks,
investors,
etc.)
familiarity
 with
the
wine
business
in
their
region
based
on
a
seven‐point
scale.
The
scale
ranged
from
one,
 funders
do
not
understand
management
practices
of
wineries
in
the
owner’s
region,
to
seven,
 funders
do
understand
the
management
practices
of
wineries
in
the
owner’s
region,
and
the
 average
score
among
the
93
respondents
was
2.84.
The
score
indicates
that
respondents
think
 external
funders
lack
an
understanding
of
the
management
practices
of
wineries
in
the
 emerging
wine
region.
Missouri
had
the
most
responses
(38
in
total)
to
the
question
and
the
 lowest
score
(2.11).
Of
the
27
New
York
responses,
the
average
score
was
3.37
and
Michigan
 with
30
responses
had
an
average
score
of
3.47.
Next,
the
survey
reveals
information
about
the
 respondent
and
their
motivations
to
enter
the
wine
business.


 Reason owners enter the wine business     The
survey
asked
winery
owners
to
select
the
main
reason
why
they
entered
the
wine
business.
 Respondents
could
only
select
one
option
from
the
following
seven
possible
reasons:
 opportunity
to
enter
family
business,
good
business
opportunity,
lifestyle
or
hobby
objectives,
 retirement
nest
egg,
passion
for
wine
and
food,
community
development
or
other
(in
which
 respondents
were
asked
to
specify).
The
most
popular
reason,
selected
by
23
percent
of
 participants
for
entering
the
wine
business
was
because
of
a
good
business
opportunity.
The
 
 71
 second
most
popular
reason
selected
by
21
percent
of
respondents
was
to
fulfill
lifestyle
or
 hobby
objectives.
The
third
reason,
selected
by
21
percent
of
respondents
was
because
of
a
 passion
for
wine
and
food.
Next,
17
percent
of
respondents
entered
the
wine
business
an
 opportunity
to
enter
a
family
business.
While
8
percent
entered
the
business
as
a
retirement
 nest
egg,
5
percent
for
community
development
reasons
and
4
percent
for
other
reasons,
 (N=113).

 The
top
three
reasons
for
entering
the
wine
business
vary
across
the
three
states.
In
Michigan,
 the
No.
1
reason
was
as
a
good
business
opportunity
(28
percent),
No.
2
was
because
of
a
 passion
for
wine
and
food
(21
percent)
and
No.
3
was
from
an
opportunity
to
enter
the
family
 business
(17
percent),
(N=40).
In
Missouri,
the
No.
1
reason
was
because
of
lifestyle
or
hobby
 objectives
(33
percent)
and
the
No.
2
and
3
reasons
had
the
same
amount
of
responses
were
 because
of
an
opportunity
to
enter
the
family
business
and
as
a
good
business
opportunity,
 (N=40).
New
York
and
Michigan
share
the
same
No.1
and
2
reasons
of
entering
as
a
good
 business
opportunity
(27
percent)
and
because
of
a
passion
for
wine
and
food
(24
percent)
but
 New
York’s
No.
3
reason
is
divided
between
an
opportunity
to
enter
the
family
business
(15
 percent)
and
for
lifestyle
or
hobby
objectives
(15
percent).
In
summary,
the
reasons
are
quite
 similar
across
the
states
with
the
only
significant
percentage
difference
in
the
reason
of
 entering
for
lifestyle
or
hobby
objectives.
Finally,
Missouri
has
the
highest
number
of
 respondents
that
selected
lifestyle
or
hobby
objectives
(33
percent)
follow
by
Michigan
and
 Missouri
(15
percent).
Below
shows
an
interesting
look
at
the
number
of
cases
wineries
 produce
based
on
the
reasons
the
owners
entered
the
wine
industry.

 
 72
 Number
of
Cases
in
Thousands
 Figure 13: Production and Reason for Entering the Industry  20
 18
 16
 14
 12
 10
 8
 6
 4
 2
 0
 Mean  Median
   Employees  On
average,
a
winery
in
the
emerging
wine
region
employs
three
full
time,
year
round
people,
 two
full
time,
seasonal
people
and
7
part
time
people,
(N=113).
However,
almost
half
of
the
 wineries
in
this
study
have
been
operating
for
less
than
five
years
and
49
percent
of
those
 wineries
do
not
employ
any
full
time,
year
round
help
(N=53).
Further,
for
wineries
that
are
less
 than
5
years
old,
the
range
of
the
number
of
employees
they
hire
doubles
for
the
full
time,
 seasonal
employees.
While
75.5
percent
of
these
owners
do
not
have
any
full
time,
seasonal
 employees,
17
percent
have
one
to
five
employees,
5.66
percent
have
six
to
10
employees
and
 finally
one
winery
has
20
employees,
(N=53).

Finally,
39.62
percent
of
the
wineries
that
are
less
 
 73
 than
5
years
old
hire
zero
part‐time
employees,
37.74
percent
hire
one
to
five
employees,
13.21
 percent
hire
6
to
10
employees
and
3.78
percent
hire
more
than
45
part‐time
employees,
 (N=53).

 Fifty‐three
percent
of
the
wineries
have
been
in
business
for
six
or
more
years
(N=60)
and
26.67
 percent
still
hire
zero
full
time,
year
round
employees.
However,
many
do
hire
full
time,
year
 round
employees:
55
percent
have
one
to
five
employees,
15
percent
hire
six
to
20
employees
 and
3.34
percent
hire
47
to
84
employees,
(N=60).

For
the
number
of
full
time,
seasonal
 employees,
61.67
percent
of
the
wineries
that
are
6
years
and
older
hire
zero
full
time,
seasonal
 employees,
30.02
percent
hire
one
to
10
employees
and
8.35
percent
hire
12
to
28
employees,
 (N=60).
Finally,
for
the
number
of
part‐time
employees,
15
percent
hire
zero,
35
percent
hire
 one
to
five
employees,
26.66
percent
hire
6
to
10
employees,
16.67
percent
hire
11
to
20
 employees,
3.34
percent
hire
23
to
30
employees
and
3.34
percent
hire
50
to
80
employees.

 Products and Services offered  The
survey
asked
winery
owners
to
check
all
of
the
following
products
and
services
their
winery
 offers,
tours,
a
restaurant,
a
tasting
room,
a
gift
shop,
food
products
and
whether
the
winery
 hosts
events
(i.e.
a
wedding).
All
but
one
of
the
113
wineries
surveyed
have
a
tasting
room.
The
 next
most
popular
product
or
service
is
having
a
gift
shop,
on
average
74
percent
of
the
 wineries
in
the
region
have
a
gift
shop,
66
percent
offer
tours
of
their
vineyard
or
winery,
65
 percent
offer
food
products,
65
percent
can
host
events
(i.e.
weddings,
receptions,
etc.)
and
25
 percent
of
the
wineries
have
a
restaurant,
(N=113).

 
 
 74
 Table 12: Products and Services Wineries Offer  Response  COMBINED  MICHIGAN  MISSOURI  NEW YORK  Winery/Vineyard
 66.4%
 Tours
 52.5%
 75.0%
 72.7%
 Restaurant
 24.8%
 19.1%
 31.9%
 18.2%
 Tasting
room
 99.1%
 100.0%
 100.0%
 97.0%
 Gift
Shop
 74.3%
 72.5%
 77.5%
 72.7%
 Food
products
 64.6%
 65.0%
 72.5%
 54.5%
 Hosts
winery
 events

 64.6%
 52.5%
 82.5%
 57.6%
   When
comparing
the
differences
among
the
states,
the
most
significant
difference
is
between
 whether
wineries
host
events.
In
Missouri,
82.5
percent
of
wineries
host
events
whereas
only
 57.6
percent
of
New
York
wineries
host
events
and
only
52.5
percent
of
Michigan
wineries,
 (N=113).
The
second
largest
difference
in
among
the
wineries
that
offer
winery
or
vineyard
 tours.
In
Missouri
75
percent
of
wineries
offer
tours
and
72.7
percent
of
New
York
wineries
 offer
tours
as
well
but
only
52.5
percent
of
Michigan
wineries
offer
tours,
(N=113).
Finally,
the
 third
most
notable
difference
among
the
states
is
the
wineries
that
offer
food
products.
The
 number
of
wineries
that
offer
food
products
varies
from
only
54.6
percent
of
New
York
 wineries
offering
food
products
to
65
percent
of
Michigan
wineries
and
72.5
percent
of
 Missouri
wineries
that
offer
food
products,
(N=113).

 Industry certifications  
 75
 The
survey
asks
respondents
if
their
winery
or
vineyards
has
obtained
any
industry
 certifications
(i.e.
sustainable,
organic,
etc.).
Interestingly,
zero
wineries
in
Missouri
have
 obtained
winery
or
vineyard
certification,
(N=40).
In
Michigan,
25
percent
of
wineries
and
 vineyards
have
certifications,
(N=40).
And,
12.12
percent
of
New
York
wineries
and
vineyards
 have
certifications,
(N=33).

 Awards  Table 13: Awards Won by Wineries in the Emerging Wine Region  Response  COMBINED  MICHIGAN  MISSOURI  NEW YORK  Wine
 competitions
 68.1%
 75.0%
 62.5%
 63.6%
 Trade
press
 38.9%
 45.0%
 22.5%
 51.5%
 Other
sources
 37.2%
 47.5%
 27.5%
 36.4%
 
 Almost
70
percent
(68.14
percent)
of
the
wineries
in
the
emerging
wine
region
have
won
an
 award
at
a
wine
competition.
Seventy‐seven
wineries
in
total
have
received
awards:
75
percent
 of
the
Michigan
wineries,
65
percent
of
the
Missouri
wineries
and
63.64
percent
of
New
York
 wineries,
(N=113).
Less
than
half
(38.94
percent)
of
the
wineries
won
trade
press
awards,
 (N=113).
Among
the
states,
were
quite
different,
51.52
percent
of
New
York
wineries,
45
 percent
of
Michigan
wineries
and
22.50
percent
of
Missouri
wineries,
(N=133).
In
total,
37.17
 percent
of
the
wineries
received
an
award
from
some
“other”
source:
47.50
of
Michigan
 wineries,
36.36
percent
of
New
York
wineries
and
27.50
of
Missouri
wineries
all
received
some
 type
of
“other”
award,
(N=113).

 
 76
 Respondents’ satisfaction with winery’s current performance  The
survey
asked
respondents
about
their
level
of
satisfaction
with
the
current
performance
of
 their
winery
based
on
a
five‐point
Likert
scale
ranging
from
very
unsatisfied
to
very
satisfied.
 Across
all
three
states,
46.9
percent
of
winery
owners
were
generally
“satisfied"
with
the
 performance
of
their
winery
(N=113).
Missouri
had
the
greatest
number
of
winery
owners,
55
 percent,
that
were
“satisfied”
with
their
winery’s
current
performance
(N=40).
However,
52.5
 percent
of
Michigan
winery
owners
describe
being
“very
satisfied”
with
the
current
 performance
of
their
winery
(N=40).

 Overall,
analyzing
the
results
across
the
state,
Michigan
has
the
highest
number
of
owners
that
 are
satisfied
or
very
satisfied,
87.2
percent,
(N=39).
Zero
respondents
expressed
being
“very
 unsatisfied”
with
their
winery’s
performance,
however;
New
York
wineries
had
the
highest
 number
of
respondents
who
were
“neither
satisfied
or
unsatisfied”
(15.6
percent)
or
 “unsatisfied”
(9.4
percent)
with
their
winery’s
performance
(N=32).

Finally,
Missouri
and
New
 York
are
most
similar
among
the
states,
with
the
majority
of
the
respondents
being
“satisfied”
 with
their
winery’s
current
performance.

 WINERY OWNER  The
average
winery
owner
is
52
years
old.
About
half
(45.5
percent)
have
a
bachelor’s
degree
in
 addition
to
years
of
experience
in
business,
the
wine
industry
and
grape
production.
Of
the
31
 New
York
respondents,
more
than
half
(55
percent)
have
one
or
more
graduate
degrees,
this
 was
higher
than
Michigan
(21
percent)
and
Missouri
(33
percent),
(N=113).
The
average
winery
 owner
has
21.2
years
of
experience
in
business,
12.5
years
of
experience
in
the
wine
industry
 
 77
 and
11.2
years
of
experience
in
grape
production.
About
one
in
every
eight
winery
owners
has
a
 certificate
in
winemaking
or
viticulture.
The
average
owner
invested
44.6
percent
of
their
net
 worth
into
the
winery,
and
spends
about
three‐fourths
of
their
time
working
at
the
winery
 conducting
activities
related
to
the
business
like
planning
or
working
in
the
tasting
room.


 Table 14: Demographics of Winery Owners in the Emerging Wine Region by State  Response  COMBINED  MICHIGAN  MISSOURI  NEW YORK  Age
(years)
 52
 51
 52
 52
 Education
level
(Bachelor’s
degree
 or
higher)
 81.3%
 72.5%
 89.7%
 81.8%
 Certified
in
winemaking
or
 viticulture
 16.1%
 10.0%
 15.4%
 24.2%
 Wine
industry
experience
(years)
 12.7
 12.8
 12.2
 13.2
 Grape
production
experience
 (years)
 11.2
 13.5
 11.5
 8.3
 Business
experience
(years)
 21.5
 21.2
 21.7
 21.5
 Time
spent
at
winery
(%)
 77.28%
 76.3%
 75.8%
 80.3%
 Net
worth
invested
in
winery
(%)
 45.4%
 38.0%
 42.8%
 57.0%
 
 Membership  Belonging
to
a
local
or
regional
chamber
of
commerce
is
popular
among
respondents
with
90
 owners
acknowledging
their
membership.
Michigan
had
the
highest
membership
among
 owners
in
belonging
to
a
chamber
of
commerce
(85
percent),
followed
by
Missouri
(72.50
 percent),
and
New
York
(81.82
percent).

 
 78
 The
survey
asked
owners
if
they
are
a
member
of
a
wine
trade
association
(board
or
council).
 Membership
proved
high
again
with
86
owners
acknowledging
their
membership
to
a
wine
 trade
association.
In
New
York,
85
percent
of
the
owners
are
members
of
a
wine
association
 (N=33),
in
Michigan
80
percent
of
the
owners
are
members
(N=40)
and
65
percent
of
Missouri
 owners
belong
to
a
wine
association
(N=40).

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 79
 Bivariate Results      This
chapter
includes
the
results
of
the
bivariate
tests
including
Pearson
correlations,
 independent,
two
sample
t‐tests
and
chi‐square
tests.
These
tests
were
chosen
based
on
the
 type
of
data
being
analyzed,
which
included
continuous,
binary
and
categorical
data.
Before
 running
a
t‐test,
the
data
was
checked
for
equal
variances,
and
if
needed
corrected
using
a
 robust
f‐test.
Through
running
a
Pearson
correlation,
we
learned
if
a
statistically
significant
 relationship
exists
between
the
variables
and
how
strongly
the
variables
are
related.
By
running
 an
independent,
two
sample
t‐test
we
were
able
to
see
if
the
population
of
the
means
of
the
 two
samples
were
statistically
significant
and
how
the
two
groups
varied.

In
an
independent
 two‐sample
t‐test
the
variances
are
assumed
to
be
equal
and
when
detected
that
they
were
 not,
Welch’s
test
was
used
to
correct
for
the
violated
assumption.
Finally,
a
chi‐square
test
was
 used
to
determine
if
the
observed
observations
are
independent
and
how
likely
that
the
 observed
distribution
is
due
to
chance.

   Relationship
1:
The
relationship
between
the
number
of
cases
and
the
number
of
years
a
 winery
has
been
commercially
producing
wine
will
both
have
a
strong,
positive
correlation
with
 all
eight
legitimacy
indicators.   Wine production    
 80
 Table 15: Correlation Values of Legitimacy Variables with the Average Number of Cases  Wineries in the Region Produced in 2011  Variable  Full‐time,
year
round
employees
 Full‐time,
seasonal
employees
 Percent
of
wine
volume
sold
through
a
liquor
store
 Percent
of
wine
sold
to
a
restaurant

 Percent
sold
through
a
distributor
 Arrangement
with
a
tour
bus
company
 Received
external
funding
 Large
trading
network

   Covariance  0.6615***
 0.2903***
 ‐0.1292
 ‐0.0781
 0.7085***
 0.2492***
 0.2114***
 0.1313
   A
strong,
positive
correlation
exists
between
the
number
of
cases
a
winery
produced
in
2011
 and
the
number
of
full‐time,
year
round
employees
the
firm
employs,
(r=0.6615,
p=0.0000)
and
 the
percent
of
wine
volume
the
firm
sells
through
distributors,
(r=0.7085,
p=0.0000).
This
 means,
the
more
cases
of
wine
a
winery
produces
is
related
to
an
increase
in
the
number
of
 full‐time,
year
round
employees
a
winery
employs.
Further,
as
expected
the
more
cases
a
 winery
produces
is
related
to
selling
a
greater
percent
of
the
firm’s
total
wine
volume
sales
 through
distributors.

 A
weak,
positive
correlation
exists
between
the
number
of
cases
a
winery
produces
and
the
 number
of
full‐time,
seasonal
employees
a
winery
employs
(r=0.2903,
p=0.0021),
whether
they
 have
an
arrangement
with
a
tour
bus
company
(r=0.2903,
p=0.0090)
and
have
obtained
 external
financing
(r=0.2114,
p=0.0266).
A
winery
that
produces
more
cases
of
wine
is
 associated
with
a
greater
number
of
full‐time,
seasonal
employees.
Whether
a
winery
has
an
 arrangement
with
a
tour
bus
company
is
associated
with
an
increase
in
the
number
of
cases
 
 81
 produced.
Finally,
an
association
exists
between
an
increase
in
wine
production
and
the
 wineries
that
have
external
funding.

