Exploring Legitimation Strategies of New Ventures

DISSERTATION
of the University of St. Gallen,
School of Management,
Economics, Law, Social Sciences
and International Affairs
to obtain the title of
Doctor of Philosophy in Management

submitted by

Florian Ueberbacher
from
Austria

Approved on the application of

Prof. Claus D. Jacobs, Ph.D.

and
Prof. Steven W. Floyd, Ph.D.

Dissertation no. 4120

Difo-Druck GmbH, Bamberg 2013

The University of St. Gallen, School of Management, Economics, Law, Social Sciences
and International Affairs hereby consents to the printing of the present dissertation,
without hereby expressing any opinion on the views herein expressed.

St. Gallen, October 29, 2012

The President:

Prof. Dr. Thomas Bieger

ACKNOWLEDGEMENTS

Having dedicated the past 4 years to the study of new ventures, in retrospect, even my
dissertation itself appears like a new venture to me: Like most other ventures, also my
dissertation initially consisted of little more than a diffuse idea. Over time, then, as

‘dissertation-entrepreneur’, it was my task to refine and clarify this idea and to secure the

resources that were decisive for growing it into something meaningful and legitimate. Hence,
and as scholarship on new ventures suggests, also the development of this venture was not
primarily enabled by any kind of personal genius on the side of the entrepreneur but rather
by the institutions and people that have embedded and supported me. Let me thus seize the
opportunity to express my deepest gratitude to each of them. Without them, the past four

years would not have been as enjoyable, fruitful, and smooth as they were.

For their expert guidance, I thank the following scholars:

 Claus Jacobs, the principal advisor of this dissertation, guided the evolution of this
research project in a superb and farsighted way. Claus provided all his trust and support in

order to help me create and manage a research agenda which I still find truly fascinating.
Moreover, Claus outlined for me what it means to be an accomplished academic and a

citizen. Our close collaboration has been extremely insightful and rewarding for me; I’d be

very happy to continue and deepen it in the years ahead.

 Steven Floyd, the co-advisor of this dissertation, has been another academic role-model
for me. With his intellect and tolerance, Steve has been exemplifying for me – as well as
for an entire generation of scholars – what sound reasoning is about and how to provide

peers with the critical yet constructive feedback their efforts deserve.

 Eero Vaara, my external advisor, has repeatedly helped me set direction for my research
and to detect its flaws. Eero has been an invaluable source of knowledge and inspiration.
In retrospect, he seems to always have been several steps ahead of my thinking.
 Ekkehard Kappler, my mentor, has enabled me to come to St. Gallen. In Innsbruck, with all
his energy and wisdom, Ekkehard set many of those categories and oppositions that have
profoundly and lastingly shaped my thinking ever since.

 Christoph Lechner, Joep Cornelissen, Michael Lounsbury, and Paula Jarzabkowski have

provided me with insights and suggestions that proofed decisive for the overall
development of my research.

For providing access to critical resources, I thank the following institutions:

 The Swiss National Science Foundation has generously funded my research.

 The University of St. Gallen – and especially its Institute of Management (IfB) – has

provided me with a superb academic infrastructure.

 My research partner organization (anonym) – and especially its founding manager RM –

has granted access to fascinating data.

For their continued encouragement and support, I thank my colleagues, friends, and family:

 My colleagues at the University of St. Gallen – Carola Wolf, Janice Spiess, Karin and Markus
Kreutzer, Markus Schimmer, Michael Boppel, Stephanie Grubenmann, Sven Kunisch, and
Tim Lehmann – have made a significant contribution to making the past 4 years as smooth

and enjoyable as they were. I am very grateful for their friendship, collegial advice, and our
joint adventures.
 Three companions – Stefan Larcher, Thomas Mackinger, and Andreas Sailer – have
accompanied me (in person and/or in mind) almost as long as I can remember. They have
ensured that I do not lose the ground underneath my feet and that I remain somehow

open to the larger things in life that wait beyond the office doors. I cannot thank them

enough.
 My family – my mother Eva, my father Eduard, and my godmother Brigitte – have given

me endless amounts of love and dedication – during the past 4 years and throughout my

whole life. Without them, I would not be who and where I am today. While it was
sometimes hard to be several hours away from my family, I have strived to carry their love,
care and charm with me in my life and work. I do hope this has been visible.
Oftentimes, however, there is one person that exerts a lasting influence on a new venture. In
this case, my girlfriend Emma has had this ‘imprinting effect’ on my dissertation and – even
more so – on myself. Her input has greatly sharpened and expanded my thinking. And the

radical ups and downs we mastered have literally bonded us together. During the past 4

years, Emma has become a colleague I admire, a friend I trust, and the partner I love. I
dedicate this dissertation to her.

St. Gallen, December 2012 Florian Überbacher

TABLE OF CONTENTS

LIST OF FIGURES I

LIST OF TABLES II

ABSTRACT III

1. INTRODUCTION TO DISSERTATION 2

1.1. THE RELEVANCE OF LEGITIMACY FOR NEW VENTURES 3

1.1.1. The Concept of Legitimacy 4
1.1.2. Legitimacy versus Legitimation 6

1.2. MOTIVATION AND FOCUS: TOWARD PROCESS THEORIES OF

NORMATIVE NEW VENTURE LEGITIMATION 7
1.2.1. The Field of Research: 4 Research Trajectories 7
1.2.2. Focus on Process-Perspectives of New Venture Legitimation
(Trajectory 3) 8
1.2.3. Focus on Normative New Venture Legitimation Strategies 9
1.2.4. Research Focus 1: How Normative New Venture Legitimation
Strategies Evolve 12
1.2.5. Research Focus 2: How Normative New Venture Legitimation
Strategies are formed 13

1.3. OUTLINE OF DISSERTATION 14

2. THE LEGITIMACY OF NEW VENTURES: A REVIEW AND

RESEARCH PROGRAM 17

2.1. INTRODUCTION 18

2.2. BACKGROUND: THE ROLE OF LEGITIMACY FOR NEW VENTURES 21

2.2.1. New Ventures and their Liabilities 21
2.2.2. The Concept of Legitimacy: A Plethora of Perspectives and
Potential Applications 23

2.3. METHOD 26
2.3.1. Inclusion Criteria 26
2.3.2. Analysis of Articles 29
2.4. OUTLINE OF THE LITERATURE 29
2.4.1. Assumed Degree of Agency 30
2.4.2. Level of Analysis of Explored Legitimacy Subjects 37
2.4.3. Applied Legitimacy Typologies 37
2.4.4. Applied Theoretical Perspectives 38

2.5. REVIEW OF THE LITERATURE 42

2.5.1. Legitimate New Venture Characteristics (Trajectory 1) 42
2.5.2. Legitimate Industry Characteristics (Trajectory 2) 45
2.5.3. New Venture Legitimation Strategies (Trajectory 3) 47
2.5.4. Industry Legitimation Strategies (Trajectory 4) 51

2.6. TOWARDS A PROGRAM FOR FUTURE RESEARCH 53

2.6.1. Seizing the Applied Legitimacy and Legitimation Typology 54
2.6.2. Mobilizing Alternative Legitimacy and Legitimation Typologies 57
2.6.3. Exploring Structural Contingencies 59

2.7. DISCUSSION 61

3. HOW NORMATIVE NEW VENTURE LEGITIMATION STRATEGIES

EVOLVE: THE RELEVANCE OF CULTURAL KNOWLEDGE FOR
SYMBOLIC LEGITIMATION 64

3.1. INTRODUCTION AND BACKGROUND 65

3.2. RESEARCH SETTING AND METHODS 69

3.2.1. Research Setting 69
3.2.2. Data Collection 71
3.2.3. Data Analysis 77
3.2.4. Trustworthiness of Research Methods 82

3.3. FIELD ANALYSIS 83

3.3.1. Phase 1 (2004-2005): Compensation 83
3.3.2. Phase 2 (2006-2008): Experimentation 86
3.3.3. Phase 3 (2009-present): Exploitation 90

3.4. CONCEPTUAL INTERPRETATION: THE ROLE OF CULTURAL

KNOWLEDGE IN THE EVOLUTION OF LEGITIMATION PRACTICES 94
3.4.1. Cultural Knowledge 97
3.4.2. Legitimation Practices 100

3.5. DISCUSSION 107

4. HOW NORMATIVE NEW VENTURE LEGITIMATION STRATEGIES

ARE FORMED: THE ROLE OF ANALOGIES IN THE CREATION
PROCESS OF A LEGITIMATING NARRATIVE 114
4.1. INTRODUCTION 115

4.2. BACKGROUND: LEGITIMATING NARRATIVES – AN IMPRESSION

MANAGEMENT PERSPECTIVE 117
4.2.1. Impression Management 117
4.2.2. The Front-Stage of Impression Management:
The Deployment of a Legitimating Narrative 119
4.2.3. The Back-Stage of Impression Management:
The Creation of a Legitimating Narrative 119

4.3. THE ROLE OF ANALOGIES IN THE CREATION PROCESS OF A

LEGITIMATING NARRATIVE 121
4.3.1. The Role of Analogies in a Legitimating Narrative 121
4.3.2. Assumptions about the Creation Process
of a Legitimating Narrative 123
4.3.3. The Creation Process of a Legitimating Narrative 128

4.4. DISCUSSION 139

4.4.1. Implications for Impression Management Theory 141
4.4.2. Implications for Research on New Venture Legitimation 143
4.4.3. Implications for Perspectives on the Processing of Analogies 144

5. DISCUSSION OF DISSERTATION 147

5.1. BACKGROUND ASSUMPTIONS AND CONCEPT DEFINITIONS 148

5.2. REVIEW AND FOCUS 149

5.3. FINDINGS 151

5.3.1. Research Focus 1: How Normative New Venture
Legitimation Strategies Evolve 151
5.3.2. Research Focus 2: How Normative New Venture
Legitimation Strategies are formed 153

5.4. CONTRIBUTIONS OF DISSERTATION 155

5.4.1. Contribution 1: How Normative Legitimation
Affects New Venture Outcomes 157
5.4.2. Contribution 2: How Normative New Venture Legitimation
Strategies are formulated 158
5.4.3. Contribution 3: How Cultural Knowledge Affects Normative
New Venture Legitimation 159

REFERENCES 163

CURRICULUM VITAE 182

LIST OF FIGURES

Figure 2-1: Cumulative Number of Articles (1986-2011) 19

Figure 2-2: Distribution of Prior Research according to Assumed Degree

of Agency, Level of Analysis, and Type of Legitimacy 40

Figure 2-3: Distribution of Prior Research according to Applied

Theoretical Perspectives 41

Figure 3-1: Conceptual Interpretation 96

Figure 3-2: Conceptual Model 102

Figure 3-3: The Relevance of Cultural Knowledge for New Ventures 110

Figure 5-1: Antecedents, Processes and Outcomes of Normative New

Venture Legitimation 156

I
LIST OF TABLES

Table 1-1: Definitions of Legitimacy (time-ordered) 6

Table 2-1: Overview of Articles per Year and Journal 28

Table 2-2: Overview of the Research Field According to Analyzed

Dimensions and Distinctions 31

Table 3-1: Overview of Data Status per Bid 72

Table 3-2: Overview of Interviews per Field Stay 73

Table 3-3: Interview Guide Field Stay 1: The Market Environment,

Evolution and Strategic Issues of PUB_BLUE 74

Table 3-4: Interview Guide Field Stays 2-3: Resource-holders, Resource

Acquisition Processes 75

Table 3-5: Interview Guide Field Stay 4: Evolution of Legitimation

Practices and -Outcomes across Resource Acquisition
Attempts 75

Table 3-6: Observation of Bid-related Meetings 77

Table 3-7: Data Structure - Hierarchical Aggregation of Themes (Phase 1) 79

Table 3-8: Data Structure - Hierarchical Aggregation of Themes (Phase 2) 80

Table 3-9: Data Structure - Hierarchical Aggregation of Themes (Phase 3) 81

Table 4-1: The Role of Analogies in the Creation of a Legitimating

Narrative 131

Table 5-1: Normative New Venture Legitimation Practices 153

II
ABSTRACT

English. This dissertation furthers scholarly understanding of the role of legitimacy

for new ventures – a topic of longstanding interest to scholars in the fields of
research on organization theory and strategy, entrepreneurship, and sociology. New
ventures comprise independent as well as corporate ventures in their first years of
existence. The judgment of a new venture’s legitimacy – that is, of its
appropriateness, acceptability, and/or desirability – among the venture’s external
audiences (including such resource-holders as investors, consumers, governmental
authorities, or prospective employees and partners) serves as central asset for a new
venture to acquire the resources it desperately requires for growth, survival and
persistence in the market it entered.

The dissertation proceeds as follows: Chapter 1 provides the conceptual definitions

which the dissertation’s theoretical arguments subsequently build upon. The chapter
also focuses the dissertation specifically on ‘normative legitimation’, that is, on the
processes and strategic actions involved when a new venture aims to acquire
‘normative legitimacy’ (i.e. alignment with the norms and values of a targeted
audience) in order to propel its chances of survival. The chapter points to 2 critical
gaps in the literature on normative new venture legitimation and deduces 2
according research questions. In chapter 2, a thorough literature review further
substantiates the relevance of these research questions. They will subsequently be
addressed in the chapters 3 and 4 respectively. Chapter 5 concludes the dissertation
with a discussion of theoretical findings and their main contribution, that is, the
elaboration of a detailed perspective on the antecedents, processes, and outcomes of
normative new venture legitimation.

III
Deutsch. Diese Dissertation befasst sich mit der Rolle von Legitimität für sogenannte
‚New Ventures‘ – ein Thema von anhaltender Relevanz in den Forschungsrichtungen
Organisationstheorie und Strategie, Unternehmertum, und Soziologie. New Ventures
sind definiert als Organisationen – entweder unabhängige Organisationen oder
Tochtergesellschaften – in den ersten Jahren nach Gründung und Markteintritt.
Legitimität – das Urteil von aktuellen und zukünftigen Anspruchsgruppen (z.B. von
Konsumenten, Investoren, Partnern, oder öffentlichen Ämtern) über die Akzeptanz,
Angemessenheit und Wünschbarkeit eines New Ventures – ist besonders wichtig für
New Ventures, da es ihnen den Zutritt zu den Ressourcen ihrer Anspruchsgruppen
erleichtert und damit ihr Überleben ermöglicht.

Die Arbeit ist wie folgt gegliedert: Kapitel 1 erarbeitet Definitionen jener Konzepte,
auf die diese Dissertation anschliessend aufbaut. Dabei fokussiert es die Dissertation
insbesondere auf die ‚normative Legitimation‘ eines New Ventures und damit auf jene
Prozesse und strategischen Handlungen eines New Ventures, die deren normative
Legitimität (d.h. die Anschlussfähigkeit eines New Ventures an die Normen und Werte
einer Anspruchsgruppe) sicherstellen sollen. In diesem Zusammenhang weist das
Kapitel auf 2 wichtige theoretische Lücken in der Literatur hin und erarbeitet 2
entsprechende Forschungsfragen. Im Kapitel 2 wird die Wichtigkeit dieser beiden
Forschungsfragen durch eine systematische Analyse der relevanten Literatur weiter
abgestützt. Diese Forschungsfragen werden anschliessend in den Kapiteln 3 und 4
ausführlich adressiert. Abschliessend verschafft Kapitel 5 eine Übersicht über die
erzielten Forschungsergebnisse und beendet die Arbeit mit einer Diskussion ihres
wichtigsten theoretischen Beitrags, nämlich der Erarbeitung einer detaillierten
Perspektive auf Voraussetzungen, Prozesse und Folgen der normativen Legitimation
eines New Ventures.

IV
AS IF
1. INTRODUCTION TO DISSERTATION

Abstract. This chapter introduces the reader to the focal topic of this dissertation
and thus to the central relevance of legitimacy for new ventures. After defining the
central concepts that this dissertation builds on, the 2 central research foci of this
dissertation and its 2 according research questions are deduced from a brief review
of the existing literature. These research foci and research questions will then be
further elaborated, addressed, and discussed in the dissertation’s subsequent
chapters.

2
1.1. THE RELEVANCE OF LEGITIMACY FOR NEW VENTURES

Studying new ventures has been an important research focus for a long tradition of
scholars across the generic disciplines of organization theory, strategy,
entrepreneurship, and sociology. New ventures comprise independent start-ups as
well as corporate ventures in their first 5 years of existence (e.g. Zimmerman & Zeitz,
2002). These 5 years can encompass such phases as venture creation, market entry, as
well as early growth and development. According to a number of entrepreneurship
scholars (e.g. Gartner, 1985), the successful creation and growth of a new venture is
both the embodiment and the epitome of entrepreneurial activity: With their new
ventures, entrepreneurs aim to exploit newly discovered and enacted opportunities
(Alvarez, Barney, & Anderson, 2012) either by creating at all new markets for those
goods they offer with their new ventures or by leading to innovation and
differentiation in existing and more mature markets (Aldrich & Ruef, 2006). If
successful, new ventures are thus a core mechanism for change in or even for radical
transformation of our market landscapes.

According to a number of organization theorists and sociologists, however, most new

ventures do not get as far. Rather and according to some classic institutional theory-
and population ecology-treatises, new ventures tend to suffer from a number of so-
called ‘liabilities’ that make them highly vulnerable and prone to early failure –
including their ‘liability of newness’ (cf. Stinchcombe, 1965), their ‘liability of
adolescence’ (cf. Bruederl & Schuessler, 1990) and their ‘liability of smallness’ (cf.
Freeman, Carroll & Hannan, 1983). Collectively, these liabilities follow from new
ventures’ oftentimes insufficient endowments with and access to scarce yet urgently
needed resources. Hereby, resources tend to be defined broadly and include all kinds
of financial resources (e.g. investments, turnover), human resources (e.g. qualified
staff), material resources (e.g. facilities) as well as other tangible and intangible assets
of critical relevance to a new venture.

3
To characterize those new ventures that overcome their liabilities, a number of highly
cited articles have turned to the concept of legitimacy (e.g. Aldrich & Fiol, 1994;
Singh, Tucker & House, 1986; Stinchcombe, 1965; Zimmerman & Zeitz, 2002). For
instance, already Stinchcombe (1965: 241-242) had noted that the legitimacy that
most established organizations have already obtained may be “one of the most
important resources” for new ventures to achieve “consent of those outside [the new
venture] whose consent is essential” (i.e. key resource-holders) in order to overcome
their liability of newness. And in a related way, also institutional theorists hold that
legitimacy provides an organization with a reservoir of trust and support among
external resource-holders which in turn facilitates the organization’s access to scarce
resources and thus its survival and persistence (e.g. Meyer & Rowan, 1977). Not least
from an institutional perspective, legitimacy is thus conceived as the single most
important aspect for new venture growth and survival (e.g. Zimmerman & Zeitz, 2002).

1.1.1. The Concept of Legitimacy

But the concept of legitimacy is not bound to institutional theory. As a fundamental

component of social judgment and of social control (Bitektine, 2011), it also appears
center stage in other perspectives that provide answers to how ‘actors’ (i.e.
individuals, groups, organizations, etc.) deal with, survive within, or escape from the
constraints of their social and cultural environments – including population ecology
(Hannan & Freeman, 1989), social network theory (White, 2008), resource
dependence theory (Pfeffer & Salancik, 1978), cultural theory (Weber & Dacin, 2011),
discourse analysis (Vaara & Monin, 2010), impression management theory (Goffman,
1959) and social psychology (Tost, 2011). While several definitions of the concept
have evolved across these perspectives (see Table 1-1), scholars would generally
agree that a new venture is legitimate when it appears consistent with the beliefs,
norms, and values that are shared in its social and cultural environment and when its
audiences consider it appropriate, acceptable, and/or desirable (e.g. Suchman, 1995;
Johnson, Dowd & Ridgeway, 2006; Zimmerman & Zeitz, 2002).

4
Whether a new venture is considered ‘legitimate’ is a matter (1) of the audiences that
scholars focus on as well as (2) of the legitimacy dimensions and (3) of the features of
new ventures they include in their analyses: For the first, explored audiences tend to
be those “who have the capacity to mobilize and confront” the venture (Deephouse
& Suchman, 2008: 54) including potential and actual resource-holders (investors,
consumers, staff etc.), other industry participants (e.g. Aldrich & Fiol, 1994), regulators
and certification authorities (e.g. Sine, David & Mitsuhashi, 2007), the media (Pollock
& Rindova, 2003) or society at large (e.g. Hiatt, Sine & Tolbert, 2009). For the second,
frequently studied legitimacy dimensions include the new venture’s regulative
legitimacy (its alignment with rules and laws), its normative legitimacy (its alignment
with cultural norms and values), and its cognitive legitimacy (its alignment with
dominant ideas and beliefs) (cf. Scott, 2007; Zimmerman & Zeitz, 2002). For the third,
features of new ventures that are frequently assessed for their legitimacy comprise
the venture’s structures and policies (e.g. Meyer & Rowan, 1977), the experience of its
founder and top management (e.g. Packalen, 2007), the quality of its inter-
organizational relationships (Stuart, Hoang & Hybels, 1999), or the type of its industry
and sector (e.g. Baum & Oliver, 1991).

5
 Table 1-1: Definitions of Legitimacy (time-ordered)

Definitions Theoretical Perspectives Reference

Congruence with “the norms of acceptable Resource Dependence Dowling & Pfeffer
behavior in the larger social system” Theory (1975: 122)
Adoption of formal structures that are Institutional Theory Meyer & Rowan (1977:
rationalized and institutionalized in a given 345)
domain of work activity
Array of established cultural accounts that Cultural Theory, Discourse Meyer & Scott (1983:
“provide explanations for the existence” of an Analysis 201)
organization

“Social fitness” Institutional Theory, Oliver (1991: 160)

Resource Dependence
Theory
“A generalized perception that the actions of Institutional Theory, Suchman (1995: 574)
an entity are desirable, proper, or appropriate Resource Dependence
within some socially constructed system of Theory
norms, values, beliefs, and definitions”
“The endorsement of an organization by social Institutional Theory, Social Deephouse (1996:
actors” Network Theory 1025)
“A social judgment of appropriateness, Institutional Theory Zimmerman & Zeitz
acceptance, and/or desirability” (2002: 416)
“The construal of a social object as consistent Institutional Theory, Social Johnson, Dowd &
with cultural beliefs, norms, and values that are Psychology Ridgeway (2006: 57)
presumed to be shared by others in the local
situation and perhaps more broadly by actors
in a broader community”
“Deference or obedience to authorities or Institutional Theory, Social Tost (2011: 8)
rules” Psychology
Expanded and adapted from Bitektine (2011)

1.1.2. Legitimacy versus Legitimation

It is important to distinguish legitimacy as a property of a new venture which is

conferred by its audiences from the legitimation process which connotes the actual
process and practices of acquiring legitimacy (as potential outcome) between
managers of a new venture1 and their audiences (e.g. Bitektine, 2011; cf. Vaara &
1
Depending on the specialized vocabulary of the generic disciplines to which scholars commit
themselves, the leaders and members’ of new ventures have received different names: Entrepreneurship
scholars tend to call them “entrepreneurs” , many sociologists call them “founders”, and strategy
scholars tend to call them “top managers”, “managers”, or “executives”. For reasons of connectivity to
…

6
Monin, 2010). This distinction is critical because, as new entrants to given market
environments, most new ventures are not yet familiar and legitimate to their
resource-holders. Moreover, most new ventures cannot conform to their audiences’
pre-existing norms and values: This may be due to their inherent lack of track-records
and ties to high status organizations that their resource-holders might expect (e.g.
Higgins & Gulati, 2003) or because the new ventures may not (yet) have an
understanding of the ‘recipes’ that the markets they entered demand (cf.
Stinchcombe, 1965). Finally, many new ventures do not want to conform to dominant
beliefs and understandings, because – when regarded as entrepreneurial endeavors –
they are by definition a means of emancipation from the status quo (Rindova, Berry &
Ketchen, 2009). In order to acquire legitimacy and to overcome their liabilities,
managers may then have to mobilize legitimation strategies that weed out these
inherent legitimacy deficits of their new ventures when facing and interacting with
targeted resource-holders. In this regard, we2 define a legitimation strategy most
generally as a legitimation practice that is purposive and calculated (Suchman, 1995:
576).

1.2. MOTIVATION AND FOCUS: TOWARD PROCESS THEORIES OF

NORMATIVE NEW VENTURE LEGITIMATION

In the following we narrow down the vast existing field of study on the role of
legitimacy for new ventures in order to derive the 2 specific research gaps that this
dissertation aims to address.

1.2.1. The Field of Research: 4 Research Trajectories

A systematic review of the literature on the role of legitimacy for new ventures (cf.
Chapter 2) uncovers 4 central research trajectories across the generic disciplines of

all these disciplines, the leaders and members of new ventures are referred to as “managers”
throughout the dissertation.
2
The use of “we” is editorial. The document is single-authored.

7
organization theory and strategy, entrepreneurship and sociology as well as across
the variously employed source-theories such as institutional theory, social network
theory and others: Each of the 4 trajectories is determined by scholars’ assumed
degree of agency of new ventures (low/high) and the explored level of analysis
(individual new venture/collectives of new ventures - mostly on the level of an
industry). As follows, these trajectories are: (1) ‘Legitimate New Venture
Characteristics’ (low/new venture) focusing on new venture characteristics that yield
legitimacy, (2) ‘Legitimate Industry Characteristics’ (low/collective) focusing on
industry characteristics that yield legitimacy for a new venture, (3) ‘New Venture
Legitimation Strategies’ (high/individual) focusing on the strategic practices of new
venture managers to acquire legitimacy for their new ventures, and (4) ‘Industry
Legitimation Strategies’ (high/collective) focusing on the strategic practices of
collectives of new ventures to acquire legitimacy for their (typically emerging)
industry.

1.2.2. Focus on Process-Perspectives of New Venture Legitimation

(Trajectory 3)

As trajectory 3 (New Venture Legitimation Strategies) has attracted wide-spread

attention recently, we chose to situate the overall focus of the dissertation within this
trajectory to benefit from this attention and to further refine scholarly understanding
of how new ventures aim to acquire legitimacy in ways that are “purposive,
calculated” and ideally controlled (cf. Suchman, 1995: 576). In this regard, we
uncovered that prior research in trajectory 3 has predominantly studied which

patterns of legitimation strategies work for managers in order to acquire legitimacy in

and resources from targeted resource-holders (e.g. Lounsbury & Glynn, 2001; Navis &
Glynn, 2011; Zott & Huy, 2007). Those who concentrated on how managers mobilize
discursive legitimation strategies have, for instance, shown which of their stories are
most successful in winning the cultural support of their resource-holders (e.g.
Lounsbury & Glynn, 2001; Martens, Jennings & Jennings, 2007; Navis & Glynn, 2011).

8
And those who explored other forms of legitimation strategies have advanced that
successful new venture managers may be highly skillful in highlighting their personal
credibility, the achievements and professional nature of their venture, or the prestige
of their venture’s existing stakeholder relationships (Clarke, 2011; Zott & Huy, 2007).

These studies have been important and groundbreaking in beginning to lay out
systematic patterns and relationships around the phenomenon of new venture
legitimation. Altogether, however, these studies were not designed to provide
temporally embedded accounts on how these patterns come to be (cf. Langley, 2007:
273). The overall motivation that came to guide this dissertation is thus to develop
fine-grained process perspectives on new venture legitimation. As first step in this
direction, we focus on

RESEARCH FOCUS 1: How New Venture Legitimation Strategies Evolve

RESEARCH FOCUS 2: How New Venture Legitimation Strategies are formed

1.2.3. Focus on Normative New Venture Legitimation Strategies

In our review, we further distinguish each of the 4 research trajectories according to

the types of legitimacy explored – i.e. regulative, normative, and cognitive legitimacy
(Scott, 2007; cf. Ruef & Scott, 1998; Zimmerman & Zeitz, 2002). Within trajectory 3
(i.e. New Venture Legitimation Strategies), we chose to focus our dissertation in
particular on normative new venture legitimation strategies (i.e. how new ventures
aim to achieve alignment with the norms and values in the cultural environment of
their resource-holders) to add further specificity to our research projects.

According to Scott (2007), the regulative, the normative, and the cognitive constitute
the 3 dominant ‘pillars’ that enable and constrain social action and interaction. Within
the normative pillar that we focus on, a particular emphasis is placed “on normative
rules that introduce a prescriptive [and] evaluative […] dimension into social life.
Normative systems include both values and norms” (Scott, 2007: 54): Norms define

9
how things should be done while values define how things should be (cf. March &
Olsen, 1984). Normative systems, which are frequently referred to as “institutional
logics” (cf. Thornton, Ocasio, & Lounsbury, 2012), thus shape appropriate means and
ends for actors and organization in a given socio-cultural environment.

To illustrate these considerations, we draw on a brief example of a public sector

outsourcing-venture which we have been studying (cf. chapter 3): As public sector
outsourcer, the new venture faces public sector organizations as resource-holders
whose institutional logic requires them to aim for maximizing public welfare (rather
than, e.g. profit maximization) in their specific geographical area (as value) when
tendering for a public sector outsourcing contract. To acquire the contract (and thus
urgently needed resources), the new venture thus has to appear (at least somehow)
aligned with the public welfare value of their resource-holders. Moreover, resource
acquisition attempts of the public sector outsourcing venture also have to adhere to
detailed contract bidding processes (as norms) which the resource-holding public
sector organizations prescribe in order to secure that their values and interests are
met.

As this illustration depicts, values and norms are the decisive components of the
institutional logic (cf. Thornton, Ocasio, & Ocasio, 2012) of resource-holders to which
a new venture needs to adapt in order to acquire normative legitimacy and scarce
resources. As follows, a new venture obtains normative legitimacy when it appears
aligned with the norms and values of its resource-holders (Johnson, Greve, &
Fujiwara-Greve, 2009; Ruef & Scott, 1998) and when they thus consider the venture’s
apparent intentions and actions as “the right thing to do” (Suchman, 1995: 579).
Hence normative legitimacy is theorized to follow from a resource-holder’s active
evaluation of a focal venture (cf. Bitektine, 2011).

