Who Engages in Contested Practices in the Champagne Industry? Not the Usual Suspects


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Abstract

Some practices are contested because they violate established industry norms or go against the interests of a firm's constituents. This paper investigates what sort of firm is more likely to engage in contested practices, if these are difficult to observe. I propose that, paradoxically, the firms that are considered most legitimate in an industry are more likely to adopt a contested practice, because they are more trusted and less scrutinized. My empirical analysis looks at the supply of private labels in the Champagne industry: this practice is contested and difficult to observe for grape growers, a key constituent for Champagne producers. Using a mix of fieldwork and statistical analysis, I find it is those firms that constituents trust the most that engage in a practice they contest. Specifically, private labels are more likely to be supplied by firms whose CEO is a member of the original founder’s family rather than a professional CEO, firms whose activities are exclusively tied to the production of Champagne and firms located in traditional Champagne clusters.
 
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Patricia de Wilde-Mes
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