 Table 16: Correlation Results with the Number of Years a Firm has Commercially Produced  Wine  Variable  Full‐time,
year
round
employees
 Full‐time,
seasonal
employees
 Percent
of
wine
volume
sold
through
a
liquor
store
 Percent
of
wine
sold
to
a
restaurant

 Percent
sold
through
a
distributor
 Arrangement
with
a
tour
bus
company
 Received
external
funding
 Large
trading
network

 Covariance  0.6304***
 0.2866***
 ‐0.0424
 ‐0.1275
 0.5001***
 0.1773*
 0.1338
 0.0514
   A
strong,
positive
correlation
exists
between
the
number
of
years
a
winery
has
been
 commercially
producing
wine
and
the
number
of
full‐time,
year
round
employees
the
firm
 employs,
(r=0.6304,
p=0.0000)
and
the
percent
of
wine
volume
the
firm
sells
through
 distributors,
(r=0.5001,
p=0.0000).
This
means,
the
longer
a
winery
has
been
producing,
or
an
 older
winery,
is
related
to
employing
more
full‐time,
year
round
employees
than
a
young
or
 newly
established
winery.
Further,
while
both
findings
were
expected,
the
second
strong
 correlation
states
that
again
an
older
winery
is
correlated
with
selling
a
higher
percentage
of
its
 total
wine
volume
through
distributors.    Next,
two
weak,
positive
correlations
exist
between
the
age
of
a
winery
and
the
number
of
full‐ time,
seasonal
employees
a
winery
hires
and
having
an
arrangement
with
a
tour
bus
company.
 The
more
years
a
winery
has
been
producing
correlates
with
an
increasing
number
of
full‐time,
 
 82
 seasonal
employees,
(r=0.2866,
p=o.0021).
Second,
the
more
years
a
winery
has
been
 producing
correlates
with
the
winery
having
an
arrangement
with
a
tour
bus
company,
 (r=01773,
p=0.0615).
Surprisingly,
a
correlation
was
not
found
between
the
number
of
years
a
 winery
has
been
commercially
producing
wine
and
receiving
external
funding,
we
anticipated
 seeing
a
strong,
positive
correlation
between
the
two
variables.
 Relationship
2:
Human
capital
has
a
strong,
positive
correlation
to
the
eight
legitimacy
 indicators.

 Employees  Full‐time, year round  Table 17: Correlation Results of the Average Number of Full‐time, Year Round Employees   Variable  Full‐time,
seasonal
employees
 Percent
of
wine
volume
sold
through
a
liquor
store
 Percent
of
wine
sold
to
a
restaurant

 Percent
sold
through
a
distributor
 Arrangement
with
a
tour
bus
company
 Received
external
funding
 Large
trading
network

 Covariance  0.3261**
 ‐0.1192
 ‐0.0516
 0.4291***
 0.2276**
 0.2014**
 0.0957
 
 A
moderate
to
strong,
positive
correlation
exists
between
the
number
of
full‐time,
year
round
 employees
a
winery
hires
and
the
percent
of
the
firm’s
wine
volume
that
it
sells
through
 distributors
(r=0.4291,
p=0.0000).
Another
moderate,
positive
correlation
exists
between
the
 number
of
full‐time,
year
round
employees
working
at
a
winery
and
the
number
of
full‐time,
 seasonal
employees
working
at
a
winery
(r=0.321,
p=0.0021).
Overall,
the
more
full‐time,
year
 round
employees
a
winery
employs
is
correlated
with
increases
in
the
percent
of
a
winery’s
 
 83
 wine
volume
sold
through
distributors
as
well
as
the
number
of
full‐time,
seasonal
employees
a
 winery
employs.

 A
weak,
positive
correlation
exists
between
the
number
of
full‐time,
year
round
employees
and
 whether
a
winery
has
an
arrangement
with
a
tour
bus
company
(r=0.2276,
p=0.0158).
This
 means
a
correlation
exists
between
increases
in
the
number
of
full‐time,
year
round
employees
 a
winery
hires
and
a
winery
having
an
established
arrangement
with
a
tour
bus
company.

 A
weak,
positive
correlation
exists
between
the
number
of
full‐time,
year
round
employees
a
 winery
employs
and
whether
the
winery
receives
external
funding
(r=0.2013,
p=0.0324).
 Therefore,
when
a
winery
hires
more
full‐time,
year
round
employees
a
correlation
exists
with
 an
increase
in
the
winery
receiving
external
funding.

 Full‐time, seasonal employees  Table 18: Correlation Results of the Average Number of Full‐time, Seasonal Employees  Variable  Full‐time,
year
round
employees
 Percent
of
wine
volume
sold
through
a
liquor
store
 Percent
of
wine
sold
to
a
restaurant

 Percent
sold
through
a
distributor
 Arrangement
with
a
tour
bus
company
 Received
external
funding
 Large
trading
network

 Covariance  0.3261***
 ‐0.1595*
 ‐0.0275
 0.3833***
 0.2799***
 0.2760***
 0.0000
 
 A
moderate,
positive
correlation
exists
between
the
number
of
full‐time,
seasonal
employees
a
 winery
employs
and
the
percent
of
wine
volume
sales
sold
through
distributors
(r=0.3833,
 p=0.0000).
Increases
in
the
number
of
full‐time,
seasonal
employees
a
winery
has
correlate
 with
increases
in
the
percent
of
a
winery’s
total
sales
volume
sold
through
distributors.
Another
 
 84
 moderate,
positive
correlation
exists
between
the
number
of
full‐time,
seasonal
employees
a
 winery
employs
and
the
number
of
full‐time,
year
round
employees
a
winery
has
(r=0.3261,
 p=0.0004).
Therefore,
an
increase
in
the
number
of
full‐time,
seasonal
employees
a
winery
has
 is
correlated
with
increases
in
the
number
of
full‐time,
year
round
employees
a
winery
has.

 
 A
weak,
positive
correlation
exists
between
the
number
of
full‐time,
seasonal
employees
and
 whether
a
winery
has
established
an
arrangement
with
a
tour
bus
company
(r=0.2799,
 p=0.0028).
Therefore,
an
increase
in
the
number
of
full‐time,
seasonal
employees
is
correlated
 with
wineries
that
have
an
arrangement
with
a
tour
bus
company.

 A
weak,
positive
correlation
exists
between
the
number
of
full‐time,
seasonal
employees
a
 winery
employs
and
whether
the
winery
obtains
external
funding
(r=0.2760,
p=0.0031).
So,
 having
external
funding
is
associated
with
an
increasing
number
of
full‐time,
seasonal
 employees.
 A
weak,
negative
correlation
exists
between
the
number
of
full‐time,
seasonal
employees
a
 winery
employs
and
the
percent
of
a
winery’s
total
wine
volume
sales
sold
direct
to
a
liquor
 store
(r=‐0.1595,
p=0.0960).
Therefore,
wineries
with
fewer
full‐time,
seasonal
employees
is
 associated
with
wineries
that
have
sell
a
greater
percentage
of
their
total
wine
volume
direct
to
 a
liquor
store.
However,
since
this
relationship
is
negative,
the
relationship
also
finds
a
 correlation
between
a
winery
increasing
numbers
of
full‐time,
seasonal
employees
and
a
lower
 percentage
of
wine
volume
selling
directly
through
a
liquor
store.
 Part‐time employees  
 85
 Table 19: Correlation Results of the Average Number of Part‐time Employees  Variable  Full‐time,
year
round
employees
 Full‐time,
seasonal
employees
 Percent
of
wine
volume
sold
through
a
liquor
store
 Percent
of
wine
sold
to
a
restaurant

 Percent
sold
through
a
distributor
 Arrangement
with
a
tour
bus
company
 Received
external
funding
 Large
trading
network

 Covariance  0.6363***
 0.3402***
 ‐0.1229
 ‐0.066
 0.3656***
 0.3286***
 0.2526***
 ‐0.033
 
 A
strong,
positive
correlation
exists
between
the
number
of
part‐time
employees
a
winery
 employs
and
the
number
of
full‐time,
year
round
employees
a
winery
employs
(r=0.6363,
 p=0.0000).
Therefore
an
increasing
number
of
full‐time,
year
round
employees
is
associated
 with
an
increase
in
the
number
of
part‐time
employees.

 
 A
moderate,
positive
correlation
exists
among
the
number
of
part‐time
employees
a
winery
has
 and
three
variables,
the
number
of
full‐time,
seasonal
employees
a
winery
has
(r=0.3402,
 p=0.0002),
the
percent
of
wine
volume
sales
sold
through
distributors
(r=0.3656,
p=0.0001)
and
 whether
a
winery
has
an
arrangement
with
a
tour
bus
company
(r=0.3286,
p=0.0004).
As
the
 number
of
part‐time
employees
increases
a
correlation
exists
between
an
increasing
number
of
 full‐time,
seasonal
employees
a
winery
employs.
Second,
a
correlation
exists
between
a
winery
 increasing
the
number
of
part‐time
employees
and
an
increasing
percent
in
the
total
wine
 volume
sales
sold
through
distributors.
Third,
having
an
arrangement
with
a
tour
bus
company
 is
associated
with
an
increasing
number
of
part‐time
employees.
Again
these
findings
are
 
 86
 correlations;
therefore
the
two
variables
are
not
affecting
each
other
but
more
simply
showing
 that
they
are
related.
 A
weak,
positive
relationship
exists
between
the
number
of
part‐time
employees
a
winery
has
 and
whether
the
winery
has
external
funding
(r=0.2526,
p=0.0070).
Since
the
point‐biserial
 value
is
weak
yet
positive,
this
suggests
that
wineries
who
received
external
funding
are
 associated
with
having
more
part‐time
employees.


 Prior experience of firm owner  Table 20: Correlation Results of the Average Number of Years of Experience Owner has in the  Wine Industry, Grape Production and Business  Variable  Wine  industry  Covariance  Grape  production  Business  Full‐time,
year
round
employees
 Full‐time,
seasonal
employees
 Percent
of
wine
volume
sold
through
a
liquor
store
 Percent
of
wine
sold
to
a
restaurant
 Percent
sold
through
a
distributor
 Arrangement
with
a
tour
bus
company
 Received
external
funding
 Large
trading
network
 0.3604***
 0.2263**

 0.1037
 0.0931
 0.2437**
 0.0351
 ‐0.0019
 ‐0.0422
 
0.4195***
 0.2221**
 ‐0.0813
 ‐0.0777
 
0.3286***
 0.0156
 0.0312
 ‐0.1042
 0.1753*


 0.023
 ‐0.21423**


 ‐0.0757
 ‐0.0489
 0.1182
 ‐0.0699
 ‐0.0115
 Note:
***=
significantly
different
at
the
1%
significance
level
 












**=
significantly
different
at
the
5%
significance
level
 














*=
significantly
different
at
the
10%
significance
level
   Wine industry experience  
 87
 
 Winery
owners
were
asked
how
many
years
of
experience
they
have
in
the
wine
industry,
in
 grape
production
and
in
business
in
general.
The
number
of
years
of
experience
an
owner
has
 in
the
wine
industry
shared
a
moderate,
positive
relationship
to
the
number
of
full‐time,
year
 round
employees
a
winery
employs
(r=0.3604,
p=0.0001).
Therefore,
a
winery
owner
that
has
 more
experience
in
the
wine
industry
correlates
with
a
winery
having
more
full‐time,
year
 round
employees.
The
second
and
third
correlations
show
winery
owners
with
again
more
wine
 industry
experience
are
associated
with
wineries
that
have
a
greater
percentage
of
their
wine
 volume
sold
through
a
distributor
(r=0.2436,
p=0.0110)
as
well
as
a
greater
number
of
full‐time,
 seasonal
employees
(r=0.2263,
p=0.0169).

 Business experience  Next,
two
correlations
were
found
between
the
number
of
years
in
business
a
winery
owner
 has
and
the
percent
of
wine
volume
a
winery
sells
direct
to
a
liquor
store
(r=‐0.2142,
p=0.0283)
 and
the
number
of
full‐time,
year
round
employees
a
winery
employs
(r=0.1753,
p=0.0709).
 This
weak,
negative
correlation
suggests
that
winery
owners
with
less
business
experience
are
 associated
with
wineries
that
distribute
a
greater
percentage
of
their
wine
volume
direct
to
a
 liquor
store.
Further,
the
second
correlations
suggests
wineries
with
owners
who
have
more
 business
experience
are
related
to
wineries
that
also
have
a
greater
number
of
full‐time,
year
 round
employees.
This
could
mean
that
the
owner
understands
the
business
aspect
of
the
 winery
but
hires
others
who
have
more
experience
in
viticulture
and
enology
that
can
help
run
 those
aspects
of
the
winery.

 Grape production experience  
 88
 Correlations
show
that
wineries
whose
owners
who
have
more
years
of
experience
in
grape
 production
are
associated
with
wineries
that
have
increasing
numbers
of
full‐time
employees
 (both
year
round
and
seasonal),
as
well
as
the
wineries
with
a
high
percentage
of
their
total
 wine
volume
being
sold
through
distributors.
A
moderate
to
strong,
positive
correlation
exists
 between
wineries
with
owners
who
have
a
significant
number
of
years
experience
in
grape
 production
and
those
wineries
that
employ
an
increasing
number
of
full‐time,
year
round
 employees
(r=0.4195,
p=0.0000).
Next,
a
moderate,
positive
correlation
exists
with
a
winery’s
 owner
with
increasing
experience
in
grape
production
and
wineries
that
sell
an
increasing
 percent
of
their
total
wine
volume
through
distributors
(r=0.3286,
p=0.0007).
Finally,
a
weak,
 positive
relationship
exists
between
the
owner’s
grape
production
experience
and
wineries
that
 employ
an
increasing
number
of
full‐time,
seasonal
employees
(r=0.2221,
p=0.0228).

 Relationship
3:
The
relationships
vary
among
the
percent
of
production
from
certain
grapes
(i.e.
 Vinifera
vitis,
hybrid,
native
American
or
other),
the
main
inputs
used
to
produce
the
wine,
the
 bottling
styles
used
by
wineries
and
the
strategy
used
to
procure
grapes.

 Type of grape  Vinifera vitis  Table 21: Correlation Results of Percent of a Firm’s Total Wine Production Made from  Vinifera Grapes  Variable  Full‐time,
year
round
employees
 Full‐time,
seasonal
employees
 Percent
of
wine
volume
sold
through
a
liquor
store
 Percent
of
wine
sold
to
a
restaurant

 
 89
 Covariance  ‐0.0021
 0.2377**
 ‐0.1952**
 0.0528
 Table 21 (Cont’d):   Percent
sold
through
a
distributor
 Arrangement
with
a
tour
bus
company
 Received
external
funding
 Large
trading
network

   0.3514***
 0.3806***
 0.2263**
 ‐0.0066
   Moderate,
positive
correlations
exist
between
the
wineries
with
higher
percentages
of
total
 wine
production
being
made
from
vinifera
grapes
and
whether
a
winery
has
an
arrangement
 with
a
tour
bus
company
(r=0.3806,
p=0.0004)
and
the
percent
of
wine
volume
sold
through
 distributors
(r=0.3512,
p=0.0002).
A
relationship
exists
between
a
winery
that
has
an
 arrangement
with
a
tour
bus
company
and
an
increasing
percentage
of
its
total
wine
 production
made
from
vinifera
grapes.
Next,
an
increasing
percent
of
a
winery’s
total
sales
 volume
sold
through
distributors
is
related
to
an
increasing
percentage
of
vinifera
grapes
that
a
 winery
uses
to
produce
its
wine.

 A
weak,
positive
correlation
exists
between
the
percent
of
vinifera
grapes
used
and
the
number
 of
full‐time,
year
seasonal
employees
a
winery
has
(r=0.2377,
p=0.0112)
and
whether
the
 winery
has
financing
(r=0.2263,
p=0.0159).
Therefore,
a
relationship
exists
between
an
increase
 in
the
percent
of
vinifera
grapes
used
and
an
increasing
number
of
full‐time,
seasonal
workers
a
 winery
employs.
Second,
wineries
that
have
external
funding
are
associated
with
having
a
 higher
percentage
of
their
wine
made
from
vinifera
grapes.
We
anticipated
seeing
a
positive,
 moderate
to
strong
correlation
develop
between
wineries
that
use
a
high
percentage
of
vinifera
 grapes
and
those
wineries
that
have
external
funding
since
vinifera
grapes
are
well
known
(i.e.
 merlot,
cabernet
franc,

chardonnay,
etc.).

 
 90
 Finally,
a
weak,
negative
correlation
exists
between
the
percent
of
vinifera
grapes
used
in
 production
and
the
percent
of
total
wine
sales
sold
at
a
liquor
store
(r=‐0.1952,
p<0.0410).
This
 inverse
relationship
indicates
that
wineries
that
use
a
low
percentage
of
vinifera
grapes
to
 produce
their
wine
are
associated
with
sell
more
wine
direct
to
liquor
stores.

 Hybrid grapes  Table 22: Correlation Results of a Percent of a Firm’s Total Wine Production with Hybrid  Grapes  Variable  Full‐time,
year
round
employees
 Full‐time,
seasonal
employees
 Percent
of
wine
volume
sold
through
a
liquor
store
 Percent
of
wine
sold
to
a
restaurant

 Percent
sold
through
a
distributor
 Arrangement
with
a
tour
bus
company
 Received
external
funding
 Large
trading
network

 Covariance  ‐0.0376
 ‐0.0576
 0.0373
 0.0518
 ‐0.1967**
 ‐0.3120***
 ‐0.0993
 ‐0.0145
 
 One
moderate,
negative
correlation
exists
between
the
percent
of
hybrid
grapes
a
winery
uses
 in
its
total
wine
production
and
whether
the
winery
has
obtained
external
funding
(r=‐.3120,
 p=0.000).
Therefore,
the
firms
that
have
external
funding
are
associated
with
having
a
lower
 percentage
of
their
wine
production
from
hybrid
grapes.
 A
weak,
negative
correlation
exists
between
the
percent
of
hybrid
grapes
a
winery
uses
and
the
 percent
of
wine
volume
sold
through
distributors
(r=‐0.1967,
p=0.0395).
Therefore,
using
less
 hybrid
grapes
is
associated
with
selling
more
wine
through
distributors.
 Native American  
 91
 Table 23: Correlation Results of a Percent of a Firm’s Total Wine Production Made with native  American Grapes  Variable  Full‐time,
year
round
employees
 Full‐time,
seasonal
employees
 Percent
of
wine
volume
sold
through
a
liquor
store
 Percent
of
wine
sold
to
a
restaurant

 Percent
sold
through
a
distributor
 Arrangement
with
a
tour
bus
company
 Received
external
funding
 Large
trading
network

 Covariance  ‐0.0677
 ‐0.1405
 ‐0.0636
 ‐0.0845
 ‐0.1222
 0.0546
 0.0201
 0.0166
   Other  Winery
owners
were
asked
about
the
percent
of
their
total
wine
production
that
was
made
 from
vinifera
grapes,
hybrid
grapes,
native
American
grapes
or
other.
No
significant
correlations
 were
found
among
“other”
and
the
eight
variables
of
interest.
This
is
surprising,
we
anticipated
 finding
a
strong,
negative
relationship
among
wineries
with
high
percentages
of
“other”
and
all
 three
distribution
channels
tested
as
well
as
in
whether
the
winery
had
external
funding.