Prior research on how organizations aim to strategically acquire normative legitimacy

has particularly drawn from perspectives of impression management and symbolic
management (for new ventures: Aldrich & Fiol, 1994; Zott & Huy 2007; for other

10
contexts: e.g. Elsbach, 1994; Westphal & Zajac, 1994): Impression management is
defined as involving managers’ purposeful attempts to construct an identity for their
new venture that will be regarded positively by their target audience (e.g. Elsbach &
Kramer, 1996). And symbolic actions are attempts of an organization to ‘appear’
consistent with values and interests in the cultural environment of targeted resource-
holders while pursuing its own, divergent values and interests (Ashforth & Gibbs,
1990). As follows, symbolic management can thus be regarded as a specific aspect of
impression management (cf. Gardner & Avolio, 1998; Goffman, 1959) although both
terms are also frequently employed in an interrelated way (e.g. Westphal & Graebner,
2010, for a review). Using symbolic management- and impression management
perspectives as analytical lenses, we thus geared our 2 research foci specifically
towards addressing the following two conceptual shortcomings in the literature on
normative new venture legitimation3:

THEORETICAL GAP 1: The dominant focus on new ventures’ “symbolic

management” has led to a relative neglect of new ventures’
“substantive management” (cf. Ashforth & Gibbs, 1990) –
addressed within RESEARCH FOCUS 1.

THEORETICAL GAP 2: The dominant focus on the “front-stage” of new ventures’

impression management has led to a relative neglect of the
“back-stage” of new ventures’ impression management (cf.
Goffman, 1959) – addressed within RESEARCH FOCUS 2.

3
These two omissions are also elaborated in extensive detail in the section “Normative legitimacy and
legitimation of new ventures and industries” in the „Towards a program for future research“-section of
chapter 2 (cf. chapter 2.6.1.).

11
1.2.4. Research Focus 1: How Normative New Venture Legitimation
Strategies Evolve4

For the first, in their attempts to acquire resources and survive, new ventures may
acquire normative legitimacy through symbolic legitimation practices (i.e. in a way
that enables the venture to pursue its own, divergent interests and to preserve its
resources) or through substantive legitimation practices (i.e. in a way that
compromises the venture’s own interests and resources) (cf. Ashforth & Gibbs, 1990).
On the one hand, a number of institutional theory-minded studies have concentrated
on the symbolic actions new ventures mobilize to acquire legitimacy (e.g. Aldrich &
Fiol, 1994; Lounsbury & Glynn, 2001; Zott & Huy, 2007). They have even characterized
new ventures as “skillful symbolic operators” (Lounsbury & Glynn, 2001; Rao, 1994) –
perhaps already at the time of creation and market entry.

On the other hand, however, cultural theorists would question such skillful symbolic
ability of new ventures. They would rather point out that new ventures, as new
entrants to a given cultural environment, may experience a “culture shock” (e.g.
Swidler, 1986) and that they may only gradually receive the “symbolic influence” from
their new cultural environment that may enable them to acquire legitimacy
symbolically (e.g. Barley, Meyer, & Gash, 1988). To resolve this ambiguity that has
emerged between institutional and cultural explanations, a study on the actual
evolution of a new venture’s legitimation practices will be particularly fruitful. In this
regard, we aim to address the dissertation’s first research question in order to
elaborate existing theory:

4
Please note that we explore symbolic and substantive legitimation practices (cf. Ashforth & Gibbs,
1990) in this chapter! Symbolic legitimation involves gaining an appearance of normative legitimacy
while pursuing one’s own divergent interests and substantive legitimation involves full (rather than
symbolic) conformance to the legitimacy criteria of resource-holders (ibid.). As symbolic legitimation
has been frequently referred to as a “highly strategic” legitimation practice (e.g. Crilly, Zollo, & Hansen,
2012, for a review) whereas substantive legitimation has been referred to as “the least strategic”
legitimation practice (e.g. Zimmerman & Zeitz, 2002: 423), we thus explore legitimation practices rather
than legitimation strategies in this study.

12
RESEARCH QUESTION 1: How do the legitimation practices of a new venture evolve
across repeated resource acquisition attempts? 5

1.2.5. Research Focus 2: How Normative New Venture Legitimation

Strategies are formed

For the second, we seem to already have a reasonably good understanding of the
patterns of strategic action that elicit impressions of a new venture’s normative
legitimacy in target audiences (e.g. Zott & Huy, 2007). Yet, these studies did not
account for how managers of new ventures develop these legitimation strategies
before they deploy them when facing their target audiences. This is a significant
omission in the literature, since managers of the most successful new ventures tend
to devote considerable time and effort to preparing and creating their legitimation
strategies (e.g. Hargadon & Douglas, 2001; Santos & Eisenhardt, 2009).

Drawing on the theoretical perspective of impression management, we focus on

discursive ‘legitimating narratives’ as specific modality and type of legitimation
strategy (cf. Elsbach, 1994): Legitimating narratives are written documents or oral
accounts deployed by actors to explain the nature and potential of their organization
in a coherent and ordered manner (cf. Martens et al., 2007; Elsbach, 2006).
Legitimating narratives are critical for new ventures because they underlie their
business plans, investment proposals, or contract bids (cf. Lounsbury & Glynn, 2001).
Impression management theory has coined the distinction between front-stage and
back-stage (cf. Goffman, 1959): Front-stage refers to the temporal and spatial area
where managers will deploy legitimation strategies in general and legitimating

narratives in particular when facing a targeted audience while “back-stage” refers to

the area where managers may create a legitimating narrative remote from the view of
their target audience before its actual deployment. In light of these definitions, we
thus aim to address the following second research question:

5
For reasons of convenience and readability, we refer to “normative legitimacy“ as “legitimacy”
throughout this study.

13
RESEARCH QUESTION 2: How do managers create a legitimating narrative at the
back-stage of their new venture?

1.3. OUTLINE OF DISSERTATION

We aim to address these two research questions in the following way and across the
following chapters:

CHAPTER 2 aims to build a more rigorous foundation for this dissertation by

comprehensively reviewing prior literature on the role of legitimacy for new ventures.
This is done through a systematic data base survey of articles in journals with the
consistently highest impact factors in the relevant research domains of organization
theory and strategy, entrepreneurship, and sociology. The 54 studies that this survey
yielded have been carefully analyzed in order to distill core findings, to carve out its 4
main research trajectories, and to point to critical future research directions.

CHAPTER 3 addresses RESEARCH QUESTION 1 of this dissertation, that is, how

legitimation practices of a new venture evolve across repeated resource acquisition
attempts. We draw on qualitative research methods in general (cf. Miles & Huberman,
1994) and the longitudinal study of a new corporate venture in an established public
sector outsourcing market in particular. The aim of this chapter is theory elaboration
(cf. Bluhm, Harman, Lee & Mitchell, 2011), in order to achieve a convincing
integration of institutional and cultural perspectives on normative new venture
legitimation.

CHAPTER 4 subsequently addresses RESEARCH QUESTION 2 of this dissertation, that

is, how managers create a legitimating narrative at the back-stage of their new
venture. Chapter 4 builds theory deductively. As is typical for this genre, two
established theoretical perspectives are juxtaposed to create novel insights.
Specifically, we draw on the bodies of research on impression management (e.g.
Elsbach & Kramer, 1996; Goffman, 1959) and on the processing of analogies (e.g.

14
Gentner, 2003; Holyoak, 2005) – both widely applied in the study of new venture
legitimation (e.g. Cornelissen & Clarke, 2010; Zott & Huy, 2007) – to develop theory
on the processes involved in the creation of a legitimating narrative.

CHAPTER 5 concludes this dissertation by reviewing its main findings and by

discussing their contribution to the literature.

15
16
2. THE LEGITIMACY OF NEW VENTURES:
A REVIEW AND RESEARCH PROGRAM

Abstract. Perceptions of legitimacy among key resource-holders have been

established in the literature as decisive for new ventures to acquire resources, grow,
and survive. Due to the plethora of perspectives on the concept of legitimacy and its
wide-spread interest in recent research, in this chapter, we conduct a systematic
review of how the concept of legitimacy has been applied in existing new venture
research. We uncover 4 dominant research trajectories in this field of research and
show how scholars have drawn on different theories and different conceptions of
legitimacy to further our understanding of processes and outcomes within these
trajectories. We conclude the chapter by highlighting a program of future research
opportunities. Two of these research opportunities constitute the dissertation’s
THEORETICAL GAP 1 and THEORETICAL GAP 2 (as outlined already in chapter 1)
which we address subsequently in the chapters 3 and 4 respectively.

17
2.1. INTRODUCTION

A new venture is legitimate when it appears consistent with the beliefs, norms, and
values that are shared in its social and cultural environment and when its audiences
consider it appropriate, acceptable, and/or desirable (e.g. Suchman, 1995; Johnson,
Dowd & Ridgeway, 2006; Zimmerman & Zeitz, 2002). The particular role of legitimacy
for new ventures has been an important area of research in such disciplines as
entrepreneurship, organization theory and strategy, or sociology. These disciplines
converge on and operate from the assumption that new ventures tend to suffer from
the liabilities of their newness, adolescence, and smallness thus repeatedly failing to
acquire the scarce resources necessary for their survival (cf. Bruederl & Schuessler,
1990; Freeman et al., 1983). To overcome their liabilities, a number of important and
highly-cited studies content that legitimacy is the most important resource for new
ventures (time-ordered: e.g. Stinchcombe, 1965; Singh et al., 1986; Baum & Oliver,
1991; Aldrich & Fiol, 1994; Lounsbury & Glynn, 2001; Zimmerman & Zeitz, 2002;
Pollock & Rindova, 2003; Higgins & Gulati, 2003; 2006; Delmar & Shane, 2004; Zott &
Huy, 2007). According to these scholars, legitimacy creates trust and willingness to
support in resource-holders, thus easing new ventures’ access to their resources and
in turn increasing their chances to grow, perform, and survive. Given its dramatic
importance for new ventures, how new ventures benefit from their legitimacy or how
they gain legitimacy from their various resource-holders (such as investors,
consumers, personnel) and other relevant audiences has been explored in a large
number of studies over the last 25 years. Moreover, as Figure 2-1 indicates, these
topics currently enjoy massive and wide-spread popularity with more than half of the
field’s currently 54 articles published in the last 5 years (between 2006-2011).

18
 Figure 2-1: Cumulative Number of Articles (1986-2011)6

55

50

45

40
Number of Articles (cumulative)

35

30

25

20

15

10

0
1986 1991 1996 2001 2006 2011
Year

Yet, the concept of legitimacy offers scholars a plethora of perspectives, choices, and
options. It can thus be – and indeed has been – applied in a variety of different ways
to explore the characteristics of and the dynamics around new ventures. Expected
variety in the literature relate for instance to the theoretical perspectives selected to
study the legitimacy of new ventures: While the explorations of the legitimacy
concept have generally evolved in tight connection with institutional theory (c.f.
Deephouse & Suchman, 2008), the concept also appears center stage in a number of
further theoretical perspectives, including population ecology (cf. Hannan & Freeman,
1989), cultural and discursive perspectives (cf. Weber & Dacin, 2011), resource
dependence theory (Pfeffer & Salancik, 1978) or social network theory (cf. White,
2008). Moreover, a variety of widely applied legitimacy typologies exists (e.g. Aldrich

6
Please proceed to the method section for details on the research domains, journals, search terms,
and time period that underlie the numbers in Figure 2-1.

19
& Fiol, 1990; Scott, 2007; Suchman, 1995) which can be drawn on to further detail and
differentiate new ventures’ legitimate characteristics and their legitimation attempts.
Additional variation can also be expected in the literature with regard to the explored
subjects of legitimacy. While “possible subjects of legitimation are almost
innumerable” (Deephouse & Suchman, 2008: 54), in the case of new ventures, they
may include the new ventures’ identities, policies and strategies, products and
services, founders and top managers, relations to other actors and organizations, or
even the whole industries they aim to populate and cultivate.

Given these and further distinctions that the concept of legitimacy enables and given
the soaring numbers of articles on new venture legitimacy, we believe that scholars
will clearly benefit from more explicit guidance on what we have already learned on
the role of legitimacy for new ventures and what still remains to be explored. While
prior reviews have already hinted at the role of legitimacy for new ventures (Bruton &
Ahlstrom, 2010; Tolbert et al., 2011), with their exclusive commitment to institutional
theory, their picture has remained partial as they were unable to account for the full
diversity of applications of the legitimacy concept in new venture research. Our aim is
thus to provide a comprehensive review of this literature in order to carefully distill its
core findings, to carve out its main research trajectories, and to point the field to
potential future research directions. The question that guided both our review and
the remainder of this chapter was thus: How has the concept of legitimacy been
applied in prior research on new ventures?

Hence, the remainder of this chapter is organized as follows: After an expanded

theoretical background on the role of legitimacy for new ventures, we detail our
methods for the inclusion and analysis of the existing literature. Based on a careful
examination of the literature according to a number of critical distinctions, we then
show how the field has contributed to the advancement of four main research
trajectories for studying the role of legitimacy for new ventures. Within each of these
trajectories, we subsequently outline crucial findings thus providing a map of the

20
current intellectual structure of this field of research. Finally, we invite scholars to
uncover underexplored areas of research in this field thus distilling a program of
relevant future research directions.

2.2. BACKGROUND: THE ROLE OF LEGITIMACY FOR NEW VENTURES

2.2.1. New Ventures and their Liabilities

New ventures comprise independent startups as well as corporate ventures in their

first years after creation and market entry (e.g. Gartner, 1985; Romanelli, 1989;
Zimmerman & Zeitz, 2002). The study of new ventures has been both a popular and
important focus in organization theory and strategy, in entrepreneurship research, as
well as in sociology. According to these literatures, new ventures suffer from a
number of ‘liabilities’ that may delimit their chances of survival. Underlying these
liabilities is the assumption that, in their environments (i.e. niches, markets, sectors,
countries, etc.), new ventures need to compete against other new entrants and
established organizations for scarce resources. Based on this assumption, how new
ventures acquire scarce resources – such as investment, qualified staff, a customer
base, or facilities – has become a most important focus to explain new venture
creation, survival, growth, or wealth creation.

Coming back to these ‘liabilities’ of new ventures, a large number of studies has
explored new ventures’ “liability of smallness” (cf. Freeman, Carroll & Hannan, 1983),
indicating on the one hand that new ventures suffer from their typically small size and
insufficient resource base, and on the other, that those ventures founded with

sufficient size and resources enjoy positive feedbacks in the resource accumulation
process where the initial advantage cumulates over time. Other researchers have in
turn challenged this view by exploring new ventures’ “liability of adolescence” (cf.
Bruederl & Schuessler, 1990) thus arguing that while ventures are typically founded
with sufficient resource endowments, these endowments may dissipate quickly as

21
new ventures may not be able to perform adequately in their chosen market
environments.

Among the studies of new ventures and their potential liabilities, however, Arthur
Stinchcombe’s (1965) early article on “Social Structure and Organizations” – one of
the most cited studies in the history of organization theory and organizational
sociology – continues to be perhaps the most impactful and influential. Among the
general theses that Stinchcombe (1965) outlines, his postulate of new ventures’
“liability of newness” implies a higher propensity of new organizations to fail and
disband than of established organizations. For Stinchcombe (1965), this liability of
newness has two primary origins – one internal to the venture and the other external.
For the former, new ventures face the difficult task of inventing and coordinating new
organizational roles among potential strangers while these structures tend to be
more efficient and calibrated in established organizations. For the latter, established
organizations can already rely on a stable set of ties to customers which new ventures
potentially lack.

While Stinchcombe’s arguments on the role of external ties led to an impressive and
highly impactful research program on how new ventures’ social networks to actual or
potential resource-holders affect new venture outcomes (e.g. Shane & Stuart, 2002;
Stuart et al., 1999; Wiewel & Hunter, 1985), Stinchcombe (1965: 241-242) also
remarked that the legitimacy that most established organizations have already
obtained may be “one of the most important resources” (emphasis added) for new
ventures to overcome their liability by achieving “consent of those outside whose
consent is essential”. Subsequently, in perhaps the first statistical treatment on new
ventures’ legitimacy, Singh, Tucker, and House (1986) further investigated
Stinchcombe’s (1965) thesis and found that new ventures’ legitimacy significantly
depresses their mortality rates while the ventures’ internal characteristics they
examined were unrelated. The authors thus concluded that legitimacy may in fact be
the most important resource for a new venture to survive and Zimmerman and Zeitz

22
(2002) subsequently argued that legitimacy may be even regarded as a meta-resource
for new venture growth and prosperity. We thus turn to an in-depth overview of the
legitimacy-concept to create a basis for our subsequent assessment of prior research
on the role of legitimacy for new ventures.

2.2.2. The Concept of Legitimacy: A Plethora of Perspectives and

Potential Applications

At least since Max Weber’s (1947) foundational treatise, the concept of legitimacy has
been of fundamental interest to management and strategy scholars and to the social
sciences more broadly. Similar to status or reputation, legitimacy has been conceived
as fundamental component of social judgment (Bitektine, 2011) and involves the
“perception or assumption that the actions of an entity are desirable, proper, or
appropriate” according to norms and understandings (Suchman, 1995: 574) which are
“presumed to be shared by others in the local situation and perhaps more broadly by
actors in a broader community (Johnson, Dowd, & Ridgeway, 2006: 57). Legitimacy
has thus been conceived as providing organizations with trust and support thus
easing their access to scarce resources and promoting their survival and persistence
(e.g. Meyer & Rowan, 1977). Due to their particular dependence on these scarce
resources, legitimacy is thus of prototypical relevance for new ventures.

The concept of legitimacy occupies a central role in a large variety of theories that
explore how the ‘embeddedness’ of actors in social and cultural settings enables and
constrains their actions and outcomes. Legitimacy thus figures prominently in such
paradigms as institutional theory (Scott, 2007), population ecology (Hannan &

Freeman, 1989), cultural and discursive perspectives (Weber & Dacin, 2011; Vaara &
Tienari, 2011), social network theory (White, 2008), resource dependence theory
(Pfeffer & Salancik, 1978), impression management perspectives (Goffman, 1959),
social movement theory (Benford & Snow, 2000) or stakeholder theory (Donaldson &
Preston, 1995). In turn, and on a more micro level of analysis, also cognitive and

23
psychological perspectives have developed which aim to explore actors’ legitimacy
judgements, how they take show, and how they change (cf. Tylor, 2006, Tost, 2011).

Across these theoretical disciplines, the potential subjects of resource-holders’

legitimacy judgments are almost endless and may, in the case of new ventures,
include its organizational form and identity, its organization structure, its abstract
policies and concrete actions, the shape and value of their products/services, its
founder and personnel, or even its ties to other organizations and actors. Moreover,
also the potential sources of a new venture’s legitimacy are manifold. Most generally,
they will include “the internal and external audiences … who have the capacity to
mobilize and confront the organization” (Deephouse & Suchman, 2008: 54). New
ventures’ obvious external sources include their resource-holders in the broadest
sense, such as potential investors and customers, regulatory authorities, the media, or
society more broadly. Internal sources, in turn, may include for new ventures, their
executives and personnel or – in the particular case of corporate ventures – also their
parent organizations.

While a number of further legitimacy typologies exist (cf. Bitektine, 2011), Scott’s
(2007) and Suchman’s (1995) are perhaps the most widely applied ones: According to
all typologies, legitimacy may comprise a number of sub-dimensions. For Scott
(2007), these include regulative legitimacy (the alignment with rules and laws),
normative legitimacy (alignment with norms and values), and cognitive legitimacy
(alignment widely held beliefs and ideas such as cultural scripts, schemas, and
identities). Additionally, Suchman (1995) suggested moral legitimacy and cognitive
legitimacy (which are largely congruent with Scott’s focus on normative legitimacy
and cognitive legitimacy) as well as pragmatic legitimacy which may be based on
audiences’ self-interested calculations on a focal venture’s value.

Yet, legitimacy as a property of an organization conferred by its audiences is

generally distinguished from legitimation, which emphasizes the process of how
organizations aim to acquire, maintain, and defend legitimacy (e.g. Ashforth & Gibbs,

24
1990; Suchman, 1995). A number of studies have accordingly found that
organizations are not necessarily passive carriers of certain characteristics, but as able
to very actively and strategically manage their legitimacy. Legitimation will involve
substantive processes (e.g. coercive isomorphism, role conformance) as well as
symbolic processes such as “espousing socially acceptable goals … while actually
pursuing less acceptable ones” (Ashforth & Gibbs, 1990: 180). Conceiving of
legitimation as context-dependent process of social construction, recent research has
focused in particular on the symbolic aspects of legitimation. Accordingly, a number
of influential studies have investigated how organizations engage in impression- and
symbolic management (e.g. Elsbach, 1994; Pfeffer, 1981) and how they attempt to
mobilize discourse and rhetoric in their favor (e.g. Suddaby & Greenwood, 2005).

Overall, the concept of legitimacy offers a sparkling source for gaining in depth
insights into the how new ventures overcome their liabilities, acquire resources,
survive, and grow. It is thus no surprise that the role of legitimacy for new ventures
has been an important and widely studied field of research. Yet, as our outline shows,
the concept of legitimacy offers scholars of new ventures a myriad of options. It thus
can be – and indeed has been – applied in multiple fruitful ways. Expected differences
in these applications include but are not limited to how scholars chose, for instance,
among potential theoretical perspectives, among sources and subjects, as well as
among potential typologies for studying new venture legitimacy and new venture
legitimation. Given the field’s widespread popularity and rapidly increasing number of
publications, we thus believe that the field will benefit from a comprehensive review
of prior applications of the legitimacy concept to new venture research in order to
both uncover a certain systematicity among these different applications, and to point
to relevant future research directions. Prior reviews have already touched upon the
role of legitimacy for new ventures (cf. Bruton & Ahlstrom, 2010; Tolbert et al., 2011).
Yet, with their exclusive commitment to institutional theory, their picture remains
partial as they were not intended to explore how the multi-theoretical concept of

25
legitimacy has been applied in prior research on new ventures – the question we aim
to answer with our review of the literature.

2.3. METHOD

To derive both a comprehensive and systematic review of the literature on the role of
legitimacy for new ventures, we adhered to the following data base survey
procedures.

2.3.1. Inclusion Criteria

We selected studies for this review according to 4 criteria (research domains, journals,
search terms, and time period): In terms of research domains, we limited our focus to
the fields of organization theory and strategy, entrepreneurship, and sociology since
the study of new ventures has been an important research focus in each of these
three domains. In terms of journals, we included only those outlets with the
consistently highest impact factor in each of these three fields according to the Social
Science Citation Index (SSCI). For organization theory and strategy, we thus included 6
journals into our article search: Academy of Management Journal (AMJ), Academy of
Management Review (AMR), Administrative Science Quarterly (ASQ), Management
Science (MS), Organization Science (OS), and Strategic Management Journal (SMJ); for
entrepreneurship research, we included 3 journals: Entrepreneurship Theory and
Practice (ETP), Journal of Business Venturing (JBV), and Strategic Entrepreneurship
Journal (SEJ); and for sociology also 3 journals: American Journal of Sociology (AJS),
American Sociological Review (ASR), and Annual Review of Sociology (ARS).

For the key word search in these articles, we again relied on the Social Science
Citation Index (SSCI) as widely used, reliable article data base. Our searches focused
on the articles’ “topic” thus searching their titles, abstracts, and keywords as most
informative parts of each study. We iteratively ran the following 7 closely related
topic searches to include as many articles as possible with relevance to our interest:

26
The search for the terms “ventur*” and “legitim*” yielded 38 hits, for “entrepreneur*”
and “legitim*” 75 hits, for “newness” and “legitim*” 10 hits, for “new organization*”
and “legitim*” 15 hits, for “new firm*” and “legitim*” 7 hits, “start-up*”/”startup*” and
“legitim*” 7/1 hits, and for “initial public offering*” and “legitim*” yielded 11 hits.

Subsequently, we excluded the many studies that figured in multiple of the above
topic searches as well as those with zero relevance to our interest. The latter included,
for instance, studies on venture capital or joint ventures in the “ventur*” search,
studies on new organizational forms and new organization theories in the “new
organization*” search, and studies on the legitimacy of entrepreneurship as field of
study or on institutional entrepreneurship without an explicit focus on new ventures
in the “entrepreneur*” search. We then read through the references in the remaining
studies to uncover 4 further studies of high relevance (i.e. Hargadon & Douglas, 2001;
Hiatt et al., 2009; Santos & Eisenhardt, 2009; Starr & MacMillan, 1990) that were not
covered by the above topic searches. Overall, our article search thus yielded 54
articles – most of which pertaining to the field of organization theory and strategy
(33), followed by entrepreneurship (18) and sociology (3). Regarding individual
journals, most articles have been published in Organization Science (9) and
Administrative Science Quarterly (8) in the field of organization theory and strategy,
and in Journal of Business Venturing (9) and Entrepreneurship Theory and Practice (9)
in the field of entrepreneurship research. Strategic Entrepreneurship Journal and
Annual Review of Sociology yielded no relevant articles and, thus, do not figure in our
study.

Finally, in terms of time period, we included articles published within the last 25 years
(i.e. 1986-2011). This is coherent with the publishing data of Sing et al.’s (1986)
influential study which thus set its starting line both for research on the role of
legitimacy for new ventures – of course except for Stinchcombe (1965) – as well as for
our according review. Yet, as Table 2-1 indicates, more than half of the included

27
studies (28) have been published from 2007 onwards indicating an enormous recent
interest in this area of research within the last 5 years covered.

Table 2-1: Overview of Articles per Year and Journal

Year Organization Theory and Strategy Sociology Entrepreneurship Total

OS ASQ SMJ AMR AMJ MS ASR AJS ARS JBV ETP SEJ
2011 2 1 3
2010 2 1 1 1 1 2 8
2009 1 1 3 3 8
2008 1 2 3
2007 1 1 1 1 1 1 6
2006 1 1 1 3
2005 1 1 2
2004 2 2
2003 1 1 1 3
2002 1 1
2001 1 1 1 3
2000 0
1999 1 1
1998 0
1997 0
1996 1 1
1995 0
1994 2 1 1 1 5
1993 0
1992 1 1
1991 1 1 2
1990 1 1
1989 0
1988 0
1987 0
1986 1 1
Total 9 8 6 5 4 1 2 1 0 9 9 0 54
33 3 18
Source Journals:
- Organization Theory and Strategy – ASQ: Administrative Science Quarterly; AMR: Academy of
Management Review; AMJ: Academy of Management Journal; SMJ: Strategic Management Journal; MS:
Management Science; OS: Organization Science
- Sociology – AJS: American Journal of Sociology; ASR: American Sociological Review; ARS: Annual Review
of Sociology
- Entrepreneurship – ETP: Entrepreneurship Theory and Practice; JBV: Journal of Business Venturing; SEJ:
Strategic Entrepreneurship Journal

28
2.3.2. Analysis of Articles

We engaged in a qualitative thematic analysis (cf. Miles & Huberman, 1994) to yield
and structure the findings of our review. The analysis broadly included 2 steps – first
an inductive thematic analysis and later a deductive thematic analysis. For the
inductive thematic analysis, we initially started by thoroughly reading the articles’
abstracts and contents to gain a solid grasp of underlying themes and trends. In this
iterative process, a number of critical distinctions emerged that we used to cluster
articles and findings. For the subsequent deductive thematic analysis, we went back
to prior literature on antecedents, processes, and outcomes of legitimacy (e.g.
Deephouse & Suchman, 2008; Scott, 2007; Suchman, 1995) to make sense of these
themes and other more implicit or fuzzy categories and distinctions that our inductive
thematic analysis had produced.

2.4. OUTLINE OF THE LITERATURE

Table 2-2 provides a detailed outline of all 54 articles we covered on the role of
legitimacy for new ventures. Across the literature, two aspects were relatively
homogenous: First, as we expected, the predominant ‘new venture focus’ in prior
research related to how new ventures acquire resources (or to tightly related
outcomes such as new venture creation, survival or growth which are directly related
to successful resource acquisition). This is unsurprising, given the dominant
assumption that new ventures need to acquire scarce resources from external
resource-holders to overcome their ‘liabilities’. Second, following from the former, the

dominantly studied ‘source of legitimacy’ was external to the venture rather than
internal7, since new ventures are primarily dependent on the legitimacy judgments of
various external audiences (resource-holders, investors, consumers, other industry
members, media, society etc.) to acquire precious and urgently needed resources. 4
7
The few studies with a focus on additional legitimacy sources internal to new ventures (e.g. founders
or employee groups) are underlined.

29
additional dimensions of the literature proofed more critical for structuring our
findings as the contained higher degrees of variances across articles (see Table 2-3
for an overview of these distinctions as applied to each of the 54 articles).

2.4.1. Assumed Degree of Agency

The first critical distinction relates to what we tentatively referred to as the assumed
‘degree of agency’ that new ventures may have in their attempts to secure legitimacy.
In this regard, a large number of predominantly earlier work has explored the
‘inherent’ legitimate characteristics of new ventures. They focus on new ventures’
legitimacy, that is, on an attribute that new ventures have – thus conceiving of certain
aspects of new ventures as constraining their fates and determining such outcomes
as venture creation, survival, or growth. In turn, and more recently, a currently
burgeoning camp of research has amassed insights on how new ventures may rather
mobilize legitimation strategies. They do not focus on new ventures’ legitimacy but
rather on their legitimation process, hence conceiving of legitimation as an activity
(i.e. ‘legitimizing), that is, as something new ventures do in order to gain legitimacy in
a targeted audience and to actively shape their fates. These latter studies ascribe to
new ventures a considerably higher degree of agency than those studies that
investigate new ventures’ legitimate characteristics. Overall, and as per Table 2-2,
prior research has almost equally contributed to our understanding of new ventures
legitimating characteristics and their legitimation strategies.

