Distilling entrepreneurs from Scotland’s whisky-soaked history

How contested industries can become ‘hotbeds of entrepreneurship’: the 19th century Scottish whisky industry can teach us lessons today, says a study co-authored by Thomas Roulet of Cambridge Judge Business School.

When you think of “contested” industries – those subject to public challenge about their very nature – tobacco, oil, and nuclear power may spring to mind. However, profitable businesses that some view as morally tainted are not a new phenomenon. Throughout history, these industries have been targeted by social movements in an attempt to make them unattractive, and now an innovative study examines how such opposition can also highlight them as an opportunity for entrepreneurs.

The Curse of Scotland

The research published in the Academy of Management Journal focuses on one contested industry: Scottish whisky production in the 19th century, which faced opposition from the temperance movement as a source of alcohol abuse and related crime, the so-called ‘Curse of Scotland’. The study examines how opposition actually led to some areas becoming “hotbeds of entrepreneurship” as they learned to evade or rebut the religious and political opposition to whisky and the woes traditionally associated to it – and the research draws parallels with today in some other sectors.

The parallels with more modern sectors such as wind energy

“Social movement-fuelled entrepreneurship in nascent industries competing with contested incumbent industries has been observed in settings as diverse as wind energy, ‘green’ buildings, and grass-fed meat,” says the study co-authored by Thomas Roulet, Associate Professor in Organisation Theory at Cambridge Judge Business School and Bye-Fellow of King’s College.

What can we learn from the study?

Thomas Roulet discusses some of the findings of the study:

The study looked at a little-researched area involving social movements and enterprise. It’s well known that social movements can undermine incumbents and create opportunities for challenger firms selling alternative products or using different technologies. But there was little previous research on how social movements affect entrepreneurial entry in established contested industries. So the study sheds light on the effectiveness of these social movements in contested industries, and also how such industries can continue to grow despite this opposition.

We looked at the difference between elite and mass support for a social movement. In the case of the Scottish whisky industry in the 19^th Century, mass support in opposition to the industry increased the social costs for entrepreneurs contemplating entry, while another oppositional element sought the support of politicians to deter entry by signaling that more stringent regulations may be enacted. Even so, elite and mass support are interconnected in how a social movement wins the “informational competition” targeting an industry.

One focus was on ancestral populations, or comparable organisations occupying a similar geographic locale in earlier times. While we thought they act as a buffer for entrepreneurs wanting to open their distilleries despite opposition, we showed that religious opposition is actually more effective when it can capitalise on those ancestral populations to show their nefarious influence, While our analysis focuses on the period beginning in 1823, we were able to draw on population and other data dating back to the founding of the first legal distillery in Scotland in 1680 – when most whisky was drunk straight from the still.

The medical cannabis industry in the US is a good example of contested entrepreneurs rebutting social contestation. The industry faced many obstacles because the cannabis trade was illegal under federal law in the US, but it repainted its public image to stress pain management and patient rights – and this improved conditions for entrepreneurial entry.