 Inputs used to produce wine  Grapes  Table 24: Correlation Results of the Percent of Firm that use Grapes as Main Input in Wine  Variable  Full‐time,
year
round
employees

 Full‐time,
seasonal
employees

 Percent
of
wine
volume
sold
through
a
liquor
store
 Percent
of
wine
sold
to
a
restaurant

 Percent
sold
through
a
distributor
 
 
 Mean  3.804**
 2.298969***
 7.023404
 1.911702
 8.017021***
 
 92
 Three
of
the
eight
variables
of
interest
are
significantly
related
to
the
wineries
that
use
grapes
 as
the
main
input
in
their
wine.
A
two‐sample,
independent
t‐test
showed
that
the
wineries
 who
use
grapes
as
its
main
input
in
producing
their
wine
employ
more
full‐time,
year
round
 employees
(M=3.804,
SD=10.1156)
than
those
that
do
not
use
grapes
as
the
main
input
in
 producing
their
wine
(M=1.2,
SD=1.4736),
t(109.957)=‐2.3776.
Secondly,
wineries
that
use
 grapes
as
the
main
input
in
their
wine
also
employ
more
full‐time,
seasonal
employees
(M=
 2.298969,
SD=
5.148149)
than
those
that
do
not
use
grapes
as
their
main
input
(M=.3333,
 SD=1.046536),
t(103.488)=‐3.3405,
p=0.0012.
And
third,
those
wineries
that
consider
grapes
 the
main
input
in
their
wine
are
associated
with
selling
more
wine
through
distributors
 (M=8.017021,
p=0.0001)
than
the
wineries
make
use
grape
juice,
bulk
wine
or
other
as
their
 main
input
(M=0.6666667,
p=0.0001).

 Grape juice  Table 25: Correlation Results of the Percent of Firm that use Grape Juice as Main Input in  Wine  Variable  Full‐time,
year
round
employees

 Full‐time,
seasonal
employees

 Percent
of
wine
volume
sold
through
a
liquor
store
 Percent
of
wine
sold
to
a
restaurant

 Percent
sold
through
a
distributor
 Mean  1.742857*
 1.485714
 8.58
 2.485714
 9.571429
   The
only
significant
relationship
that
exists
shows
that
wineries
who
use
a
grape
juice
as
their
 main
input
and
associated
with
hiring
more
full‐time,
year
round
employees
(M=1.742857,
 
 93
 SD=3.58381)
than
those
that
do
not
use
grape
juice
as
their
main
input
(M=4.33766,
 SD=11.09516),
t(102.788)=1.7766,
p=0.0786.

 Bulk wine  Table 26: Correlation Results of the Percent of Firm that use Bulk Wine as Main Input in Wine   Variable  Full‐time,
year
round
employees

 Full‐time,
seasonal
employees

 Percent
of
wine
volume
sold
through
a
liquor
store
 Percent
of
wine
sold
to
a
restaurant

 Percent
sold
through
a
distributor
 Mean  3.375
 2.833333
 7.583333
 
2.416667



 15.16667*
   A
two‐sample,
independent
t‐tests
revealed
that
wineries
that
use
bulk
wine
as
the
main
input
 or
ingredient
to
produce
their
wine
are
only
related
to
one
variable.
Wineries
that
use
bulk
 wine
as
the
main
input
are
associated
with
selling
a
higher
percentage
of
their
total
wine
 volume
through
distributors
than
those
that
do
not
use
bulk
wine
as
the
main
input
 (M=4.701176,
SD=11.17848),
t(25.6989)=‐2.0131,
p=0.0547.
However,
wineries
that
use
grapes
 as
their
main
input
showed
a
stronger
correlation
than
the
wineries
that
use
bulk
wine
as
the
 main
input
in
relation
to
a
high
percentage
of
wine
being
sold
through
distributors.

 Other  Table 27: Correlation Results of the Percent of Firm that use Other as Main Input in Wine  Variable  Full‐time,
year
round
employees
 Full‐time,
seasonal
employees
 Percent
of
wine
volume
sold
through
a
liquor
store
 Percent
of
wine
sold
to
a
restaurant
 Percent
sold
through
a
distributor
   
 94
 Mean  4.853659
 1.878049
 10.1
 1.8375
 7.3925
 Wineries
were
asked
what
was
the
main
input
used
to
produce
their
wine,
those
that
selected
 “other”
listed
juice
(not
including
grape
juice),
grape
concentrate,
apple
cider,
honey,
cherries,
 apples,
berries,
black
currant,
pecans,
pumpkin,
peaches
and
other
fruits.
A
two‐sample,
 independent
t‐test
showed
that
the
wineries
who
selected
“other”
as
the
main
input
used
to
 produce
wine
and
associated
with
having
a
large
trading
network
(M=0.625,
SD=0.4903)
than
 those
wineries
that
do
not
use
“other”
as
the
main
input
when
producing
their
wine
 (M=0.4225,
SD=0.4975),
t(81.994)=‐2.0778,
p=0.0409.
None
of
the
other
seven
variables
of
 interest
were
significantly
related
to
those
wineries
that
use
“other”
as
their
main
input.

 
 A
chi‐square
test
found
a
moderately
strong,
positive
correlation
between
those
wineries
that
 said
“other”
was
the
main
input
their
winery
used
to
produce
wine
and
wineries
that
have
a
 large
trading
network.

 Table 28: Contingency Table Between Using “Other” as a Main Input and Wineries having a  Large Trading Network     Large Trading  Network  No
 Yes
 Total  Other as main  input  No
 Yes
 41
 30
 71
 15
 25
 40
 Total  56
 55
 111
 
 A
significant
correlation
exists
between
whether
the
winery
uses
“other”
as
their
main
input
 and
whether
the
winery
has
a
large
trading
network,
chi‐square(1,N=111)=4.1956,
p=0.041.

 
 95
 Relationship
4:
Wineries
that
procure
their
grapes
from
their
own
estate
or
through
a
written
 contract
will
have
a
strong,
positive
correlation
with
the
eight
legitimacy
indicators.
 Procuring grapes  The
survey
asked
winery
owners
to
sum
the
percentage
of
their
grapes
that
they
procure
 through
their
own
vineyards
(estate
grown),
acquire
in
a
spot
or
cash
market,
procure
through
 a
verbal
(handshake)
contract
or
through
a
written
contract.
Correlations
were
run
with
the
 eight
variables
of
interest
and
these
four
procurement
strategies.
Only
six
significant
 correlations
were
found
between
all
the
correlations.
Below
is
a
table
representing
the
 correlations
between
the
percent
of
grapes
firms
in
the
emerging
wine
region
procure
through
 the
different
types
of
contract
options:

 Table 29: Correlation Results of Different Procurement Strategies Firms Use   Variable  Full‐time,
year
round
employees
 Full‐time,
seasonal
employees
 Percent
of
wine
volume
sold
 through
a
liquor
store
 Percent
of
wine
sold
to
a
 restaurant
 Percent
sold
through
a
distributor
 Arrangement
with
a
tour
bus
 company
 Received
external
funding
 Large
trading
network
 
 Covariance  Spot/cash  Verbal  Estate grown  market  (handshake)  ‐0.0361
 ‐0.049
 ‐0.0584
 0.005
 ‐0.0455
 ‐0.0967
 Written  Contract  0.2060**
 0.2146**
 ‐0.1159
 0.0342
 ‐0.0224
 ‐0.0385
 ‐0.0836
 
0.2328**

 ‐0.07
 ‐0.0438
 ‐0.0264
 0.0475
 0.2674***
 ‐0.1205
 0.047
 
‐0.3286***

 0.0663
 ‐0.0527
 0.073
 0.096
 0.0809
 0.148
 96
 0.1081
 0.0926
 ‐0.0126
 

0.2149**


 Table 29 (Cont’d):   Note:
***=
significantly
different
at
the
1%
significance
level
 










**=
significantly
different
at
the
5%
significance
level
 












*=
significantly
different
at
the
10%
significance
level
 
 
 Estate grown  A
moderate,
negative
correlation
was
found
between
the
percent
of
grapes
procured
through
a
 winery’s
own
vineyard
and
the
breadth
of
a
winery’s
trading
network
(r=‐0.3286,
p<0.0006).
 The
correlation
shows
wineries
that
have
a
large
trading
network
are
associated
with
procuring
 less
grapes
form
their
own
vineyards.
This
finding
was
expected,
wineries
that
do
not
grow
a
 significant
percentage
of
their
own
grapes
have
to
interact
more
with
others
to
obtain
grapes,
 unlike
for
example
an
established
winery
that
manages
their
own
large
vineyard
or
has
 established
or
multi‐year
contracts
with
the
same
grape
growers.

 Spot market contracts  The
percentage
of
grapes
a
winery
procures
through
spot
or
cash
markets
has
a
weak,
positive
 correlation
with
the
percent
of
wine
a
winery
sells
to
a
restaurant
(r=0.2328,
p=0.0179).
This
 finding
shows
an
association
between
the
wineries
that
have
an
increasing
percent
of
their
 grapes
procured
through
spot
or
cash
markets
and
those
wineries
that
have
an
increasing
 percentage
of
their
wineries
being
sold
to
restaurants.
This
finding
was
not
expected,
because
 often
supplying
to
a
business
requires
a
winery
to
provide
a
consistent
and
often
high
volume
 of
wine
therefore
leading
the
wineries
to
desire
a
more
secure
contract
to
obtain
grapes.

 Verbal (handshake) contracts  
 97
 A
weak,
positive
correlation
exists
between
wineries
that
procure
a
high
percentage
of
their
 grapes
through
verbal
contracts
and
those
wineries
that
have
a
large
trading
network
 (r=0.2149,
p=0.0277).
We
anticipated
this
finding
to
have
a
stronger
correlation
value,
however
 depending
on
the
number
of
verbal
contracts
a
winery
needs
they
may
only
need
to
 communicate
with
a
few
grapes
growers
and
they
may
even
use
the
same
growers
each
year.


 Written contracts  The
percent
of
grapes
a
winery
procures
through
a
written
contract
correlates
with
three
 variables.
The
first
correlation
is
with
the
percent
of
wine
volume
sold
through
distributors
 (r=0.2674,
p=0.0066),
this
weak,
positive
correlation
shows
a
relationship
exists
between
a
high
 percentage
of
grapes
being
procured
through
a
written
contract
and
those
wineries
that
sell
a
 high
percentage
of
their
wine
through
distributors.
Two
more
weak,
positive
correlations
exist
 between
the
percentage
of
grapes
procured
and
the
number
of
full‐time,
year
round
 employees
a
winery
has
(r=0.2060,
p=0.0350)
and
the
number
of
full‐time,
seasonal
employees
 a
winery
has
(r=0.2146,
p=0.0279).
These
two
correlations
indicate
that
wineries
that
use
more
 written
contracts
when
buying
grapes
are
related
to
wineries
that
have
an
increasing
number
of
 full‐time
employees.

 Relationship
5:
Firms
who
outsource
their
wineries’
winemaking
have
a
strong,
positive
 correlation
with
the
eight
legitimacy
indicators.

 Winemaking  
 98
 Table 30: Two Sample T‐Test with Unequal Variances for Differences in Mean for Firms that  Outsource Winemaking  Variable  Full‐time,
year
round
employees
 Full‐time,
seasonal
employees
 Percent
of
wine
volume
sold
through
a
liquor
store
 Percent
of
wine
sold
to
a
restaurant
 Percent
sold
through
a
distributor
 Mean  3.65625
 3.84375*
 4.865625*
 1.7875
 9.371875
 
 A
two‐sample,
independent
t‐test
showed
those
firms
that
outsource
their
winemaking
hire
 more
full‐time,
seasonal
employees
(M=3.8438,
SD=7.5993)
than
the
firms
that
do
all
their
own
 winemaking
(M=1.2963,
SD=2.045),
t(34.6367)=‐1.8438,
p=0.0738.
Interestingly,
of
the
three
 distribution
channels
that
we
ran
t‐tests
against
if
a
firm
outsources
their
winemaking,
the
only
 significant
distribution
channel
was
the
percent
of
wine
volume
a
winery
sells
direct
to
a
liquor
 store,
compared
to
those
wineries
that
do
not
outsource
their
winemaking
(M=8.9038,
 SD=14.8370),
t(94.5422)=1.7701,
p=0.0799.

 Table 31: Contingency Table Between Firms that Outsource Winemaking and Firms that have  an Arrangement with a Tour Bus Company    Arrangement with tour bus company  No
 Yes
 Total  Outsource winemaking  Yes  No  15
 59
 17
 21
 80
 32
 Total  74
 38
 112
 
 A
significant
correlation
exists
between
whether
a
winery
outsources
their
winemaking
and
 whether
the
winery
has
an
arrangement
with
a
tour
bus
company,
chi‐ square(1,N=112)=7.3644,
p=0.007.
This
finding
was
surprising,
however
outsourcing
the
 
 99
 winemaking
means
a
winery
is
interacting
with
someone
outside
the
firm
which
could
lead
to
a
 network
expansion
that
could
include
gaining
access
and
building
a
relationship
with
a
tour
bus
 company.

 Table 32: Contingency Table Between Firms that Outsource Winemaking and Firms that  Obtain External Funding    Obtained external funding  No
 Yes
 Outsource  winemaking  No                      Yes  9
 56
 47
 23
 57
 34
 Total  81
 32
 Total  113
 
 A
significant
correlation
exists
between
a
winery
that
outsources
their
firm’s
winemaking
and
 whether
the
firm
obtains
external
financing
or
not,
chi‐square(1,N=113)=8.2032,
p=0.004.
This
 finding
could
be
from
external
funders
viewing
the
outsourcing
of
a
significant
cost
to
the
firm,
 winemaking,
as
positive
or
as
an
indicator
of
legitimacy
that
the
winery
is
working
with
a
skilled
 or
established
winemaker
therefore
potentially
increasing
the
potential
success
of
the
new
 firm.
However,
outsourcing
the
winemaking
could
also
be
a
risk
for
the
winery
if
they
winery
 develops
a
reputation
based
on
the
style
or
reputation
of
a
specific
winemaker.
A
winery
could
 reduce
this
risk
through
having
a
formal
contract
with
the
winemaker.
Further,
in
developing
 wine
regions,
a
higher
percentage
of
wineries
often
share
the
same
winemaker.
 Relationship
6:
Firms
that
derive
a
higher
percentage
of
their
gross
revenue
from
wine
sales
 only
correlate
negatively
with
the
legitimacy
indicators.
Further,
firms
that
have
a
high
 percentage
of
in
state
sales
have
a
negative
relationship
with
the
legitimacy
indicators.
Firms
 
 100
 with
a
high
percentage
of
sales
outside
their
winery’s
home
state
have
a
strong,
positive
 correlation
with
the
legitimacy
indicators.
 Wine sales  Table 33: Correlation Results of the Percent of Winery’s 2011 Gross Revenue from Wine Sales  Only  Variable  Full‐time,
year
round
employees
 Full‐time,
seasonal
employees
 Percent
of
wine
volume
sold
through
a
liquor
store
 Percent
of
wine
sold
to
a
restaurant

 Percent
sold
through
a
distributor
 Arrangement
with
a
tour
bus
company
 Received
external
funding
 Large
trading
network

   Covariance  ‐0.049
 ‐0.1448
 0.1854**

 0.0065
 0.0618
 ‐0.1567
 ‐0.0875
 0.0112
   Wineries
provided
the
percent
of
their
gross
revenue
that
is
from
wine
sales
only:
this
variable
 only
correlated
with
one
variable.
A
weak,
positive
relationship
exists
between
the
percent
of
 total
wine
sales
sold
through
a
liquor
store
and
percent
of
gross
revenue
from
wine
sales
only
 (r=0.1854,
p=0.0560).
Therefore
showing
that
as
the
percent
of
gross
revenue
from
wine
sales
 increases,
the
percent
of
wine
volume
sold
direct
to
a
liquor
store
is
also
increasing.
Finally,
we
 were
surprised
that
no
other
correlations
existed
with
this
variable,
since
an
increase
in
the
 percent
of
gross
revenue
from
wine
sales
only
could
mean
an
increase
in
the
production
of
 wine
leading
to
a
greater
need
for
more
employees
or
more
wine
being
distributed
outside
the
 winery’s
tasting
room
to
restaurants
or
through
distributors.

 In‐state sales  
 101
 Table 34: Correlation Results of Firms’ Percent of In‐State Sales  Variable  Full‐time,
year
round
employees
 Full‐time,
seasonal
employees
 Percent
of
wine
volume
sold
through
a
liquor
store
 Percent
of
wine
sold
to
a
restaurant
 Percent
sold
through
a
distributor
 Arrangement
with
a
tour
bus
company
 Received
external
funding
 Large
trading
network
 Covariance  ‐0.3647***
 ‐0.2061**
 0.0703
 0.0555
 ‐0.3629***
 ‐0.2376**
 ‐0.1910**
 ‐0.1481
 
 The
percent
of
a
winery’s
in‐state
sales
correlated
with
five
variables.
A
moderate,
negative
 correlation
exists
between
the
wineries’
in‐state
sales
and
the
number
of
full‐time
employees
a
 winery
employs
(r=‐0.3647,
p=0.0001).
This
finding
could
be
explained
by
as
the
percent
of
in‐ state
sales
decreases,
the
number
of
full‐time,
year
round
employees
increases,
this
could
be
 due
to
increasing
out
of
state
sales
which
may
require
more
employees
to
assist
with
growing
 the
grapes,
producing
the
wine
and
establishing
and
facilitating
out
of
state
sales.
The
second
 moderate,
negative
correlation
is
with
the
percent
of
wine
sales
sold
through
a
distributor
(r=‐ 0.3629,
p=0.0001).
This
means
a
decrease
in
the
amount
of
in‐state
sales
is
related
to
an
 increase
in
the
percent
of
wine
sales
sold
through
distributors,
this
can
be
explained
by
a
 winery
potentially
working
with
a
regional
distributor
who
could
help
the
winery
increase
its
 distribution
to
more
channels
outside
the
winery’s
home
state.