30
 Table 2-2: Overview of the Research Field According to Analyzed Dimensions and Distinctions

No. Authors Year Jour Cit.* Focus: New Source of Degree of Level of legitimacy Type of Theoretical
-nal venture… legitimacy Agency subject Legitimacy perspective(s)
(Distinction 1) (Distinction 2) (Distinction 3) (Distinction 4)
Contribution to:
- Research Trajectory 1 (Legitimate New Venture Characteristics) and
- Research Trajectory 3 (New Venture Legitimation Strategies)
1 Tornikoski & 2007 JBV 12 Creation External Legitimacy Venture unclear Social Network;
Newbert (unspec. resource- Characteristics; (general) Human Capital;
holders) Legitimation Symbolic Action
Strategies
2 Sine, David, & 2007 OS 14 Creation External Legitimacy Venture Regulative Institutional
Mitsuhashi (unspec. resource- Characteristics; Theory
holders) Legitimation
Strategies
3 Rao 1994 SMJ 236 Survival External Legitimacy Venture (its Regulative Institutional
(unspec. resource- Characteristics; certifications) Theory
holders) Legitimation
Strategies
Contribution to:
- Research Trajectory 1 (Legitimate New Venture Characteristics)
4 Wiklund, Baker, 2010 JBV 3 Survival External Legitimacy Venture Cognitive Cognition
& Shepherd (investors) Characteristics (Signalling)
5 Arthurs, 2009 JBV 2 Resource External Legitimacy Venture (its policy) Cognitive Cognition
Busenitz, Acquisition; (investors) Characteristics (Signalling)
Hoskisson, & IPO valuation
Johnson
6 Bell, Moore, & 2008 ETP 4 Resource External Legitimacy Venture (its Normative Institutional
Al-Shammari Acquisition, (investors) Characteristics geographical origin) Theory
IPO valuation

31
 7 Packalen 2007 ETP 9 Resource External Legitimacy Venture (its founder, Normative, Human Capital;
Acquisiton (unspec. resource- Characteristics relations of founder) Cognitive Social Network
holders)
8 Godwin, 2006 ETP 5 Resource External Legitimacy Venture (its founder, Cognitive Human Capital;
Stevens, & Acquisition (unspec. resource- Characteristics top management Cognition
Brenner holders, industry team) (Stereotypes)
members)
9 Higgins & 2006 OS 68 Resource External Legitimacy Venture (its top Normative, Social Network;
Gulati Acquisition; (investors) Characteristics management team; Cognitive Human Capital
IPO valuation relations of top
management team)
10 Cohen & Dean 2005 SMJ 34 Resource External Legitimacy Venture (its top Normative Social Network
Acquisition; (investors) Characteristics management team;
IPO valuation relations of top
management team)
11 Certo 2003 AMR 73 Resource External Legitimacy Venture (relations of Normative Social Network
Acquisition; (investors) Characteristics top management
IPO valuation team)
12 Higgins & 2003 SMJ 42 Resource External (investors) Legitimacy Venture (its top Normative Social Network
Gulati Acquisition; Characteristics management team;
IPO valuation relations of top
management team)
13 Pollock & 2003 AMJ 99 Resource External (media, Legitimacy Venture Cognitive Cognition
Rindova Acquisition; investors) Characteristics (Framing)
IPO valuation
14 Shane & Foo 1999 MS 34 Survival External (unspec. Legitimacy Venture Regulative; Institutional
resource-holders) Characteristics Cognitive Theory
15 Baum & Oliver 1991 ASQ 315 Survival External (unspec. Legitimacy Venture Normative Social Network;
resource-holders) Characteristics (its relationships) Population
Ecology

32
 16 Singh, Tucker, 1986 ASQ 277 Survival External (unspec. Legitimacy Venture (its Normative Social Network;
& House resource-holders) Characteristics relationships) Population
Ecology
(Newness)
Contribution to:
- Research Trajectory 2 (Legitimate Industry Characteristics)
17 Dobrev & 2010 AMJ 0 Survival External (unspec. Legitimacy Industry Cognitive Population
Gotsopoulos resource-holders) Characteristics Ecology
18 Bruton, 2010 ETP 3 Survival External (unspec. Legitimacy Industry (of Regulative, Institutional
Ahlstrom, D, & resource-holders) Characteristics transition economy) Normative, Theory
Li Cognitive
19 Nasra & Dacin 2010 ETP 1 Creation External (unspec. Legitimacy Industry (a market Regulative Institutional
resource-holders) Characteristics sector) Theory
20 Hiatt, Sine, & 2009 ASQ 3 Failure; External (unspec. Legitimacy Industry Normative Social Movement
Tolbert Creation resource-holders) Characteristics Theory
21 Mair, & Marti 2009 JBV 10 Creation External (society, Legitimacy Industry (a market Cognitive Institutional
unspec. resource- Characteristics sector) Theory
holders)
22 Woolley & 2009 ETP 3 Creation External (unspec. Legitimacy Industry Regulative Institutional
Rottner resource-holders); Characteristics Theory
Internal (founders)
23 Sine, Haveman, 2005 ASQ 44 Creation External (unspec. Legitimacy Industry Regulative, Institutional
& Tolbert resource-holders); Characteristics (a market category) Cognitive Theory;
Internal (founders) Cognition (Risk
Assessment)
24 Rao 2004 JBV 15 Creation External (unspec. Legitimacy Industry Normative Social Movement
resource-holders, Characteristics (a market category) Theory
society)
25 McKendrick & 2001 OS 39 Survival External (unspec. Legitimacy Industry (an Cognitive Population
Carroll resource-holders, Characteristics organizational form) Ecology
industry members)

33
 26 Manigart 1994 JBV 13 Creation; External (unspec. Legitimacy Industry (an Cognitive Population
Survival resource-holders, Characteristics organizational form) Ecology
industry members)
27 Baum & Singh 1994 OS 64 Creation; External (unspec. Legitimacy Industry (an Cognitive Population
Survival resource-holders, Characteristics organizational form) Ecology
industry members)
28 Budros 1994 OS 3 Creation; External (unspec. Legitimacy Industry (an Cognitive Population
Survival resource-holders, Characteristics organizational form) Ecology
industry members)
29 Baum & Oliver 1992 ASR 189 Survival External (unspec. Legitimacy Industry (an Normative Social Network;
resource-holders, Characteristics organizational form) Population
industry members) Ecology
30 Petersen & 1991 ASR 48 Survival External (unspec. Legitimacy Industry (an Cognitive Population
Koput resource-holders, Characteristics organizational form) Ecology
industry members)
Contribution to:
- Research Trajectory 3 (New Venture Legitimation Strategies) and
- Research Trajectory 4 (Industry Legitimation Strategies)
31 Zimmerman & 2002 AMR 132 Resource External (various Legitimation Venture; Industry Regulative, Institutional
Zeitz Acquisition; resource-holders) Strategies Normative, Theory
Growth Cognitive
32 Aldrich & Fiol 1994 AMR 492 Creation; External (resource- Legitimation Venture; Industry Normative, Culture/
Resource holders, industry Strategies Cognitive Discourse
Acquisition members, society)
Contribution to:
- Research Trajectory 3 (New Venture Legitimation Strategies)
33 Navis & Glynn 2011 AMR 0 Resource External (investors) Legitimation Venture (its identity) Cognitive Culture/
Acquisition Strategies Discourse
34 Cornelissen & 2010 AMR 10 Resource External (unspec. Legitimation Venture Cognitive Culture/
Clarke Acquisition resource-holders) Strategies Discourse;
Cognition
(Sensemaking)

34
35 Etzion & 2010 OS 7 Evolution; External (consumers/ Legitimation Venture (its Cognitive Culture/
Ferraro Growth adopters) Strategies product/ service) Discourse
36 Khaire 2010 OS 3 Growth External (unspec. Legitimation Venture Normative, Symbolic Action
resource-holders) Strategies Cognitive
37 Karlsson & 2009 JBV 3 Evolution External (unspec. Legitimation Venture (its policy) Normative Symbolic Action;
Honig resource-holders); Strategies Cognition
Internal (founders) (Inertia)
38 Santos & 2009 AMJ 31 Growth; External (unspec. Legitimation Venture (its identity) Cognitive Culture/
Eisenhardt Dominance resource-holders) Strategies Discourse
39 Drori, Honig, & 2009 ETP 5 Evolution; External (unspec. Legitimation Venture (its actions) Cognitive Culture/
Sheaffer Failure resource-holders); Strategies Discourse;
Internal (employees) Cognition
(Scripts)
40 Rutherford, 2009 ETP 1 Resource External ("key Legitimation Venture Normative Symbolic Action
Buller, & Acquisition stakeholders") Strategies
Stebbins
41 Townsend & 2008 ETP 10 Creation External (unspec. Legitimation Venture (its Cognitive Cognition
Hart resource-holders); Strategies form/identity) (Ambiguity)
Internal (founders)
42 Martens, 2007 AMJ 34 Resource External (investors) Legitimation Venture (its identity) Cognitive Culture/
Jennings, & Acquisition; Strategies Discourse
Jennings IPO valuation
43 Zott & Huy 2007 ASQ 41 Resource External (investors) Legitimation Venture (its policy, Normative Symbolic Action
Acquisition Strategies actions, (Predominant),
relationships) Cognitive,
Pragmatic
44 Johnson 2007 AJS 24 Evolution External (unspec. Legitimation Venture (its identity) Cognitive Culture/
resource-holders); Strategies Discourse;
Internal (founders) Further
(Imprinting)
45 Cliff, Jennings, 2006 JBV 21 Creation External (unspec. Legitimation Venture (its actions) Cognitive Institutional
& Greenwood resource-holders); Strategies Theory (Field
Internal (founders) Theory)

35
 46 Delmar & 2004 JBV 71 Creation; External (unspec. Legitimation Venture unclear Further
Shane Survival resource-holders) Strategies (general) (Legitimacy)
Theory)
47 Hargadon & 2001 ASQ 129 Creation; External (consumers/ Legitimation Venture (its Cognitive Institutional
Douglas Resource adopters) Strategies product/service) Theory;
Acquisition Cognition
(Schemas)
48 Lounsbury & 2001 SMJ 170 Resource External (various Legitimation Venture (its identity) Cognitive Culture/
Glynn Acquisition; resource-holders) Strategies Discourse
Growth
49 Stone & Brush 1996 SMJ 30 Resource External (unspec. Legitimation Venture (its Cognitive Symbolic Action
Acquisition resource-holders) Strategies policy/plan)
50 Starr & 1990 SMJ 154 Resource External (partners, Legitimation Venture Normative, Further
MacMillan Acquisition investors) Strategies Pragmatic (Cooptation)
Contribution to:
- Research Trajectory 4 (Industry Legitimation Strategies)
51 King, Clemens 2011 OS 0 Evolution; External (unspec. Legitimation Industry (market Cognitive Culture/
& Fry Growth resource-holders, Strategies category) Discourse
industry members)
52 Wry, Lounsbury, 2011 OS 1 Growth External (unspec. Legitimation Industry (market Cognitive Culture/
& Glynn resource-holders, Strategies category) Discourse
industry members)
53 Navis & Glynn 2010 ASQ 2 Growth; External (investors, Legitimation Industry (market Cognitive Culture/
Survival industry members, Strategies category) Discourse
media)
54 Weber, Heinze, 2008 ASQ 34 Creation External (industry Legitimation Industry Normative Social Movement
& Desoucey members, Strategies (product/market Theory
consumers/adopters, category)
society)
* SSCI Citations (accessed 17 March 2012)

36
2.4.2. Level of Analysis of Explored Legitimacy Subjects

The second critical distinction emerged when we coded the articles for their assumed
subject of legitimacy and legitimation and most generally relates to the articles’
assumed ‘level of legitimacy subject’: In this regard and contrary to our initial
expectation, we discovered that a large number of studies did not explore legitimacy
subjects at the level of individual ventures (such as the venture per se or certain
aspects thereof such as its identity, products, founders, or relationships) but
legitimacy subjects at the level of collectives of new ventures and mostly at the
industry-level (such as an industry or sector per se or certain aspects thereof – e.g. its
product/market category or its underlying organizational form). Based on these two
distinctions (i.e. ‘degree of agency’ and ‘level of legitimacy subject’), we could derive 4
basic research trajectories (referred to as ‘trajectories’ in Table 2-2) – two concerning
legitimacy characteristics (i.e. trajectory 1: ‘legitimate new venture characteristics’ and
trajectory 2: ‘legitimate industry characteristics’) and two concerning legitimation
strategies (i.e. trajectory 3: ‘new venture legitimation strategies’ and trajectory 4:
‘industry legitimation strategies’). As we can infer from Table 2-2, most of the
reviewed articles have explored how actors mobilize legitimation strategies to
legitimate their individual ventures (trajectory 3) – a currently burgeoning topic –
while comparatively little research has to date explored how new ventures collectively
attempt to legitimate the industry they populate (trajectory 4). Remaining research
has roughly equally contributed to our understanding of the legitimate characteristics
of ventures and their industries (trajectories 1 and 2).

2.4.3. Applied Legitimacy Typologies

Thirdly, to add further nuance to these 4 research fields, we highlight those

characteristics and practices that secured 3 different types of legitimacy for new
ventures and their industry domains, i.e. regulative, normative, and cognitive
legitimacy (cf. Scott, 2007). Compared to other legitimacy-typologies (e.g. Ashforth &
Gibbs, 1990; Suchman, 1995), this typology proofed most capable for deriving a fine-

37
grained overview of the assumptions and results of prior applications of the
legitimacy-concept to new ventures. Figure 2-2 yields a graphical representation of
the distribution of these 3 legitimacy types across all 4 trajectories. As we can see, the
overwhelming majority of prior research has investigated characteristics and practices
that may lead to cognitive legitimacy of ventures and industries. This may be due to
two primary reasons: First, cognitive legitimacy has been proposed as both the most
important and most difficult type of legitimacy to acquire for actors as the plausibility
and taken-for-grantedness that underlie an actors’ cognitive legitimacy make it hard
for assessing audiences to even conceive of alternatives to a focal venture and its
propositions (c.f. Suchman, 1995). From this perspective, several studies have argued
that cognitive legitimacy is the most important meta-resource for new ventures to
acquire resources and to survive and have accordingly dedicated their focus to this
type of legitimacy. The second reason is that cognitive legitimacy obtains a critical
role in or is commensurable to a comparatively large number of theoretical
perspectives applied in prior research. These perspectives include institutional theory,
population ecology, human capital theories, cultural and discourse theories, as well as
applications of concepts from cognitive psychology such as schemas, scripts or
sensemaking. While a focus on regulative legitimacy appears to have largely been
bound to applications of institutional theory, studying the normative legitimacy of
new ventures has equally – although to a lesser degree than cognitive legitimacy -
invited drawing on different theoretical perspectives, including institutional theory,
social network theory, social movement theory and impression
management/symbolic action perspectives.

2.4.4. Applied Theoretical Perspectives

The final critical distinction thus relates to the articles’ theoretical perspective. As
follows from Figure 2-3, a relatively large number of perspectives has been applied in
the field. Moreover, the field has also witnessed increasing pluralism of applied
perspectives. Yet those theories that have been applicable in multiple of the 4

38
trajectories tend to dominate the field: Accordingly, institutional theory with its broad
applicability across all four trajectories and across the complete time span dominates
the literature together with cultural and discursive perspectives that have been
applied with enormously increased interest across the last ten years to explore how
new ventures individually or collectively attempt to acquire (cognitive) legitimacy. The
research field of new venture legitimacy has also been a fertile ground for cognitive
perspectives (trajectories 1, 2, 3) as well as for population ecology (predominantly in
the late 1980s and early 1990s in trajectory 2) and for social network theory
(predominantly in the early 2000s in trajectory 2). On the other end, while stakeholder
theories have remained at all absent in this field of study, social movement
perspectives – although currently explored in soaring numbers in sociology journals –
have seen relatively little application yet.

39
 Figure 2-2: Distribution of Prior Research according to Assumed Degree of Agency, Level of Analysis, and Type of Legitimacy8

25

20

15
15 8 Cognitive (37)
9 Normative (22)
10 Regulative (11)
8
5
4 7
5
3
3 4
3
0 1
Trajectory 1: Trajectory 2: Trajectory 3: Trajectory 4:
Legitimate New Legitimate Industry New Venture Industry Legitimation
Venture Characteristics Legitimation Strategies Strategies
Characteristics (17) (25) (9)
(19)

8
Several studies yielded multiple entries in this table as they have pointed to both legitimacy characteristics as well as legitimation strategies (e.g. Rao, 1994)
to several types of legitimacy (e.g. Zimmerman & Zeitz, 2002) or to both venture- and industry-level of analysis (e.g. Aldrich & Fiol, 1994). The number of
entries in Figure 2-2 (70) accordingly does not equal the number of reviewed articles (54). See Table 2-2 for distribution per article.

40
 Figure 2-3: Distribution of Prior Research according to Applied Theoretical Perspectives9

30 Further perspectives (3)

3 Social Movement Theory (3)

25

5 Human Capital perspectives (4)

4
20
Symbolic Action/Impression
5 Management (6)
15 8
2 Social Network Theory (9)
1

10 2 Population Ecology (9)

9
7
4 1 Cognitive Perspectives (10)
5 1
1
5 5 4 Cultural and Discourse Theory (13)
4
0 1
Trajectory 1: Trajectory 2: Trajectory 3: Trajectory 4: Institutional Theory (15)
Legitimate New Venture Legitimate Industry New Venture Legitimation Industry Legitimation
Characteristics Characteristics Strategies Strategies
(23) (15) (27) (7)

9
As in Figure 2-2, many studies draw on combinations of theories thus yielding several entries in terms of applied theoretical perspectives. As follows, the
number of entries in Figure 2-3 (72) does not conform to the number of entries in Figure 2-2 (70) no to overall number of reviewed articles (i.e. 54). See Table
2-2 for distribution per article.

41
2.5. REVIEW OF THE LITERATURE

To gain a more in-depth overview of the literature, we separately highlight each of

the four trajectories (‘legitimate new venture characteristics’, ‘legitimate industry
characteristics’, ‘venture legitimation strategies’, and ‘industry legitimation strategies’)
and how the 3 different legitimacy subtypes (regulative, normative, cognitive) have
been explored within these 4 trajectories. Additionally, we show how different
theoretical perspectives have been engaged to explore these different legitimacy
subtypes within the 4 trajectories.

2.5.1. Legitimate New Venture Characteristics (Trajectory 1)

Extant research has yielded insights into those inherently legitimate characteristics
that largely determine and constrain the fates of new venture. Similar to studies in
the subsequent trajectory 2, these studies thus refer to legitimacy as an attribute of
new ventures, that is, as something new ventures have. To derive factors of ventures’
regulative legitimacy, prior research has predominantly drawn on institutional theory
to explore the role of product standards and certifications. To derive factors of
ventures’ normative legitimacy, studies have mostly relied on social network theory to
argue for the role of ventures’ social capital. Finally, to investigate cognitively
legitimate characteristics of new ventures and their founders, a number of articles
have studied their human capital.

Regulative new venture legitimacy. Regulative legitimacy involves the perception

that the new venture is a ‘good citizen’ that operates according to laws and
regulations. Failure to acquire regulatory legitimacy may in turn prevent the new

venture from operating legally and may preclude or limit its access to resources. New
ventures derive regulative legitimacy from conformance to “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”

42
(Zimmerman & Zeitz, 2002: 418). Indeed, from these potential foci, prior research has
predominantly explored new ventures operating in manufacturing or high-tech
industries and has predominantly focused on the role of new product certifications as
signals of new ventures’ regulative legitimacy. Studies have shown that product
certifications increase the chances for new ventures to reach their operational start-
up phase (Sine et al., 2007) and that the number of these certifications is a significant
indicators of new venture survival (Rao, 1994; Shane & Foo, 1999).

Normative new venture legitimacy. New ventures are normatively legitimate when
they address the norms and values in their domains of activity. Accordingly, the
venture gains normative legitimacy when it is considered to be desirable and
appropriate by addressing such values as profitability, value for money, ecological
awareness, fair treatment of employees, or public welfare. Zimmerman and Zeitz
(2002) propose several levels of a venture’s normative legitimacy including the
societal-, the industry- and the professional level: Regarding the societal level, the
country of origin has been found to influence ventures’ normative legitimacy insofar
as, ventures from countries that promote the value of economic freedom tend to
acquire higher value and more resources during their initial public offerings (Bell et
al., 2008)

Regarding the industry-level of ventures’ normative legitimacy, a large number of

studies have investigated new venture’s social capital in the form of endorsements
and network ties as critical manifestations of their normative legitimacy: These early
accounts have jointly drawn on population ecology and social network theory to
focus on new ventures’ “legitimating linkages” and thus on their generated
“legitimacy by association with organizations that already possess high legitimacy”
and that may signal the venture’s “adherence to institutional prescriptions of
appropriate conduct” (e.g. Baum & Oliver, 1991: 189; cf. Baum & Oliver, 1992; Singh
et al., 1986). Investigated linkages of normative legitimacy include endorsements by
and relationships with “powerful external collective actors” as indicated e.g. by a

43
venture’s listing in community directories (Singh et al., 1986) or “ties to well-
established societal institutions" such as charitable organizations (Baum & Oliver,
1991: 189). Overall, these legitimating linkages may significantly decrease the
mortality rate of ventures – an advantage with increasing benefits in mature
industries with intense competition (Baum & Oliver, 1991).

Regarding the professional level of ventures’ normative legitimacy, more recent

studies have enriched the scope of social network work theory by jointly drawing on
insights from various upper echelon perspectives to explore the fund-raising efforts
of new ventures during initial public offerings (IPO), these studies have explored the
legitimating effect of the social capital of ventures’ top management teams, boards,
or founding teams (Certo, 2003; Cohen & Dean, 2005; Higgins & Gulati, 2003; 2006;
Packalen, 2007). These studies thus found, that a greater range of top managers’
affiliations with high status organizations increases the legitimacy of the venture as a
whole thus attracting more prestigious underwriters (Higgins & Gulati, 2003) and
leading to higher IPO valuations (Certo, 2003; Higgins & Gulati, 2006; Packalen, 2007)

Cognitive new venture legitimacy. New ventures derive cognitive legitimacy when
addressing widely held beliefs and assumptions. In particular, cognitive legitimacy
follows for new ventures from acting in line with powerful cognitive filters such as
social identities and social roles that are accepted in a given environment and from
endorsing and implementing “methods, models, practices, assumptions, knowledge,
ideas, realities, concepts, modes of thinking, and so on that are widely accepted”
(Zimmerman & Zeitz, 2002). Accordingly and in the most basic sense, the identity of a
cognitively legitimate new venture is such that “it provides what is needed or desired
and will be successful in the business domain in which it purports to operate” (ibid.).
In this regard, studies have drawn on cognitive perspectives to explore such
characteristics as a venture’s perceived age and size (Shane & Foo, 1999; Wiklund et
al., 2010; cf. Arthurs et al., 2009) while Pollock and Rindova (2003) have drawn on

44
social psychology to investigate positive media coverage as triggering a focal IPO
ventures cognitive legitimacy and subsequent valuation.

A comparably larger base of prior research, however, has explored new ventures’ and
their founders’ ‘human capital’ (cf. Bruederl, Preisendoerfer & Ziegler, 1992), i.e. their
demographics, background and know-how, in supplying cognitive legitimacy and
resources. Founding teams accordingly benefit from the following four characteristics:
detailed industry experience and thus knowledge about how the industry works; prior
management experience; prior founding experience; and prior joint work experience
(Packalen, 2007). Additionally, Godwin et al. (2006) draw on theories of cognitive
stereotyping to argue that a mixed-sex founding team may benefit women
entrepreneurs in gaining cognitive legitimacy and resources in male-dominated
industries and cultures. It has also been found that the characteristics of key
individuals, such as of the chief executive or of the Chief Scientific Officer in
biotechnology startups, were particularly important for resource acquisition and
survival (Higgins & Gulati, 2006; Goodwin et al., 2006; Tornikowski & Newbert, 2007).

2.5.2. Legitimate Industry Characteristics (Trajectory 2)

An important body of work has developed theory on how characteristics of social

structures in a venture’s environment – and in particular of the industries they
participate in – promote or hinder the ventures’ legitimacy irrespective of the
venture’s own and potentially idiosyncratic characteristics. Most of the covered
studies have explored different types of legitimacy separately (cf. Bruton & Ahlstrom,
2010, for an exception): Accordingly, while a small number of mostly institutional-
theoretical studies have investigated the effect of formal extra-industrial actors (e.g.
governments) on industries’ regulative legitimacy and according venture outcomes,
social movement theory articles have studied how informal extra-industrial actors
(social movements) affect industries’ and ventures’ normative legitimacy. Finally, a
large number of population ecology studies have focused on the interactive effects of
industries’ cognitive legitimacy and competition on venture survival.

45
Regulative industry legitimacy. Studies within this category have drawn mostly on
institutional theory and have explored the influence of relatively formal authorities
such as nation states or governmental policy programs on industries and ventures: It
has been found in this regard, that the development of regulative institutions which
legitimate newly created industries and sectors may reduce the risk of entry thus
incentivizing new venture creation (Sine et al., 2005; 2007). By increasing the
regulative legitimacy of an industry, such governmental programs also facilitate local
new ventures’ subsequent access to resources (Wolley & Rottner, 2009) and spur
international entrepreneurship from abroad thus leading to further venture creation
in the focal industry (Nasra & Dacin, 2010).

Normative industry legitimacy. Studies exploring industries’ normative legitimacy –

their social desirability and appropriateness – have predominantly integrated
institutional research on new ventures with the broad field of social movement theory
(cf. Davis, Morrill, Rao, & Soule, 2008). Social movements are forms of relatively
informal collective action with a focus on ethical, political, or social issues and with
the aim to promote social change. These studies have shown how activists external to
a focal industry may organize contests and may engage in claim making to either
promote or attack the industry thus affecting the populating venture’s normative
legitimacy and subsequent prosperity (Hiatt, Sine & Tolbert, 2009; Maier & Marti,
2009; Rao, 2004). Yet, when attacking a focal industry such as beer breweries, social
movements have also been shown to indirectly contribute to normative legitimation,
venture creation, and resource acquisition in such opposing sectors as the soft drink
industry thus leading to increases (Hiatt et al., 2009).

Cognitive industry legitimacy. Predominantly during the late 1980s and early 1990s,
a large number of population ecologists had explored how the ‘population density’ –
the number of organizations that populates an industry – determines both the
industry’ cognitive legitimacy (plausibility and taken-for-grantedness) as well as its
competitive intensity. Together, these factors affect the likelihood new venture

46
creation, resource acquisition, and survival (Caroll & Hannan, 1989; cf. Baum & Oliver,
1992; Baum & Singh, 1994; Manigart, 1994; Petersen & Koput, 1994):

When a new industry is emerging, limited population density implies that the
industry’s underlying organizational form and identity (e.g. “bank”, “hospital”, or
“university”) suffers from limited cognitive legitimacy (cf. Budros, 1994; Dobrev &
Gotsopoulos, 2010; McKendrick & Carroll, 2001). Each new venture creation thus
increases the industries’ cognitive legitimacy in turn easing venture creation, resource
acquisition and survival (e.g. Caroll & Hannan, 1989; cf. Baum & Oliver, 1992; Baum &
Singh, 1994; Low & Abrahamson, 1997; Manigart, 1994; Petersen & Koput, 1994).
Ventures in growth industries thus benefit both from the industries’ increased
cognitive legitimacy as well as from limited competition. Conversely, in mature
industries, the positive effect of the industry’s cognitive legitimacy is outweighed by
the ventures’ intense competition for scarce resources. At high levels of population
density, competition will thus dominate over cognitive legitimacy, and consequently
founding rates will decline and mortality rates will rise (e.g. Caroll & Hannan, 1989; cf.
Baum & Oliver, 1992; Baum & Singh, 1994; Manigart, 1994; Petersen & Koput, 1994).
As more recent studies have accordingly argued, once an industry’s “legitimacy
threshold” (Navis & Glynn, 2010) is reached and competition for scarce resources
intensifies, cognitive legitimacy is a necessary but not a sufficient factor for resource
acquisition and survival. Rather, audiences require ventures to be successfully
differentiated within the audience’s category of legitimate organizations in order to
obtain “legitimate distinctiveness” and to acquire needed resources (Navis & Glynn,
2011).

2.5.3. New Venture Legitimation Strategies (Trajectory 3)

While the above studies on legitimate characteristics of new ventures and industries
(trajectories 1 and 2) regard audiences’ perceptions of a focal venture’ legitimacy as
both inherent in new ventures and as constraining their fates, more recently, a large
and steadily increasingly number of studies have explored the practices that new

47
ventures mobilize in their attempts to strategically “extract” legitimacy from their
environment (cf. Suchman, 1995)10. These studies thus refer to legitimation as
something new ventures and their managers actively do either individually (cf.
trajectory 3) or collectively (cf. trajectory 4).

While it was even found that the strategies of new ventures are more important in
explaining their acquisition of legitimacy and resources than their characteristics
(Delmar & Shane, 2004; Tornikowski & Newbert, 2007), most generally, new ventures
may mobilize “conforming”, “manipulating” and “selecting” practices to acquire
legitimacy for their venture (cf. Zimmerman & Zeitz, 2002). Regarding the individual
types of legitimacy, prior research has started exploring how ventures may engage in
political action to convince governments or certification authorities of their regulative
legitimacy, how they mobilize symbolic action and impression management tactics to
acquire normative legitimacy, and how they mobilize rhetoric and discourse to shape
the beliefs and understandings of their audiences thus influencing their cognitive
legitimacy.

