Where is the real craic?: A resource-based view of authentic Irish pubs

1. Where is the real craic?: A resource-based view of authentic Irish pubs Presented by Rodney C. Runyan Department of Retailing University of South carolina At CiD seminar Finding an Irish Voice Dublin City University October 17, 2007

2. Current Presentation • What this paper is not about: • Furthering the literature on authenticity • Furthering the literature on cultural studies • What this paper is about: • Furthering the literature on strategic choice • Resource-based view as a tool to evaluate strategy • The Irish Pub as a strategic choice for entrepreneurs

3. Theming and Authenticity • Themed businesses: • Flagship outlets as brand builders • Nike, ESPNzone, Coke, etc. • Theme is the brand • As strategic choice to gain competitive advantage • Activity-themed: sports bar, dance club • Product-themed: wine bar, sushi bar, brew pub • Country-themed: Australian, Irish, German

4. Theming and Authenticity • Theme marketing studies • Tourism and hospitality-heavy • Authenticity seen as the key component (Lego, et al. 2001) • Pubs as study-focus are neglected (Brown & Patterson, 2000)

5. Irish Pub Concept • Guinness Brewing • Through IPC website • Positioned as a franchise-like opportunity • IPC “like a franchise without the downsides” • Touts “McDonald’s-like” success rates • IPC pubs supposedly have a 90%+ survival rate • Each new Irish pub is an additional customer • What is an Irish pub without Guinness? • U.S. is mostly untapped market • Guinness, Harp, etc. not oft-carried beers at bars

6. IPC’s Schtick • Many “Irish bars” in U.S., but none are “authentic” • “Genuine Irish culture • Genuine Irish “surroundings” • Genuine Irish “standards”… • “Like the true Irish pubs of today.”

7. IPC and Authenticity • Success Factors: • Irish staff • Irish food • Irish music • Irish drink • Irish pub design

8. Authenticity and Success • Implications are that authenticity in all critical factors will lead to success • Long-term success implies that authenticity provides a sustainable competitive advantage • What is authentic Irish? What is Irishness? • Presumption is that U.S. consumers will perceive the Irish Pubs as authentic if the entrepreneur follows IPC guidelines and approved suppliers

9. RBV • Firms compete with existing resources • Superior resources lead to competitive advantage • Sustainable competitive advantage (Peteraf, 1993) • Heterogeneous • Ex ante limits to competition for resource • Ex post limits to competition for resource • Imperfect mobility

10. RBV and Authenticity • Authenticity a source of much discussion • What is authentic? • Real or replica (Lego, et al. 2001) • Authentic reproductions? (Graham, 2001) • Disaggregating authenticity as a provider of sustainable competitive advantage

11. Heterogeneity • All five success factors would be unique in markets without an existing Irish pub • Possible exception is Irish drink (e.g., beer, whiskey, etc.) • Extent to which they would be unique in presence of existing pub is debatable (IPC would say that most existing pubs do not meet the success factors) • Existing pubs may already meet several of these • RBV Score: High if executed

12. Ex ante Limits to Resource Competition • First-mover advantages would apply • Limited competition for drink (price and taste), design (cost) and food (taste) • Music and staff are the resources which are more problematic • Finite number of each in a market area • Entrance of new firms drive up price of resource, limiting returns to be realized • RBV Score: moderate to low

13. Ex post Limits to Resource Competition • Substitution possible – British instead of Irish • Imitation possible – Duplication of the Irish pub • Imitate staff, music etc. • Better the imitation the more erosion of returns • Neither will earn above-average returns • RBV Score: high if imitators can be prevented (e.g. exclusive trading area); low if not

14. Imperfect Mobility of Resources • Trading of resources of little value to the average U.S. pub or bar • Irish staff, food, music, design and perhaps even drink are out of place • Exception is the Imitator • Staff, music and design are mobile (tradable) • Each might be more valuable due to learning • RBV Score: High in absence of imitator; low in presence of imitator

15. Round Up • The Irish Pub Concept as a strategic choice • From RBV framework: • Meets most of Peteraf’s criteria • In the U.S. market the RBV would see this strategic choice as sound, and likely to return above normal profits • Only two problems ….

16. Problem One • Market Demand: • Irish Food – is this a high-demand cuisine? • Irish Drink – are these high-demand beverages? • Irish Music – does traditional music draw customers? • Irish Design – does the typical customer care?

17. Typical Menu

18. Musical Offerings • Typically non-Irish oriented music • Often suits local young crowd • E.G. McFly • http://www.conoroneills.com/annarbor/calendar/month.php?LocationID=

19. Problem One - continued • Labor pool • Irish staff • Too few ex-patriates in the U.S. • Pay too low to draw workers

20. Problem Two • “Like a franchise but no downsides” • Franchisees have exclusive trading areas • Franchisees have legal recourse in trade-infringement disputes • Franchisees benefit from corporate advertising

21. Long-term Sustainability • Depends on demand for product • Depends on imitators • If there is demand, then there will likely be imitators….. And in that case sustainable competitive advantage depends on: • Which pub has the Craic… • And which one has the “deadly” Craic