 A
weak,
negative
relationship
exists
between
the
percent
of
in‐state
sales
and
whether
a
winery
 has
a
relationship
with
a
tour
bus
company
(r=‐0.2376,
p=0.0120).
Therefore,
wineries
that
 have
an
arrangement
with
a
tour
bus
company
are
often
associated
with
having
a
lower
 percent
of
their
sales
from
in
state.
The
second
negative,
weak
relationship
is
between
the
 
 102
 percent
of
in‐state
sales
and
the
number
of
full‐time,
seasonal
employees
a
winery
hires
(r=‐ 0.2061,
p=0.0300).
Therefore,
an
association
exists
between
a
decrease
in
the
percent
of
in‐ state
sales
and
an
increase
in
the
number
of
full‐time,
seasonal
employees
a
winery
hires.
The
 final
weak,
negative
correlation
is
with
the
whether
the
winery
has
obtained
external
funding
 (r=‐0.1910,
p<0.0446).
Therefore,
wineries
that
have
external
funding
are
associated
with
 having
a
lower
percent
of
their
sales
from
in
state,
inside
the
winery’s
home
state.

 Out‐of‐state sales  Table 35: Correlation Results of Firms’ Percent of Out‐of‐State Sales  Variable  Full‐time,
year
round
employees
 Full‐time,
seasonal
employees
 Percent
of
wine
volume
sold
through
a
liquor
store
 Percent
of
wine
sold
to
a
restaurant

 Percent
sold
through
a
distributor
 Arrangement
with
a
tour
bus
company
 Received
external
funding
 Large
trading
network

 
 Covariance  
0.3713***

 

0.2111**

 ‐0.0699
 ‐0.0574
 
0.3635***

 
0.2370**
 
0.1919**
 0.144
 
 Similar
to
the
percent
of
in‐state
sales,
five
variables
correlate
with
the
percent
of
a
winery’s
 out‐of‐state
sales,
however;
unlike
in‐state
sales,
the
same
variables
are
positively
correlated
 with
out‐of‐state
sales.
A
moderate,
positive
correlation
exists
with
the
number
of
full‐time,
 year
round
employees
a
winery
hires
(r=0.3713,
p=0.0001).
Therefore,
an
increase
in
the
 percent
of
sales
a
winery
sells
outside
their
home
state
is
related
to
an
increase
in
the
number
 of
full‐time,
year
round
employees
the
winery
hires.
The
second
variable
that
shares
a
 moderate,
positive
correlation
is
the
percent
of
wine
volume
sold
through
distributors
 (r=0.3629,
p=0.0001).
This
is
understandable,
since
often
times
a
winery
will
work
with
a
 
 103
 distributor
to
help
increase
their
distribution
network
to
outside
the
winery’s
home
state.
So,
 wineries
that
work
with
a
distributor
are
associated
with
selling
more
wine
outside
their
home
 state.

 Three
weak,
positive
correlations
exist
between
the
percent
of
out‐of‐state
sales.
The
first
is
 those
wineries
that
have
an
arrangement
with
a
tour
bus
company
(r=0.2370,
p=0.0123).
 Wineries
that
have
an
arrangement
with
a
tour
bus
company
are
associated
with
having
an
 increasing
percent
of
the
wine
sales
from
out
of
state,
outside
the
winery’s
home
state.
The
 second
weak,
positive
correlation
is
between
the
number
of
full‐time,
seasonal
employees
 (r=0.2111,
p<0.0262),
therefore
an
association
exists
between
an
increasing
percent
of
out‐of‐ state
sales
and
an
increase
in
the
number
of
full‐time,
seasonal
employees
a
winery
hires.
The
 third
correlation
is
among
those
wineries
that
have
external
funding
(r=0.1919,
p<0.0436).
 Therefore,
wineries
with
external
funding
are
associated
with
having
a
greater
percentage
of
 their
sales
from
outside
their
state.
Finally,
one
weak,
positive
correlation
was
found
between
 those
wineries
with
an
increasing
percentage
of
sales
outside
the
U.S.
and
those
wineries
with
 an
increasing
percentage
of
their
wine
volume
being
sold
through
distributors
(r=0.1778,
 p=0.0644).

 Relationship
7:
Firms
that
sell
a
high
percentage
of
their
total
wine
volume
at
their
winery
have
 a
strong,
negative
correlation
with
the
legitimacy
indicators.
 Distribution
channels
 The
survey
asked
wineries
to
sum
the
percent
of
their
wine
volume
sold
through
eight
different
 distribution
channels
to
100
percent,
the
following
are
the
distribution
channels
listed
on
the
 
 104
 survey,
at
the
winery,
to
a
liquor
store,
to
a
restaurant,
through
a
distributor,
through
direct
 mail,
at
festivals
or
other.
Correlations
were
conducted
to
see
if
relationships
exist
between
 those
seven
distribution
channels
and
the
eight
variables
of
interest,
listed
below
are
the
 significant
correlations
found.

 Table 36: Correlation Results of Firms’ Percent of Total Wine Volume Sold through  Distribution Channels  Number of  full‐time,  year round  Variables  employees  At
the
 winery
 Farmers
 market
 Direct
 mail
 Festivals
 or
 communi ty
events
 Other
 Number of  full‐time,  seasonal  employees  Wine  volume sold  direct to  liquor store  (%)  Wine  volume  sold direct  to  restaurant  (%)  Wine  volume  sold  through  distributor  (%)  ‐0.1949**
 ‐0.1061
 ‐0.4561***
 ‐0.3616***
 ‐0.4487***
 ‐0.0642
 ‐0.0896
 0.0379
 0.0355
 ‐0.0896
 0.1385
 ‐0.0258
 0.1178
 0.0003
 ‐0.1177
 0.1361
 0.0075
 0.0835
 0.2195**
 ‐0.0899
 0.0308
 ‐0.0375
 ‐0.0920
 ‐0.0487
 ‐0.0626
 NOTE:
***=
significantly
different
at
1%
significance
level

 













**=
significantly
different
at
the
5%
significance
level

 
















*=
significantly
different
at
10%
significance
level  Regulations
can
also
determine
which
distribution
channel
a
winery
sells
through
since
 regulations
can
often
include
wineries
having
to
obtain
permits
or
pay
fees.
In
Michigan,
 wineries
can
offer
free
samples
or
charge
for
samples
but
are
restricted
at
their
facility
where
 
 105
 wine
can
be
served.
For
example,
Michigan
wineries
can
only
serve
glasses
of
wine
in
a
 restaurant
that
is
“owned
by
the
Wine
Maker
or
Small
Wine
Maker
or
is
leased
to
another
 person,”
(MLCC,
p.
2).
Additionally,
all
glasses
of
wine
sold
must
be
wine
made
by
the
winery.

 According
to
a
Missouri
alcohol
and
tobacco
agent,
wineries
that
have
a
domestic
winery
 permit,
which
means
those
firms
that
sell
less
than
500,000
gallons
a
year
of
wine,
can
sell
any
 alcoholic
products
from
their
own
winery
or
other
alcohol
producers
in
their
tasting
room.
 Further,
domestic
wineries
are
able
to
sell
outside
Missouri
and
can
sell
direct
to
consumers,
 retailers
and
wholesalers.
The
agent
suggests
that
new
firms’
challenge
to
sell
through
formal
 distribution
channels
is
not
due
to
regulations,
saying
that
the
possibilities
for
domestic
 wineries
is
“wide
open.”

 Percent of wine volume sold at the winery  Table 37: Correlation Results of Firms’ Percent of Wine Volume Sold at the Winery   Variable  Full‐time,
year
round
employees
 Full‐time,
seasonal
employees
 Percent
of
wine
volume
sold
through
a
liquor
 store
 Percent
of
wine
sold
to
a
restaurant

 Percent
sold
through
a
distributor
 Arrangement
with
a
tour
bus
company
 Received
external
funding
 Large
trading
network

   Covariance  ‐0.1949**
 ‐0.1061
 ‐0.4561***
 ‐0.3616***
 ‐0.4487***
 ‐0.044
 0.1085
 ‐0.0898
   Four
variables
negatively
correlate
with
the
percent
of
wine
volume
a
winery
sells
at
their
 winery
(i.e.
in
a
tasting
room,
gift
shop,
etc.).
First,
a
moderate
to
strong,
negative
correlation
 exists
between
the
percent
of
wine
volume
sold
at
the
winery
and
the
percent
of
wine
volume
 sold
direct
to
a
liquor
store
(r=‐0.4561,
p=0.0000),
meaning
a
decrease
in
the
percent
of
wine
 
 106
 volume
sold
at
the
winery
is
related
to
an
increase
in
the
percent
of
wine
volume
a
winery
sells
 direct
to
a
liquor
store.
Next,
another
moderate
to
strong,
negative
correlation
is
presented
 between
the
percent
of
wine
volume
sold
at
a
winery
and
the
percent
of
wine
volume
sold
 through
distributors
(r=‐0.4487,
p=0.0000).
Finally,
a
moderate,
negative
correlation
exists
 between
the
percent
of
wine
volume
sold
at
the
winery
and
the
percent
of
wine
volume
sold
to
 a
restaurant
(r=‐0.3616,
p=0.0001).
The
relationships
of
these
three
distribution
channels
and
 the
percent
of
wine
sold
at
the
winery
are
similar
since
all
negative,
leading
to
an
inverse
 relationship
with
the
percent
of
wine
sold
at
a
winery.

 One
weak,
negative
relationship
exists
between
the
percent
of
wine
volume
sold
at
the
winery
 and
the
number
of
full‐time,
year
round
employees
a
winery
employs
(r=‐0.1949,
p=0.0413).

 Percent of wine volume sold direct to a liquor store  Table 38: Correlation Results of Firms’ Percent of Wine Volume Sold Direct to a Liquor Store  Variable  Covariance  Full‐time,
year
round
employees
 ‐0.1192
 Full‐time,
seasonal
employees
 ‐0.1595*
 Percent
of
wine
volume
sold
through
a
liquor
store
 1.0000***
 Percent
of
wine
sold
to
a
restaurant

 0.3736***
 Percent
sold
through
a
distributor
 ‐0.1892**

 Arrangement
with
a
tour
bus
company
 ‐0.1539
 Received
external
funding
 ‐0.113
 Large
trading
network

 ‐0.0401
 Note:
***=
significantly
different
at
the
1%
significance
level
 










**=
significantly
different
at
the
5%
significance
level
 












*=
significantly
different
at
the
10%
significance
level
   
 107
 Three
variables
correlate
with
the
percent
of
wine
volume
a
winery
sells
direct
to
a
liquor
store.
 First,
a
moderate,
positive
correlation
is
present
between
the
percent
of
wine
volume
a
winery
 sells
to
a
liquor
store
and
the
percent
of
wine
volume
the
winery
sells
to
a
restaurant
(r=0.3726,
 p=0.0001).
Therefore,
a
percent
increase
in
these
two
distribution
channels
is
related.
An
 important
note,
a
comparison
can
be
found
between
this
moderate
and
positive
correlation
to
 the
percent
of
wine
volume
sold
to
a
restaurant
and
to
the
previous
correlation,
where
a
 moderate
but
negative
correlation
was
found
between
the
percent
of
wine
volume
sold
to
a
 restaurant
and
the
percent
of
wine
volume
sold
at
the
winery.
In
summary,
the
percent
of
wine
 volume
sold
at
the
winery
and
to
a
restaurant
have
are
negatively
correlated
whereas
an
 increase
in
the
percent
of
wine
volume
sold
to
a
liquor
store
is
related
to
an
increase
in
the
 wine
volume
sold
to
a
restaurant.

 The
percent
of
wine
volume
sold
to
a
liquor
store
and
the
percent
of
wine
volume
sold
through
 distributors
has
a
weak,
negative
correlation
(r=‐1892,
p=0.0477).
This
shows
an
association
 between
a
decrease
in
the
percent
of
wine
volume
sold
through
a
liquor
store
and
an
increase
 in
the
percent
of
wine
volume
sold
through
distributors.

 Another
variable
shares
a
weak,
negative
correlation
with
the
percent
of
wine
volume
sold
to
a
 liquor
store,
the
number
of
full‐time,
year
round
employees
a
winery
hires
(r=‐0.1595,
 p=0.0960).
This
correlation
shows
a
decrease
in
the
percent
of
wine
volume
sold
through
a
 liquor
store
is
related
to
an
increase
in
the
number
of
full‐time,
year
round
employees
a
winery
 has.
The
correlation
result
is
surprising,
one
possible
reasoning
could
be
that
the
winery
is
 
 108
 selling
more
volume
through
its
tasting
room
therefore
they
need
more
full‐time,
year
round
 employees
to
manage
their
tasting
room.

 Percent of wine volume sold through distributors  Table 39: Correlation Results of Firms’ Percent of Wine Volume Sold through Distributors  Variable  Full‐time,
year
round
employees
 Full‐time,
seasonal
employees
 Percent
of
wine
volume
sold
through
a
liquor
store
 Percent
of
wine
sold
to
a
restaurant

 Arrangement
with
a
tour
bus
company
 Received
external
funding
 Large
trading
network

       Covariance  
0.4291***
 
0.3833***
 
‐0.1892**
 ‐0.1069
 
0.1758*
 
0.2604***


 

0.2288**
   A
moderate
to
strong,
positive
correlation
exists
between
the
percent
of
wine
volume
sold
 through
a
distributor
and
the
number
of
full‐time,
year
round
employees
a
winery
employs
 (r=0.4291,
p=0.0000).
A
second
moderate,
positive
correlation
was
found
between
the
number
 of
full‐time,
seasonal
employees
a
winery
has
(r=0.3833,
p=0.0000).
These
two
findings
were
 expected,
an
association
between
an
increase
in
the
percent
of
wine
volume
sold
through
 distributors
and
an
increase
in
the
number
of
full‐time
employees
a
winery
has
because
often
 to
work
with
distributors,
wineries
need
to
be
producing
a
consistent
and
often
high
volume
of
 wine
to
support
the
volume
needs
of
the
alcohol
distributors.
Additionally,
according
to
Mark
 Esterman,
wine
buyer
at
Meijer
Grocery,
distributors
are
more
likely
to
work
with
a
winery
if
 they
have
a
tasting
room
therefore
requiring
staff
to
operate
and
manage
a
tasting
room
 experience
for
consumers.

 
 109
 A
weak,
positive
correlation
exists
between
the
percent
of
wine
volume
sold
through
 distributors
and
those
wineries
with
a
large
trading
network
(r=0.2288,
p=0.0167).
This
finding
 was
expected;
wineries
that
have
a
large
trading
network
are
associated
with
selling
a
high
 percentage
of
wine
volume
through
distributors.

 The
second
correlation
is
also
weak
but
negative
with
the
percent
of
wine
volume
sold
through
 distributors
and
the
percent
of
wine
volume
sold
direct
to
a
liquor
store
(r=‐.1892,
p=0.0477).
 The
correlation
has
an
inverse
relationship
therefore
those
wineries
that
sell
less
through
 distributors
are
associated
with
those
wineries
that
sell
a
greater
percent
through
a
liquor
 store.
However,
as
stated
in
an
earlier
correlation,
this
relationship
can
be
the
opposite
with
a
 winery
that
sells
less
to
a
liquor
store
and
one
that
sells
more
through
distributors
(r=‐0.1892,
 p=0.0477).
The
third
correlation
is
with
those
wineries
that
have
an
arrangement
with
a
tour
 bus
company
and
those
that
have
an
increasing
percent
of
their
wine
volume
sold
through
 distributors
(r=0.1758,
p<0.0662).
Therefore,
wineries
that
have
an
arrangement
with
a
tour
 bus
company
are
associated
with
selling
a
greater
percentage
of
wine
through
distributors.
 Relationship
8:
Firms
that
charge
more
for
their
wine
have
a
strong,
positive
correlation
with
 the
legitimacy
indicators.
  Wine pricing        
 110
 Table 40: Correlation Results of Firms’ Average Prices of their Highest, Lowest and Top Selling  Wines  Covariance  Highest  Lowest  Variable  priced  priced  Full‐time,
year
round
employees
 0.151
 ‐0.1242
 Full‐time,
seasonal
employees
 0.5504***
 0.0701
 Percent
of
wine
volume
sold
through
a
liquor
store
 ‐0.2240**
 ‐0.1421
 Percent
of
wine
sold
to
a
restaurant
 0.0313
 0.0974
 Percent
sold
through
a
distributor
 
0.3476***
 ‐0.1606*
 Arrangement
with
a
tour
bus
company
 
0.3433***
 0.0657
 Received
external
funding
 
0.3250***
 ‐0.1069
 Large
trading
network
 ‐0.0789
 ‐0.024
 NOTE:
***=
significantly
different
at
1%
significance
level

 Top  selling  ‐0.1433
 0.1531
 ‐0.1794*
 0.1474
 ‐0.0791
 0.0816
 ‐0.0425
 ‐0.0058
 













**=
significantly
different
at
the
5%
significance
level

 
















*=
significantly
different
at
10%
significance
level
 
   Price of wineries’ highest priced wine  A
strong,
positive
correlation
exists
between
the
cost
of
wineries’
highest
priced
wine
and
the
 number
of
full‐time,
seasonal
employees
a
winery
employs,
(r=0.5504,
p=0.0000).
This
 correlation
highlights
a
relationship
between
a
higher
priced
wine
and
an
increasing
number
of
 full‐time,
seasonal
employees
that
a
winery
employs.

 A
moderate,
positive
relationship
exists
between
the
cost
of
a
winery’s
highest
priced
wine
and
 the
percent
of
wine
sold
through
distributors,
whether
the
winery
has
an
arrangement
with
a
 tour
bus
company
and
if
the
winery
has
obtained
external
funding.
The
correlation
between
the
 percent
of
wine
sold
through
distributors
(r=0.3476,
p=0.0002),
reveals
that
having
a
high
 
 111
 priced
wine
correlates
with
an
increasing
percent
of
wine
being
sold
through
distributors.
 Secondly,
a
correlation
exists
between
a
winery
that
has
an
arrangement
with
a
tour
bus
 company
and
a
winery
with
an
increasingly
high
priced
wine
(r=0.3433,
p=0.0002).

The
third
 moderately
strong,
positive
correlation
is
between
a
winery
that
has
external
funding
and
the
 increasing
cost
of
a
winery’s
highest
priced
wine,
(r=0.3250,
p=0.0005).

 Finally,
one
weak,
negative
correlation
exists
between
the
cost
of
a
winery’s
highest
priced
 wine
and
the
percent
of
wine
sold
direct
to
a
liquor
store,
(r=‐0.2240,
p=0.0186).
Therefore,
a
 winery
that
has
a
lower
price
of
its
highest
priced
wine
is
correlated
with
a
winery
that
sells
a
 higher
percentage
of
its
wine
sales
direct
to
a
liquor
store.