Regulative new venture legitimation. How new ventures gain regulative legitimacy
and thus alignment with rules and laws has remained comparably under-researched.
With their conformance-selection-manipulation-framework, Zimmerman and Zeitz
(2002) argue that ventures can gain regulative legitimacy by “adhering to
government rules and regulations, such as registering with the SEC to publicly sell
stock” (conforming), by “selecting a geographic location based on favorable
regulations for new ventures, such as when a new venture expands its sales into
additional states to benefit from interstate sales tax exemption” (selecting), or by
“lobbying for changes in existing regulations to which the new venture is subject”

10
This body of research thus shows an earlier albeit similar tendency as recent network theoretic
research on new venture outcomes (such as resource acquisition and survival or performance more
generally). Moving on from regarding new ventures’ social networks as stable constraints to an interest
in “network agency” (Ahuja, Soda, & Zaheer, 2012), these scholars have similarly explored how new
ventures form the ties and networks that shape their outcomes (e.g. Hallen & Eisenhardt, 2012; Ozcan
& Eisenhardt, 2009; Vissa, 2011; 2012).

48
(manipulating) (Zimmerman & Zeitz, 2002: 424). Additionally, it has been pointed out
that new ventures that succeed in having their products and innovations certified by
authorized extra-industrial certification authorities create important symbols for
stakeholders to judge the regulative legitimacy of new ventures thus increasing their
prospects for resource acquisition and survival (Rao, 1994; Sine et al., 2007). Yet, while
the number of a new venture’s product certifications may significantly increase its
survival prospects (Rao, 1994), this effect may be more pronounced in industries that
are nascent or lack legitimacy than in settings that are already established and
legitimate (Sine et al., 2007).

Normative new venture legitimation. Overall, new ventures may acquire normative
legitimacy by “following societal norms such as operating profitably and adopting
professional norms” (conforming), “selecting domains in which the norms and values
are more accepting of the venture’s products/services and/or vision” (selecting), or by
“changing existing norms and values. For example, biotech new ventures manipulated
the norms that a good investment generates profit by refocusing investors’ attention
to the value of potential scientific breakthroughs” (manipulating) (Zimmerman and
Zeitz; 2002: 424). Subsequent studies particularly highlighted the role of impression
management performances and symbolic actions for new ventures in order to gain
normative legitimacy (e.g. Khaire, 2010; Rutherford et al., 2009; Zott & Huy, 2007).
While such symbolic actions may include staged exaggerations or even outright lies
(Rutherford et al., 2009), due to information asymmetry and the frequent lack of
established quality criteria, resource-holders may frequently rely on these symbols to
judge the value and appropriateness of a focal venture (Zott & Huy, 2007)

Symbolic actions that new ventures may rely on to create impressions of normative
legitimacy may include: conveying symbols of new venture managers’ personal
credibility and commitment; creating impressions of the professional nature of a
venture’s structures and processes; creating impressions of the venture’s
achievement; and symbols conveying the prestige of the venture’s social capital (Zott

49
& Huy, 2007). These authors additionally highlighted a number of factors that may
moderate the relationship between managers’ symbolic actions and their capacity to
acquire legitimacy and resources – including the “skillfulness” and “complementarity”
of these actions, the ‘structural similarity’ between venture and resource holder or the
venture’s ‘intrinsic quality’ (Zott & Huy, 2007).

Cognitive new venture legitimation. How new ventures acquire cognitive

legitimacy has experienced an overwhelming interest in recent research. Generally,
new ventures can acquire cognitive legitimacy by “complying with ideas models,
practices, etc. assumed to be correct, such as hiring top managers with desirable
experience and education credentials” (conforming), “selecting domains in which the
ideas, models, practices, etc. are more accepting of the venture” (selecting), or by
“altering existing ideas, models, practices, etc.” (manipulating) (Zimmerman & Zeitz,
2002: 425). Most of the reviewed studies have drawn on cultural theory and related
discursive perspectives to explore various aspects of “cultural entrepreneurship”
(Lounsbury & Glynn, 2001). From this angle, skillfully acquiring cognitive legitimacy
entails for new venture managers drawing on widely shared concepts and
vocabularies to either create linkages of their new ventures to these ‘cultural tools’ or
to engage in cultural bricolage by recombining existing concepts thus creating novel
yet legitimate identities and resource spaces (Lounsbury & Glynn, 2001; Johnson,
2007; cf. Douglas, 1986; Swidler, 1986). For the former, skillful new venture managers
may mobilize discursive analogies and, for the latter, they may engage in story-telling.

Stories, through the narrative plot lines and causal relationships they propose, can
help managers create identities for and ‘theories’ about their venture thereby
reducing ambiguity in their audiences and creating cognitive legitimacy
(comprehensibility and plausibility) (e.g. Aldrich & Fiol, 1994; Lounsbury & Glynn,
2001; Martens et al., 2007; Navis & Glynn, 2011; Weber et al., 2008). These narratives
underlie managers’ oral presentations or their written business plans and
prospectuses (Stone & Brush, 1994) and may in turn positively influence their chances

50
to acquire resources (Martens et al., 2007). However, if stories and narratives are to
yield cognitive legitimacy for new ventures, they require both external resonance with
their audiences’ understandings as well as internal coherence and thus a non-
contradictory causal plot (Lounsbury & Glynn, 2001; Martens et al., 2007; Navis &
Glynn, 2011).

Analogies (and related tropes such as metaphors) have figured prominently in most
recent research (Cornelissen & Clarke, 2010; Etzion & Ferraro, 2009; Navis & Glynn,
2010; Santos & Eisenhardt, 2009; cf. Hargadon & Douglas, 2001). New venture
managers have been shown to draw analogies between their novel ventures,
products, or propositions (e.g. “online shopping”) and concepts that their resource-
holders are widely familiar with (e.g. “shopping”) in attempts to win support,
resources, and to spur their products’ initial comprehension and valuation. Later, once
analogies have secured the initial legitimacy of a new venture, managers can again
draw on analogies to signal their novel products or services ‘dissimilarities’ to
competing products and conceptions in order to highlight their offerings difference
or superiority and to carve out a distinctive legitimate space for their venture (Etzion
& Ferraro, 2009).

2.5.4. Industry Legitimation Strategies (Trajectory 4)

While the above studies in trajectory 3 have tentatively focused on how new venture
managers aim to strategically legitimize their individual new ventures in either novel
or established industries, a small number of studies have begun to explore how new
ventures engage in collective action to legitimize the – typically nascent – industry
they populate. These studies thus respond to current trends e.g. in institutional
theory, social movement theory, and cultural theory that regard strategic legitimation
not so much as the endeavor of individual “hyper-muscular” actors but as a collective
exercise (cf. e.g. Battilana et al., 2011).

51
Regulative industry legitimation. To create regulatory legitimacy for a nascent
industry, new ventures accordingly need to create beneficial rules, laws, and
regulations for their nascent industries. Zimmerman & Zeitz (2002: 425) point to the
anecdotal evidence of collective lobbying and political action such as, for instance,
when “internet retailers lobby for federal legislation to create tax-free interstate
internet sales”. Yet, more comprehensive theorizations and empirical explorations of
how new ventures secure regulative legitimacy for their industries have remained
notably absent.

Normative industry legitimation. To create normative legitimacy for a nascent

industry, new ventures need to develop, share, and circulate norms and values
beneficial to their new industries (Zimmerman & Zeitz, 2002). In this regard, finding
avenues for collaborative action among new ventures despite their potential
competitive conflicts might be most important (Aldrich & Fiol, 1994). In their recent
qualitative study on the creation of an organic food market in the US, Weber et al.
(2008) draw from social movement theory and show how new ventures that
participate in this organic food movement collectively mobilized broad cultural codes
that created normative oppositions between the nascent market and the dominating
food industry (such as “sustainable” vs “exploitative” or “natural” vs “artificial”). These
cultural codes in turn motivated producers to enter and persist in the nascent market,
shaped their choices about product and exchange and formed the basis for the
products’ valuation.

Cognitive industry legitimation. To create cognitive legitimacy for their nascent

industries, new ventures face the daunting task of legitimizing their industries’ novel
operating practices, models, and ideas (Zimmerman & Zeitz, 2002). In this regard
some kind of consolidation – i.e. isomorphism - among the ventures that populate a
nascent industry may be most important. Accordingly, while organizational forms that
are consolidated are categorized by their audiences as more legitimate and acquire
more resources while nascent industries with differentiated organizational forms are

52
more likely to be categorized as illegitimate and tend to fail (c.f. King et al., 2011;
Navis & Glynn, 2010)11.

In this regard, attempts to yield collective product standards and a collective identity
have been regarded as driving a nascent industries’ cognitive legitimation (Aldrich &
Fiol, 1994; King et al., 2011; Wry et al., 2011): Accordingly, when new ventures
encourage convergence around dominant designs and technology stands, they are
more likely to gain cognitive legitimacy for their industry – although this may imply
for self-interested new ventures to imitate and follow their competitors rather than
seeking further innovation and differentiation (Aldrich & Fiol, 1994). Yet, until such
consolidation may be reached, the industry’s liability of newness may be high and the
failure of existing ventures may be frequent. In a related way, new ventures are more
likely to yield both a shared collective identity and cognitive legitimacy for their
nascent industry when they achieve consensus on and jointly articulate a clear
collective identity story to achieve a consolidated vision for the industry and to
sustainably attract both resource-holders and further entrants.

Overall, while a large number of studies have furthered our knowledge on the
practices of new ventures to acquire legitimacy, efforts have been made recently to
conceive of such legitimation strategies not as endeavor of individual ventures but as
collective enterprise that requires buy-in of and coordination among the majority of
ventures that may populate an industry.

2.6. TOWARDS A PROGRAM FOR FUTURE RESEARCH

As our review has shown, the field of research on new venture legitimacy and new
venture legitimation has amassed a considerable amount and depth of insights. Still,
a large number of opportunities for highly relevant future research remain. Our
11
As we outlined previously, the reverse appears to hold for established and mature industries where
audiences may look for ventures that are legitimately differentiated from the remaining population
(Navis & Glynn, 2010; cf. Zuckerman, 1999).

53
suggestions in this regard pertain to the following three areas: Seizing the applied
legitimacy and legitimation typology, mobilizing alternative legitimacy and
legitimation typologies, and exploring further contingencies on new venture
legitimacy and legitimation.

2.6.1. Seizing the Applied Legitimacy and Legitimation Typology

A number of research gaps have remained under- or even unexplored with regard to
new ventures’ and their industries’ regulative, sociopolitical normative, and cognitive
legitimacy and legitimation. Further explorations of these legitimacy types will be
critical for furthering our understanding of new venture outcomes in general and of
their legitimate characteristics and legitimation strategies in particular.

Regulative legitimacy and legitimation of new ventures and industries. Overall,

how managers of new ventures are affected by or actively affect the regulative
legitimacy of their new ventures and industries has received comparatively least
attention (see Figure 2). In furthering prior research in this area, we are in particular
need of both theoretical and empirical studies on how new ventures gain regulative
legitimacy either individually for their novel products or ventures or collectively for
nascent industries. For instance, while prior research has shown that certifications are
important for new ventures to acquire legitimacy and resources (e.g. Rao, 1994; Sine
et al., 2007), we do not know how they go about and which practices they mobilize to
acquire product certifications from authorized agencies. More generally, a large
number of industries and professions require formal and official regulation in order
to publicly offer their products and services including, for instance, pharmaceutical,
construction, or military products and services. Yet, we do not know which ventures
tend to receive regulatory approval or how new ventures (individually or collectively)
mobilize to have their ventures and nascent industries legalized and regulated. Future
explorations of these questions may for instance extend the reach of recent work on
lobbying and strategic political action (cf. Oliver & Holzinger, 2008).

54
Normative legitimacy and legitimation of new ventures and industries. Prior
research predominantly suggests drawing on perspectives of symbolic action and
impression management for theorizing the strategic actions actors in general and
new ventures in particular engage in to acquire normative legitimacy.

Regarding the former, i.e. perspectives on symbolic action, several scholars have
argued that organizations can acquire normative legitimacy by means of either
symbolic legitimation or substantive legitimation (e.g. Ashforth & Gibbs, 1990; cf.
Westphal & Zajac, 1994). While substantive legitimation involves “real, material
change in organizational goals, structures, and processes” which thus implies the
concrete commitment of ‘substantive’ (i.e. material or economic) resources, symbolic
legitimation rather implies that the focal organization may rather “portray – or
symbolically manage – so as to appear consistent with social values and expectations”
(Ashforth & Gibbs, 1990: 180) while refraining from substantive changes and
investments. Examples of such symbolic management include, for instance,
“espousing socially acceptable goals… while actually pursuing less acceptable ones”,
“redefining [audiences’ valued] means and ends”, or “ceremonial conformity… while
leaving the essential machinery of the organization intact” (Ashforth & Gibbs, 1990:
180-181). Yet, with a predominant focus on new ventures’ symbolic action, new
ventures’ substantive legitimation processes and their consequences have remained
under-researched. Accordingly, a number of important questions urgently require
exploration to create more fine-grained and less ‘heroic’ accounts of new venture
outcomes: For instance, under which circumstances do new ventures engage in
substantive or in symbolic legitimation? Do new ventures engage in substantive and
symbolic legitimation in a parallel or in a sequential fashion? And what are the
consequences of substantive and symbolic legitimation processes for new ventures?12

12
As outlined in the introduction of this dissertation in Chapter 1, in the subsequent CHAPTER 3, we
will begin to explore this important research gap by studying a new venture’s SYMBOLIC AND
SUBSTANTIVE legitimation practices.

55
Regarding the latter, i.e. impression management perspectives, prior research has
predominantly focused on the “front-stage” on the front stage of impression
management (cf. Goffman, 1959), that is, on how new ventures (and organizations
more generally) deploy impression management strategies such as identity narratives
and other impression management “performances” to acquire legitimacy when facing
a ‘target audience’ (i.e. a targeted resource-holder) (e.g. Zott & Huy, 2007). Yet, while
successful new venture managers may invest considerable time and energy into the
preparation of their impression management strategy (cf. e.g. Santos & Eisenhardt,
2009), studies of the “back-stage” of impression management, where actors may
prepare and rehearse their impression management strategies remote from the view
of their target audience (cf. Goffman, 1959), are notably absent. Overall, we thus lack
theory on how (normative) legitimation strategies are “crafted” and on how impression
management performances get shaped (cf. Sonenshein, 2006).13

Cognitive legitimacy and legitimation of new ventures and industries. Several

opportunities exist for building on the large number of studies on the role of
ventures’ cognitive legitimacy and cognitive legitimation: First, while new ventures in
nascent industries may need to achieve consolidation of their forms, identities, and
standards to become meaningful to their audiences and to acquire resources (e.g.
Aldrich & Fiol, 1994), existing explorations have remained partial in explaining how
consolidation among self-interested new ventures’ forms, identities, and standards
occurs in nascent industries (cf. King et al., 2011; Wry et al., 2011). Drawing on social
movement theory to conceive of consolidation processes as “framing contests” (cf.
Benford & Snow, 2000), it becomes meaningful and relevant to study the frames new
ventures mobilize individually or collectively to drive or to counter consolidation in
nascent industries? In this regard, it would also be particularly fruitful to study why
and how certain new ventures (such as Apple) can successfully shield themselves from

13
As outlined in the introduction of this dissertation in Chapter 1, in CHAPTER 4, we will address this
important research gap by addressing how managers create a legitimating narrative (a specific type
and modality of an impression management strategy) at the BACK-STAGE of their new venture.

56
consolidation processes in nascent industries. Second, while new ventures in mature
industries may need to legitimately differentiate themselves (Navis & Glynn, 2011; cf.
Zuckerman, 1999), recent sociological work suggests that all actors in established
fields (such as industries) act strategically to achieve differentiation from competing
groups (Fligstein & MacAdam, 2011). Yet in this case, we do not know which patterns
of (more/less legitimate) differentiation arise in mature industries. Recent work in
social network theory on actors’ status hierarchies and status competition might proof
fruitful to answer this and related questions (Sauder, Lynn & Podolny, 2012).

2.6.2. Mobilizing Alternative Legitimacy and Legitimation Typologies

Additionally, even more opportunities for future research appear once we draw on
other influential legitimacy typologies (e.g. Asforth & Gibbs, 1990; Deephouse &
Suchman, 2008; Suchman, 1995) to study new venture characteristics, actions, and
outcomes.

External and internal legitimacy and legitimation. Perhaps most generally, sources
of legitimacy may include both “internal and external audiences who observe
organizations and make legitimacy assessments” (Deephouse & Suchman, 2008: 54)
where internal legitimacy may thus be granted from internal stakeholders such as
employees and executives while external legitimacy may be granted from external
stakeholders such as investors and customers (cf. Kostova & Zaheer, 1999).
Accordingly, to become sustainable organizations, new ventures will require external
legitimacy – the predominant focus of prior research – but also internal legitimacy.
Yet, both the focus on internal legitimacy/legitimation as well as the combined
exploration of internal and external legitimacy/legitimation of ventures has remained
relatively absent (for exceptions, cf. e.g. Drori et al., 2009 or the few other underlined
studies in Table 2-2). Such a balance of internal and external legitimacy will be
particularly critical for corporate ventures, newly created corporate subunits with the
aim to enter new markets for their parent companies or to market new products.
While prior research on corporate ventures has primarily focused on the internal

57
corporate context (i.e. the interactions between venture and corporate parent) in
mediating venture survival (e.g. Burgelman, 1983), a more fine-grained picture may
be yielded from the study of how corporate ventures secure coherence between their
internal and external legitimacy.

Pragmatic legitimacy and legitimation. When comparing the two most widely
applied legitimacy typologies – Scott’s (2007), which we applied to structure the
findings of the present review, as well as Suchman’s (2005) – Suchman’s (2005) focus
on organizations’ pragmatic legitimacy and legitimation has remained largely
uncovered both in this review as well as in prior research on new ventures (cf. Starr &
MacMillan, 1990; Zott & Huy, 2007, for exceptions). Pragmatic legitimacy, which may
rest on the self-interested calculations of a venture’s immediate audiences, involves
two sub-types (cf. Suchman, 1995): First, a venture’s exchange legitimacy will be based
on the excepted valued for an audience of exchanging with the venture (Suchman,
1995: 578). Building on recent developments in the sociology of value and valuation
(e.g. Zuckerman, 2012), future research could explore how audiences’ social
categorizations determine the value of a new venture or how new ventures affect the
value judgments of their audiences. Second, influence legitimacy follows from
incorporating institutional constituents into a ventures’ policy making structures
(Suchman, 1995: 578), which is elsewhere referred to as ‘cooptation’ (cf. Selznick,
1948). While cooptation may involve for new ventures agreeing to share control
rights with their investors or to have their strategies (co)determined by external
advisors in return for investors’ support, we do not exactly know what forms of new
venture cooptation exist and how cooptation affects new venture outcomes.

Maintaining and defending legitimacy. The study of “legitimation” generally

involves explorations of how actors acquire, maintain, and defend their legitimacy
(e.g. Ashforth & Gibbs, 1990; Suchman, 1995). Yet, the studies we reviewed show a
predominant interest in how new ventures individually or collectively acquire
legitimacy. Given that new ventures typically lack both legitimacy and resources, this

58
general direction of prior research is both understandable and necessary.
Additionally, however, there are number of reasons for focusing as well on how new
venture managers individually and collectively aim to maintain and defend their
ventures’ and industries’ legitimacy. For instance, during the stages of foundation and
early growth, new industries are oftentimes characterized by “high velocity”, that is,
by rapid transformations of product types, populating organizations, or consumer
preferences. In such contexts, new ventures have to live up to changes in their social
and cultural environment in order to maintain initial resource-flows. From this
perspective, the maintenance of legitimacy even appears as decisive ‘dynamic
capability’ for new ventures in dynamic settings.

2.6.3. Exploring Structural Contingencies

In addition to those industry- and venture-characteristics that have been covered in

the literature, a number of further contingencies act as important constraints on new
venture legitimacy and legitimation and thus deserve increased attention by future
research. Here, we aim to highlight only a number of those contingencies that we
consider as most relevant and profound.

Institutional complexity. Institutional complexity may perhaps act as the most

important of these contingencies. We thus need to deepen our understanding of how
ventures acquire legitimacy in situations of institutional complexity, that is, when
facing resource-holders with plural or even conflicting demands or when operating in
multiple contexts. For the former, while prior research has portrayed resource-holders
as relatively uniform, the demands of, e.g. investors, consumers, or governmental
bodies are multiple and may appear, at least in part, conflicting. For the latter, new
ventures oftentimes operate in multiple contexts such as sectors, industries, or
countries or, in the case of corporate ventures, they face demands of their corporate
parents as well as of other external resource-holders. Yet then, the important
question arises, how and when a new venture appears legitimate to multiple

59
resource-holders and/or in multiple contexts – each with potentially conflicting
regulative, normative, or cognitive demands and affordances.

To answer these questions, future research could build on a number of theoretical

paradigms: First and most generally, resource dependence theory suggests a number
of tactics that new ventures might engage in to “compromise”, “manipulate” or
“deny” conflicting demands of external constituents (cf. Oliver, 1991; Pache & Santos,
2010). Second, from stakeholder theory-perspective, new ventures’ responses and
strategies may depend on the perceived priority of a resource-holder on the
venture’s agenda which may be determined by a focal resource-holder’s power,
perceived legitimacy, and urgency (cf. Mitchell et al., 1997). Third, from a social
network theory perspective, particularly skillful new ventures may also aim to engage
in “robust action”, that is to act in an ambiguous and sphinxlike manner and to create
a “multivocal identity” so that its actions can be “interpreted coherently [and
favorably] from multiple perspectives simultaneously” (Padgett & Ansell, 1996: 1263;
cf. White, 2008).

New venture position. Research on new ventures’ cognitive legitimation studies

have assumed new ventures to be “skillful cultural operators” and rhetoricians who
can draw on their audiences’ cultural beliefs and understandings as symbolic “toolkit”
to create stories that win their constituents’ support and resources (e.g. Lounsbury &
Glynn, 2001; Navis & Glynn, 2010). Yet, as recent cultural research points out, these
claims potentially suffer from two exaggerations: First, “although rhetorical strategies
leave room to maneuver, social actors are not free to strategically choose from the
entire menu or toolkit” (Meyer & Hoellerer, 2010: 1242, emphasis added).
Accordingly, individual ventures’ accounts may be distributed and constrained within
the field according to their social positions – thus pointing out that future research is
in need to explore different patterns of individual ventures’ understanding and power
within their newly entered market contexts.

60
New venture evolution. Social actors’ potential for strategic cultural action may not
only be constrained by their social position but also by their evolution (Weber, 2005).
In this regard, recent arguments in the literature that new ventures be skillful
symbolic actors already at the time of foundation and market entry (e.g. Hallen &
Eisenhardt, 2012; Lounsbury & Glynn, 2001; Martens et al., 2007) appear unrealistic as
most new ventures may rather suffer from a lack of understanding of the norms and
industry recipes of the markets and fields they enter (cf. Stinchcombe, 1965). Rather
than assuming that new ventures typically have a capacity for strategic legitimation
and resource acquisition, future research might thus fruitfully begin to explore how
new ventures gain a capacity for strategic legitimation – that is, how they acquire the
necessary ‘domain knowledge’ (Ganz, 2000) and ‘cultural repertoire’ (Weber & Dacin,
2011) or how they construct the ‘legitimacy façade’ that enables them to decouple
their inherent interests from their externally visible, ceremonial structures (cf. Meyer
& Rowan, 1977).

2.7. DISCUSSION

Our objective in this chapter was to provide an overview of how the concept of
legitimacy has been applied in prior research on new ventures. Legitimacy – a
concept central to a large number of social and cultural theories – provides new
ventures with a reservoir of support among their actual and potential stakeholders
which facilitates accessing urgently needed resources (including economic capital,
human capital, and social capital) and overcoming their liabilities. The review provides
evidence for the significant impact that prior applications of the concept of legitimacy
has had on the field’s understanding of characteristics and actions of new ventures in
general and of how they can acquire resources, survive, and grow in particular.

In this regard, our systematic review has uncovered 4 central and distinctive research
trajectories across the generic disciplines of organization theory and strategy,
entrepreneurship, and sociology. Depending on scholars’ assumed degree of agency

61
(low/high) and the explored level of analysis (individual/collective), these trajectories
were (1) ‘Legitimate New Venture Characteristics’ (low/new venture) focusing on new
venture characteristics that yield legitimacy, (2) ‘Legitimate Industry Characteristics’
(low/collective) focusing on industry characteristics that yield new venture legitimacy
independent on a venture’s idiosyncratic characteristics, (3) ‘New Venture
Legitimation strategies’ (high/individual) focusing on the practices of managers to
acquire legitimacy for their new ventures, and (4) ‘Industry Legitimation strategies’
(high/collective) focusing on the practices of a collectives of new ventures to acquire
legitimacy for their (typically emerging) industries.

Although the contributions within these 4 trajectories have been remarkably and
significant, fully realizing the potential of these areas of study will require future
research to both dig deeper into these areas of study but also to explore further
aspects and typologies in order to create a more fine-grained picture of how
legitimate characteristics and legitimation strategies may aide new ventures in
overcoming their own liabilities and those of their industries. We trust that this review
and the program for future research which we outlined will contribute to the
advancement of research in these fascinating areas of research.

In the 2 subsequent chapters, we proceed with addressing those 2 critical future

research opportunities which we highlighted regarding a new venture’s NORMATIVE
LEGITIMATION. We thus explore a new venture’s SYMBOLIC AND SUBSTANTIVE
LEGITIMATION practices in the subsequent CHAPTER 3 and theorize the “BACK-
STAGE” OF IMPRESSION MANAGEMENT in CHAPTER 4.

62
63
3. HOW NORMATIVE NEW VENTURE
LEGITIMATION STRATEGIES EVOLVE: THE
RELEVANCE OF CULTURAL KNOWLEDGE FOR
SYMBOLIC LEGITIMATION14

Abstract. In this chapter, THEORETICAL GAP 1 will be addressed. Hence, both

SUBSTANTIVE AND SYMBOLIC new venture legitimation practices will be explored. In
this regard, we address RESEARCH QUESTION 1: How do new venture legitimation
practices evolve across repeated resource acquisition attempts? Through a
longitudinal qualitative study, we uncover a new venture’s cultural knowledge – the
knowledge about the norms and values in the cultural environment of its resource-
holders – as central ‘change engine’ of the new venture’s legitimation practices. At
the time of venture creation and market entry, lack of cultural knowledge forced the
new venture to engage in substantive legitimation which enabled resource
acquisition but endangered its survival through ‘resource dissipation’. The new
venture was only able to mobilize symbolic legitimation practices which enabled both
resource acquisition and survival after it had accumulated cultural knowledge
through repeated experimental interactions with resource-holders throughout 4 years
in the market. Implications for research on new venture legitimation and new venture
survival are discussed.

14
Earlier versions of this argument have been accepted and/or presented at several international,
peer-reviewed conferences including the AOM conference 2011 and 2012, the EGOS conference 2011,
and the SMS conference 2012.

64
3.1. INTRODUCTION AND BACKGROUND

Normative legitimacy follows when an organization is considered to be aligned with

the cultural norms and values of its audiences (Bitektine, 2011) and when these
audiences thus consider the organization’s apparent intentions and actions as “the
right thing to do” (Suchman, 1995: 579). According to institutional theory, normative
legitimacy is central for an organization to acquire the (financial, human, or material)
resources necessary to survive and persist in a chosen environment (e.g. Meyer &
Rowan, 1977). In particular, for new ventures – including independent- and corporate
ventures in their first years of existence –, normative legitimacy is frequently
considered as decisive asset as it provides them with a reservoir of trust and support
among potential resource-holders which in turn facilitates new ventures’ access to
the desperately needed but scarce resources (Khaire, 2010; Zott & Huy, 2007) on
which new ventures are dependent in order to overcome their ‘liability of newness’
and survive (Singh, Tucker, & House, 1986; Stinchcombe, 1965, Zimmerman & Zeitz,
2002).

Due to their “flexibility and economy”, organizations have been depicted as preferring
to acquire normative legitimacy15 through symbolic legitimation practices (Suchman,
1995: 577; cf. Ashforth & Gibbs, 1990). Symbolic legitimation enables an organization
to acquire normative legitimacy by appearing consistent with the values and norms in
the cultural environment of its resource-holders while pursuing its own, divergent
interests (Ashforth & Gibbs, 1990; cf. Suchman, 1995). Symbolic legitimation can thus
take the form of “espousing socially acceptable goals… while actually pursuing less
acceptable ones”, “redefining [resource-holders’] valued means and ends”, or
decoupling, that is, “ceremonial conformity… while leaving the essential machinery of
the organization intact” (Ashforth & Gibbs, 1990: 180-181).

15
For reasons of convenience and readability, we refer to “normative legitimacy“ as “legitimacy”
throughout the remainder of this study.

65
Recently, institutional theorists have begun to particularly explore the symbolic
actions new ventures engage in to acquire legitimacy and resources from targeted
resource-holders. In this regard, new ventures have been characterized as “skillful
symbolic actors” – supposedly already at their time of their creation and market entry
(cf. Rao, 1994; Lounsbury & Glynn, 2001; Navis & Glynn, 2011; Zott & Huy, 2007).
These studies have argued that new ventures can, for instance, draw on vocabularies
that resonate with resource-holders’ cultural values and expectations (e.g. Lounsbury
& Glynn, 2001; Martens et al., 2007; Navis & Glynn, 2011), and that they are capable
to reference the quality of their inter-organizational relationships (Zott & Huy, 2007)
or to select resource-holders in areas that are particularly beneficial to the new
venture’s interests (e.g. Zimmerman & Zeitz, 2002).

However, several cultural theorists would rather question institutionally-minded

characterizations of new ventures as “skillful symbolic operators” at their time of their
creation and market entry. They would instead point to a potentially “drastic and
costly” “culture shock” that many new ventures – as new entrants to a given cultural
environment – would experience when facing the norms and values of targeted
resource-holders for the first time (cf. e.g. Swidler, 1986: 277). From a cross-cultural
perspective, new ventures may then – through repeated interactions with their
resource-holders – rather have to explore what the norms and values in this
environment may be (e.g. Shenkar, Luo & Yeheskel, 2008). Through these
interactions, new ventures may gradually come to be influenced by their cultural
environment in ‘symbolic’ ways. Rather, and conversely to the institutional argument,
symbolic influence – the conscious adoption and use of cultural symbols “as means to
their own ends” (Barley, Meyer & Gash, 1988: 26)16 – may then only gradually enable
new ventures’ symbolic legitimation practices.

16
Please note that “symbolic influence” is thus different from the more widely studied “conceptual
influence” of cultural environments upon new entrants. Conceptual influence, which results when new
entrants appropriate “the perspective of their cultural environment so thoroughly that may come to
wield it as if it were their own”, may thus lead to conformance with resource-holders’ legitimacy criteria
and may thus gradually disable a new venture from mobilizing symbolic legitimation practices (Barley
…

66
As follows, the purpose of this study is to tackle the ambiguity that has arisen
between institutional and cultural explanations about a new venture’s capacity of
symbolic legitimation. To do so, the in-depth study of the actual evolution of a new
venture’s legitimation practices will be particularly revealing. In this respect, some
studies have already argued that in order to survive, a new venture needs to
repeatedly acquire legitimacy and resources from different resource-holders in their
targeted cultural environment (Zimmerman & Zeitz, 2002; Starr & MacMillan, 1990),
yet that legitimation practices may vary in success and feedback from targeted
resource-holders (Cornelissen & Clarke, 2010; Lounsbury & Glynn, 2001; Santos &
Eisenhardt, 2009; Starr & MacMillan, 1990). The feedback that these legitimation
practices trigger may in turn influence whether a new ventures reinforces, refines, or
replaces its legitimation practices between its resource acquisition attempts (cf.
Cornelissen & Clarke, 2010). These initial insights were critical four our revision and
elaboration of how the legitimation practices of a new venture evolve across repeated
resource acquisition attempts.

To explore this question, we conducted an intensive, longitudinal case study on the

evolution of a new corporate venture’s resource acquisition attempts in the public
sector outsourcing market of a large European country. Relying on the new venture’s
six absorbing and sequential bidding processes for public sector authorities’ service
delivery outsourcing contracts as a series of embedded resource acquisition attempts
to track the new venture’s legitimation practices, we drew on institutional theory and
cultural theory to interpret our findings.

Through our analysis, we identified the new venture’s knowledge about the cultural
norms and values of its resource-holders (i.e. of public sector authorities) as central
determinant for its symbolic legitimation practices. Drawing on cultural theory, we
chose to refer to such knowledge as cultural knowledge (e.g. Molinsky, 2007; 2013).

et al., 1988: 26). Conceptual influence is thus similar in scope as the institutional theory notion of
“institutional inhabitation” (cf. Hallett, 2010).

67
The new venture was only able to mobilize symbolic legitimation practices that
contributed to its survival after it had gained cultural knowledge throughout four
years in the market. Conversely, at the time of organization creation and market
entry, its lack of cultural knowledge forced the venture to resort to substantive
legitimation practices – actual, material conformance to resource-holders’ legitimacy
criteria (cf. Ashforth & Gibbs, 1990) – which subsequently led to ‘resource dissipation’
(Bruederl & Schuessler, 1990) and threatened the venture’s survival. In a subsequent
phase, the new venture thus saw itself forced to repeatedly engage in experimental
interactions with resource-holders in order to gradually adapt its repertoire of bidding
practices by repeatedly ‘testing’ how to gain legitimacy and resources in ways that
were more symbolic in nature, that is, more protective of its interests and resources
and thus more beneficial for its survival. Experimentation thus enabled the
organization to gradually accumulate the cultural knowledge necessary for mobilizing
symbolic legitimation practices.

Our study contributes the concept of cultural knowledge as antecedent condition for
symbolic legitimation (Ashforth & Gibbs, 1990; Suchman, 1995) which will be
beneficial for new venture survival in that symbolic legitimation both enables resource
acquisition (Lounsbury & Glynn, 2001; Navis & Glynn, 2011; Zott & Huy, 2007) but
also prevents resource dissipation (Bruederl & Schuessler, 1990). In turn, substantive
legitimation which resulted from the new venture’s lack of cultural knowledge may
even promote new venture failure in that it may lead a new venture to resource
acquisition but to even more resource dissipation. Accordingly, while prior research on
new venture legitimation has predominantly focused on how new ventures can
acquire the resources needed for growth and survival (Khaire, 2010; Singh et al., 1986;
Zimmerman & Zeitz, 2002), new venture survival may hinge on the ability of new
ventures to both acquire new resources but also to protect existing resources. On this
basis, the question to ask for future research appears to be not only whether and how
new ventures can acquire legitimacy and resources but also: how beneficial or how
dangerous are legitimation practices for new ventures themselves?

68
We proceed as follows: After transparently laying out our research setting and
methods, we present a detailed narrative with our empirical findings. Subsequently,
we interpret these findings to elaborate existing theory on new venture legitimation.
We conclude with a discussion of our study’s theoretical implications.

3.2. RESEARCH SETTING AND METHODS

To study how the legitimation practices of a new venture evolve across repeated
resource acquisition attempts, we chose an interpretive, contextualist methodology
due to the processual focus of our research question (Pettigrew, 1990; Ketokivi and
Mantere, 2010; Van Maanen, 1979) and conducted a longitudinal, exploratory case
study (Stake, 1995) of the new corporate venture PUB-BLUE’s17 repeated resource
acquisition attempts in the public sector outsourcing market. Hereby, PUB-BLUE’s
repeated bidding processes for public sector outsourcing contracts served as
embedded cases of a new venture’s resource acquisition attempts and allowed a clear
cut cross-temporal comparison of the legitimation practices that the new venture
mobilized within them.

3.2.1. Research Setting

We selected this research setting for its theoretical and practical relevance (Miles &
Huberman, 1984): PUB-BLUE is a prototypical case to study how a new venture
repeatedly attempted to acquire resources from resource-holders in order to grow
and survive in an established market environment: Neither PUB-BLUE nor its parent
BLUE – an international provider of private sector business process outsourcing

services – had done process outsourcing for public sector organizations before. Yet,
since its initiation in 2005, PUB-BLUE has managed to win 3 of its 6 contract bidding
attempts (i.e. bid 1, bid 4, bid 5, bid 6 short before signature). These contracts consist

17
A pseudonym. All names - and where necessary other aspects - have been altered in deference to
our informed consent confidentiality agreements with the organization and our informants.

69
in large-scale and long-term joint public service delivery contracts between a public
sector authority and a private sector organization. While the public sector
outsourcing market is relatively small – on average 4-8 tenders of public sector
authorities are launched per year – the contracts are substantial and involve an
average contract length of 10 years, an average contract value of USD 250 million
and the temporal transfer of up to 1.000 public sector employees to the private
sector company. Winning 3 public sector outsourcing contracts over the course of
our investigation thus enabled PUB-BLUE to grow substantially through the increase
of both substantial monetary as well as human resources.

The public sector outsourcing market is also a prototypical setting for transparently
observing a new venture’s dependence on resource-holders’ norms and values. Due
to the venture’s principal reliance on public sector authorities as resource-holders,
the venture had to cope with the values and norms of the public sector environment
of this respective country. PUB-BLUE accordingly faced resource-holders who aimed
to increase the public welfare in their specific geographical areas of their authorities
(as value). To acquire bidding contracts (and thus urgently needed resources), the
new venture thus had to appear aligned with the public welfare value of public sector
authorities. Moreover, contract bids (i.e. resource acquisition attempts) of the venture
also had to adhere to detailed bidding requirements (as norms) which the resource-
holding public sector organizations prescribe in order to secure that their values and
interests are met. Accordingly, bidding processes in this environment are typically
initiated by a tender of the public sector organization and take 1-3 years until an
outsourcing agreement is reached and an according contract is signed. As bidding
processes are triggered and led by public sector organizations, they have to conform
to the extensive guidelines of the public sector in this respective country. Bidding
processes have to be formal, transparent, and to follow the public sector protocol.
They involve several rounds of submission and evaluation of public-sector tender-
documents such as "pre-qualification questionnaires" and according bid-responses.

70
3.2.2. Data Collection

Initially interested more broadly in the dynamics of how PUB-BLUE addresses its
institutional and strategic challenges, we collected data primarily during four
extended field stays ranging between 10 days and 3 weeks with PUB-BLUE
throughout 2008 to 2010 (see Table 3-1). As this study oriented increasingly on the
evolution of a new venture’s bidding practices as central manifestation of its
institutional and strategic challenges, the data collection between our field stays
gained in focus in this respect. As we became aware that PUB-BLUE’s bidding
practices must have changed drastically between bid 1 and current bids, we focused
our data collection efforts during our stays 3 and 4 on unearthing how and why such
a radical evolution in PUB-BLUE’s bidding practices had occurred. We relied on three
primary data collection methods: interviews, documentary data, non-participant
observation of bidding processes 5 and 6.

Interviews. We conducted 41 semi-structured, open-ended and tape-recorded

interviews with those members of PUB-BLUE which were involved in its bidding
processes (average duration: 55 minutes, see Table 3-2). We transcribed and
thoroughly read through those interviews we considered most insightful during and
immediately after each field stay (Miles & Huberman, 1984). All interviews were based
on interview guidelines which accounted for the adjusted and narrowed focus from
one field stay to the next (See Tables 3-3 - 3-5) and were transcribed verbatim.

Initially starting with a snowball sampling approach, we started our first field stay with
two semi-structured and open-ended interviews with Frederic, the founder and top
manager of PUB-BLUE, and then followed-up with interviewing 10 further key actors
of PUB-BLUE. This group formed our core group of interviewees that we interviewed
throughout the study. During field stay 3, we seized the opportunity to contextualize
these core data with interviews with a public sector outsourcing expert who consulted
for PUB-BLUE as well as 3 members of the public sector local authority of bidding
process 5.

71
 Table 3-1: Overview of Data Status per Bid

Bid 1 Bid 2 Bid 3 Bid 4 Bid 5 Bid 6

Authority_1 Authority_2 Authority_3 Authority_4 Authority_5 Authority_6
Autumn-Winter
Duration 2004-2005 Spring 2006 2007-2008 2009-2010 2009-ongoing
2006
Bid Overview
Rejected after Rejected after
Bid Outcome Contact Signed Contract Signed Contract Signed In Final Round
Round 1 Round 2
real-time/ real-time/
Interviews (Total: 41) retrospective retrospective retrospective retrospective
prospective prospective

Documents Bid Documentation complete Complete complete complete partial partial

Bid Memos - Yes Yes yes - -

Minutes complete Complete complete complete - -
Data
Council feedback
yes Yes Yes - - -
documents

Other Council
yes Yes Yes yes yes yes
documents

Participant Observation - - - - yes yes

72
 Table 3-2: Overview of Interviews per Field Stay

No Stay Date Informant Min. Status No Stay Date Informant Min. Status
1 1 20090608 PUB-BLUE, CEO 40 taped, 21 3 20100324 PUB-BLUE, 35 taped,
transcr. MMgmt, Bidder transcr.
2 1 20090611 PUB-BLUE, CEO 85 taped, 22 3 20100324 PUB-BLUE, SMgmt, 45 taped,
transcr. Bidder transcr.
3 1 20090611 PUB-BLUE, CFO 90 taped, 23 3 20100324 PUB-BLUE, 40 taped,
transcr. MMgmt, Bidder transcr.
4 1 20090612 PUB-BLUE, 55 taped, 24 3 20100325 PUB-BLUE- 65 taped,
SMgmt, Dir- transcr. Subcontr. SMgmt, transcr.
Contract1 Bidder
5 1 20090616 PUB-BLUE, 85 taped, 25 3 20100325 PUB-BLUE, 40 taped,
Ass.Bid-Man transcr. MMgmt, Bidder transcr.
6 1 20090616 PUB-BLUE, 85 taped, 26 3 20100414 PUB-BLUE, 55 taped,
MMgmt, Bidder transcr. MMgmt, Bidder transcr.
7 1 20090617 PUB-BLUE, 90 taped, 27 3 20100414 PUB-BLUE, Ass.Bid- 40 taped,
MMgmt, Bidder transcr. Man transcr.
8 1 20090618 PUB-BLUE, 90 taped, 28 3 20100416 PUB-BLUE, 75 taped,
SMgmt,Dir- transcr. MMgmt, Bidder transcr.
Contract2
9 1 20090622 PUB-BLUE, 55 taped, 29 3 20100419 PUB-BLUE, 65 taped,
MMgmt, Bidder transcr. BidMan. transcr.
10 1 20090623 PUB-BLUE, 90 taped, 30 3 20100419 PUB-BLUE, SMgmt, 75 taped,
MMgmt, Bidder transcr. Bidder transcr.
11 1 20090623 PUB-BLUE, 65 taped, 31 4 20100917 PUB-BLUE, 40 taped,
MMgmt, Bidder transcr. Mmgmt, transcr.
Lobby/Capital (1)
12 1 20090629 PUB-BLUE, CEO (1) 45 taped, 32 4 20100917 PUB-BLUE, 35 taped,
transcr. Mmgmt, transcr.
Lobby/Capital(2)
13 1 20090629 PUB-BLUE, CEO (2) 35 taped, 33 4 20100918 PUB-BLUE, 60 taped,
transcr. MMgmt, Bidder transcr.
14 1 20091128 Consultant (PUB- 60 not 34 4 20100918 PUB-BLUE, SMgmt, 80 taped,
BLUE) taped, Bidder transcr.
notes
15 1 20091222 PUB-BLUE, CEO 20 not 35 4 20100920 PUB-BLUE, SMgmt, 60 taped,
taped, Head ERYC transcr.
notes
16 2 20100217 Authority_5, 25 taped, 36 4 20100920 PUB-BLUE, SMgmt, 90 taped,
BidMan transcr. Bidder transcr.
17 2 20100217 Authority_5, 35 taped, 37 4 20100921 PUB-BLUE, 60 taped,
SMgmt transcr. MMgmt, Bidder, transcr.
Dir Contract3
18 2 20100219 Authority_5, CEO 35 taped, 38 4 20100921 PUB-BLUE, 90 taped,
transcr. MMgmt, Bidder, transcr.
Vice-Dir. Contract3
19 2 20100219 Authority_5, 45 taped, 39 4 20100924 PUB-BLUE, 65 taped,
MMgmt transcr. MMgmt, Bidder transcr.
20 2 20100302 PUB-BLUE, CEO 55 taped, 40 4 20101018 PUB-BLUE, CEO 95 taped,
transcr. transcr.
41 4 20101018 PUB-BLUE, Bidding 35 taped,
coordinator transcr.
Total 40.5 h

73
Table 3-3: Interview Guide Field Stay 1: The Market Environment, Evolution and Strategic Issues
of PUB_BLUE

Intended contents Questions

History of New venture:
‐ Reflection on history of ‐ At the time of PUB-BLUE's creation and market entry, how did the
market environment public sector outsourcing (PSO) business work?
‐ Reflection on PUB-BLUE ‐ How do you recall PUB-BLUE working then?
within market
environment
‐ Reflection on market ‐ Have there been any changes since – both in terms of the PSO
environment and new business as well as how PUB-BLUE works?
venture's actions within
‐ Theory in use on ‐ Do you recall instances where you felt PUB-BLUE being out of sync of
mismatch between market the PSO business?
environment and new ‐ What differentiated PUB-BLUE from its competitors?
venture
‐ BPO in private vs BPO in ‐ In your judgment, is the business process outsourcing-business (BPO)
public sector in the public sector different from the BPO-business in the private
sector at all? If so, how?
Most important issues for new venture:
‐ Estimate of new venture ‐ In your judgment, does AGS have it right?
performance
‐ Interpretation of new ‐ What have been PUB-BLUE's most important challenges?
venture issues (prior, ‐ What do you consider PUB-BLUE’ current challenges?
current, future) ‐ Do you think PUB-BLUE is prepared for these and future challenges?
How so?
‐ How new venture has ‐ How did PUB-BLUE address these challenges in the past? How will
tackled/will tackle issues PUB-BLUE address challenges in the future?

74
 Table 3-4: Interview Guide Field Stays 2-3: Resource-holders, Resource Acquisition Processes

Intended contents Questions

Current bids (Authority_5 and authorities in general):
‐ Reflection on Authority_5 ‐ How does Authority_5 work?
and comparison to other ‐ How is Authority_5 different from other authorities?
authorities in market ‐ What are the challenges and targets of Authority_5?
environment
‐ Reflection on Authority_5 ‐ What are their expectations about a PSO partner? If so, how are
expectations about new these expectations different from other councils’?
venture
‐ Reflection on new ‐ How are you dealing with these expectations?
venture's own interests ‐ Besides winning the contract, what are PUB-BLUE’s other targets
and targets here? How do you make sure you reach these targets?
Bidding process (Authority_5):
‐ Reflection on Authority_5 ‐ What kind of bidding process are you engaged in in Bid5?
resource acquisition ‐ What are key milestones for you in this process?
process (and comparison ‐ How is this process different from other bidding processes you are
with other resource currently/have previously been engaged in?
acquisition processes)
‐ How to acquire resources ‐ In order to win this deal, what are the main challenges? How will
from Authority_5 (in a you tackle these challenges?
sustainable way) ‐ In order to win this deal in a profitable way, what will then be your
main challenges? How to tackle them?

Table 3-5: Interview Guide Field Stay 4: Evolution of Legitimation Practices and -Outcomes
across Resource Acquisition Attempts

Intended contents Questions

‐ Change in New venture's ‐ How has PUB-BLUE's standing evolved across all bids? What were
Legitimacy and key phases or key changes?
Reputation over time
‐ Change in New venture's ‐ How has the PUB-BLUE's bidding team evolved across all bids?
Resource Acquisition What were key phases or key changes?
Team and Infrastructure ‐ How has PUB-BLUE's bidding infrastructure evolved across all bids?
over time What were key phases or key changes?

‐ Change in New venture's ‐ How has PUB-BLUE's bidding style evolved across all bids? (in terms
Legitimation Practices of engagement with the authority, your willingness to address
over time demands, etc.) What were key phases or key changes?
‐ How has the way PUB-BLUE engages into bid writing evolved across
all bids? (in terms of compilation of materials, your "pitch", your
precision etc.) What were key phases or key changes?

‐ Change in New venture's ‐ Which phase have you reached in each bid?
Legitimation and ‐ In how far was that (not) a "success" for PUB-BLUE?
Resource Acquisition ‐ Which feedback did you receive after each bid?
Outcomes over time ‐ In how far did the feedback influence your subsequent bid?

75
Our data collection span PUB-BLUE’s evolution (2005-2010) of which we covered the
period 2008-2010 in real time. We accounted for the caveats of retrospective data
(Miller et al., 1997; Pentland, 1999), by using free reports rather than forced reports,
allowing informants to not answer a question if they did not remember clearly; by
verifying individual retrospective reports by using the same interview guideline and
thus asking similar questions in every interview during a field stay as well as by
triangulating our interviews with other data types.

Documents. Frederic made available the complete bid documentations for each of
the bidding processes. Subject to PUB-BLUE’s progress, these documentations
ranged from about 200 pages per bid when PUB-BLUE failed in the first round of the
bid process (as in bid 2) to several thousand pages per bid when PUB-BLUE
progressed to the final round and signed a contract (as in bids 1, 4, and 5). Given the
technical focus of most of this material, we focused on the document’s executive
summaries and topical introductions.

Other types of bid-related documentary data included PUB-BLUE’s public and private
plans and presentations; tender and background documents by tendering local
authorities; e-mail correspondence related to the bid; meeting minutes 2005-2009 as
well as Frederic’s and other members of PUB-BLUE’s own notes and memos
containing remarks, local authorities’ feedback and their key insights from each
bidding process.

Non-participant observation. During field stays 1 to 4 and in addition to regular

strategy and management meetings, we attended several meetings that were
concerned with selection of tenders and the right “story” to pitch PUB-BLUE’s services
in general and with preparation and execution of bidding processes 5 and 6
respectively (see Table 3-6). Furthermore, we witnessed also talking and writing
practices in several of PUB-BLUE’s “bidding war rooms”.

76
 Table 3-6: Observation of Bid-related Meetings

No Stay Date Participants Topics Min. Status

1 1 20090612 PUB-BLUE: Bid5: First meeting on upcoming bid5 75 taped, field
SMgmt, (whether or not to bid) notes
MMgmt
2 1 20090618 PUB-BLUE: All Bid5: "Kick-off meeting" Bid5 (facilitated by 245 taped, field
SMgmt, external consultant) notes
MMgmt, - What are Authority_5's demands and
Consultant expectations?
- How to present PUB-BLUE to Authority_5?
3 1 20090619 PUB-BLUE: All PUB-BLUE's strategic challenges: Market 160 taped, field
SMgmt, environment, current bidding agenda notes
MMgmt
4 2 20100218 PUB-BLUE: Bid5: current challenges, misunderstandings, 80 taped, field
Bidders. interactions between Blue and council and notes
Subcontractor between Blue and subcontractor
: Bidders
5 2 20100218 PUB-BLUE: Bid5: Conference call on current bidding 60 not taped,
Bidders and challenges field notes
SMgmt
6 3 20100323 PUB-BLUE: Bid5: "Financial Bid" + "How to make the 120 taped, field
SMgmt numbers look good for Authority_5?" notes
7 4 20100924 PUB-BLUE: All Senior Management Meeting: Update on 160 taped, field
SMgmt, Bid5 bidding process, strategic agenda, notes
MMgmt upcoming bids
Total 15 h

3.2.3. Data Analysis

Typical in qualitative analysis, we gradually and iteratively progressed from a very

close and detailed immersion with the natives’ point of view towards greater
theoretical abstraction (Ketokivi and Mantere, 2010). When conducting an inductive
thematic analysis of our data (Patton, 1990; Braun & Clarke, 2006) we initially coded
‘close to data’ as to iteratively identify more abstract, cross-data type codes. We
initiated formal data analysis after we had completed our data collection efforts -
albeit our empirical and conceptual interpretations had begun much earlier (Miles &
Huberman, 1984).

Determining Phases. We started formal data analysis with detailed readings of our
data (cf. Braun & Clarke, 2006) and by immersing in a pile of data transcripts that we
deemed as most insightful. Our interviewees consistently referred to the overall 2005-

77
2010 evolution of PUB-BLUE’s bids in terms of 3 temporally bracketed phases (cf.
Langley, 1999), that we initially labeled as ‘Entering the market by winning the first bid’
(comprising mainly of bid 1); ‘Finding a sustainable way for winning bids’ (comprising
mainly of bids 2-4) and ‘Accelerating PUB-BLUE’s profitable growth’ (comprising of
then current bids 5 and 6 as well as their outlook to prospective bids).

Creating Phase-specific Data Structures. Thoroughly coding our data transcripts

with Atlas.ti, we arrived at a very fine-grained list of semantic and latent themes
(Braun & Clarke, 2006) that were based on informants’ own language and terms. In
structuring our data further and thus deriving more general, aggregate dimensions as
well as hierarchical nestings, we engaged in what some scholars refer to axial coding
(Flick, 2009; Strauss & Corbin, 1998). Such axial coding led us to conclude a hierarchal
aggregation of within-phase themes (see Tables 3-7 - 3-9).

At a higher level of abstraction (Level 2), we identified three themes central and
providing our phase specific findings both with temporal and hierarchical structure:
“Knowledge about the public sector”, “Bidding practice”, and “Outcome”. These three
themes vary in their parametric contents across the three phases. Thus, we accounted
for PUB-BLUE’ overall knowledge base and tracked how this knowledge base
changed over time. Secondly, we investigated how PUB-BLUE operated in its
attempts to formulate and win bids for public sector outsourcing contracts.
Specifically, we were interested in how these bidding practices might have changed
over the course of the three phases. Lastly, we accounted for the overall – and
broadly defined - outcomes of each phase. A third order of abstraction allowed us to
metaphorically label and summarize each phase. We present our data structures
which oriented the empirical findings narrative that we present below.

78
 Table 3-7: Data Structure - Hierarchical Aggregation of Themes (Phase 1)

Abstraction Abstraction Abstraction

Semantic and Latent Themes
Level 1 Level 2 Level 3
- General knowledge about
outsourcing
- Underestimated differences
Exclusive private
between private sector/publ.
sector expertise
Sector outsourcing Absent public
- No understanding how councils sector knowledge
work
No understanding
- Start with blank sheet of paper
of bidding
- No focus on referencability
conventions
- People ad-hoc drafted into bid
from wider BLUE
- Massive external support during Ad-hoc Resource
bid Usage
- Improvisation/reactive
Compensatory
bidding/muddling through Compensation
bidding practice
- Very responsive to
specifications
Hyperbolic
- Inferred requirements only from
Responsiveness
council documents
- «Copy the spec»
- Lucky/accidental win
- Winning Authority_1 contract Lucky strike
allowed PUB-BLUE to exist
- PUB-BLUE utilized/manipulated
by Authority_1 Myopic Heterogeneous
- Compliance to council without Compliance outcomes
knowing the consequences
- Bidding caused enormous costs
- No focus on using bidding Inefficient Bidding
content again

79
 Table 3-8: Data Structure - Hierarchical Aggregation of Themes (Phase 2)

Abstraction Abstraction Abstraction

Semantic and Latent Themes
Level 1 Level 2 Level 3
- Stories and bidding responses
around «regeneration»/job
creation
- Bid 2: Saying that «we don’t do
Authority
this» disqualified PUB-BLUE
Regeneration
- Bid 4: Loose promise to look at
Issue
regeneration later on
Attending to
- Bid 4: suggest other ways to
public sector
regenerate authority besides
requirements
job-creation
- Learning from
- Bid 2: Learned from Authority_2
bidding
experience: important to score
experience
points
- Learning from
- Bid 2: Learned from Authority_2 Scoring Issue
council
experience: write more concisely
feedback
- Bids 3/4: bid written more
purposefully to score points
- Bid 2: learned from Authority_2
feedback: referencability is
important
- Bid 3: Authority_2 feedback to
highlighting referencable Experimentation
aspects of BLUE
Referencability Experimental
- Bid 3:Authority_2 feedback led
Issue Bidding practice
to partner-selection to increase
- Use bids as
referencability
experiments
- Bid 3: learned from Authority_3
- Nothing to
feedback: reference not tailored
loose
to council type (“wrong story”)
- Trial/error
- Bid 4: focus on referencability
- Bid 3: learned from Authority_3
feedback: different bidding
Outsourcing
types (dialogue vs. Restricted
‘model’ Issue
procedure)
(different bidding
- Bid 3: Authority_3 bid triggered
types)
need to create view on how to
do this
- Winning Authority_4 created
feeling of rightness (internally ‘Controlled Strike’
and externally) Accretive
- Become more efficient in bid Increased Outcomes
writing Efficiency and
systematicity

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 Table 3-9: Data Structure - Hierarchical Aggregation of Themes (Phase 3)

Abstraction Abstraction Abstraction

Semantic and Latent Themes
Level 1 Level 2 Level 3
- Differentiated picture of
authorities
Anticipating
- Aware of authority requirements
authorities’
- Extended focus on referencability
requirements
- Receive update information on
Advanced public
authorities
sector knowledge
- Aware of councils’ differences Anticipating
- Small vs. big authorities authorities’
- Rural vs. metropolitan authorities differences
- Adapted to diff. bidding types Anticipating
bidding types
- Distilling «picture» of authority
before start of bid
- Focus on related sector (e.g.
central government) Systematic
- Focus on client in capital city selection
- Focus on clients around existing
clients
- Avoid job creation
Controlled
- Tailor presentation to audience
Bidding practice
- Adapt solution to council type Systematically
- Identify key authority individuals tailored pitch
Exploitation
and respond to their picture
- Proactive shaping of tender
(before it comes out formally)
Influencing
- Focus on lobbying/business
bidding process
development
- Stay in control of bidding process
- On the «automatic list»
- Competitors want to work with Satisfactory
PUB-BLUE Reputation
- «We deliver what we promise»
- Executing own model
- «Direct» the council Operating from
- Be less submissive distinct model
- «exploit grey areas» Favorable
- Focus on efficient bid writing Outcomes
- Now able to run multiple bids in
parallel
Efficient and
- Less costs (e.g. external support)
systematic
per bid
bidding process
- Professionalized bidding team
- Draw on and recreate existing bid
material

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Theory Elaboration through Conceptual Interpretation. Then, we formally began
with a theoretical interpretation of our data structures to address our research
question and subsequently to elaborate on existing theoretical considerations (Lee,
Mitchell & Sablynski, 1999) by systematically juxtaposing our findings with related
literatures on new ventures, institutional theory, and cultural theory.

3.2.4. Trustworthiness of Research Methods

Throughout data collection and data analysis, we took several measures to ensure the
trustworthiness of our interpretive research procedures (Lincoln & Guba, 1985). First,
we carefully managed our data, including contact records, audio files of interviews
and meetings, transcripts, field notes, and documentary data as we collected them. In
this regard, we derived a meticulous case study data base relying on Atlas.ti as
computer-based qualitative data management program. Second, we undertook
reviews of our emergent findings both with our key informants as well as with our
peers (cf. Gibbert & Ruigrok, 2010). For the former, we went back to senior managers
at PUB-BLUE to discuss our thoughts and emerging results in order to both gauge
their validity and to refine our understandings of PUB-BLUE’s evolution. For the latter,
at several occasions we undertook peer reviews to gain the perspective of
experienced outsiders. Peer reviewing thus included engaging researchers not
involved in the case study in order to discuss emerging patterns and propositions, to
act as sounding board and to point out critical issues throughout the data collection
and analysis process. Peers included both department members as well as a senior
scholar at another school. Finally, we independently asked two experts for qualitative
research methods to evaluate and audit our methodological thematic analysis
procedures so as to help secure the robustness of our field analysis and conceptual
interpretation.