 Price of wineries’ lowest priced wine  Only
one
variable
correlated
with
the
values
of
a
winery’s
lowest
priced
wine.
The
percent
of
 wine
sold
through
distributors
has
a
weak
and
negative
relationship
with
the
cost
of
a
winery’s
 lowest
priced
wine
(r=‐0.1606,
p=0.0937).
This
finding
is
interesting
because
of
its
negative
sign,
 stating
that
an
inverse
relationship
exists
between
the
two
variables,
so
a
winery
that
increases
 their
lowest
priced
wine
is
associated
with
a
decreasing
percent
of
their
wine
being
sold
 through
distributors.
Finally,
we
anticipated
seeing
correlations
among
the
other
two
 distribution
channels
of
interest.
 Price of a wineries top selling wine  Again,
only
one
variable
correlated
with
the
price
of
the
wineries’
top
selling
wine
and
eight
of
 the
variables
of
interest.
A
weak,
negative
relationship
exists
with
the
percent
of
total
wine
 
 112
 volume
sold
through
a
liquor
store
(r=‐0.1794,
p=0.0608).
Therefore,
a
relationship
exists
 between
the
price
of
a
wineries’
top
selling
wine
decreasing,
the
total
wine
volume
sold
direct
 to
a
liquor
store
increasing,
however;
because
this
is
only
a
correlation
we
cannot
say
that
one
 affects
the
other,
simply
the
two
variables
are
related.

 Relationship
9:
Firms
that
have
won
awards
have
a
strong,
positive
correlation
with
the
 legitimacy
indicators.
 Awards  Table 41: Correlation Results of Firms that Won Awards from Wine Competitions   Variable  Full‐time,
year
round
employees
 Full‐time,
seasonal
employees
 Percent
of
wine
volume
sold
through
a
liquor
store
 Percent
of
wine
sold
to
a
restaurant

 Percent
sold
through
a
distributor
 Mean  4.519481**
 2.454545
 7.713158
 1.956579
 10.41579***
   Wine competitions  A
two‐sample,
independent
t‐test
showed
the
wineries
who
won
a
wine
competition
award
 hire
more
full‐time,
year
round
employees
(M=4.5195,
SD=11.2069)
than
those
wineries
who
 have
not
won
an
award
(M=1.0833,
SD=1.842),
t(84.4243)=‐2.6160,
p=0.0105.
As
expected,
the
 wineries
who
won
an
award
from
a
wine
competition
sell
a
higher
percentage
of
their
total
 wine
volume
through
distributors
(M=10.4158,
SD=18.652)
than
those
wineries
that
have
not
 won
an
award
(M=0.6471,
SD=2.058),
t(79.0027)=‐4.5040.
However,
the
question
asks
wineries
 
 113
 if
they
have
won
an
award
from
a
wine
competition,
so
whether
a
winery
has
even
entered
a
 wine
competition
is
unknown.

 Table 42: Contingency Table Between Firms that Won an Award from a Wine Competition  and Firms that have an Arrangement with a Tour Bus Company  Won wine    competition award  Total  Yes  Arrangement with tour bus company  No  45
 74
 No
 29
 32
 38
 Yes
 6
 Total
 35
 77
 112
 
 A
chi‐square
test
shows
that
wineries
who
have
won
wine
competitions
are
correlated
with
 having
an
arrangement
with
a
tour
bus
company,
chi‐square(1,N=112)=6.3988,
p=0.011.
The
 results
show
that
58
percent
wineries
that
won
an
award
from
a
wine
competition
were
not
 more
likely
to
have
an
arrangement
with
a
tour
bus
company.
 Table 43: Contingency Table Between Firms that Won an Award from a Wine Competition  and Firms that have Obtained External Funding  Won wine    competition award  Total  Yes  Obtained external funding  No  32
 56
 No
 24
 45
 57
 Yes
 12
 Total  36
 77
 113
 
 
 114
 A
chi‐square
test
shows
that
wineries
who
have
won
wine
competitions
are
correlated
with
 having
obtained
external
funding,
chi‐square,
chi‐square(1,N=113)=6.1864,
p=0.013.
Wineries
 that
won
an
award
from
a
wine
competition
were
more
likely
to
obtain
external
funding.

 Trade Press Award  Table 44: Correlation Results of Firms that Won a Trade Press Award    Variable  Full‐time,
year
round
employees
 Full‐time,
seasonal
employees
 Percent
of
wine
volume
sold
through
a
liquor
store
 Percent
of
wine
sold
to
a
restaurant

 Percent
sold
through
a
distributor
 Mean  6.818182**
 4.113636***
 6.055814
 2.539535
 14.87442***
   Through
conducting
two‐sample,
independent
t‐tests,
results
showed
those
wineries
that
have
 won
a
trade
press
award
employ
more
full‐time,
year
round
and
seasonal
employees
than
the
 wineries
that
have
not
won
a
trade
press
award.

The
winning
wineries
hired
more
full‐time,
 year
round
employees
(M=6.8182,
SD=14.2963)
than
those
not
winning
wineries
(M=1.2609,
 SD=2.2206),
t(44.3266)=‐2.5589,
p=0.0140.
In
addition
winning
wineries
hired
more
full‐time,
 seasonal
employees
(M=4.1136,
SD=6.9088)
than
the
wineries
that
did
not
win
the
same
award
 (M=0.68116,
SD=1.8981),
t(47.1699)=‐3.2190,
p=0.0023.

 Wineries
that
have
won
a
trade
press
award
sell
a
greater
percent
of
their
wine
volume
through
 distributors
(M=14.8744,
SD=19.6852)
than
those
wineries
that
have
not
won
an
award
 (M=2.5970,
SD=11.1886),
t(59.591)=‐3.7221,
p=0.0004.

 
 115
 Table 45: Contingency Table Between Firms that Won a Trade Press Award and Firms that  have an Arrangement with a Tour Bus Company    Arrangement with tour bus company  No
 Yes
 Total  Won trade press award  Yes  No  22
 52
 22
 26
 68
 44
 Total  
 74
 38
 112
 
 Additionally,
a
significant
correlation
exists
between
those
wineries
that
have
won
a
trade
press
 award
and
whether
the
wineries
have
an
arrangement
with
a
tour
bus
company,
chi‐ square(1)=8.3501,
p=0.004.

 Table 46: Contingency Table Between Firms that Won a Trade Press Award and Firms that  Obtained External Funding    Obtained external funding  No
 Yes
 Total  Won trade press  award  Total  Yes  No  15
 56
 41
 29
 57
 28
 69
 44
 113
 
 
 Finally,
a
significant
correlation
exists
between
wineries
that
have
won
a
trade
press
award
and
 whether
the
winery
obtains
external
funding,
chi‐square(1)=6.8955,
p‐value=0.009.
No
 significant
findings
were
found
between
a
winery
that
wins
a
trade
press
award
and
having
a
 large
trading
network.
 
 116
 Relationship
10:
Firms
that
utilize
new
forms
of
media
have
a
strong,
positive
relationship
with
 the
legitimacy
indicators,
in
this
survey
new
media
includes
.
Firms
that
use
traditional
forms
of
 media
have
negative
relationship
with
the
legitimacy
indicators.

 
 
 
 Table 47: Two Sample T‐Tests with Unequal Variances Results of Promotional Activities Firms  Use  Variables  Promotions
 for

 returning
 Customer
 customers
 database
 Club
 promotions
 Newsletter
 Social
 media
 Volume
 discounts
 Other
 Number of  full‐time,  year  round  employees  Number of  full‐time,  seasonal  employees  Wine  volume  sold  direct to  liquor  stores  (%)  Wine  volume  sold direct  to  restaurants  (%)  Wine  volume  sold  through  distributors  (%)  2.5088
 
 2.5128**
 
 
 4.02174***
 
 2.5574
 
 3.8557***
 2.1237
 
 
 3.5648***
 2.1111***
 
 
 5.1554**
 
 6.0442
 
 5.26*
 
 6.8254
 
 7.5547
 
 7.5962
 
 1.7268
 
 3.0807
 
 1.8156
 2.3848
 
 2.5653**
 
 1.9359
 
 8.9929
 
 9.8779***
 
 11.9311**
 
 9.7390*
 
 8.4905***
 11.5333
 
 6.000
 
 2.7857
 
 9.55
 
 4.82456
 
 4.4744***
 
 4.7826
 
 5.2951**
 3.9333
 
 NOTE:
***=
significantly
different
at
1%
significance
level

 













**=
significantly
different
at
the
5%
significance
level

 
 117
 7.6566***
 
 















*=
significantly
different
at
10%
significance
level
 Through
conducting
two‐sample,
independent
t‐tests
and
chi‐square
tests
results
showed
club
 promotions
as
being
the
most
significant
across
all
eight
legitimacy
indicators.
The
wineries
that
 offer
club
promotions
hire
more
full,
time
seasonal
employees,
and
sell
a
higher
percentage
of
 their
total
wine
volume
through
liquor
stores
and
distributors.

 The
next
highly
correlated
promotional
activity
was
social
media
(i.e.
Facebook
and
Twitter).
 Wineries
that
use
social
media
are
correlated
with
hiring
more
full‐time,
year
round
employees,
 and
selling
an
increasing
percentage
of
their
total
wine
volume
through
restaurants
and
 distributors.
First,
wineries
that
use
social
media
are
associated
with
hiring
more
full‐time,
year
 round
employees
(M=3.86,
SD=10.11)
than
wineries
that
do
not
use
social
media
(M=0.929,
 SD=1.27),
t(108.5)=‐2.71,
p=0.0079.
Second,
wineries
that
use
social
media
are
correlated
with
 selling
an
increasing
percent
of
their
total
wine
volume
through
restaurants
(M=2.57,
SD=5.52)
 than
wineries
that
do
not
use
social
media
(M=0.964,
SD=1.84),
t(56.4)=‐2.13.
This
result
was
 expected,
as
social
media
can
create
awareness
quickly
about
a
brand
and
serve
as
a
tool
to
 interact
with
other
brands
or
supporting
industries
like
restaurants.
The
third
correlation
is
 between
those
wineries
that
use
social
media
sell
a
higher
percentage
of
their
total
wine
 volume
through
distributors
(M=8.49,
SD=17.14)
than
wineries
that
do
not
use
social
media
 (M=0.5,
SD=1.24),
t(100.74)=‐4.45.

 A
surprising
finding
was
wineries
that
use
newsletters
was
positively
correlated
with
two
of
the
 legitimacy
indicators,
we
anticipated
this
traditional
media
form
to
be
negatively
correlated
 with
several
of
the
indicators.
First,
wineries
that
use
newsletters
hire
more
full‐time,
year
 
 118
 round
employees
(M=5.30,
SD=12.45)
than
those
that
do
not
create
newsletters
(M=1.25,
 SD=1.91),
t(63.35)=‐2.50.
Second,
and
the
most
surprising
finding,
wineries
that
create
 newsletters
sell
a
greater
percentage
of
their
total
wine
volume
through
distributors
(M=9.74,
 SD=17.6)
than
wineries
that
do
not
use
newsletters
(M=4.69,
SD=14.01),
t(107.32)=‐1.67.

 Table 48: Chi‐Square Results of Promotional Activities Firms Use  Variables  Promotions
for
 returning
customers
 
 Arrangement with  tour bus company  7.0704***
 
 Obtained  external funding  9.1283***
 
 119
 Large trading  network  2.0360
 
 Table 48 (Cont’d):   Customer
database
 Club
promotions
 0.2824
 
 3.1756**
 1.2589
 
 6.4090**
 Website
 0.5181
 1.0457
 
 
 Newsletter
 0.0148
 5.1090**
 
 
 Social
media
 0.0156
 8.8105***
 
 
 Volume
discounts
 0.1475
 1.1128
 
 
 Other
 1.2536
 0.1238
 
 
 NOTE:
***=
significantly
different
at
1%
significance
level

 1.4063
 
 0.2164
 0.9911
 
 2.0744
 
 0.3274
 0.0003
 
 0.0993
 
 













**=
significantly
different
at
the
5%
significance
level

 















*=
significantly
different
at
10%
significance
level
 A
significant
relationship
exists
between
wineries
that
offer
promotions
for
returning
customers
 and
having
an
arrangement
with
a
tour
bus
company,
chi‐square(1)=
7.0704,
p‐value=0.008.
A
 significant
relationship
exists
between
wineries
that
offer
promotions
for
returning
customers
 and
obtaining
external
funding,
chi‐square(1)=
9.1283,
p‐value=0.003.

 A
significant
relationship
exists
between
wineries
that
offer
club
promotions
and
have
an
 arrangement
with
a
tour
bus
company,
chi‐square(1)=
3.1756,
p‐value=0.075.
A
significant
 relationship
exists
between
wineries
that
offer
club
promotions
and
obtaining
external
funding,
 chi‐square(1)=
6.4090,
p‐value=0.011.

 A
significant
relationship
exists
between
wineries
that
have
newsletters
and
firms
that
obtained
 external
funding,
chi‐square(1)=
5.1090,
p‐value=0.024.
This
finding
was
since
newsletters
are
 associated
with
being
a
traditional,
an
older
type
of
media.
Further,
instead
of
sending
out
 
 120
 monthly
updates
many
wineries
and
businesses
choose
to
update
daily
or
weekly
through
 social
media
outlets.
In
addition,
printing
and
mailing
newsletter
is
often
quite
costly
for
 businesses,
however,
this
newsletter
could
be
sent
through
email
but
this
information
was
not
 collected
in
our
survey.
 A
significant
relationship
exists
between
wineries
that
use
social
media
and
obtaining
external
 funding,
chi‐square(1)=
5.1090,
p‐value=0.003.

 Table 49: Contingency Table Between Firms that use Social Media and Obtain External  Funding    Obtained external funding  No
 Yes
 Total  Utilizes social  media  Yes  No  42
 12
 55
 2
 14
 97
 Total  54
 57
 111
 Pearson
chi2(1)
=
8.8105,
P‐Value
=
0.003
 
 NOTE:
***=
significantly
different
at
1%
significance
level

 













**=
significantly
different
at
the
5%
significance
level

 















*=
significantly
different
at
10%
significance
level
   The
chi‐square
result
shows
that
a
significant
relationship
exists
between
those
wineries
that
 use
social
media
and
those
that
do
not
and
the
likelihood
that
a
winery
obtains
external
 funding.
The
contingency
table
above
reveals
that
57
percent
of
the
wineries
that
use
social
 media
obtained
external
funding.
However,
another
43
percent
of
wineries
also
use
social
 media
but
did
not
obtain
external
funding.
We
anticipated
a
higher
percentage
of
the
wineries
 
 121
 that
use
social
media
to
obtain
external
funding,
instead
of
this
results
that
show
the
groups
 are
quite
similar.
 Table 50: Two Sample T‐Tests with Unequal Variances Results of Products and Services Firms  Offer   Variable  Number of  full‐time,  year round  employees  Number of  full‐time,  seasonal  employees  Winery
 and/or
 vineyard
 tours
 4.0933
 
 2.6267**
 
 Restaurant
 6.6786
 
 Gift
shop
 4.1905**
 
 Offer
food
 4.6712** 
 products
 
 
 Hosts
wine
 
 4.1644
 events
 
 3.2857
 2.3691*
 
 2.7945***
 
 2.6438**
 
 Wine  volume sold  direct to  liquor store  (%)  6.6904
 
 Wine  volume sold  direct to  restaurant  (%)  2.5849
 
 
 Wine  volume sold  through  distributors  (%)  5.9945
 
 3.2964***
 
 7.3256
 
 7.3901
 2.1429
 
 1.3866**
 
 2.1366
 
 
 11.7036
 6.7264
 1.6875
 
 8.1347
 8.2512
 
 9.3887*
 
 
 
 Through
conducting
two‐sample,
independent
t‐tests
with
those
wineries
that
offer
food
 products
and
the
eight
indicators
of
legitimacy,
we
found
five
significant
correlations.
Wineries
 who
offer
food
products
hire
more
full‐time,
year
round
employees
and
more
full‐time,
 seasonal
employees.
In
addition
wineries
that
offer
food
products
sell
a
higher
percentage
of
 their
total
wine
volume
through
distributors.

 Wineries
that
have
a
gift
shop
correlated
among
five
of
the
legitimacy
indicators.
Wineries
with
 gift
shops
employ
more
full‐time,
year
round
employees
and
full‐time,
seasonal
employees
 
 122
 than
wineries
that
do
not
have
a
gift
shop.
In
addition
wineries
with
gift
shops
are
associated
 with
selling
a
higher
percentage
of
their
total
wine
volume
through
restaurants.

 Wineries
that
have
a
restaurant
and
the
eight
indicators
of
legitimacy,
results
showed
a
 correlation
with
one
of
the
legitimacy
indicators
and
wineries
that
have
a
restaurant.
Wineries
 with
restaurants
employ
sell
a
higher
percentage
of
their
total
wine
volume
through
liquor
 stores.

 Finally,
we
anticipated
seeing
wineries
that
offer
tours
of
their
winery
or
vineyard
to
correlate
 with
more
of
the
legitimacy
indicators
than
just
an
increase
in
the
number
of
full‐time,
seasonal
 employees
a
winery
hires.

 Table 51: Chi‐Square Results of Products or Services Firms Use     Winery
and/or
 tours
 Restaurant
 Tasting
room
 Gift
shop
 Offer
food
 products
 Hosts
events
 
 Arrangement  with tour bus  company  0.4345
 0.4780
 
 ‐
 ‐
 2.6022
 
 6.8159***
 
 0.8744
 Obtained  Large trading  external funding  network  0.1098
 
 6.5581***
 
 1.0269
 
 3.9750**
 13.0374***
 2.7010
 
 0.0404
 
 1.905
 
 1.0090
 
 1.7143
 
 0.3541
 
 8.8514***
 
 A
significant
relationship
exists
between
wineries
that
have
a
restaurant
and
obtaining
external
 funding,
chi‐square(1)=6.5581,
p‐value=0.010.
In
addition,
a
significant
relationship
exists
 
 123
 between
wineries
that
have
a
gift
shop
and
wineries
that
obtain
external
funding,
chi‐ square(1)=3.9750,
p‐value=0.046.

 A
significant
relationship
exists
between
wineries
that
offer
food
products
and
having
an
 arrangement
with
a
tour
bus
company,
chi‐square(1)=6.8159,
p‐value=0.009.
Another
 significant
relationship
exists
with
those
wineries
that
offer
food
products
and
obtaining
 external
funding,
chi‐square(1)=13.0374,
p‐value=0.000.