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3.3. FIELD ANALYSIS

As per our time bracketing reported in the above data structures (Langley, 1999), we
present our data in terms of three phases, namely compensation, experimentation,
and exploitation.

3.3.1. Phase 1 (2004-2005): Compensation

This phase comprises of the startup of PUB-BLUE (‘the venture’) and thus focuses
primarily on the bidding process regarding Bid 1 (Authority_1). At the beginning of
this phase, PUB-BLUE did not exist as a legal entity but in the form of its subsequent
founding managing director. The overall interest that drove much of the activities in
this phase was to – opportunistically – ‘get an initial deal’.

Knowledge: Absence of public sector knowledge. Exclusive expertise in Private

Sector Outsourcing18: By 2003, Frederic, PUB-BLUE’s founding managing director and
then manager in BLUE’s private sector outsourcing arm, had accumulated a
considerable expertise in business process outsourcing in the private sector. When
parent BLUE alerted Frederic to a public sector outsourcing tender, he convinced his
superiors to dedicate some initial resources to this bidding which they did.

Absence of Public Sector Outsourcing Knowledge in general, and in terms of tender

and bidding conventions in particular: It was only when the local authority requested
further details about BLUE’s outsourcing service provision that Frederic realized that
his understanding of public sector in general and of public sector outsourcing in
particular was fairly limited: “in the Authority_1 case, we had no context, no analysis,
nothing” (P76, I5, 20101018, 5419). Furthermore, he realized also that public sector
requirements differed distinctively from private sector requirements, in particular
regarding non-commercial aspects such as apprenticeships, health and safety, etc.
Thus, “suddenly we had public sector debates basically in a private sector
18
Themes on the Abstraction Level 1 in our data structures are underlined.
19
These numbers reflects the number of the entry in our Atlas.ti database.

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organization” (P40, I1, 20090608, 42). In addition to these content dimensions, BLUE
also was unfamiliar with tender and bidding conventions in the public sector.

Bidding practice: Compensatory. In public sector outsourcing, resources are

allocated through highly formalized tender and bidding practices that determine
negotiations between supply and demand. Operating from a quasi-inexistent sector
specific knowledge base in this respect, the organization embraced what can at best
be described as compensatory bidding practices because PUB-BLUE metaphorically
and literally ‘paid’ for its lacking familiarity with public sector organizations during
and after this bid.

Adhoc usage of corporate resource base: Frederic attempted to compensate for the
lacking knowledge of public sector outsourcing by enrolling a small bidding team
consisting of internal BLUE staff – neither of whom had any public sector experience.
Furthermore, Frederic extended this team with external legal advice and consulting
resources.

Hyperbolic responsiveness: The team struggled in particular to comprehend the local

authority requirements, let alone how to adhere to them in a formal bidding
document: “In Authority_1, I didn’t have a real clue of what the key requirements
were, apart from what was in their documents.” (P76, I5, 20101018, 54). In a rather
pragmatic move, Frederic suggested to make use of the highly structured
specifications of the tender (‘specs’), as a blueprint for their own bidding response:
”What do we write?' and I said, 'Well, let’s start with repeating what they said in the
spec!' … So, we just basically took the whole spec and said, 'We will - we will - we will'.
I didn’t know better myself!” (P76, I5, 20101018, 78).

Outcomes: heterogeneous. As outlined above, we tracked outcomes in different

aspects including bidding success, compliance with client needs and systematicity of
bidding process. Overall, the outcomes of bid 1 were considered heterogeneous.

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“Lucky strike”: On the one hand, the team won their very first bid which was
undoubtedly considered an enormous success. As per the 10-year contract,
Authority_1 provided PUB-BLUE with monetary and human resources in terms of a
fixed annual service fee as well as of a transfer of 400 local authority employees. Thus,
Frederic staffed most middle and operational management from these transferred
local authority employees. Subsequently, Frederic became MD of the organization
now legally registered as PUB-BLUE. Yet Frederic and his team also acknowledge the
surprise in this decision: “Let's be fair, the Authority_1 one, we shouldn’t have
qualified.” (P76, I5, 20101018, 62).

Myopic Compliance: On the other hand, however, winning a first contract and thus
gaining fixed income and employees despite lacking a detailed understanding of its
implications incurred substantive costs: “We had signed up to a deal that we probably
would never sign up to again… in terms of the leverage that the local authority had
over us as an organization” (P75, I5, 20100924, 159). For instance, PUB-BLUE had
agreed to a regional regeneration target of creating 400 new jobs in the region that –
according to a PUB-BLUE manager - the local authority had “slipped into the deal”
(P74, I5, 20100921, 183). Failing to comply with this requirement has since incurred
substantive contractual penalties to date.

Unsystematic and Inefficient Bidding Process: Additionally, PUB-BLUE’s initial

compensatory bidding practice lacked cumulation and efficiency. Not only did the
adhoc bid team dissolve after the contract had been won but no resources were
committed to systematically capture knowledge and experience for subsequent bids:
“There was no focus at that time… on writing content in order to use it again later or
to… to create some sort of team, some sort of contingency for bidding” (P74, I5,
20100921, 111). Needless to say that the bidding process was also highly cost-
intensive “Authority_1 was enormous, the cost of … getting the contract because we
had to bring so many experts in from outside.” (P72, I5, 20100920, 324).

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3.3.2. Phase 2 (2006-2008): Experimentation

Now an incorporated legal entity, after the heterogeneous experience of bid 1, the
organization strove to secure its viability and also to avoid the stigma of a ‘one-hit-
wonder’. Now, however, while the team could draw on newly transferred employees
from Authority_1, they were not allowed to draw on the corporate resource base any
longer. This phase mostly covers the three subsequent bids 2, 3 and 4 and thus, our
findings are presented as cross-bid findings.

Knowledge: Attending to public sector requirements. In phase 2, the organization

noticed that several aspects of the tender and bidding protocol were considered
critical by the public sector organizations. This was mainly due to direct and explicit
feedback from the local authorities: “we learned from the feedback from Authority_2,
where we didn’t qualify, and we learned from the feedback from Authority_3.” (P76,
I5, 20101018, 62).

Authority Regeneration Issue: As outlined above, Bid 1 involved a commitment to

economically regenerate Authority_1. In particular, Bid 1 thus involved an agreement
to job creation that economically did not work out for the organization. “You can ask
for 600 jobs, 1000 jobs, but this is not a machine, it's not happening automatically.”
(P40, 59) Yet, the organization needed to find out how to best adhere to these
consistently voiced requirements.

Scoring Issue: Based on the feedback of Authority_2 after the failed Bid 2, the
organization learned about the nuanced mechanism of bidding specifications in
terms of “scoring points” – basically an algorithm to weigh (a bidder’s compliance
with) specification items of the tender: “In the public sector, certain elements of the
bid will be just split apart, sent off to an administration pool and they're just purely
marking it on the basis of the information they see, not as a full picture.” (P77, I5,
20101022, 93). Thus, the organization explained its early failure in Bid 2 as its inability
to comply with this logic. Furthermore, the organization only realized in retrospect

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how some aspects turned out to be hygiene factors for an authority: “Some stuff we
didn't take very seriously in [Authority_1], authorities take quite seriously. So, things
like health and safety, we probably just dismissed it all as... pfff... not really very
important. But for the public sector, it's incredibly important!” (P72, I5, 20100920, 128)

Referencability Issue: Public sector authorities being risk-averse, they rely strongly on
evidenced proof of concept, called "referencability", thus instilling confidence in the
local authority that "you demonstrate that you've done it before … They would
probably rather give the business to someone … who has done it in the past ten
times even it is ten times a bad story than to someone new, because if it all goes
wrong they will say: Well, we followed the procedure." (P40, I1, 20090608, 63). PUB-
BLUE learned about this unwritten rule of ‘referencability’ only after a rather sobering
feedback of Authority_2 after Bid 2.

Offer a ‘PUB-BLUE model’ to outscourcing: When learning in Bid 3 that tender and
bidding processes can also take other forms than a so-called “restricted procedure”
for instance a “competitive dialogue”, PUB-BLUE realized that it wasn’t prepared for
direct, proactive interaction with local authorities in terms of presenting ‘its’ approach
to outsourcing: “they are looking at us and say 'You are the expert! Now show us,
how you do this.' But we couldn’t.” (P76, I5, 20101018, 66).

Bidding practice: experimental. Having noticed critical public sector requirements,

the organization engaged in an experimental bidding practice in order to test-drive
the how to deal with the noticed public sector demands in ways aimed at efficiently
and protectively using their scarcely existing financial and human resources. Evidence
of such deliberate, albeit incremental, experimentation was the team’s attitude to
consider each bid an opportunity to test and learn from local authority feedback:
“Around the time of Authority_3, we went through a conscious learning curve.
Through bidding Authority_3 - and failing - … we were consciously learning. We
approached it with a view of: we don't expect to win, but we will learn something out

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of this. We did sit down at the end of that process and talked about it. We went
through a conscious evolution stage around that time.” (72: 264).

Overall, through experimental bidding, the team thus gradually attempted to use its
increased knowledge about public sector organizations in a way that would advance
their interest of winning a second deal while protecting them from signing a non-
sustainable deal again. Experimentation led to a gradual focus on and refinement of
those experimental bidding practices that created positive experiences and/or led to
positive explicit feedback of local authorities and abandoned those experiments that
led to negative experiences and or negative explicit feedback: Altough the team
failed, “authority_2, for the company, it was a success because we learned lessons.
Same with Authority_3. It wasn't a success, because we didn't win, but it was a
success, because we learned a lot of lessons.” (P77, I5, 20101024, 194). We illustrate
such experimentation briefly below by drawing on PUB-BLUE’s dealing with
‘regeneration requirements’.

After the rather painful experience of job creation/regeneration in Bid 1, Fredrick “had
realized, that we could not have signed our first deal without that job commitment.
But we don’t do this anymore. We simply cannot afford it!” (P57, 46) The team was
alert when in Bid 2 service providers were asked to create 600 new jobs in the region.
In an experimental attempt to deal with this requirement, the organization decided to
decline this regeneration requirement in its submitted document: “We just said 'We
don’t do this!' And Authority_2 disqualified us for that reason” (P76, 62). At a later
stage and despite this ‘expected failure’ in Bid 2, the organization realized that
established players in the market equally decline major regeneration requirements
and are still able to sign deals. At a later bid, experimenting thus brought up a more
successful way to cope with authorities’ demand for regeneration: “[The authority] felt
it was important that we look at the redevelopment of … [the authority], creating
jobs, that sort of thing. Whereas, in all honesty, we are not really that interested in

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that. So we have given a commitment that ‘we will look at it within time’… We needed
to say that to get through” (P75, 83).

Outcomes: accretive. At different levels, this experimental bidding practice of Phase

2 induced accretive outcomes.

‘Controlled strike: First, experimental bidding – or ‘test-bidding’ – led the

organization to winning a second large and long-term deal with Authority_4 local
authority. Winning the Authority_4 contract was considered a “huge success” for PUB-
BLUE by Frederic and the bid team: “Getting Authority_4, … is absolutely massive....
because it's the second big deal. … it was important … both towards ourselves, to
show ourselves that we could do it, but it also showed back to BLUE that, there is a
business model here, that it's worth investing in … it also got on the radar of other
competitors in the country. I think that was probably the first time that we started
appearing on their radar. It was the biggest deal that year - and probably for a couple
of years.” (P72, 252)

Increased efficiency and systematicity: Approaching the bidding process

systematically enhanced the organization’s bidding efficiency and systematicity. In
particular, the organization started taking stock of its bidding experience by building
up a “bid library”: ”Every time we bid we have more collateral, and we learn from that.
In every bid we write now, we tend to pull information from a previous bid, so we are
getting much more of what we call a bid library.” (P77, 141). This bidding material
which drastically increased in quantity during Phase 2 consisted of documents such
as word-files, presentation-slides, or files with calculations and models that the team
developed for each bid. With every new bid, the team then attempted to draw on this
bidding material in devising new bidding solutions. At the same time, the team also
strove for accumulating and deploying bidding materials systematically. While
functional specialization within the bidding team gradually emerged as such
functions as “bid coordinator” or “business developer” were created on a permanent
or contractual basis, repeated bidding led the team to access and recombine bid

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materials with an increased precision and a decreased failure-rate. Both these
developments were considered an important outcome of Phase 2.

3.3.3. Phase 3 (2009-present): Exploitation

Having won a second major contract, and through this ‘getting on the map’ as a
serious player in the PSO market, the organization now strove not only to win deals
but actually to grow faster and more profitably. “The experiment is over… It's proofed
to be a success… it is now time to put a foot down and accelerate it” (P73, 127).

Knowledge: Advanced public sector knowledge. Anticipation of local authority

requirements: Based on its accumulated bidding and delivery experience, the
organization had established a detailed and nuanced understanding of the country’s
public sector as well as its challenges and affordances in general and of local
authority’s pressures and requirements in particular: “You get a feel generally for
what's happening …, you get a feel generally for the pressures that the local
authorities are under… therefore, you're going into a conversation with an
expectation.” (P72, 92)

The organization became mindful of the local authorities’ requirement of

referenceability and has increased its competence in creatively extracting a
“referencable story”, for instance, by also highlighting the (albeit small) public sector
deals of other BLUE companies: “The PUB-BLUE story is different… because we are
clearly selling something that says "We have got a breadth of services, a great
breadth of capacity, our capability, we are much more experienced, and we have got
two references that can show how we can change performance.” (P75, 143)

Anticipation of differences in local authority requirements: The organization also

understands much better the significant differences in local authority types and thus
their requirements. Subject to location, size, ranking position, political orientation,
rural vs. urban, local authority requirements obviously differ: “We tailor our approach
depending what we think their drivers are.” (P72, 104).

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Anticipation of different bidding types: Rather than assuming a single bidding
convention (“restricted procedure”), PUB-BLUE had realized that other conventions
were also permitted (“competitive dialogue”). In Phase 3, the organization considers
itself well prepared for such differences in bidding protocol: “How we will move
forward is depending on the procurement process: If it is restricted procedure or
dialogue, we have to have a view on how we want to deliver.” (P76, 66).

Bidding practice: Controlled. This knowledge and experience base gives the
bidding team the feeling that it is already in a position to “control the client without
them realizing that we are in control” (P 76, 42). Rather than improvising or
experimenting, the organization thus engaged in Phase 3 in a controlled, systematic,
and proactive bidding practice and aimed at signing deals more quickly and in a
more profitable way.

Systematically selecting local authority and geographic area: Rather than purely being
driven by bidding opportunities of any kind, Phase 3 saw the organization very
deliberately and consciously selecting their targeted local authorities in line with PUB-
BLUE’ interest and strategy to profitably grow in its market. Then, the organization
considered three major ‘selection criteria’ for future tenders: First, select local
authorities in the South of the country to seize existing relationships and reputation
with politicians in this region. Second, win a contract in the North of the country,
ideally in or near its capital, in order to create larger spill-overs and a bigger “media-
effect”: “strategically, the South, we have covered. … But one problem we will have is:
There is nothing in the capital city and there certainly is nothing in the North at all.”
(P74, 135). Third, seek to win a central government public sector outsourcing
contract.

“Systematically tailoring pitch to target audience”: Another aspect of the

organization’s controlled bidding practice includes the team’s tailoring of its bids in
general and in particular of its bidding documents, presentations, and its appearances
and interactions with local authorities to the specific requirements and affordances of

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each local authority. Depending for instance, on whether it is a large metropolitan
local authority or a small rural local authority, the team now tried to highlight either
the “large, worldwide BLUE story” or the “small, local” PUB-BLUE story. Also within
each local authority, the bid team strives in phase 3 to present BLUE, PUB-BLUE and
their outsourcing solution differently to different groups – such as politicians, key
decision makers, operating personnel or those local authority members that are likely
to be transferred to PUB-BLUE.

Among these groups, PUB-BLUE has found it increasingly relevant to particularly spot
those individuals or groups within a local authority that are likely to make the
decision on which bidder to award the outsourcing contract. Thus, Frederic and the
team attempt in each bid to locate and to create a “picture” of these individuals in
order to speak to and include the understandings, requirements, and interests of
these key individuals centrally into their bidding practice.

Proactively and early on influencing the bidding process: In a different, yet

complementary strategic gesture, the organization strives in Phase 3 to proactively
shape the bidding process, i.e. to influence the local authority requirements prior to
and during the formal bidding process. For instance, the organization is now in a
position to interact with and “shape” the outsourcing requirements of local
authorities before they get published in formal tenders: “What is key is relationship
building… as an organization decides that it wants to let a contract, it will serve a
notice… The reality is that, before that happens, they will have been talking to lots of
organizations, lots of people, that have built up those networks. And they will have a
relatively good understanding as to who it is they want to deliver their services.” (P43,
155)

In this regard, Frederic and the team pursue two strategies: First, those members of
the bidding team who also have operational roles within PUB-BLUE are requested in
Phase 3 to systematically build “relationships” with politicians and decision makers of
neighboring local authorities in order to advertise “the PUB-BLUE way” and thus to

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create fit between PUB-BLUE and the technical and social demands of a local
authority. Second, to particularly increase PUB-BLUE’s “presence” in the capital city,
PUB-BLUE also hired an experienced capital-based lobbyist on a contractual basis in
an attempt to “seize his network of contacts” and thus to advertise PUB-BLUE with
capital-based politicians and local authority leaders.

Outcomes: favorable. Beyond increasingly accretive outcomes in Phase 2, Phase 3

saw an even more consistent and favorable set of outcomes at different levels.

Satisfactory level of client and industry reputation: The organization’s controlled

bidding practice in Phase 3 led to winning a third, large-scale and long-term contract
with a public sector local authority in Bid 6. Winning this contract was considered the
ultimate endorsement by the industry: “we belong in this environment” (P73, 151).
There is thus a general feeling within the team that a certain “hurdle” has been
passed in the way towards becoming a sustainable public sector outsourcing
provider: “With one deal in Authority_1, you looked a bit like a one hit wonder, now
you are there. We accept, you can do this!” (P40, 67). In this regard, the team now
considers PUB-BLUE to increasingly become one of those bidders that local
authorities who, when tendering, “automatically” put on their short list.

Operating from PUB-BLUE’ distinct, “own” model of outsourcing: While in Phase 1 –

and to a certain extent in Phase 2 – the organization complied somewhat myopically
with local authority requirements, in Phase 3 the organization calculates and controls
for the consistency of local authority requirements with PUB-BLUE’s economic
interests: “There is a clear development from just being responsive to what the
specification says or getting in dialogue and developing something with the client, to
now turn this slightly around and that you have to have a model of how you do
things. And you clearly then give the client the impression that you are tweaking or
customizing it…” (P76, 66). Compared to phase 1, advanced PSO bidding knowledge
and controlled bidding thus entails for the team to be considerably “less submissive”
and to “less bend over backwards” to satisfy local authorities: In other words, they are

93
“a bit tougher now than we were a few years ago” (P72, 184). “The time where we
bend over backwards to fulfill their requirements is over.”

Sustainably systematic and efficient bidding process: In Phase 3, the organization had
established a sustainable, cumulative and thus systematic and efficient bidding
process. Besides a professionalization and formalization of roles, such as “bid leader”,
“bid coordinator” or “assistant to bid coordinator”, “area experts” were drafted into
the bid team part time but whose bidding experience also allows them to quickly
derive area-specific stories and solutions. Accordingly, the bid library did not only
grow in quantity but mainly also in quality. A typical bidding team also involves less
manpower than in the previous phases and rarely employs external consultants.
Lastly, Frederic’s active role in bidding processes also declined with the increasing
expertise of his bidding team members. Evidence of such routinized bidding process
consists in the organization engaging in parallel bidding processes in Phase 3 – an
approach to accelerate company growth: “We’ve been bidding on Authority_5… [and
4 other authorities]. And all of these have been running alongside Authority_5. Bids
that we've been working on with generally the same people. So, whereas before we
would have had our team fully engaged in one bid, we now have a similar team of
people working on a number of bids.” (P77, 105).

3.4. CONCEPTUAL INTERPRETATION: THE ROLE OF CULTURAL

KNOWLEDGE IN THE EVOLUTION OF LEGITIMATION PRACTICES

We now interpret our empirical findings conceptually to provide an answer to how

the legitimation practices of a new venture evolve across repeated resource

acquisition attempts by drawing on and elaborating existing literature on new
ventures, institutional theory, and cultural theory. How we move from our empirical
analysis to our conceptual interpretation is in turn demonstrated in Figure 3-1.

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From our empirical analysis, it becomes apparent that the new venture’s contract
bidding evolved during repeated bidding attempts from being compensatory and
substantive, to being experimental, to finally becoming more controlled and symbolic
in nature. While a conceptual extension of these three practices provides an answer
to our research question, what we found particularly interesting in light of prior
research was that the difference over time in the new venture’s knowledge about the
cultural environment of the public sector (i.e. its values, norms, and its different
audiences) drove how it engaged in contract biddings and thus how it sought to
acquire resources and legitimacy from the public sector. Following several cultural
theorists, we chose to term the new venture’s knowledge about the cultural
environment of its resource-holders as cultural knowledge (cf. etc. Molinsky, 2007;
2013; Sackman, 1992) and subsequently reinterpret our findings conceptually to
highlight the interrelationship between a new venture’s cultural knowledge and its
legitimation practices.

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 Figure 3-1: Conceptual Interpretation

Empirical Analysis Conceptual Analysis Empirical Analysis

Cultural Knowledge Legitimation practice

Absent public sector Absent cultural Substantive Compensatory Bidding

knowledge knowledge Legitimation practice

Attending to public Attending to Experimental Bidding

Experimentation
sector requirements institutional demands practice

Advanced public Advanced cultural Controlled Bidding

Symbolic Legitimation
sector knowledge knowledge practice

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3.4.1. Cultural Knowledge

Zimmerman and Zeitz (2002: 422) argue that new ventures can only mobilize
legitimation practices in ways that are strategic and advance their interests when they
“become aware of these systems of expectations” according to which resource-
holders may evaluate the organization and its activities (emphasis added). While a
number of institutional theorists argue that such awareness largely depends on an
actor’s position within or between institutional fields (cf. Fligstein, 2001; Sewell, 1992),
cultural theorists have more generally referred to actors’ awareness of and their
skillful responses to a culture’s systems of norms and expectations as depending on
the actors’ “cultural knowledge” (e.g. Molinsky, 2007; 2013). Actors’ cultural
knowledge has been studied in terms of their knowledge about national cultures (e.g.
Molinsky, 2007; 2013) or about organizational cultures (e.g. Sackman, 1992). Most
broadly, cultural knowledge can thus be defined as an actor’s knowledge about any
given cultural environment such as a country, an organization, or – as in our case –
their knowledge about an organizational field (i.e. the field of public sector
authorities).

As a kind of “domain knowledge”, cultural knowledge (in the form of knowledge

about an organizational field) critically impacts a new venture’ strategic capacity in
general (cf. Ganz, 2000) and thus – as we have shown – its capacity to mobilize
symbolic legitimation practices (i.e. legitimation practices that allow both for the
acquisition of new resources and for the protection of existing resources) during
resource acquisition attempts in particular. Cultural knowledge is thus an important
cultural resource that a new venture can deploy to create evocative symbols while
pursuing its interests (Creed et al., 2002; Emirbayer & Mische, 1998; Swidler, 1986)
and protecting its resources. Our study offers insights into both types of cultural
knowledge and into the process of cultural knowledge development.

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Types of cultural knowledge. Our findings highlight content knowledge, audience
knowledge, and ritual knowledge as three distinctive yet interrelated types of cultural
knowledge.

For the first, as the PUB-BLUE bidding team experienced, every cultural environment
is made up and structured by a specific body of cultural contents. In the case of the
PUB-BLUE bidders’ representation of public sector authorities, such cultural contents
were, for instance, the local authority’s schematic requirement of bidders’
“referencability” which the bidding team was largely unaware of during phase 1 and
in its early bids. Content knowledge thus refers to the representation of the symbolic
system of a cultural environment and thus of the symbolic structure that sources the
values of a given cultural field (cf. Meyer & Rowan, 1977). This form of cultural
knowledge entails the representation of basic oppositions – such as “referencable” vs
“non-referencable” – that demarcate a represented cultural environment’s logic of
appropriateness and its tools for evaluating others (cf. Sewell, 1992).

For the second, while PUB-BLUE’s audiences shared cultural contents (e.g. such
cultural values as “referencability”), this does not necessarily imply that they all had
the same opinions. Rather, they only agreed on the structures of relevance and
opposition that make symbols and actions meaningful and legitimate (cf. Goldberg,
2011: 1397). Accordingly, as the bidding team had to experience during phase 2, its
resource-holders’ use of cultural contents differs according to their positions within
the cultural field. These positions in turn determined their localized world-views and
their specific interests and requirements (Meyer & Hoellerer, 2010; Weber, 2005;
2011). For instance, while sharing the demand of a bidder’s “referencability”, the
specific “referencability” affordances of such a “large”, “metropolitan”, and “right-
wing local authority” as Authority_3 were markedly different from those of such a
“small”, “rural” and “left-wing” local authority as Authority_1. Entering the Authority_3
bid with symbolic actions for gaining “referencability” tuned towards the

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“referencability” requirements of Authority_1 thus substantially contributed to the
failure of Bid 3.

For the third, PUB-BLUE’s audiences relied on rituals to coordinate their resource-
distribution and to accordingly meet their interests and values (cf. Goffman, 1967).
These rituals prescribed for PUB-BLUE process-specific discursive genres (cf. Navis &
Glynn, 2011; Orlikowski & Yates, 1994) and norms of action and interaction (cf.
Alexander, 2004). Ritual knowledge thus refers to the representation of cultural
processes in terms of their legitimate scripts of discourse and norms of interaction. In
our case, depending on their own requirements, local authorities relied on two basic
but fundamentally different procedures to structure bidding processes: On the one
hand, in a “restricted procedure”, local authorities submit tender documents with
exactly defined requirements and demand specific and gradually refined bid-
responses to these requirements while forbidding other modes of interaction. On the
other hand, in a “dialogue procedure”, local authorities do not submit a tender
document with exactly defined requirements but rather give bidders much more
leeway to interact and to present and convince with their solutions. Initially bidding
for public sector contracts without a general understanding of these cultural
processes and specifically entering the Authority_3 bid without appreciating and
preparing for a “dialogue procedure” contributed to bid failure.

Evolution of cultural knowledge. Accumulating cultural knowledge involved for the

PUB-BLUE bidding team the introduction of distinctions that refined their content
knowledge, audience knowledge, and ritual knowledge. This finding is in line with
Tsoukas’ (2009) argument that the development of new knowledge rests upon the
creation of distinctions to disentangle previously holistic understandings of processes
or phenomena. Across the 3 phases, the accumulation of distinctions among
represented contents, audiences, and rituals led the PUB-BLUE bidding team from
having severely limited knowledge about the cultural environment of public sector
local authorities (before and during phase 1) to generalizing a more differentiated set

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of distinctions within represented cultural contents, audiences, and rituals (cf.
Johnson et al., 2009). Such generalization was largely based on the new venture’s
experience of a limited sample of bidding processes with public sector local
authorities during phase 2 (cf. Levitt & March, 1988).

The new venture’s cultural knowledge may then have evolved differently across the
three major phases it went through: According to our analysis, PUB-BLUE did not
accumulate much cultural knowledge in phase 1 (bid 1). In the second phase
(comprising 3 bids and thus 3 instances of iteration), PUB-BLUE’ “understanding [of
public sector local authorities] changed beyond recognition” signaling a fundamental
increase in the new venture’s cultural knowledge. The new venture ended its radical
injection of cultural knowledge when it saw its effectiveness confirmed by applying it
in and winning bid 4. In the subsequent phase 3 (again comprising 3 iterations within
the scope of the present study), the new venture undertook only minor changes to its
cultural knowledge due to perceiving its increased appropriateness. Launching from a
“change in type” to a “change in degree”, the new venture thus appears to gradually
increase its commitment by organizationally embedding its cultural knowledge.
Increasing commitment to and settlement of the new venture’s cultural knowledge
base may thus inhibit its further expansion and adaptation (cf. Drori et al., 2009;
Zucker, 1977) and may thus act as increasing constraint onto its cultural repertoire
(Weber & Dacin, 2011) by potentially “blinding” the organization for the demands of
other resource-holders in their cultural environment (Leonardi, 2011) or for changes
of the cultural environment per se.

3.4.2. Legitimation Practices

As summarized by our conceptual model (Figure 3-2), we thus found that the new
venture’s legitimation practices were contingent on and thus enabled and
constrained by the cultural knowledge it could deploy. Relying on PUB-BLUE’ bids as
analytic lenses for the study of a new venture’s legitimation practices, our findings
accordingly show that PUB-BLUE was primarily able to engage in symbolic

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legitimation in phase 3 – once it had accumulated an advanced stock of knowledge
about the cultural environment of public sector local authorities that it could deploy
to legitimation practices that both allowed for the acquisition of new resources but
also for the protection of scarcely existing resources. The development of these
symbolic legitimation practices thus contributed to the survival of the new venture
thus enabling the new venture to overcome its so-called “liability of adolescence”
since these legitimation practices both enabled resource acquisition and prevented
“resource dissipation” (Bruederl & Schuessler, 1990). Conversely, during phase 1,
absence of cultural knowledge forced the new venture to engage in what we
conceptualized as substantive legitimation (cf. Ashforth & Gibbs, 1990) as lacking
cultural knowledge forced the new venture to fully, materially comply to its resource-
holder’s legitimacy criteria which one the one hand enabled the venture overcome its
“liability of newness” (cf. Stinchcombe, 1965) by enabling the acquisition of initial
resources but also “dissipated” the new venture’s resources thus threatening its
survival (cf. Bruederl & Schuessler, 1990). As our empirical data highlight, the
evolution from substantive legitimation to symbolic legitimation was enabled by
repeated practices of experimentation.