 A
significant
relationship
exists
between
wineries
that
host
events
(i.e.
weddings
and
 receptions)
and
having
a
large
trading
network,
chi‐square(1)=8.8514,
p‐value=0.003.
This
 result
was
anticipated
because
hosting
events
often
involves
collaborating
with
other
 supporting
industries
like
party
planners,
caterers,
tent
companies
and
party
rental
companies.

 
 
 
 
 
 
 
 
 
 124
 CHAPTER 5: DISCUSSION AND CONCLUSION    New
firms
need
to
first
obtain
legitimacy
as
a
resource
to
gain
access
to
other
resources
crucial
 to
their
survival
and
growth.
Through
this
study,
we
analyzed
how
wineries’
management
and
 marketing
decisions
affect
the
number
of
legitimacy
indicators
a
winery
obtains.
The
bivariate
 results
indicated
the
greatest
number
of
indicators
one
variable
correlated
with
was
five.
 Further,
only
eight
variables
correlated
with
five
legitimacy
indicators.
Further,
only
three
 variables
correlated
with
four
of
the
legitimacy
indicators.
Finally,
many
of
our
study’s
 predictions
were
significant
leading
us
to
form
direct
strategies
for
nascent
firms
operating
a
 developing
industry,
and
contribute
to
the
literature
on
legitimacy
and
developing
wine
 regions.
 Interestingly,
the
number
of
years
of
experience
a
winery
owner
has
in
the
wine
industry,
grape
 production
or
business
does
not
relate
to
a
firm
obtaining
financing
or
having
a
large
trading
 network.
This
was
surprising,
since
much
of
the
previous
literature
suggests
an
owner
with
 previous
relevant
experience
often
associates
with
the
success
of
new
venture.
Further,
owners
 with
previous
experience
in
different
industries
or
the
wine
or
grape
industry
would
 presumably
have
a
large
network.
Torniskoski
and
Newberg
(2005)
had
similar
findings
in
their
 study,
networking
behavior
had
a
much
less
significant
effect
on
emerging
factors
than
 anticipated.

 Our
analysis
revealed
that
wineries
need
to
focus
on
increasing
production
levels
(number
of
 cases
produced
annually)
to
increase
their
ability
to
obtain
legitimacy.
Unlike
other
legitimacy
 
 125
 indicators,
the
age
of
the
winery
does
not
correlate
with
obtaining
external
funding,
this
is
 positive
for
new
firms
seeking
funding.
Further,
produces
a
significant
percent
of
wine
from
 vinifera
grapes
correlated
with
five
of
the
legitimacy
indicators.
Interestingly,
the
procurement
 method
that
wineries
use
to
obtain
grapes
did
not
correlate
with
obtaining
external
funding.
 We
anticipated
external
funders
viewing
formal
contract
methods
as
the
firm
behaving
like
an
 established
firm.
However,
wineries
that
outsource
some
part
of
their
winemaking
are
more
 likely
to
obtain
external
funding.
Through
in‐depths
interviews
with
lenders
in
and
outside
the
 emerging
region
could
help
to
understand
what
factors
external
funders
deem
important.
 Interestingly,
wineries
that
declared,
“bulk
wine”
as
the
main
input
correlated
with
selling
an
 increasing
percent
of
wine
through
distributors.
Finally,
a
key
relationship
was
rejected
when
 using
“other”
(i.e.
cherries,
pecans,
etc.),
as
the
main
input
to
produce
wine
did
not
negatively
 correlate
with
selling
an
wine
through
distributors.
Surprisingly,
increasing
production
did
not
 correlate
with
an
increasing
percentage
of
wine
selling
through
restaurants
or
liquor
stores.
 Finally,
information
is
lacking
on
what
owners’
ideal
visions
are
for
their
winery,
which
could
 offer
insight
to
how
firms
and
the
region
itself
views
legitimacy,
as
well
as
the
growth
and
 success
of
their
firm
and
the
region.
This
information
could
be
gathered
through
asking
winery
 owners
on
a
future
study
if
they
have
an
ideal
number
of
cases
they
hope
to
produce
and
by
 when,
or
asking
the
owners
if
they
want
to
become
a
boutique
style
winery
or
a
winery
with
 large,
national
distribution.
 Wineries
that
use
“other”
as
the
main
input
in
their
wine
are
more
likely
to
have
a
large
trading
 network.
In
this
emerging
wine
region,
many
wineries
make
wine
from
many
fruits,
which
could
 
 126
 require
a
large
network
of
suppliers.
This
was
confirmed
in
the
results
through
wineries
that
 grow
their
own
grapes
correlating
negatively
with
having
a
large
trading
network.
Surprisingly,
 none
of
the
promotional
activities
including
social
media
or
club
promotions
correlated
with
 wineries
having
a
large
trading
network.

 Further,
the
more
a
winery
charges
for
its
highest
priced
wine
correlates
with
a
winery
 obtaining
key
legitimacy
indicators.
As
expected,
the
more
wine
a
firm
sell
outside
its
home
 state
correlates
with
a
higher
number
of
legitimacy
indicators
and
selling
a
higher
percent
of
in‐ state
sales
negatively
correlates
to
obtaining
those
same
legitimacy
indicators.
Wineries
should
 offer
food
products,
club
promotions
and
have
a
gift
shop.
Further,
firms
should
use
social
 media
to
promote
their
firm,
social
media
correlated
with
the
greatest
number
of
indicators.

 Wineries
that
want
to
sell
through
distributors
need
to
produce
a
certain
amount
of
wine.
In
 future
studies,
surveying
distributors
would
help
to
understand
exactly
how
much
wine
a
firm
 needs
to
supply.
In
terms
of
production,
wineries
that
use
more
vinifera
grapes
and
grapes
as
 the
main
input
in
their
wine
sold
more
wine
through
distributors.
Finally,
in
support
of
our
 relationship,
wineries
that
produce
a
high
percent
of
their
wine
from
hybrid
grapes
sold
less
 through
distributors,
and
further
using
hybrid
grapes
did
not
correlate
with
selling
wine
through
 liquor
stores
or
restaurants.
 Winning
an
award,
having
returning
customer
promotions
and
club
promotions
may
increase
 the
likelihood
of
having
an
arrangement
with
a
tour
bus
company.
Again,
awards
and
the
 pricing
of
the
wine
could
be
the
measurements
a
tour
bus
company
uses
in
selecting
which
 wineries
it
wants
to
collaborate
with.
We
anticipated
that
a
firm
who
uses
social
media
would
 
 127
 be
more
likely
to
have
an
arrangement
with
a
tour
bus
company
but
the
results
do
not
support
 that
relationship.
However,
firms
that
offer
food
products
are
more
likely
to
have
an
 arrangement
with
a
tour
bus
company. Surprisingly,
no
correlation
was
found
between
wineries
 that
host
events.
We
anticipated
a
working
relationship
with
the
wineries
and
tour
bus
 companies.
This
aligns
with
Carlsen
(2013)
and
Hall
et
al.
(1998)
which
emphasize
compatibility
 is
important
to
ensure
that
the
experience
of
a
winery
visit
is
not
compromised,
stating
that
 some
wineries
do
not
have
space
for
bus
loads
of
wine
drinkers
and
therefore
some
wineries
 are
resistant
to
even
host
tour
buses
without
an
appointment.
 Wineries
that
win
awards
are
more
likely
to
obtain
external
funding.
Therefore,
wineries
should
 invest
in
applying
for
awards
and
advertise
their
wins
to
customers
and
resource
gatekeepers.  While
having
a
gift
shop
and
offering
food
products
is
plausible,
operating
a
restaurant
can
be
 quite
different
than
running
a
winery
therefore,
we
were
surprised
by
the
strong
relationship
 between
obtaining
external
funding
and
having
a
restaurant.
However,
offering
these
products
 and
services
often
helps
build
interest
in
the
winery
and
helps
consumers
connect
with
the
 winery
as
discussed
by
Brown
and
Getz
(2005),
“There
will
be
a
search
for
authenticity,
often
 manifested
in
seeing
the
actual
grapes,
physical
plant,
and
personnel
that
produce
favored
 wines,”
(Brown
and
Getz,
p.
269).
  We
anticipated
older
wineries
to
have
a
large
trading
network,
however,
over
time
wineries
 may
buy
more
land,
operate
their
own
vineyard
and
start
vertically
integrating
many
aspects
of
 their
business
leading
them
to
interact
less
with
others.
This
same
reasoning
could
also
apply
to
 increases
in
production,
as
wineries
expand
they
may
establish
long‐term
contracts
with
the
 
 128
 same
growers
or
grow
their
own
grapes,
and
potentially
work
with
one
distributor,
therefore
 reducing
their
trading
network.

 A
few
key
strategies
can
be
suggested
for
the
region.
First,
the
success
of
the
individual
 wineries
depends
on
the
success
of
the
overall
region;
further
legitimizing
the
region
must
be
 done
first
before
wineries
can
legitimize
their
own
firm.
“Therefore
a
regional
brand
is
more
 important
to
new
wineries
and
small
brands
than
to
large
well
known
brands,”
(McCutcheon
et
 al.,
2013;
Johnson
and
Bruwer,
2007;
Lockshin
et
al.,
2006;
Van
Zanten
et
al.,
2003).
This
is
a
key
 finding
for
the
region
that
newer
wineries
need
a
strong
regional
brand
more
than
well‐known
 wineries
and
since
more
established
firms
might
have
more
power
this
could
be
challenging.

 Table 52: Current Status of the Emerging Wine Region based on Easingwood (2006) model  Variables  Specializing
in
a
wine
style
 Producing
significant
amounts
of
 Discussed
by
opinion
formers
 wine
 Consistently
produces
high
quality
 Has
a
wine
heritage
 wines
 Produces
distinctive
wines
 Makes
wine
that
terroir
can
 produce
 Emerging Wine Region  
 
 
 
 
 
 
 Note:
Applied
Easingwood’s
(2006)
model
of
key
features
that
drive
regionality
of
a
wine
region
 to
the
emerging
wine
region
 While
the
emerging
region
is
not
producing
significant
amounts
of
wine,
the
quality
of
the
wine
 and
percent
of
vinifera
grapes
used
are
increasing
according
to
Master
Sommelier
Ron
 Edwards.
Further,
viticulture
expert
Paolo
Sabbitini,
Ph.D.,
finds
that
wineries
that
have
been
 operating
for
30
to
40
years
do
a
“portfolio
switch”
from
simply
producing
wine
to
pay
their
 
 129
 bills
to
producing
wine
that
builds
their
winery’s
reputation.
This
transition
is
what
Sabbitini
 believes
is
the
leading
cause
of
the
increased
planting
of
vinifera
grapes
across
the
region.

 The
emerging
wine
region
needs
to
acknowledge
and
focus
on
producing
a
flagship
varietal
to
 increase
the
region’s
reputation
and
recognition.
Edwards
and
Sabbitini
both
agree
a
wine
style
 or
flagship
varietal
is
lacking
but
both
note
this
decision
may
be
state
based.
Easingwood
(2006)
 agrees
that
having
a
flagship
grape
increases
regionality
but
also
notes
that,
“it
also
helps
if
the
 wine
is
a
result
of
a
particular
terroir
so
that
other
regions
will
find
it
hard
to
replicate
the
wine
 style,”
(Easingwood,
p.
224).


 Finally,
the
emerging
wine
region
must
change
its
perception
of
being
a
service
economy
to
an
 experience
economy.
As
Getz
and
Brown
(2006)
mention
wineries
in
almost
every
growing
area
 of
the
world
can
produce
high
quality
wine
therefore
leading
consumers
to
easily
switch
wines
 since
the
overall
message
is
quality.
Wineries
and
supporting
industries
in
emerging
wine
 regions
need
to
collaborate
and
reinforce
the
same
message
about
the
activities
that
wineries
 offer,
the
quality
of
the
wine
in
the
region
and
the
cultural
and
recreational
experiences
that
 make
the
region
an
exciting
wine
destination.

 Finally,
we
added
to
the
work
of
Navis
and
Glynn
(2006)
on
building
a
product
category.
Our
 analysis
contributes
to
the
research
on
the
legitimation
of
a
new
market
category
through
 analyzing
the
factors
internal
to
the
category
like
the
strategic
and
symbolic
actions
of
the
firms
 and
the
factors
external
to
the
category
like
the
resource
gatekeepers
and
legitimizing
 organizations
who
judge
the
individual
firms
and
the
region’s
credibility,
appropriateness
and
 ultimately
its
legitimacy.

 
 130
 In
summary,
increasing
the
survey
response
rate
would
increase
the
validity
of
the
results
and
 offer
a
more
comprehensive
view
of
the
wine
region.
Further,
through
surveying
the
same
 wineries
every
few
years
would
allow
a
more
in‐depth
analysis
of
the
effects
of
the
 management
and
marketing
strategies
on
the
success
and
legitimacy
of
the
individual
firms
and
 the
region.
Surveying
supporting
industries
could
also
offer
insight
in
how
these
key
resource
 gatekeepers
perceive
firms
in
the
emerging
region,
this
could
offer
more
strength
and
accuracy
 to
the
legitimacy
indicators.
Overall,
the
findings
from
this
2012
survey
are
highly
beneficial
to
 winery
owners
to
understand
how
other
wineries
are
performing
and
to
gain
perspective
on
 the
direction
the
region
is
going.
Finally,
this
research
will
also
serve
as
a
resource
for
 supporting
industries
and
resource
gatekeepers
to
understand
the
relationships
of
wineries’
 strategies
and
different
factors
as
well
an
opportunity
to
help
resource
gatekeepers
make
 decisions
that
are
less
subjective
and
more
objective
and
in
line
with
wineries
and
the
region’s
 needs
to
obtain
resources
and
ultimately
help
facilitate
growth
and
success
for
both.

 A
few
limitations
exist
in
this
thesis
research.
First,
the
wine
regions
in
Michigan,
Missouri
and
 New
York
are
a
relatively
small
industry,
therefore
we
could
increase
the
sample
size.
In
 surveying
the
winery
owners
again
in
the
future,
a
few
questions
should
be
added
to
the
survey
 including
asking
the
owners
what
their
production
goal
is
in
five
years
and
what
other
goals
the
 owners
have
for
their
winery
in
the
future,
i.e.
sell
outside
their
home
state,
sell
a
greater
 percentage
of
total
wine
volume
through
distributors,
or
increase
marketing
efforts,
etc.
The
 third
limitation
in
the
study
is
no
causation
can
be
inferred
making
it
difficult
to
infer
 recommendations
to
the
winery
owners
and
the
industry
since
we
do
not
have
causal
effects.
 The
fourth
limitation
is
the
lack
of
a
legitimacy
index,
in
the
future
this
would
benefit
the
 
 131
 research
field
on
legitimacy
and
legitimizing
a
wine
region.
The
ideal
legitimacy
index
would
 collect
data
that
would
allow
the
wineries
to
then
be
ranked
as
low,
medium
or
high
achievers
 of
legitimacy.
Finally,
an
important
limitation
is
an
adequate
model
of
legitimacy
is
lacking
and
 crucial
for
future
research.

 In
summary,
the
goal
of
this
thesis
was
to
answer
the
following
questions:
What
strategies
can
 firms
use
to
build
legitimacy
and
thereby
gain
access
to
key
resources
crucial
to
the
firm’s
 survival
and
growth?
After
completing
a
thorough
review
of
previous
literature
on
legitimacy,
 developing
wine
regions,
collaboration
and
building
a
regional
identity,
this
paper
identified
 eight
strong
indicators
of
legitimacy.
The
framework
followed
the
work
of
Zimmerman
and
 Zeitz
(2002)
and
Torniksoki
and
Newbert
(2007)
categorizing
the
indicators
into
four
categories,
 (1)
hiring
an
employee,
(2)
making
a
sale,
(3)
obtaining
financing
and
(4)
networking.
Through
 surveying
113
winery
owners
in
the
emerging
wine
region,
we
were
able
to
conduct
a
 comprehensive
descriptive,
bivariate
and
multivariate
analysis
on
the
data
between
all
eight
 variables
and
the
marketing
and
management
decisions
of
the
wineries.
The
paper
offers
 strategies
for
wineries
and
the
region
to
build
legitimacy
and
therefore
use
legitimacy
as
a
 resource
to
obtain
other
key
resources
crucial
to
the
individual
firms’
and
region’s
success
and
 growth.
 