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 Figure 3-2: Conceptual Model

Symbolic legitimation
Cultural Knowledge

Survival
Substantive legitimation

Legitimation practice
Symbolic legitimation. Symbolic legitimation enabled the new venture under study
to acquire legitimacy by appearing consistent with values and expectation in the
cultural environment of its resource-holders while pursuing its own, divergent
interests (Ashforth & Gibbs, 1990; cf. Suchman, 1995). Symbolic legitimation thus
involved for the new venture the mobilization of practices to gain legitimacy in
resource-holders during resource acquisition attempts that allow both for the
acquisition of new resources and for the protection of existing resources. Such
symbolic legitimation practices are central for a new venture to overcome both its
“liability of newness” and their “liability of adolescence” (cf. Bruederl & Schuessler,
1990; Stinchcombe, 1965) and thus to reach its threshold for survival. Our findings
highlight that the new venture PUB-BLUE predominantly engaged in symbolic
legitimation during phase 3, that is, almost 4 years after creation and entry into the
public sector outsourcing market. Its practices of symbolic legitimation were enabled
by the organization’s advanced cultural knowledge (content knowledge, audience
knowledge, ritual knowledge) which the organization could draw on in its attempts to
acquire legitimacy in resource-holders while adhering to its own interests and
protecting its scarcely existing resource endowments.

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Specifically, the organization’s audience knowledge enabled selecting those
stakeholder that it perceived to be most advantageous to its interests (Zimmerman &
Zeitz, 2002; cf. Oliver, 1991; Suchman, 1995) or where it felt that the social and
cultural similarity between the organization and stakeholders would make
legitimation and resource acquisition comparatively ‘easier’ and less resource-
intensive (cf. Zott & Huy, 2007, for the impact of social similarity on the legitimation
process). Audience knowledge also enabled the organization to tailor its appearance
in the legitimation process to what it perceived to be the requirements of the
targeted resource-holder. Such tailoring has been repeatedly noticed by institutional
theorists who argue that strategic actors can highlight selected, legitimate aspects of
their organizations while trying to hide other, non-appropriate aspects from their
audiences’ view (e.g. Elsbach & Kramer, 1996; Lamertz et al., 2005).

In turn, content knowledge generally enabled the organization to efficiently comply

with stakeholders’ perceived cultural requirements (Zimmerman & Zeitz, 2002; Oliver,
1991). Specifically, content knowledge enabled efficient compliance as it allowed the
organization to save resources in the legitimation process by (a) attempting to fulfill
the stakeholder’s minimal standards of cultural conformance and by (b) attempting to
seize gaps or “grey areas” in stakeholders’ cultural requirements that remained
largely unnoticed by its stakeholders. Cultural theorists, such as Emirbayer and
Mische (1998) or Sewell (1992) have similarly argued that the capacity to exploit gaps
in cultural landscapes is a central component for strategic agency.

Finally, ritual knowledge clearly enabled the organization to manipulate its

stakeholders’ cultural requirements (cf. Zimmerman & Zeitz, 2002; Oliver, 1991;
Suchman, 1995). While the organization generally focused on disseminating stories as
a means of gaining influence and legitimacy (Aldrich & Fiol, 1994; Santos &
Eisenhardt, 2009), its knowledge of the rituals through which resource-holders
structured the allocation of their resources in turn determined the timing of these
influence attempts. In our case, PUB-BLUE was confronted with two fundamentally

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different rituals which enabled and constrained its legitimation practices: First,
“restricted bidding procedures” which granted PUB-BLUE limited potential to directly
interact with local authorities and shape their requirements during the bidding
process. Second, a “dialogue procedure” where, contrary to a “restricted procedure”,
bidders are requested to interact with local authorities and to advertise their
solutions. In turn, the new venture’s knowledge about these two cultural processes
enabled it to manipulate resource-holders in process-specific ways. For the former, as
interactions were not allowed during the “restricted procedures”, the organization
focused on engaging with those stakeholders that were likely to publish tenders
before the formal commencement of their tender by disseminating stories about the
appropriateness and superiority of its solutions. For the latter, once the new venture
had realized that skillful interactions were central for creating favorable “dialogue
procedures”, PUB-BLUE particularly focused on developing “models” that were tuned
on presenting the appropriateness and superiority of the organization’s outsourcing
solutions during “dialogue procedures”. Overall, the new venture’s advanced cultural
knowledge enabled the organization to gain more control over the legitimation
process (cf. Suchman, 1995) and to attempt at acquiring new resources while
considerably reducing its input of existing resources.

Experimentation. Engaging in what we – following our informants - termed

‘experimentation’ during repeated iterations also enabled the new venture to
gradually move from substantive legitimation to symbolic legitimation during phase
2. Cultural theorists frequently refer to the central role of experimentation for cultural
learning and enculturation (e.g. Lave & Wenger, 1991). Accordingly, it was through
repeated experimentation that the new venture PUB-BLUE actively sought to gain
“symbolic influence” from the resource-holding public sector authorities (cf. Barley et
al., 1988: 26). The symbolic influence gained through these experimental interactions
gradually enabled the new venture to use accumulated cultural knowledge “as means
to their own ends” (ibid.) by engaging in symbolic legitimation. Bingham and Davis
(2012) refer to experimentation as a controlled situation that organizations use to test

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causal propositions and to create new knowledge about the consequences of their
actions. Accordingly, post hoc reflection on experimental outcomes is high. While
several authors have argued that experimentation can occur in parallel fashion where
organizations “vary inputs ‘off-line’ in comparative contexts … to correctly attribute
outcomes to inputs” (Bingham & Davis, 2012: 4), other authors have equally
suggested that organizations engage in experimentation in a sequential fashion. Such
serial experimentation which we also observed in our study has been referred to as
“trial-and-error experimentation” (e.g. Levitt & March, 1988; Orlikowski & Yates,
1994). Trial and error experimentation is a means for actors to gradually but
deliberately adapt their action repertoires to reach more beneficial outcomes
(Orlikowski & Yates, 1994: 548).

It is in this latter regard that we refer to experimentation as interaction with resource-

holders that new ventures use to test causal propositions and reflect on outcomes in
order to gradually adapt their repertoire of legitimation practices to becoming more
beneficial in nature. As we observed, PUB-BLUE engaged in experimental interactions
with resource-holders predominantly during phase 2. The consequence of such
experimentation was that, on the basis of central cultural demands that the
organization came to notice during these repeated interactions with resource-
holders, PUB-BLUE could gradually benefit from their resource-holders’ “symbolic
influence” (cf. Barley et al., 1988). The symbolic influence from resource-holders which
predominantly took the form of their feedback in turn enabled the new venture to
develop a repertoire of symbolic legitimation practices. Through experimenting, the
new venture could thus create an understanding of how to acquire further resources
while its interests and existing resources.

Substantive legitimation. Our informants referred to their first resource acquisition

attempt in this cultural environment (i.e. bid 1) as having had to ‘compensate’ for
their lacking knowledge about the norms and values of the public sector
environment. On the basis of this insight, we conceptualized this bid as based on

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substantive legitimation rather than symbolic legitimation (Ashforth & Gibbs, 1990; cf.
Westphal & Zajac, 1994). Substantive legitimation involves the actual, material
conformance to resource-holders’ legitimacy criteria (ibid.). In this specific case,
substantive legitimation thus consisted of the improvised acquisition of legitimacy
and resources by thoroughly complying with legitimacy criteria of resource-holders.
As institutionalists have argued, improvisational processes occur when actors respond
to experiencing the demands of unfamiliar contexts and resulting problems and
situations (Smets, Morris & Greenwood, 2012). During phase 1, substantive
legitimation was the new venture’s response to the unfamiliar cultural context of
public sector organizations. Substantive legitimation was thus the consequence of the
new venture’s lacking cultural knowledge which resulted in its inability to engage in
symbolic legitimation.

Contrary to the proactive process of symbolic legitimation, substantive legitimation

was a reactive process where – as also hinted at by Baker et al. (2003: 263) – the new
venture had to mobilize resources “on the fly to make their fledging firms seem
comfortable and normal” (emphasis added). As our study highlights, conversely to
symbolic legitimation which enabled the organization to stay in control over
legitimation processes (Suchman, 1995), substantive legitimation required the new
venture to give up a considerable degree of control over the legitimation and
resource acquisition process. Accordingly, while lacking audience knowledge and
ritual knowledge did not allow the organization to engage in selecting and
influencing strategies, lacking general content knowledge proofed to be particularly
consequential for the new venture as the organization hyperbolically complied with
its resource-holders demands without being fully aware of the consequences of this
compliance. Overall, absent of cultural knowledge that the new venture could have
used to “defend” its existing resources (Katila et al., 2008), substantive legitimation
thus meant for the organization that the acquisition of new resources simultaneously
lead to the “dissipation” of existing resources in a way that threatened the venture’s
viability (Bruederl & Schuessler, 1990).

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Such substantive legitimation in the new venture’s first resource acquisition process
(i.e. bid 1) lead Frederic – the founder and manager of the new venture – to argue
that “we cannot do this anymore. We simply cannot afford it!” (P57, 46) Substantive
legitimation thus created a pyrrhic victory for the new venture: Following the
historical example, after the small and resource-poor army of ancient King Pyrrhus of
Epirus had fought an unlikely victory against the far superior Roman troops (280-279
BC) which had caused enormous casualties to the Pyrrhus’ army, Pyrrhus became
famous for his outcry: “One more such victory will utterly undo us”. By way of analogy,
substantive legitimation may then yield a pyrrhic victory for an organization when the
victory of acquiring legitimacy and resources may have such devastating resource-
dissipation consequences, that one more such substantive legitimation attempt may
lead to the new venture’s failure and disbanding. As follows, the new venture under
study aimed to resolve the heterogeneous and endangering outcomes of substantive
legitimation through repeated experimentation which eventually created the more
beneficial repertoire of symbolic legitimation practices that contributed to its survival.

3.5. DISCUSSION

In our in-depth exploration of how the legitimation practices of a new venture evolve
across repeated resource acquisition attempts, we integrated institutional and
cultural perspectives to tackle ambiguity created in previous studies about the
potential of a new venture for engaging in “skillful symbolic action” (e.g. Lounsbury &
Glynn, 2001; Zott & Huy, 2007). In this regard, our study makes two important
contributions to the study of new venture legitimation and new venture survival.

First, we highlight the importance of distinguishing between symbolic and substantive

legitimation processes (cf. Ashforth & Gibbs, 1990) for studying new ventures’
resource acquisition and survival: It has been a dominant theme in the literature that
perceptions of a new venture’s (normative) legitimacy among its key resource-holders
are beneficial for new ventures in that legitimacy facilitates resource acquisition (e.g.

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Lounsbury & Glynn, 2001; Navis & Glynn, 2011; Zott & Huy, 2007) and thus new
venture survival by overcoming the new venture’s “liability of newness” (Stinchcombe,
1965; cf. Aldrich & Fiol, 1994; Singh et al., 1986; Zimmerman & Zeitz, 2002).

What we add to these studies, however, is that it may not only be important to
observe whether and how new ventures acquire normative legitimacy. Rather, it may
be even more important to explore the consequences of these legitimation processes
for the new ventures themselves. Based on our study, we drew on the distinction
between symbolic legitimation and substantive legitimation processes (cf. Ashforth &
Gibbs, 1990; Suchman, 1995) and thus complement the predominant focus of prior
research on new ventures’ symbolic actions (e.g. Lounsbury & Glynn, 2001; Navis &
Glynn, 2011; Zott & Huy, 2007). On this basis, we could argue that only symbolic
legitimation processes – when employed repeatedly and across resource acquisition
processes – may promote new venture survival due to their effect in enabling the
acquisition of resources while simultaneously preventing the dissipation of resources
as consequence of the legitimation process. On the other hand, the continued use of
substantive legitimation processes may even promote new venture failure in that they
lead to the acquisition but also to the dissipation of a new venture’s scarce resources.
Following a famous historical example, we referred to such substantive legitimation
processes as pyrrhic victories for new ventures when the victory of acquiring
legitimacy and resources leads to such devastating resource outflows that – in the
words of Pyrrhus – “one more such victory will utterly undo us”.

The distinction between symbolic and substantive legitimation may then refine a
central theme in the literature on new venture survival: On the one hand, substantive
legitimation practices may enable a new venture to overcome its “liability of newness”
(Stinchcombe, 1965) due to the acquisition of resources that substantive legitimation
enables. On the other hand however, substantive legitimation practices may also lead
to new venture’s “liability of adolescence” due to the “dissipation” of resources that
inevitably follows from these legitimation practices (Bruederl & Schuessler, 1990). As

108
a consequence, only the sustained use of symbolic legitimation practices may enable
a new venture to overcome both liabilities which will be necessary to secure its
survival. The differentiation between symbolic and substantive new venture
legitimation and the counter-intuitive insight that certain legitimation practices may
promote failure rather than survival for new ventures will thus offer an important
contribution to a dominant theme in the literature.

Second, through our study, we uncovered the concept of cultural knowledge (cf.
Howard-Grenville, 2007; Molinsky, 2007; 2013) as antecedent condition for symbolic
legitimation and its opposite – lack of cultural knowledge – as antecedent condition
for substantive legitimation (Ashforth & Gibbs, 1990; Suchman, 1995): We have thus
shown that without cultural knowledge, organizations may be unable to respond
strategically to the legitimacy criteria of their resource-holders (cf. Oliver, 1991) and
that they may thus have to resort to substantive legitimation practices (cf. Ashforth &
Gibbs, 1990) in order to acquire desperately needed resources. Cultural knowledge
will then be necessary for the generation of symbolic legitimation practices (Oliver
1991; Suchman, 1995) and the generation of symbolic legitimation practices –
through yielding new resources while preventing the dissipation of existing resources
– will be critical for organizational survival (cf. Bruederl & Schuessler, 1990; Meyer &
Rowan, 1977) (See Figure 3-3).

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 Figure 3-3: The Relevance of Cultural Knowledge for New Ventures

Cultural knowledge has been a largely understudied cultural resource, but one that
may be critical to develop symbolic actions that yield favorable outcomes for
organizations in general (Elsbach, 1994; Fiss & Zajac, 2006; Zajac & Westphal, 1995)
and for new ventures in particular (Lounsbury & Glynn, 2001; Hallen & Eisenhardt,
2012; Navis & Glynn, 2011; Zott & Huy, 2007). In this regard, we have empirically
derived a typology of 3 different types of cultural knowledge that contributes to a

more fine-grained understanding of a critical cultural resource’s components: First,

content knowledge, as an organization’s knowledge about the ideational contents that
structure the collective rationality of a cultural field. Second, audience knowledge, as
an organization’s knowledge about how different groups of audiences, depending on
their position within the cultural field, draw differently on these cultural contents.
Finally, ritual knowledge, as organization’s knowledge about the processes that actors
within a cultural field employ to coordinate their actions and achieve their ends.

When employing this typology, it becomes apparent that prior research has devoted
the most attention to how organizations seize their understanding of cultural

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contents and audiences to acquire legitimacy and resources. For the former, a number
of studies have reported that organizations enlist such cultural contents as frames or
meta-narratives in their attempts to appear legitimate (e.g. Aldrich & Fiol, 1994;
Cornelissen & Clarke, 2010; Fiss & Zajac, 2006; Lounsbury & Glynn, 2001; Navis &
Glynn, 2010; Martens et al., 2007). Scholars have also hinted at how organizations
draw on their understanding of audiences to create symbols of cultural similarity and
to engage in skillful mimicking behaviors (e.g. Zott & Huy, 2007). Yet, despite its
potential importance, prior research has been less interested in the impact of ritual
knowledge on legitimation and resource acquisition processes and outcomes.
Following Navis and Glynn’s (2011: 494) recent call and studying a new venture’s
legitimation attempts in an extremely “scripted” setting, our case of a new venture’s
public sector bidding processes highlights that legitimation and resource acquisition
may be acutely contingent on the organization’s intimate understanding of the rituals
through which resource holders structure the types and sequences of interaction with
resource-dependent organizations.

We have also highlighted that these 3 different types of cultural knowledge may be
of differential importance for engaging in the different modes of symbolic
legitimation that have been highlighted in prior institutional research: In this regard,
we could tentatively show that organizations may be particularly dependent on
content knowledge for “ceremonial compliance” strategies (e.g. Ashforth & Gibbs,
1990; Meyer & Rowan, 1977), on audience knowledge for “selection” and for
“tailoring” strategies, and on ritual knowledge for “manipulation” strategies (cf.
Zimmerman & Zeitz, 2002). This is an interesting advancement for the study of
symbolic legitimation, because the analysis of sub-types of an important cultural
resource enables providing a more nuanced picture of symbolic legitimation practices
(Oliver, 1991; Suchman, 1995; Zimmerman & Zeitz, 2002).

Highlighting the central role cultural knowledge for symbolic legitimation, our study
uncovers that the studies that have depicted new ventures as skillful symbolic actors

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(e.g. Lounsbury & Glynn, 2001; Zott & Huy, 2007) may have envisioned or studied
contexts with demands of low cultural complexity and/or low cultural distance to the
focal organizations’ experiences (cf. Molinsky, 2007; Shenkar et al., 2008). In a study
on cross-cultural interactions, Molinsky (2007) highlights cultural complexity and
cultural distance20 as two parameters for characterizing the reactions of new entrants
to an initially foreign cultural context. As he argues, the higher the experienced
complexity of the cultural context and the higher its discrepancy to the cultural
contexts experienced beforehand, the greater an actor’s experienced difficulty for
skillful interaction with members of the cultural environment. From this perspective,
one could argue that prior research which highlighted new ventures’ potential for
skillful symbolic operation (i.e. Lounsbury & Glynn, 2001; Martens et al., 2007; Navis &
Glynn, 2011; Zott & Huy, 2007) may have envisioned cultural contexts that rank low in
terms of how new ventures would experience their complexity and distance. Only in
such cases would it then be comprehensible to ascribe to new ventures a potential to
skillfully mobilize evocative symbols and to engage in symbolic legitimation in
general and at the time of foundation and market entry in particular. But if cultural
complexity and cultural discrepancy act as acute initial constraints – as in our case –
organizations may rather have to first mobilize substance and repeatedly engage in
experimentation until they generate a repertoire of symbolic legitimation practices
that may eventually lead to their survival and persistence.

20
Molinsky (2007) refers to “cultural distance” and “cultural discrepancy”. Here, we opted for the
concept of “cultural distance” due to its more general connotation (cf. Shenkar et al., 2008) and due to
its higher commensurability with the vocabulary of institutional theory (cf. Phillips, Tracey & Karra,
2009)

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113
4. HOW NORMATIVE NEW VENTURE
LEGITIMATION STRATEGIES ARE FORMED:
THE ROLE OF ANALOGIES IN THE CREATION
PROCESS OF A LEGITIMATING NARRATIVE21

Abstract. Having addressed the first theoretical gap and the first research question
in the previous chapter 3, in this chapter, THEORETICAL GAP 2 will now be addressed.
Hence, we turn to exploring the “back-stage” of a new venture’s impression
management. Specifically, we address RESEARCH QUESTION 2, that is, how managers
create a legitimating narrative at the back-stage of their new venture. Managers of
new ventures have been shown to deploy impression management ‘performances’ to
acquire legitimacy and resources for their new venture. A number of studies have
characterized some managers as particularly skillful in deploying legitimating
narratives as impression management performances on the “front-stage” – that is,
when facing their target audience. However, these studies were not intended to
provide insights into how managers create these legitimating narratives that are so
consequential for their ventures “back-stage” – that is, remote from the view of their
target audience. To fill this void within impression management theory, we draw on
the literature on analogies from cognitive linguistics and deduce theory on the
creation process of a legitimating narrative on the backstage of a new venture.
Contributions of our process theory to research on impression management; on the
role of analogies in new venture legitimation; and on the processing of analogies are
discussed.

21
Earlier versions of this argument have been accepted and/or presented at several international,
peer-reviewed conferences including the AOM conference 2010 and the EGOS conference 2010.

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4.1. INTRODUCTION

New ventures comprise independent as well as corporate ventures in their first years
after market entry (Zimmerman & Zeitz, 2002). Managers of new ventures are
critically dependent on their audiences’ perceptions of the ventures’ legitimacy in
order to acquire their resources and to overcome the new venture’s ‘liability of
newness’ (Singh, Tucker & House, 1986; Stinchcombe, 1965). Legitimacy may follow
when managers construct an identity for their new venture – a constellation of claims
of “who we are” and “what we do” as a new venture – around identity claims that
their targeted audiences comprehend and value (Navis & Glynn, 2011; Glynn, 2008).
Some managers have been reported as particularly skilled in creating a legitimate
identity for their new venture (e.g. Lounsbury & Glynn, 2001; Martens, Jennings &
Jennings, 2007; Navis & Glynn, 2011). These managers may thus proactively engage
in impression management (Elsbach & Kramer & 1996; Elsbach, Sutton & Principe,
1998).

Impression management involves managers’ purposeful attempts to construct an

identity for their new venture that will be regarded positively by a targeted audience
(cf. Elsbach & Kramer, 1996). Impression management takes the primary form of
deploying legitimating narratives (e.g. Elsbach, 2006) – written documents or verbal
accounts deployed by actors to explain and the nature and potential of a new venture
in a coherent and socially desirable manner (cf. Martens et al., 2007; Navis & Glynn,
2011). Several studies have portrayed some managers as truly skillful in managing the
impressions of their target audience in general (e.g. Aldrich & Fiol, 1994; Clarke, 2011;
Zott & Huy, 2007) and in particular of deploying internally coherent and externally
resonant legitimating narratives in order to shape their resource-holders’ impression
of the identity of their new venture (Lounsbury & Glynn, 2001; Martens et al., 2007;
Navis & Glynn, 2010; 2011).

However, while these studies on new ventures – and prior work on organizational
impression management more generally – have been truly helpful in laying out which

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legitimating narratives may work for managers in creating a legitimate identity for
their organization when facing a targeted audience on the “front-stage” of impression
management, they provide limited evidence on how these legitimating narratives that
are so consequential for organizations and for new ventures in particular get made
remote from the view of the target audience on the “back-stage” of impression
management (cf. Goffman, 1959). This is both a surprising but also a critical
theoretical gap because prior research has already provided initial evidence that the
most successful managers devote considerable time and effort when preparing and
creating legitimating narratives about their new venture on the “back-stage” of
impression management remote from the views of their targeted customers and
other resource-holders (e.g. Santos & Eisenhardt, 2009).

The purpose of this paper is thus to create theory on how managers create a
legitimating narrative at the back-stage of their new venture. Impression
management perspectives per se do not enable a comprehensive theorization of how
legitimating narratives are created back-stage. We thus build process-theory
deductively by drawing on perspectives on the construction of analogies in cognitive
linguistics (Holyoak, 1985; Holyoak & Thagard, 1989) to fill this void within impression
management theory. Analogies are critical for new ventures in that they have the
potential to associate a venture with categories familiar to a targeted audience thus
promoting the venture’s legitimacy and facilitating its access to resources (e.g.
Cornelissen & Clarke, 2010; Etzion & Ferraro, 2009). Drawing on these perspectives
enables us to theorize that (1) a legitimating narrative may be based on a set of
analogies and (2) that the creation process of a legitimating narrative may involve for
managers the (a) incremental, (b) systematic and (c) pragmatic process of creating,
extending, and integrating analogies.

Our process framework offers contributions to research on impression management;

on the role of analogies in new venture legitimation; and also to perspectives on the
processing of analogies: For the first, we investigate and highlight the important role

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of “back-stage” processes in order to create a more nuanced picture on processes of
organizational impression management (Elsbach, 2006; Elsbach & Kramer, 1996) and
specifically on the creation and deployment of legitimating narratives (c.f. Lounsbury
& Glynn, 2001; Martens et al., 2007; Navis & Glynn, 2011). Additionally, we offer
impression management scholars analogies as important theoretical concept and unit
of analysis. For the second, blending impression management theory and research on
the processing of analogies enables creating a more detailed picture on how
analogies get ‘stuck’ and yield impressions of both cognitive and normative
legitimacy in resource-holders (cf. Aldrich & Fiol, 1994; Suchman, 1995) by
complementing the focus of prior research on analogies’ comprehensibility (i.e. their
cognitive legitimacy) (e.g. Cornelissen & Clarke, 2010; Etzion & Ferraro, 2009;
Hargadon & Douglas, 2001; Santos & Eisenhardt, 2009) with an additional, pragmatic
focus on their normative appropriateness. Finally, our study offers a perspective on
the processing of analogies that is both temporally and socially situated (cf. Clarke &
Cornelissen, 2011).

4.2. BACKGROUND: LEGITIMATING NARRATIVES – AN IMPRESSION

MANAGEMENT PERSPECTIVE

4.2.1. Impression Management

Due to the newness of a new venture in its market environment, the new venture’s
target audiences (such as prospective consumers, employees, investors, and other
relevant resource-holding constituencies) are typically unfamiliar with the venture
and its qualities. Hence, to acquire resources and thus to overcome their “liability of
newness” (cf. Stinchcombe, 1965), managers of new ventures will be eager to create a
very positive first impression of their new venture in their target audiences. Managers
of new ventures have thus been reported to engage in impression management (e.g.
Aldrich & Fiol, 1994; Clarke, 2011; Zott & Huy, 2007) and to “shape interpretations of

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the nature and potential of their venture to those who may supply needed resources”
(cf. Lounsbury & Glynn, 2001: 549).

Impression management is a “claim making activity” (Ashforth & Mael, 1989) and a
form of audience-specific ‘identity work’ (Goffman, 1959; Leary & Kowalski, 1990). The
assumption of impression management theorists is that ‘social actors’ (i.e. individuals,
organizations etc.) develop not only a single identity that may be “central, distinctive,
and enduring” (Albert & Whetten, 1985) but rather that they – at all stages of
development – may have access to a repertoire of multiple and potentially
contradicting identities (building e.g. on such identity-categories as ‘being globally
oriented’, ‘being locally oriented’, ‘being shareholder oriented’, ‘being stakeholder
oriented’ etc.) that they can activate and “perform” according to their definition of the
situation and of the demands of the specific audience they may face or target
(Goffman, 1959; Gergen, 1968). On these theoretical grounds, we refer to impression
management as involving managers’ purposeful attempts to construct an identity for
their new venture that will be regarded positively by a targeted audience (cf. Elsbach
& Kramer, 1996). A new venture’s audience-specific identity is in turn defined as a
constellation of claims around “who we are” and “what we do” as a new venture (cf.
Navis & Glynn, 2011).

Scholars of impression management frequently draw on strategic legitimation

perspectives (e.g. Suchman, 1995) relying on the concept of legitimacy to supply the
type of positive identity that organizations aspire to create (Bolino et al., 2008; e.g.
Arndt & Biggelow, 1990; Elsbach 1994; Elsbach & Sutton, 1992; Zott & Huy, 2007).
Legitimacy refers to a target audience’s perception and evaluation of a new venture’s
identity as desirable, proper, and appropriate (Suchman, 1995: 574) which follows
when the venture’s audience-specific identity is constructed from identity categories
that a target audience understands and values (e.g. Creed et al., 2002; Glynn, 2008).

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4.2.2. The Front-Stage of Impression Management: The Deployment of
a Legitimating Narrative

Actors rely on “performances” in order to create a legitimate audience-specific

identity of their organization for a targeted audience on the “front-stage” of
impression management (cf. Goffman, 1959). These performances take the primary
form of deploying legitimating narratives (Elsbach, 2006). We define legitimating
narratives as written documents or oral accounts deployed by actors to explain
nature and potential of their organization in a coherent and ordered manner (cf.
Martens et al., 2007). A legitimating narrative is important for symbolically
constructing an audience-specific identity for a new venture since it can assemble a
set of identity claims about a new venture into a unified and coherent account (cf.
Ibarra & Barbulescu, 2010).

Legitimating narratives are critical for the fates of new ventures as they underlie their
verbal business plan presentations and their written IPO brochures or bidding
documents (cf. Kirsch et al., 2009; Martens et al., 2007; Navis & Glynn, 2011). Since
information asymmetry often renders a target audience’s evaluation of a venture
difficult, the impression regarding the legitimacy of a new venture’s identity may be
contingent on the legitimating narrative’s perceived external resonance and internal
coherence (Navis & Glynn, 2011). On the one hand, a legitimating narrative thus
enables a target audience to attribute meaning to the venture beyond the narrative’s
substantive impact (cf. Ashforth & Gibbs, 1990). On the other hand, however, it also
enables new venture managers to direct attention away from certain facets about

their new venture in order to make the venture appear legitimate to their target
audience (ibid.).

4.2.3. The Back-Stage of Impression Management: The Creation of a

Legitimating Narrative

Despite an abundance of research on how managers of new ventures deploy

narratives aimed at creating a legitimate impression of their new ventures, we seem

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to operate from a relatively scarce knowledge-base of how managers create the
legitimating narratives of their venture they subsequently deploy to targeted
resource-holders. While we seem to have a fair understanding of favorable patterns
of narratives that elicit impressions of legitimacy (e.g. Lounsbury & Glynn; Martens et
al., 2007; Navis & Glynn, 2011; Zott & Huy, 2007), these studies did not account for
how legitimating narratives ‘get made’ (cf. Benford & Snow, 2000). This is both a
surprising and critical omission especially since successful managers may devote
considerable time and effort when preparing and forming these legitimating
narratives about their new ventures (c.f. Hargadon & Douglas, 2001; Santos &
Eisenhardt, 2009).

Much of actors’ dedication to create legitimate narratives is thus hidden from the
views of others (Goffman, 1959). Thus, theorists of impression management have
employed the “back-stage”-metaphor (Gardner & Avolio, 1997; Goffman, 1959) to
designate the temporal and/or spatial area where actors may prepare, conceptualize
and create narratives in order to subsequently deploy these narratives in public on
the “front-stage”. Remote from views of their target audience, managers may prepare
and reflect on how to explain their venture’s qualities. And in case of an unsuccessful
deployment of a narrative, it will be also back-stage where managers will strive to
develop an even more intriguing representation of their venture for subsequent
encounters with resource-holders. In the process of creating a legitimating narrative,
managers of a new venture will thus aim to get into the eye of the beholder and to
assume the target audience’s perspective (Goffman, 1959). The creation of a
legitimating narrative may thus involve managers’ implicit ‘conversations’ with, and
anticipations of, a not-yet-present target audience (Ginzel et al., 1993).