 
 
 132
 
 
 
 
 
 
 
 
 APPENDICES  
 
 
 
 
 
 
   
 133
 APPENDIX A    Table 53: The continuous variables that correlated with the greatest number of legitimacy  indicators at the 1, 5, 10 percent significant levels  VARIABLE  1  2  3  4  5  6  7  8  CHI‐SQUARE RESULTS  CORRELATION RESULTS  Number of Years Winery has Commercially been Producing Wine and Number of Cases  Produced in 2011
 
 
 
 
 Years
in
 
 
 
 
 business
 Cases
 produced

 
 
 
 
 
 
 
 
 Percent of Total Wine Production made from Vinifera, Hybrid, native American Grapes or  Other (i.e. Cherries, Honey, Pecans, etc.)
 %
of
 Vinifera
 ‐ 
 grapes
 
 
 
 
 
 
 
 %
of
Hybrid
 ‐ 
 ‐ 
 grapes
 
 
 
 
 
 
 %
of
native
 American
 grapes
 
 
 
 
 
 
 
 
 %
of
Other
 
 
 
 
 
 
 
 
 Percent of Wine Bottled as Varietal, Blend or Other  %
of
one
 Varietal
 
 
 
 
 
 
 
 
 
 134
 Table 53 (Cont’d):  %
of
Blends
 

 
 
 
 
 
 
 
 
 %
of
Other
 
 
 
 
 
 
 
 
 Cost of Wineries’ Highest and Lowest Priced Wine and Top Selling Wine  Cost
of
 Highest
 Priced
 ‐

 
 
 
 
 Wine
 
 
 
 Cost
of
 Lowest
 Priced
 ‐ 
 Wine
 
 
 
 
 
 
 
 Cost
of
Top
 Selling
 Wine
 ‐ 
 
 
 
 
 
 
 
 Percent of Gross Revenue from Wine Sales Only, Percent of Wine Sales from In‐State, Out  of State and Outside the U.S.  %
Gross
 Revenue
 from
Wine
 Sales
 
 
 
 
 
 
 
 
 %
of
In‐ State
Sales
 ‐
 ‐ 
 ‐ 
 ‐ 
 ‐ 
 
 
 
 %
of
Out‐ of‐State
 
 
 
 
 
 Sales
 
 
 
 %
of
Out‐ of‐Country
 Sales
 
 
 
 
 
 
 
 
 Percent of Wine Volume Sold Through Various Distribution Channels  Percent of Total Wine Volume Sold through Various Distribution Channels  %
Sold
at
 the
Winery
 ‐
 ‐ 
 ‐ 
 ‐ 
 
 
 
 
 
 135
 Table 53 (Cont’d):  %
Sold
at
 Farmers
 Market
 
 
 
 
 
 
 
 
 %
Sold
 through
 Direct
Mail
 
 
 
 
 
 
 
 
 %
Sold
 through
 
 ‐ 
 Festival
 
 
 
 
 
 
 %
Sold
 through
 Other
 
 
 
 
 
 
 
 
 Percent of Total Wine Volume Produced from Grapes, Grape Juice, Bulk Wine or Other  %
 Produced
 with
 Grapes
 
 
 
 
 
 
 
 
 %
 Produced
 with
Grape
 Juice
 
 
 
 
 
 
 
 
 %
 Produced
 with
Bulk
 Wine
 
 
 
 
 
 
 
 
 %
 Produced
 with
Other
 
 
 
 
 
 
 
 
 Percent of Grapes Procured Using Different Strategies (Own vineyard, Spot/Cash Market  (As Needed), Verbal (Handshake) Agreement or Through a Written Contract  %
via
Own
 Vineyard
 ‐ 
 
 
 
 
 
 
 
 
 136
 Table 53 (Cont’d):  %
via
 Spot/Cash
 Mkt
 
 
 
 
 
 
 
 
 %
via
 Verbal/
 Handshake
 
 
 
 
 
 
 
 
 %
via
 Written
 
 
 
 Contract
 
 
 
 
 
 Percent of Wine Production a Firm Outsources   %
of
 Winemakin g
 
 
 Outsourced
 
 
 
 
 
 
 Owner Characteristics Including Prior Experience, Time Spent Working at Winery/Vineyard  and Percent of Self Worth Invested in Winery
 Years
in
 Wine
 Industry
 
 
 
 
 
 
 
 
 Years
in
 Business
 
 ‐ 
 
 
 
 
 
 
 Years
in
 Grape
 Industry
 
 
 
 
 
 
 
 
 %
Time
 Spent
at
 
 
 Winery
 
 
 
 
 
 
 %
Self
 Worth
 Invested
in
 
 
 Winery
 
 
 
 
 
 
 Owner’s
 Age
 
 
 
 
 
 
 
 
 
Note:
1=Full‐Time,
Year
Round
Employees,
2=Full‐Time,
Seasonal
Employees,
3=Wine
Volume
 Sold
to
Liquor
Stores
(%),
4=Wine
Volume
Sold
to
Restaurants
(%),
5=Wine
Volume
Sold

 
 137
 Table 53 (Cont’d):  through
Distributors
(%),
6=Arrangement
with
Tour
Bus
Company,
7=Received
External
 Funding,
and
8=Large
Trading
Network.

   Table 54: The binary variables that correlated with the greatest number of legitimacy  indicators at the 1, 5 and 10 percent significant levels
 VARIABLE  1  2  3  T‐TEST RESULTS  Main Input Used to Produce Wine 
 Grapes
 
 
 
 4  5  
 Bulk
Wine
 
 
 
 
 
 
 Grape
Juice
 
 
 
 
 Other
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Typical length of contract with grape or juice supplier  Year
to
year
 
 
 
 
 
 Multiple
 years
 
 
 
 
 
 Firms that outsource some part of their winemaking  Outsource
 winemaking
 
 
 
 
 Products or Services Wineries Offers Customers  Winery/
 Vineyard
 
 Tours
 
 
 
 Restaurant
 
 
 
 
 Tasting
 Room
 Gift
Shop
 Food
 Products
 Hosts
 events
 
 6  7  8  CHI‐SQUARE RESULTS  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 138
 Table 54 (Cont’d):  Promotional Activities Wineries Utilize  Promotion
 for
 returning
 
 customers
 
 
 Customer
 Database
 
 
 
 Club
 Promotions
 
 
 
 Website
 
 
 
 Newsletter
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Social
 Media
 
 
 
 
 Volume
 
 
 Discount
 
 
 Other
 
 
 
 
 Winery Owner is a Member of an Association   Local
 Chamber
of
 Commerce
 
 
 
 
 Wine
 Association
 
 
 
 
 Awards and Certifications Winery has Obtained  Industry
 Certification
 
 
 
 
 Wine
 Competition
 
 
 
 
 Trade
Press
 
 
 
 
 
 
 Owner
has
 vineyard/
 winemaking
 
 certification
 
 
 
 
 
 
 
 Note:
1=Full‐Time,
Year
Round
Employees,
2=Full‐Time,
Seasonal
Employees,
3=Wine
Volume
 Sold
to
Liquor
Stores
(%),
4=Wine
Volume
Sold
to
Restaurants
(%),
5=Wine
Volume
Sold

 
 139
 Table 54 (Cont’d):  through
Distributors
(%),
6=Arrangement
with
Tour
Bus
Company,
7=Received
External
 Funding,
and
8=Large
Trading
Network.

 Table 55: The categorical variables (more than 2 groups) that correlated with the greatest  number of legitimacy indicators at the 1, 5 and 10 percent significant levels  VARIABLE  1  2  3  4  5  6  7  8  ONE‐WAY ANOVA RESULTS  CHI‐SQUARE RESULTS  Reason Winery Owner Entered the Wine Business
 
 
 
 
 
 
 
 
 
 Winery Owner’s Satisfaction Level with Performance of Winery (5‐point Likert scale)
 
 
 
 
 
 
 
 
 
 How Winery Business is Organized (i.e. Sole proprietorship, partnership, L.L.C, etc.)  
 
 
 
 
 
 
 
 
 Method Used to Determine Contract Price (i.e. Based on market prices, negotiated with  supplier, set by winery, etc.)  
 
 
 
 
 
 
 
 
 Owners’ Rating of their Typical Customer’s Degree of Knowledge and Familiarity with their  Winery’s Products or Winery  
 
 
 
 
 
 
 
 
 Owners’ Rating of Consumers’ Familiarity with Wine from Their Region  
 
 
 
 
 
 
 
 
 Type of Financing a Winery Uses (Self‐financed, External Financing (bank, investor), or  Both)  
 
 
 
 
 
 
 
 
 Winery’s Method of producing wine that is 1) Similar to what consumers are familiar with  to 7) Producing a novel taste compared to what consumers are used to  
 
 
 
 
 
 
 
 
 Note:
1=Full‐Time,
Year
Round
Employees,
2=Full‐Time,
Seasonal
Employees,
3=Wine
Volume
 Sold
to
Liquor
Stores
(%),
4=Wine
Volume
Sold
to
Restaurants
(%),
5=Wine
Volume
Sold
 through
Distributors
(%),
6=Arrangement
with
Tour
Bus
Company,
7=Received
External
 Funding,
and
8=Large
Trading
Network.

 
 140
 APPENDIX B    Survey of Michigan Wineries Code No. ___ 1. Name of Winery: _________________________________________________. 2. ZIP Code of your winery: ________________. 3. In what year was your winery licensed? ___________. 4. What was the first year of commercial wine production? _________. 5. Why did you decide to enter the wine business? Please check the main reason: ( ) Opportunity to enter the family business ( ) Good business opportunity ( ) Lifestyle or hobby objectives ( ) Retirement nest egg ( ) Passion for wine and food ( ) Community development ( ) Other (please specify):_____________________________________________________. 6. How satisfied are you with the performance of your winery? Please circle one option: Very Satisfied Neither Unsatisfied Very satisfied satisfied nor unsatisfied unsatisfied 7. What best describes how your winery business is organized? ( ) Sole proprietorship ( ) Partnership ( ) Limited liability company (LLC) ( ) Closely held or family corporation ( ) Publically traded corporation ( ) Other (estate or trust, cooperative, etc.) 8. What was your total wine production in 2011? _____________cases or ___________gallons. 
 141
 9. Over the previous three years, your annual wine production has: ( ) been stable at the same level. ( ) increased. By how much? ______________% ( ) decreased. By how much? ______________% ( ) Not applicable (if winery less than 3 years in business). 10. How many persons (excluding unpaid family workers and laborers supplied by third party contractors) worked at the winery (including the vineyard if applicable) in 2011? Full time, year round ______; Full time, seasonal_____; Part time (year round and/or seasonal)_________. 11. Currently, what percentage of your total wine production is made from (sum to 100%): Vinifera Grapes ______% Hybrid Grapes ______% Native American Grapes _____% Other _____% 12. What percentage of your total wine production is bottled as (sum to 100%): Grape varietal? ______% Grape blends? ______% Other?______% 13. What is the average retail price for your: highest priced wine? $____________ per bottle lowest priced wine? $____________ per bottle top selling wine? $____________ per bottle 14. In addition to wine, what other products and services does your winery offer wine customers? YES NO Winery/vineyard tours? Restaurant? Tasting room? Gift shop? Food products? Hosting winery events (weddings, receptions, etc.)? 15. What percentage of your winery’s 2011 gross revenue is from wine sales only? _______%. 
 142
 16. What percentage of your total wine sales are: In state _____%; Out of state_____%; Out of country_____% 17. What percentage of your 2011 sales at the winery (tasting room or mail order shipments) were repeat purchases? _______ %. 18. Please answer the following questions about your wine distribution channels: Over the next three years, do you Currently, what percentage of wine volume is expect this percentage to decrease, sold…? increase or stay the same? (Please check one) Decrease__ Stay the same__ At the winery % Increase__ Decrease__ Stay the same__ Direct to liquor stores % Increase__ Decrease__ Stay the same__ Direct to restaurants % Increase__ Decrease__ Stay the same__ At a farmers market % Increase__ Decrease__ Stay the same__ Direct mail order shipments % Increase__ Decrease__ Stay the same__ Through distributors % Increase__ Decrease__ Stay the same__ Festivals or community events % Increase__ Decrease__ Stay the same__ Other:_____________________ % Increase__ 19. Please answer the following questions regarding your promotional activities: YES NO YES NO Do you have arrangements with tour or bus companies? Do you have promotions for returning customers? Do you have a customer database? Do you have club promotions? Do you have a website? 19. Please answer the following questions regarding your promotional activities (continued): 
 143
 Do you have a newsletter? Do you use social media (i.e. Facebook, Twitter, etc.)? Do you offer volume discounts? Other (please specify):____________________________________ 20. What main input or ingredient do you use in the winery to produce wine? Percentage of total YES NO wine volume produced from… Grapes % Grape juice % Bulk wine % Other: ________________________ (please specify) % Sum of all main inputs used to produce wine (as % of wine volume) 100% 21. What percentage of grapes do you currently: Produce in your own vineyards (estate grown)? _________% Acquire in spot/cash markets as needed? _________%_______% Procure via verbal (handshake) contract? _________%_______% Procure via written contract? _________% Sum: 100% If you do not use contracts to procure grapes, please skip to question 24. 22. How is the contract price determined? ( ) Contract price is based on market prices. ( ) Contract price is negotiated with supplier. ( ) Contract price is set by the winery. ( ) Contract price is set by the supplier. ( ) Other method. Please explain: ________________________________________________. 23. What is the typical length of a contract with your grape or juice supplier(s)? ( ) Year to year ( ) Multiple years (how many? _______). 
 144
 24. What other terms are included in your contracts with grape or juice supplier(s)? Please check all that apply: ( ) Specific acreage ( ) Specific quantity (tonnage, gallons) ( ) Disagreement resolution clause ( ) Viticultural practices clause ( ) Bonuses/Penalties for: ( ) sugar ( ) acids ( ) defects (mold, rot) ( ) Other (specify______________). 25. Do you outsource any of your winemaking to another winery? ( ) No, I produce all wine on site. ( ) Yes, I outsource – Percentage of you wine production that is outsourced: _______% 26. Do you produce wine for, or rent your facilities/equipment to, other wineries (custom crush)? ( ) No ( ) Yes – Percentage of winery’s gross revenue from custom crush services: _______% Please indicate how much you agree or disagree with the following statements... Strongly 27. I can easily and accurately measure all quality attributes of grapes used in winemaking. 28. It is easy to procure grapes of adequate quality. Strongly Disagree Agree 1 2 3 4 5 6 7 1 2 3 4 5 6 7 29. Indicate the degree to which physical investments made in the winery (winemaking facilities and equipment) can be redeployed to other uses. Easily redeployed without cost 1 2 3 4 5 6 7 Cannot be redeployed for technical or economic reasons 30. Indicate the degree to which physical investments made to produce grapes (vineyard, equipment, and machinery) can be redeployed to other uses. Easily redeployed without cost 1 2 3 4 5 6 7 Cannot be redeployed for technical or economic reasons 31. If the transaction between your winery and your main grape supplier ceased unexpectedly, to what degree could the assets dedicated to that specific transaction be redeployed to other uses? Easily redeployed without cost 1 2 3 4 5 6 7 Cannot be redeployed for technical or economic reasons 
 145
 32. To what degree is the timing of grape deliveries (i.e. having access to grapes on a certain schedule) important to the profitability of your winery? Not important at all 1 2 3 4 5 6 7 Extremely important 33. To what degree has your relationship with your main grape supplier become important to the profitability of your winery? Not important at all 1 2 3 4 5 6 7 Extremely important 34. Indicate the degree of uncertainty you face with respect to grape yields (and thus quantity of grapes available to winemaking) from year to year. No uncertainty at all 1 2 3 4 5 6 7 Extremely high uncertainty 35. Indicate the degree of uncertainty you face with respect to grape quality available to winemaking from year to year. No uncertainty at all 1 2 3 4 5 6 7 Extremely high uncertainty 36. Are you a member of your local/regional chamber of commerce? ( ) Yes ( ) No 37. Are you a member of a wine trade association (board or council)? ( ) Yes ( ) No 38. Has your winery or vineyard obtained any industry certifications (i.e. sustainable, organic, etc.)? ( ) Yes ( ) No 39. How would you rate your own knowledge of regulations affecting the wine industry (such as Alcohol and Tobacco Tax and Trade Bureau (TTB), zoning, environmental, labor, food safety, etc.)? No knowledge 1 2 3 4 5 6 7 Full knowledge of industry regulations 40. Has your winery received any awards from: a. Wine competitions? ( ) Yes ( ) No b. Trade Press? ( ) Yes ( ) No c. Other sources? ( ) Yes ( ) No 41. How would you rate your winery’s performance relative to others in your region? Lower Than Average 1 2 3 4 5 6 7 Higher Than Average 42. How would you rate the breadth of your winery’s trading network (i.e. buyers, suppliers, etc.)? Winery consistently Winery consistently interacts with a large interacts with a select 1 2 3 4 5 6 7 number of trading few trading partners partners 43. How would you rate your typical customer’s degree of knowledge and familiarity with your wine products or winery? Customers have a high Customers are 1 2 3 4 5 6 degree of knowledge unfamiliar with our 7 and familiarity with our products and winery products and winery 
 146
 44. How would you characterize the consumer’s familiarity with wine from your region? Consumers are likely to Consumers are likely to 1 2 3 4 5 6 be highly be unfamiliar with wines 7 knowledgeable about from my region wines from my region 45. How would you rate your typical input supplier’s (i.e. grapes, juice, bulk wine, etc.) familiarity with the management practices of wineries in your region? Input suppliers do Input suppliers do not understand the understand management management 1 2 3 4 5 6 7 N/A practices of wineries in practices of my region wineries in my region 46. How is your winery financed? ( ) Both ( ) Self-financed ( ) External funding (bank, investor) 47. How would you rate an external funder’s (banks, investors, etc.) familiarity with the wine business in your region? Funders do not understand Funders do understand the 1 2 3 4 5 6 7 management practices of management practices of N/A wineries in my region wineries in my region 48. How would you characterize the strategic behavior of new entrants in your region’s wine industry? New entrants are likely New entrants are likely to copy the strategies of 1 2 3 4 5 6 7 to experiment with new existing wineries strategies 49. Please describe the extent to which your winery focuses on: A. Adopting business practices used by 1 2 3 4 5 7 others in the wine industry B. Producing wine that tastes similar to what consumers are familiar with 1 2 3 4 7 5 6 6 Innovating and introducing new business practices in the wine industry Producing wine that has a novel taste compared to what consumers are familiar with Please answer this last set of questions about yourself (winery owner or general manager): 
 147
 50. What is your age? ______. 51. What is your level of education? ( ) High school ( ) Some college ( ) Bachelor’s degree ( ) One or more graduate degrees 52. Have you received a certificate in winemaking or viticulture? ( ) Yes ( ) No 53. How many years of experience do you have… In the wine industry? _______ years. In grape production? _______ years. In business? _______ years 
 54. What percentage of your time do you spend working on your winery or in conducting activities related to your wine business (e.g. vineyard, tasting room, planning, etc.)? ________%. 55. What percentage of your current net worth is invested in the winery? ________%. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 148
 
 
 
 
 
 
 
 
 
 
 
 
 BIBLIOGRAPHY  
 
 
 
 
 
 
 
 
 
 
 
 
 
 149
 BIBLIOGRAPHY      Alonso,
Abel
Duarte.
“Wine,
Tourism
and
Experience
in
the
Canary
Islands’
Context.”
Turizam:  znanstveno‐stručni časopis
57.1
(2009):
7–22.
Print.
 
 Baron,
Robert
A,
and
Gideon
D
Markman.
“Beyond
Social
Capital:
The
Role
of
Entrepreneurs’
 Social
Competence
in
Their
Financial
Success.”
Journal of Business Venturing
18.1
 (2003):
41–60.
ScienceDirect.
Web.
11
Feb.
2013.
 
 Baron,
Robert
A.,
and
Gideon
D.
Markman.
“Beyond
Social
Capital:
How
Social
Skills
Can
 Enhance
Entrepreneurs’
Success.”
Academy of Management Executive
14.1
(2000):
106– 116.
Print.
 
 Battilana,
Julie,
Bernard
Leca,
and
Eva
Boxenbaum.
“2
How
Actors
Change
Institutions:
Towards
 a
Theory
of
Institutional
Entrepreneurship.”
Academy of Management Annals
3
(2009):
 65–107.
Print.
 
 Beames,
Geoffrey.
“The
Rock,
the
Reef
and
the
Grape:
The
Challenges
of
Developing
Wine
 Tourism
in
Regional
Australia.”
Journal of Vacation Marketing
9.3
(2003):
205–212.
 jvm.sagepub.com.
Web.
10
Mar.
2013.
 
 Benjamin,
Beth
A.,
and
Joel
M.
Podolny.
“Status,
Quality,
and
Social
Order
in
the
California
Wine
 Industry.”
Administrative Science Quarterly
44.3
(1999):
563–589.
asq.sagepub.com.
 Web.
8
Feb.
2013.
 
 Beverland,
Michael
B.
“Crafting
Brand
Authenticity:
The
Case
of
Luxury
Wines*.”
Journal of  Management Studies
42.5
(2005):
1003–1029.
Wiley Online Library.
Web.
15
Feb.
2013.
 
 Blank,
Malin,
and
Anna
Maria
Persson.
The Swedish food retail market : An econometric analysis  of the competition on local food retail markets.
Ekonomiska
institutionen,
2004.
liu.diva‐ portal.org.
Web.
8
Feb.
2013.
 
 Brown,
Graham,
and
Donald
Getz.
“Linking
Wine
Preferences
to
the
Choice
of
Wine
Tourism
 Destinations.”
Journal of Travel Research
43.3
(2005):
266–276.
jtr.sagepub.com.
Web.
 21
Mar.
2013.
 
 Brush,
Candida
G.,
Tatiana
S.
Manolova,
and
Linda
F.
Edelman.
“Properties
of
Emerging
 Organizations:
An
Empirical
Test.”
Journal of Business Venturing
23.5
(2008):
547–566.
 ScienceDirect.
Web.
22
Mar.
2013.
 
 Bruwer,
Johan,
and
Isabelle
Lesschaeve.
“Wine
Tourists’
Destination
Region
Brand
Image
 
 150
 Perception
and
Antecedents:
Conceptualization
of
a
Winescape
Framework.”
Journal of  Travel & Tourism Marketing
29.7
(2012):
611–628.
Taylor and Francis+NEJM.
Web.
10
 Mar.
2013.
 
 Caple,
Susan.
“An
Investigation
into
the
Role
of
Collaboration
in
the
Development
of
a
Regional
 Brand.”
2011.
otago.ourarchive.ac.nz.
Web.
15
Feb.
2013.
 
 Carlsen,
Jack.
“A
Review
of
Global
Wine
Tourism
Research.”
Journal of Wine Research
15.1
 (2004):
5–13.
Taylor and Francis+NEJM.
Web.
25
Feb.
2013.
 
 Cholette,
Susan,
Richard
Castaldi,
and
April
Frederick.
“The
Globalization
of
the
Wine
Industry:
 Implications
for
Old
and
New
World
Producers.”
International Business and Economy  Conference Proceedings.
2005.
Google Scholar.
Web.
29
Apr.
2013.
 
 De
Carolis,
Donna
Marie,
Barrie
E.
Litzky,
and
Kimberly
A.
Eddleston.
“Why
Networks
Enhance
 the
Progress
of
New
Venture
Creation:
The
Influence
of
Social
Capital
and
Cognition.”
 Entrepreneurship Theory and Practice
33.2
(2009):
527–545.
Wiley Online Library.
Web.
 1
Feb.
2013.
 
 Cornelissen,
J.
P.,
and
J.
S.
Clarke.
“Imagining
and
Rationalizing
Opportunities:
Inductive
 Reasoning
and
the
Creation
and
Justification
of
New
Ventures.”
Academy of  Management Review
35.4
(2010):
539–557.
Print.
 
 De
Carolis,
Donna
Marie,
Barrie
E.
Litzky,
and
Kimberly
A.
Eddleston.
“Why
Networks
Enhance
 the
Progress
of
New
Venture
Creation:
The
Influence
of
Social
Capital
and
Cognition.”
 Entrepreneurship Theory and Practice
33.2
(2009):
527–545.
Wiley Online Library.
Web.
 1
Feb.
2013.
 
 Déjean,
Frédérique,
Jean‐Pascal
Gond,
and
Bernard
Leca.
“Measuring
the
Unmeasured:
An
 Institutional
Entrepreneur
Strategy
in
an
Emerging
Industry.”
Human Relations
57.6
 (2004):
741–764.
hum.sagepub.com.
Web.
1
Feb.
2013.
 
 Delmar,
Frédéric,
and
Scott
Shane.
“Legitimating
First:
Organizing
Activities
and
the
Survival
of
 New
Ventures.”
Journal of Business Venturing
19.3
(2004):
385–410.
ScienceDirect.
Web.
 20
Apr.
2013.
 
 Dillman,
Don
A.
et
al.
“Response
Rate
and
Measurement
Differences
in
Mixed‐mode
Surveys
 Using
Mail,
Telephone,
Interactive
Voice
Response
(IVR)
and
the
Internet.”
Social  Science Research
38.1
(2009):
1–18.
ScienceDirect.
Web.
19
Feb.
2013.
 
 Easingwood,
Chris.
“The
Drivers
of
Regionality:
The
Case
of
the
Australian
Wine
Regions.”
 Montpellier,
2006.
Web.
15
Feb.
2013.
 
 Esterman,
Mark.
Telephone
interview.
21
Mar.
2013.
 
 151
 
 Fensterseifer,
Jaime
Evaldo.
“The
Emerging
Brazilian
Wine
Industry:
Challenges
and
Prospects
 for
the
Serra
Gaúcha
Wine
Cluster.”
International Journal of Wine Business Research
 19.3
(2007):
187–206.
Emerald Publishing.
Web.
7
Feb.
2013.
 
 Fernández
Olmos,
Marta.
“The
Performance
Implications
of
‘grow
or
Buy’
Decisions
in
the
Wine
 Industry.”
Food Policy
35.3
(2010):
256–264.
ScienceDirect.
Web.
29
Apr.
2013.
 
 Fischer,
Christian,
and
Monika
Hartmann.
Agri‐food Chain Relation... ‐ Books on Google Play.
 CABI,
2010.
Web.
13
Mar.
2013.
 
 Gartner,
William
B.
“A
Conceptual
Framework
for
Describing
the
Phenomenon
of
New
Venture
 Creation.”
Academy of Management Review
10.4
(1985):
696–706.
Print.
 
 Getz,
Donald,
and
Graham
Brown.
“Critical
Success
Factors
for
Wine
Tourism
Regions:
a
 Demand
Analysis.”
Tourism Management
27.1
(2006):
146–158.
ScienceDirect.
Web.
25
 Feb.
2013.
 
 Giuliani,
Elisa.
“Do
your
neighbors
matter?
A
study
on
the
innovative
performance
of
firms
in
 wine
clusters.”
Knowledge,
innovation,
and
competitiveness:
Dynamics
of
firms,
 networks,
regions
and
institutions.
Copenhagen,
Denmark,
2006.
Web.
25
Feb.
2013.
 
 Giuliani,
Elisa,
and
Martin
Bell.
“The
Micro‐determinants
of
Meso‐level
Learning
and
 Innovation:
Evidence
from
a
Chilean
Wine
Cluster.”
Research Policy
34.1
(2005):
47–68.
 ScienceDirect.
Web.
25
Feb.
2013.
 
 Hall,
C.
Michael.
Wine Tourism Around the World.
Taylor
&
Francis,
2000.
Print.
 
 Hayward,
David,
and
Nick
Lewis.
“Regional
Dynamics
in
the
Globalising
Wine
Industry:
The
Case
 of
Marlborough,
New
Zealand.”
Geographical Journal
174.2
(2008):
124–137.
Wiley  Online Library.
Web.
11
Mar.
2013.
 
 Houghton,
Meg.
“The
propensity
of
wine
festivals
to
encourage
subsequent
winery
visitation.”
 International Journal of Wine Marketing
13.3
(2001):
32–41.
Print.
 
 Bruwer,
Johan.
Johnson,
Ray.
“Place‐based
Marketing
and
Regional
Branding
Strategy
 Perspectives
in
the
California
Wine
Industry.”
Journal of Consumer Marketing
27.1
 (2010):
5–16.
 
 Johnson,
Cathryn,
Timothy
J.
Dowd,
and
Cecilia
L.
Ridgeway.
“Legitimacy
as
a
Social
Process.”
 Annual Review of Sociology
32
(2006):
53–78.
JSTOR.
Web.
15
Feb.
2013.
 
 Johnson,
Ray,
and
Johan
Bruwer.
“Regional
Brand
Image
and
Perceived
Wine
Quality:
The
 Consumer
Perspective.”
International Journal of Wine Business Research
19.4
(2007):
 
 152
 276–297.
Emerald Publishing.
Web.
15
Feb.
2013.
 
 Jones,
Gregory
V.,
and
Robert
E.
Davis.
“Climate
Influences
on
Grapevine
Phenology,
Grape
 Composition,
and
Wine
Production
and
Quality
for
Bordeaux,
France.”
American Journal  of Enology and Viticulture
51.3
(2000):
249–261.
Print.
 
 Ling,
Bith‐Hong,
and
Larry
Lockshin.
“Components
of
Wine
Prices
for
Australian
Wine:
How
 Winery
Reputation,
Wine
Quality,
Region,
Vintage,
and
Winery
Size
Contribute
to
the
 Price
of
Varietal
Wines.”
Australasian Marketing Journal (AMJ)
11.3
(2003):
19–32.
 ScienceDirect.
Web.
18
Feb.
2013.
 
 Liu,
Tao.
“Study
on
the
Development
of
Grape
Wine
Tourism
Based
on
Industrial
Clusters:
 Yantai
City
as
an
Example.”
2011 International Conference on Management and Service  Science (MASS).
Aug.
1–4.
IEEE Xplore.
Web.
 
 Lockshin,
Larry
et
al.
“Using
Simulations
from
Discrete
Choice
Experiments
to
Measure
 Consumer
Sensitivity
to
Brand,
Region,
Price,
and
Awards
in
Wine
Choice.”
Food Quality  and Preference
17.3–4
(2006):
166–178.
ScienceDirect.
Web.
21
Mar.
2013.
 
 Low,
Murray
B.,
and
Eric
Abrahamson.
“Movements,
Bandwagons,
and
Clones:
Industry
 Evolution
and
the
Entrepreneurial
Process.”
Journal of Business Venturing
12.6
(1997):
 435–457.
ScienceDirect.
Web.
22
Mar.
2013.
 
 McCutcheon,
Emily,
Johan
Bruwer,
and
Elton
Li.
“Region
of
Origin
and
Its
Importance
Among
 Choice
Factors
in
the
Wine‐buying
Decision
Making
of
Consumers.”
International Journal  of Wine Business Research
21.3
(2009):
212–234.
Emerald Publishing.
Web.
25
Feb.
 2013.
 
 “Michigan
Wines :
Wineries :
All
Wineries.”
Michigan Grape and Wine Industry Council.
Web.
23
 Apr.
2013.
 
 “Midwest
Grape
Production
Guide.”
2005.
Web.
23
Apr.
2013.
 
 “Missouri
Wine
Country,
the
History
and
the
Grapes.”
Examiner.com.
Web.
23
Apr.
2013.
 
 MKF
Research
L.L.C.
The Economic Impact of Wine and Grapes on the Missouri Economy.
 Missouri
Department
of
Agriculture,
2007.
Web.
23
Apr.
2013.
 
 Moolhuijsen,
Leoni,
and
Ina
Boudier‐Bakkerlaan.
“The
Impact
of
Legitimacy
Strategies
on
the
 Performance
of
Companies.”
Feb.
2011.
Web.
2
Feb.
2013.
 
 Navis,
Chad,
and
Mary
Ann
Glynn.
“How
New
Market
Categories
Emerge:
Temporal
Dynamics
 of
Legitimacy,
Identity,
and
Entrepreneurship
in
Satellite
Radio,
1990‐2005.”
 Administrative Science Quarterly
55.3
(2010):
439–471.
Print.
 
 153
 
 Nowak,
Linda
I.,
and
Sandra
K.
Newton.
“Using
the
Tasting
Room
Experience
to
Create
Loyal
 Customers.”
International Journal of Wine Marketing
18.3
(2006):
157–165.
Emerald  Publishing.
Web.
29
Apr.
2013.
 
 O’Neill,
Martin,
Adrian
Palmer,
and
Steven
Charters.
“Wine
Production
as
a
Service
Experience
 –
the
Effects
of
Service
Quality
on
Wine
Sales.”
Journal of Services Marketing
16.4
 (2002):
342–362.
Emerald Publishing.
Web.
29
Apr.
2013.
 
 Packalen,
Kelley
A.
“Complementing
Capital:
The
Role
of
Status,
Demographic
Features,
and
 Social
Capital
in
Founding
Teams’
Abilities
to
Obtain
Resources.”
Entrepreneurship  Theory and Practice
31.6
(2007):
873–891.
Wiley Online Library.
Web.
2
Feb.
2013.
 
 Pereira,
Filipe,
and
Peter
Goldsmith.
“Industrial
Illegitimacy
and
Negative
Externalities:
The
Case
 of
the
Illinois
Livestock
Industry.”
Web.
6
Feb.
2013.
 
 Perry,
Ron,
Paolo
Sabbatini,
and
James
Burns.
“Growing
Wine
Grapes
in
Michigan.”
(2012).
 Google Scholar.
Web.
23
Apr.
2013.
 
 Rao,
R.
S.,
R.
K.
Chandy,
and
J.
C.
Prabhu.
“The
Fruits
of
Legitimacy:
Why
Some
New
Ventures
 Gain
More
from
Innovation
Than
Others.”
Journal of Marketing
72.4
(2008):
58–75.
 Print.
 
 Rendleman,
C.
Matthew,
William
C.
Peterson,
and
Roger
J.
Beck.
“Illinois’
Grape
and
Wine
 Industry
as
a
Contributor
to
Rural
Economic
Growth.”
Selected Paper Prepared for  Presentation at the Southern Agricultural Economics Association Annual Meeting,  Mobile, AL, February.
2003.
1–5.
Google Scholar.
Web.
15
Feb.
2013.
 
 Roberts,
Peter
W,
Mukti
Khaire,
and
Christopher
I
Rider.
“Isolating
the
Symbolic
Implications
of
 Employee
Mobility:
Price
Increases
After
Hiring
Winemakers
from
Prominent
Wineries.”
 American Economic Review
101.3
(2011):
147–151.
CrossRef.
Web.
29
Apr.
2013.
 
 Romanelli,
Elaine,
and
Olga
M.
Khessina.
“Regional
Industrial
Identity:
Cluster
Configurations
 and
Economic
Development.”
Organization Science
16.4
(2005):
344–358.
Print.
 
 Sabbatini,
Paolo,
Ph.D.
Personal
interview.
29
Mar.
2013.
 
 Schamel,
Günter,
and
Kym
Anderson.
“Wine
Quality
and
Varietal,
Regional
and
Winery
 Reputations:
Hedonic
Prices
for
Australia
and
New
Zealand.”
Economic Record
79.246
 (2003):
357–369.
Wiley Online Library.
Web.
11
Mar.
2013.
 
 Scott,
W.
Richard.
“The
Adolescence
of
Institutional
Theory.”
Administrative Science Quarterly,
 32.4
(1987):
493–511.
Print.
 
 
 154
 Scott,
Shane.
A
General
Theory
of
Entrepreneurship.
The
Individual‐Opportunity
Nexus.
Edward
 Elgar,
2003.
Print.

 
 Suchman,
Mark
C.
“Managing
Legitimacy:
Strategic
and
Institutional
Approaches.”
Academy of  Management Review
20.3
(1995):
571–610.
Print.
 
 Taplin,
Ian
M.,
and
R.
Saylor
Breckenridge.
“Large
Firms,
Legitimation
and
Industry
Identity:
The
 Growth
of
the
North
Carolina
Wine
Industry.”
The Social Science Journal
45.2
(2008):
 352–360.
ScienceDirect.
Web.
29
Apr.
2013.
 
 Thode,
Stephen
F.,
and
James
M.
Maskulka.
“Place‐based
Marketing
Strategies,
Brand
Equity
 and
Vineyard
Valuation.”
Journal of Product & Brand Management
7.5
(1998):
379–399.
 Emerald Publishing.
Web.
29
Apr.
2013.
 
 Tornikoski,
Erno
T.,
and
Scott
L.
Newbert.
“Exploring
the
Determinants
of
Organizational
 Emergence:
A
Legitimacy
Perspective.”
Journal of Business Venturing
22.2
(2007):
311– 335.
ScienceDirect.
Web.
1
Feb.
2013.
 
 Trejo‐Pech,
C.
O.
et
al.
“Is
the
Baja
California,
Mexico,
Wine
Industry
a
Cluster?”
American  Journal of Agricultural Economics
94.2
(2011):
569–575.
CrossRef.
Web.
29
Apr.
2013
 
 Van
de
Ven,
Andrew
H.,
Roger
Hudson,
and
Dean
M.
Schroeder.
“Designing
New
Business
 Startups:
Entrepreneurial,
Organizational,
and
Ecological
Considerations.”
Journal of  Management
10.1
(1984):
87–107.
Print.
 
 Vergne,
Jean‐Philippe.
“Toward
a
New
Measure
of
Organizational
Legitimacy:
Method,
 Validation,
and
Illustration.”
(2011).
Web.
8
Feb.
2013.
 
 Webb,
Justin
W.
et
al.
“You
Say
Illegal,
I
Say
Legitimate:
Entrepreneurship
in
the
Informal
 Economy.”
Academy of Management Review
34.3
(2009):
492–510.
Print.
 
 “Welcome
to
New
York
Wine
Country!”
New York Wines.
Web.
23
Apr.
2013.
 
 Williams,
Peter.
“Positioning
wine
tourism
destinations:
An
image
analysis.”
International  Journal of Wine Marketing
13.3
(2001):
42–58.
Print.
 
 “Wineries.”
Missouri Wines.
Web.
23
Apr.
2013.
 
 Yuan,
Jingxue
(Jessica)
et
al.
“Marketing
Small
Wineries:
An
Exploratory
Approach
to
Website
 Evaluation.”
Tourism Recreation Research
29.3
(2004):
15–25.
Print.
 
 Zimmerman,
Monica
A.,
and
Gerald
J.
Zeitz.
“Beyond
Survival:
Achieving
New
Venture
Growth
 by
Building
Legitimacy.”
The Academy of Management Review
27.3
(2002):
414–431.
 JSTOR.
Web.
2
Feb.
2013.
 
 155
 
 Zuzul,
Tiona,
and
Amy
C.
Edmondson.
“Working
Paper:
Ambiguity
Squared:
Growing
a
New
 Business
in
a
Nascent
Industry.”
Harvard Business School
(2012):
n.
pag.
Web.
6
Feb.
 2013.
 
 156