And yet, the above insights on the back-stage of impression management do not
enable us to derive a truly, satisfactory conceptualization of how managers create a
legitimating narrative at the back-stage of their new venture. To fill this void, we draw
from the literature on analogies in cognitive linguistics in order to complement

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impression management theory and to derive theory on the processes involved in the
creation of a legitimating narrative on the back-stage of a new venture.

4.3. THE ROLE OF ANALOGIES IN THE CREATION PROCESS OF A

LEGITIMATING NARRATIVE

In the following, we argue that (1) legitimating narratives will be based on a set of
analogies and (2) that the creation process of a legitimating narrative involves for
new venture managers the (a) incremental, (b) systematic and (c) goal-directed
process of creating, extending, and integrating analogies. We thus extend recent
studies that have provided evidence that analogies will be important for managers in
making their new venture appear familiar and legitimate to their target audience
(Cornelissen & Clarke, 2010; Etzion & Ferraro, 2011; Hargadon & Douglas, 2001;
Santos & Eisenhardt, 2009). Drawing on the literature on analogies in cognitive
linguistics (cf. Gentner, 1983; Holyoak, 1985; Holyoak & Thagard, 1989),

4.3.1. The Role of Analogies in a Legitimating Narrative

For the first, we argue that a new venture’s identity claims can be fruitfully regarded
as analogies. Since have established above that a legitimating narrative may be built
around a set of identity claims, we can thus argue in the following that a legitimating
narrative may be built around a set of analogies.

Most generally, cognitive linguists regard analogies as associations between one

domain that is relatively unfamiliar and other domains that are typically well
understood (e.g. Gentner,1998; Holyoak, 2005; for reviews; cf. Gregoire et al., 2010;
Gregoire & Shepherd, 2012). These associations enable an actor to shape an
audience’s impression of an entity that may be unfamiliar to the them (e.g. a new
venture) by associating the entity with categories from domains that may be familiar
and evocative to the audience (Holyoak, 2005). As identity claims, managers may

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then, for instance, associate their new venture which may be unfamiliar to their target
audience with the supposedly familiar and evocative identity-categories “safe bet”
and “green” (e.g. “Our venture is a safe bet for you!” “We are a green company.”).

Analogies are critical for the success of a new venture’s legitimating narratives in
shaping a target audience’s impression of the venture. Through the associations that
analogies contain, managers of a new venture will aim to make the identity of their
new venture, which they will deem not yet familiar to and legitimate for their target
audience, more familiar and more legitimate (Lounsbury & Glynn, 2001: 549). When
creating the legitimating narrative about their new venture back-stage, managers will
accordingly aim to assemble analogies that associate the venture with identity
categories from domains that the managers deem understood and valued by their
target audience. Drawing from impression management theory, we refer to such
identity categories from domains that new venture managers deem well understood
and valued by their target audiences as ‘audience-specific’ identity categories. By
building the legitimating narrative around associations of their new venture with
audience-specific identity categories, managers will strive to “translate” ‘who we are’
and ‘what we do’ as a new venture “into a language accessible to external
constituents” (cf. Basu et al., 1999: 526) thus aiming to actively create impressions of
their new venture’s legitimacy in their target audience.

If a created legitimating narrative successfully associates a new venture with

audience-specific identity categories, the legitimating narrative can later - on the
front-stage of impression management - enable the target audience to develop
“sympathy” for a new venture (cf. Alexander, 2004: 530) by making the venture both
comprehensible and thus cognitively legitimate to a target audience (Aldrich & Fiol,
1994; Suchman, 1995; cf. Cornelissen & Clarke, 2010) but also by making it appear
normatively appropriate thus shaping its normative legitimacy (Aldrich & Fiol, 1994).
For instance, Hargadon and Douglas (2001) demonstrate how Thomas Alva Edison
explained the nature and potential of his new venture which aimed at introducing

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and selling electric light by skillfully and selectively associating his venture with
identity categories from the vocabulary of the then dominant, widely familiar gas
light market. Selectively associating his new venture with these audience-specific
identity categories from the gas light market, that the prospective customers which
Edison targeted as his primary audience were understood, enabled Edison to
legitimize the nature and potential of the venture which in turn facilitated the
venture’s market entry, resource acquisition, and growth. Given this central
importance of a new venture’s associations to audience-specific identity-categories in
a legitimating narrative, it is critical to now look more deeply at how these
associations take shape in the creation process of a new venture’s legitimating
narrative.

4.3.2. Assumptions about the Creation Process of a Legitimating

Narrative

For the second, we argue that the creation process of a legitimating narrative involves
for new venture managers the (a) incremental, (b) systematic and (c) pragmatic
process of creating, extending, and integrating analogies. In this regard, we draw on 3
central assumptions of how actors process analogies as boundary conditions for
theorizing how managers create a legitimating narrative at the back-stage of their
new venture.

(a) Managers create a Legitimating Narrative incrementally. Actors process

analogies between an unfamiliar entity and categories from more familiar domains
incrementally (e.g. Gentner, Bowdle et al., 2001). As we assume that managers create

the legitimating narrative about their new venture by assembling a set of analogies,
we follow suit in assuming that managers will too create a legitimating narrative
incrementally. According to the literature on analogies, in a first step, the incremental
creation of a legitimating narrative will begin as managers (1) create individual,
‘superficial’ associations between the unfamiliar entity (here: a new venture) and
categories from familiar domains (here: audience-specific identity categories). (2)

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Subsequently, the managers will extend each of these individual superficial
associations to create deeper level, ‘structural’ associations between their new
venture and each audience-specific identity categories (c.f. e.g. Gentner, 1998;
Holyoak, 2005; for reviews). (3) In a final step of the incremental processing of
analogies (and thus of creating a legitimating narrative), managers can draw on each
these individual structural associations to create an “compound” of structural
associations that selectively relates the new venture to several audience-specific
identity categories (e.g. Grady, 2005; cf. Cornelissen & Kafouros, 2008; Yu, 2011). As
first assumption, we thus contend that the incremental process of creating a
legitimating narrative will yield a compound of structural associations between the
new venture and audience-specific identity categories and, in turn, that the finalized
legitimating narrative will be based on a compound of such structural associations.

Moreover, two primary targets have been reported in the literature on analogies as
shaping actors’ incremental associations of an unfamiliar entity with more familiar
categories: (cf. Holyoak & Thagard, 1989): their ‘systematic’ target (Gentner, 1983)
and their ‘pragmatic’ target (Holyoak, 1985). We thus assume that these two targets
will drive how managers incrementally create a legitimating narrative about their new
venture. We discuss each in turn.

(b) Managers create a Legitimating Narrative systematically. According to the

literature on analogies, actors aim to associate an unfamiliar entity with categories
from familiar domains (here: audience-specific identity categories) in a systematic way
(Gentner, 1989). As we assume that managers create the legitimating account of their
new venture by creating and assembling a set of analogies, we follow suit in
assuming that managers will create a legitimating narrative systematically.
‘Systematicity’ refers to actors’ preference to not only associate an unfamiliar entity
(here: a new venture) with categories from familiar domains (here: audience-specific
identity categories) but also with the categories’ underlying attributes and relations.
Systematicity thus adds comprehensiveness and explanatory depth to associations

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(e.g. Gentner, Bowdle et al., 2001). For instance, in their legitimating narrative, venture
managers of an online book store may not only associate their organization with the
distinctive audience-specific identity category “superb logistics” (i.e. “We rely on
superb logistics”) but also with the category’s underlying attributes and relations (e.g.
“Our delivery times are three times as fast as those of our competitors”, “We deliver
books free of charge” and several other attributes that explain the identity category
“superb logistics” more comprehensively).

If managers’ associations of their new venture with audience-specific identity

categories indeed turn out to have high systematicity, their audiences will thus
evaluate the resulting legitimating narrative as having high comprehensibility and
thus high cognitive legitimacy (cf. Suchman, 1995). This may be achieved when the
new venture is indeed associated with audience-specific identity categories in a
comprehensive way and when these associations thus provide a legitimating narrative
with explanatory depth and substance. For instance, in Santos and Eisenhardt’s (2009)
case study, the managers of the highly successful online shopping venture “Magic”
systematically associated their venture with the widely understood audience-specific
identity category from the “off-line shopping” domain. Accordingly, they drew on
such offline shopping-attributes as “shopping cart” or “check out” in their
legitimating narrative about “Magic”.

Yet, as the authors hint at, the skillful creation of systematic associations in a
legitimating narrative is not an easy task for managers. Rather, the managers of
“Magic” strived hard before they were able to create systematic associations of their
venture with widely understood identity-categories and their attributes and relations.
Managers’ success in forming systematic associations of their new venture with
audience-specific identity categories will thus vary significantly. Yet, the literature on
actors’ systematicity bias (e.g. Gentner, 1983) suggests that actors will nonetheless
aim to create associations of such an unfamiliar entity as a new venture with
categories from familiar domains that are systematic and comprehensive rather than

125
those that are superficial and isolated (cf. Holyoak, 1985). We rely on this insight as a
second assumption for theorizing how a legitimating narrative will be created.

(c) Managers create a Legitimating Narrative pragmatically. According to the

literature on analogies, actors also aim to associate an unfamiliar entity (here: a new
venture) with categories from familiar domains (here: audience-specific identity
categories) that are relevant to their goals (cf. Holyoak, 1985; Holyoak & Thagard,
1989). As we assume that managers create the legitimating account of their new
venture by creating and assembling a set of analogies, we follow suit in assuming
that managers will create a legitimating narrative pragmatically. Managers will thus
focus on associating their new venture with those audience-specific identity
categories (and those of the categories’ underlying attributes and relations) that are
“pragmatically central” to them (cf. Holyoak & Thagard, 1989) when creating a
legitimating narrative about their new venture. Accordingly, we assume that the
primary goal of managers when associating their new venture with audience-specific
identity categories when preparing their impression management performance will
be to particularly highlight those audience-specific identity categories that explain
the identity of a venture in ways that make their new venture appear as if it was
normative appropriate. Managers of new ventures will thus aim to highlight the
venture’s normative legitimacy (cf. Aldrich & Fiol, 1994; Suchman, 1995).

Also the creation of associations of a venture with audience-specific identity

categories that are indeed considered normatively appropriate by their target
audience is far from easy. For instance, the managers of several new ventures in
Santos & Eisenhardt’s (2009) case study failed to associate their new venture with
audience-specific identity categories that were considered appropriate among their
target audiences. For instance, the managers of “Haven”, another online shopping
venture, explained the identity of their new venture as a “community” to their target
audience – yet the associations to identity categories from the “community” domain
they employed in their legitimating narrative never received track with their target

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audience which in turn contributed to inhibiting a successful and sustainable
competitive position for “Haven” (cf. Santos & Eisenhardt, 2009: 649 pp).

Moreover, new venture managers may need to find a sustainable way for balancing
the pragmatic target of making their venture appear normatively appropriate with a
legitimating narrative with the their target for gaining systematicity which we
elaborated on previously. From instance, while the target of systematicity may drive
managers to associate their venture as comprehensively as possible with a given
audience-specific identity category, their pragmatic target may make the association
of the venture with certain attributes of this category appear normatively
inappropriate and thus unacceptable for inclusion in the legitimating narrative.
Coping with this tension between comprehensiveness and normative appropriateness
may thus require new venture managers to bridge a number of – so to say –
‘structural holes’ in the network of associations around which they will create the
legitimating narrative for their new venture.

The ability of managers to create normatively appropriate associations in their

legitimating narrative will hinge on their audience-specific “domain knowledge” 22 (cf.
Ganz, 2000: 1012; McMullen & Shepherd, 2006: 140) and thus on their domain-
specific space of categories and underlying attributes and relations (cf. Gentner,
1997). Since domain knowledge is not distributed evenly among new venture
managers (cf. Ganz, 2000; McMullen & Shepherd, 2006), the likelihood, that the
audience-specific identity categories managers can draw from will indeed yield
normative legitimacy in the eyes of their target audience, will thus vary greatly among
new venture managers. However, according to the literature on actors’ processing of
analogies, managers will nonetheless try to pragmatically create audience-specific

22
Please not that we explored the role of cultural knowledge as type of such audience-related domain
knowledge in extensive detail in the previous chapter 3! In chapter 3, we developed process theory of
how new ventures can accumulate such cultural knowledge through repeated experimental
interactions with their target audiences and how cultural knowledge influences the ability of new
venture managers to engage in skillful symbolic action.

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identity categories for their new ventures that are relevant to their goals (cf. Holyoak,
1985). We rely on this insight as a third and final assumption in our theorization of
how a legitimating narrative will be created at the backstage of a new venture.

4.3.3. The Creation Process of a Legitimating Narrative

The three above assumptions – that managers of new ventures may create a
legitimating narrative around a set of associations of their new venture with
audience-specific identity categories (a) ‘incrementally’ and that they aim to generate
(b) ‘systematic’ and (c) ‘pragmatic’ associations in this process – enable us to derive
three descriptive, sequential sub-processes of how managers create a legitimating
narrative at the back-stage of their new venture. These are (1) Narrative
conceptualization, (2) Narrative extension, and (3) Narrative integration. Table 4-1
provides an overview of the tasks involved in each of these three sub-processes of
creating a legitimating narrative about a new venture. Before we explain each of
these three sub-processes in detail, we would like to provide a partial introduction of
each to increase their subsequent tangibility.

As a first step in the creation of legitimating narrative, narrative conceptualization

involves managers’ creation of an array of individual associations between their new
venture and audience-specific identity categories to demarcate the narrative about
their new venture. Although superficial in nature, these associations will provide initial
points of reference for managers in the back-stage process of creating a legitimating
narrative about their venture. At this first stage in the narrative creation process,
however, managers will deem the overall legitimacy of the new venture’s identity to
be relatively low, as – on their own – the array of initial associations of their new
venture with audience-specific identity categories may have a limited potential in
signaling the venture’s comprehensibility and normative appropriateness to a target
audience.

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As a second step in the creation of legitimating narrative, narrative extension
subsequently entails for the managers the elaboration of individual ‘conceptual
models’ out of each of the previously created associations of the venture to
audience-specific identity categories. Managers create these audience-specific identity
models by finding deeper-level structural associations of their new venture with each
audience-specific identity category. As “narrative segments”, these audience-specific
identity models thus form the “building blocks” of their legitimating narrative about
the new venture.

As a final step in the creation of the legitimating narrative, narrative integration

involves for managers to create a coherent narrative about their venture that conveys
their new venture’s identity to a target audience in an integrated way. At this final
stage of narrative creation, managers will draw on the previously generated
audience-specific identity models that each offer partial perspectives on the identity
of their new venture to blend these “narrative segments” into a coherent narrative
whole. At this final stage, managers will deem the legitimating narrative about their
venture to be high both in comprehensibility and normative approval, that is, of high
cognitive and normative legitimacy. They will thus deem it ready for deployment on
the front-stage.

Empirical Illustration. To illustrate these three sequential sub-processes involved in

the creation of legitimating narrative, we draw on an empirical example: We have
been observing how managers of PUB-BLUE, a new corporate venture of Northern-
European origin, have been developing a bid document in order to acquire a public
sector outsourcing contract from the targeted resource-holder GOV, a public sector
organization responsible for public service delivery in a relatively poor, working-class
area in a Southern-European country23. As follows, we conceptualize the
development of the bid document as process of how managers create a legitimating

23
Names and other aspects (e.g. countries) have been purposefully altered and stereotyped to protect
our informants.

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narrative at the backstage of their new venture. The contract that GOV tendered
would involve for PUB-BLUE the delivery of back-office services for GOV. The contract
volume was substantial and would enable PUB-BLUE to acquire the resources it
desperate required to grow and survive: As financial resources, the contract would
guarantee PUB-BLUE revenues for a 10 year time period and as human resources, it
would involve the temporal transfer of 200 public sector employees to PUB-BLUE. In
the following, we interweave illustrations from the bid writing process in our
theorization of the 3 sequential sub-processes of creating a legitimating narrative and
of the managers’ systematic and pragmatic tasks involved within each sub-process.

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 Table 4-1: The Role of Analogies in the Creation of a Legitimating Narrative

Degree of Perceived
Incremental Process of Status of Status of Systematic Pragmatic
New Venture
Narrative Creation Analogies Legitimating Narrative Process* Process**
Legitimacy***

(1) Creating Array of Reducing Array of

Individual Individual
Narrative Audience-specific identity Audience-specific identity Low
Superficial Associations Categories
Conceptualization Categories Categories

Extending Audience-
(2)
Individual Individual specific identity Categories Manipulating Audience-
Narrative Medium
Structural Associations Narrative Segments into Audience-Specific Specific Identity Models
Extension
Identity Models

(3)
Compound of Integrated Integrating Audience-
Narrative Reducing Contradictions High
Structural Associations Narrative Specific Identity Models
Integration

* aimed at increasing the new venture’s comprehensibility (cf. cognitive legitimacy: Suchman, 1995)
** aimed at increasing the new venture’s desirability and normative approval (cf. normative legitimacy: Aldrich & Fiol, 1994)
*** perceived by the new venture managers themselves. This perception may not necessarily be shared by their target audience!

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Sub-process 1: Narrative Conceptualization. The process of narrative creation may
begin when managers of a new venture compare characteristics of their venture with
what they perceive to be the demands of their target audience. In this process,
associations of their new venture with audience-specific identity categories –
categories from domains deemed to be well understood and valued by their target
audiences – may become apparent to new venture managers. Managers may draw on
these initial associations to demarcate the boundaries of the legitimating narrative
about their new venture. Initially, these associations may be “superficial” in nature
and may thus involve recognized associations of the new venture and audience-
specific identity categories that the managers deem to be at least partially valid (cf.
Gentner, Bowdle et al., 2001). As actors typically derive superficial associations in
exploratory ways, managers may create these initial ‘candidate’ categories for their
new venture relatively flexibly (cf. Gentner, 1989). The outcome of this process may
thus be a number of audience-specific identity categorizations of the new venture –
that is, a number of categories that are intended to associate certain new venture
characteristics with perceived demands of the target audience.

In our empirical example, the Northern-European new corporate venture PUB-BLUE

anticipated that the targeted Southern European public sector organization GOV
sought to fulfill its public sector demands of maximizing public welfare in the area of
GOV and of increasing the quality and efficiency of GOV’s public sector services
through public sector outsourcing. The managers of PUB-BLUE accordingly sought to
associate characteristics of PUB-BLUE with these public sector demands of GOV in the
development of the bid document. PUB-BLUE’s management team started the bid
writing process with enlisting a number of superficial associations of PUB-BLUE with
GOV-specific identity categories – i.e. categorizations of PUB-BLUE that the
management team deemed familiar and valuable to GOV. Among others, these
associations of PUB-BLUE to GOV-specific identity categories (underlined) included the
following:

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- “We are a partner”
- “We are Northern-European”
- We are a regenerator of the GOV area”

Spontaneously creating superficial associations between demands of the target

audience and new venture characteristics on the back-stage, however, means that
these initial audience-specific identity categorizations of the venture may not be fully
goal directed (Gentner, 1997; Holyoak, 1985). The managers may therefore intend to
focus specifically on those audience-specific identity categories of their new venture
that provide the kind of identity for their new venture that may be in line with the
managers’ goals (cf. Holyoak & Thagard, 1989: 303), i.e. to make the new venture
appear normatively appropriate (cf. Aldrich & Fiol, 1994; Suchman, 1995). The
managers may thus reduce the array of previously created audience-specific identity
categories by ‘hiding’ those superficial associations of venture characteristics with
demands of target audience that they perceive to be not goal-directed and thus
normatively inappropriate for their target audience (e.g. Elsbach & Kramer, 1996; cf.
Porac et al., 1999).

For instance, when conceptualizing their bid document, the managers of PUB-BLUE
quickly excluded the previously created association of their new venture with the
identity category of being “Northern-European” as potential highlight in the bid
document. The venture managers primarily associated the identity category “Northern-
European” with the identity attribute of “being reliable”. While the managers were
aware of the positive sides of this attribute, they excluded the association of PUB-BLUE
with this identity category in order to avoid a loss of the positive impression if this
association would make the Southern-European organization GOV feel “unreliable” vis
a vis the Northern-European venture PUB-BLUE. Hence, they continued the creation of
their bid document based on associations of PUB-BLUE to other GOV-specific identity
categories, including those of being a “partner” and a “regenerator” among others.

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Managers of a new venture are thus able to draw selectively on those previously
created audience-specific identity categories for the venture as “tools” that achieve fit
with their local interests (Creed et al., 2002; Elsbach & Kramer, 1996; cf. Emirbayer &
Mische, 1998; Swidler, 1986). Back-stage, i.e. protected from the actual views of their
target audience, managers can hide incongruences between the demands of their
target audience and characteristics of their venture in order to protect their venture’s
interests while aiming to create a legitimate identity for their venture. Remaining
audience-specific identity categorizations of the new venture may thus not simply
describe the identity of the venture. They may rather serve managers as anchor
points to selectively construct the reality about their venture and to “prescribe how it
ought to be viewed and evaluated” (Tsoukas, 1991: 570).

Sub-process 2: Narrative Extension. In the subsequent sub-process involved in the

creation of a legitimating narrative, managers may “extend” the remaining superficial
associations in order to create “structural” associations of certain new venture
characteristics with certain demands of the target audience (cf. Holyoak, 1985). The
aim of creating structural associations is to associate the new venture also with the
explanatory structure underlying each of the developed audience-specific identity
categories (c.f. Gentner, 1983; Holyoak, 1985; Tsoukas, 1991). Actors aim to extend
these categories by their underlying explanatory structure in order to augment the
unfamiliar entity’s (here: the new venture’s) comprehensibility (e.g. Gentner &
Markman, 1997; cf. Gavetti et al., 2005). Structural associations arise when actors
include each category’s underlying attributes, components, and relationships in the
explanation of an unfamiliar entity (here: the new venture) (Gentner & Markman,
2006). When extending superficial associations to structural associations, actors thus
create explanatory “conceptual models” in the form of “mini-narratives” around each
category (Yu, 2011).

On the basis of superficial audience-specific identity categorizations of their new

venture, this implies for managers a need for “self-induced learning” (Gentner et al.,

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2001) in order to generate additional knowledge about more comprehensive
commonalities between the demands of their target audience and aspects of the new
venture. This may occur through managers’ individual reflection (Gentner et al., 2001)
or through their inter-individual dialogue in the management team (cf. Tsoukas,
2009). As managers elaborate each audience-specific identity category, they may thus
create individual audience-specific ‘identity models’ – narrative segments that add
comprehensiveness, depth and substance to each association of the venture with an
audience-specific identity category. From this perspective, each structural association
of characteristics of the venture with demands of the target audience may lead to an
additional increase of the managers’ perceived comprehensibility and desirability of
their new venture’s identity (cf. Aldrich & Fiol, 1994; Suchman, 1995).

Accordingly, the managers of PUB-BLUE further elaborated the associations of PUB-

BLUE with the two previously created identity categories “partner” and “regenerator”,
which it deemed familiar and normatively appropriate to their targeted resource-
holder, the public sector organization GOV. For the association of PUB-BLUE with the
GOV-specific identity category “partner”, they developed a GOV-specific identity model
by adding attributes and relations around the identity category. These included “We
work with you and not against you”; “We do not implement a standardized template
but rather customize our approach to your specific local requirements”; “The
partnership with us may contribute to the personal success of your employees”; “We
have a public sector ethos and deeply care about your maxims” or “We are someone to
lean on”. For the association of PUB-BLUE with the GOV-specific identity category
“regenerator of the GOV area”, the managers developed a GOV-specific identity model
that included, amongst others, the following identity-attributes and relations: “We
create jobs in your area”; “We make you a member in the global network of our parent
company”; “We may regenerate your culture, equipment, and service delivery”, or “We
engage with the business community to push the image of the region”.

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Yet, when creating structural associations, actors are neither able nor willing to
include all inherent attributes and relationships that may underlie the audience-
specific identity categories they created. Rather, actors may associate an unfamiliar
entity (here: the new venture) only with those attributes and relationships of familiar
categories (here: audience-specific identity categories) they deem to fit with their
pragmatic model of the unfamiliar entity (Holyoak, 1985: 70). That is, if managers’
audience-specific identity models are initially not structurally associated with a
representation of their new venture they deem normatively appropriate, they may
manipulate these narrative segments so as to create structural associations of the
new venture with their models of each target audience-specific identity category that
are “pragmatically central” (cf. Holyoak, 1985; Holyoak & Thagard, 1997) and
perceived by the new venture managers to be normatively appropriate.

In our empirical illustration, the managers of the corporate venture PUB-BLUE excluded,
for instance, the attribute “We regenerate your culture” from the narrative segment
around the structural association of their new venture with the GOV-specific identity
category “regenerator of the GOV area”. While the management team agreed that
GOV’s working culture would need to become much more pro-active and efficient, they
assumed that explicitly confronting the leaders of GOV as well as other involved
decision makers (e.g. politicians and unions) with this issue would threaten the
normative appropriateness of PUB-BLUE and thus their chances of acquiring the
contract which PUB-BLUE required desperately to grow and survive as newly created
public sector outsourcing company.

Sub-process 3: Narrative Integration. With the final sub-process involved in the

creation of a legitimating narrative, the managers may aim to complete the narrative
on which an audience-specific identity of their new venture may be based. As a
natural step for the managers, this step involves integrating the previously derived
audience-specific identity models to create a coherent explanation of the venture’s
identity which the managers deem both comprehensible and desirable. Cognitive

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linguists refer to such integrated associations as compounds (e.g. Kuepers, 2010; Yu,
2011). Such a compound is created on the basis of several individual structural
associations which serve as “primary analogies” (cf. Grady, 2005) and thus as
“cornerstones” in the foundation of a compound of analogies (Grady, 2005).
Individual, primary analogies are thus not “final products” but rather “building blocks”
of the creation of a compound of associations on which the legitimating narrative
about a new venture will be based (cf. Yu, 2011: 256). A compound of associations
can be formed from an array of structural associations through further elaboration of
their inherent conceptual models, that is, by fitting together the smaller narrative-
segments of individual conceptual models into a consistent narrative whole (cf.
Cornelissen & Kafouros, 2008). While individual structural associations may thus
involve single points of alignment between audience-specific identity models and
certain new venture characteristics, compounds of associations enable several points
of correspondence and entailments between perceived demands of the target
audience and the new venture.

Managers may arrive at a compound of associations and thus at an integrated

legitimating narrative about their new venture when blending their previously created
audience-specific identity models together. In this process, the managers may aim to
collapse the narrative segments that underlie each audience-specific identity model
into an overarching narrative structure on which their created identity of the venture
may be based (cf. Vaara & Tienari, 2011). Pragmatically, the creation of this narrative
may involve detecting and reducing contradictions among narrative segments and
introducing plot and causality in order to create internal coherence.

In our empirical example, the management team of the new corporate venture PUB-
BLUE accordingly integrated the narrative segments they had previously elaborated.
They blended their GOV-specific identity models around associations of PUB-BLUE with
a number of audience-specific identity categories such as “partner” (including
audience-specific identity-attributes like “We may customize our solution to your

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specific local requirements”) and “regenerator” (including identity-attributes like “We
make you a member in the global network of our parent). In the course of creating a
holistic legitimating narrative (i.e. the bid document) around these associations, the
management team aimed to introduce causality and hierarchy to these narrative
segments as well as what they considered as a convincing plot (“a winning story”).

Subsequently, the managers of PUB-BLUE reviewed and refined the bid document
striving to further increase its comprehensibility and to detect and avoid inconsistencies
contradictions in their argumentation. In this regard, they assumed a contradiction
between their association of PUB-BLUE with the GOV-specific identity-attribute of
“customized, localized service delivery” in one audience-specific identity model (the
model around the audience-specific identity category “partner”) and their association of
PUB-BLUE with a “globalized” parent company (i.e. an attribute in the identity model
around the “regenerator” category). In this specific case, the management team of PUB-
BLUE strived to reduce the perceived contradiction by introducing causality between the
associations of PUB-BLUE with these different, model-specific attributes. They came to
argue in the finalized bid document that PUB-BLUE’s drive towards customization and
localization “emanates from” the corporate culture of PUB-BLUE’s global parent
company where customization to each client’s local requirements is a deeply rooted
core value.

With a legitimating narrative about the venture built around a compound of

associations, managers may aim to represent their venture not only in relation to one
audience-specific identity category, but in a more complex way by integrating a
whole array of audience-specific identity categories. The more skilled managers are,
the higher the variety of audience-specific identity categories they may aim to
include. Associating their venture with multiple identity categories that their target
audience may comprehend and value may in turn enable managers to better shape
their audience’ impressions of the venture’s potential and value (Pontikes, 2012;
Rindova & Petkova, 2007) and thus its cognitive and normative legitimacy (cf. Aldrich

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& Fiol, 1994; Suchman, 1995). Accordingly, the better managers may be able to
integrate multiple audience-specific identity models in their legitimating narrative
about the venture, the more they may be able to lead their target audience to
developing complex and sophisticated understandings of their venture’s potential (cf.
Loewenstein & Gentner, 2005; Rindova & Petkova, 2007).

Moreover, once such a compound of audience-specific identity models is created,

managers of a new venture may also be able to dis-integrate the narrative again in
order to recover the specific primary associations – i.e. the individual audience-
specific identity models they associate the new venture with – on which the
compound was built (cf. Cornelissen & Kafouros, 2008; Yu, 2001). This may enable the
managers to focus on certain aspects of their venture’s identity when interacting with
the target audience or to specifically customize the narrative to achieve a normative
approval among a more diverse audience (cf. Zuckerman, Kim, Ukanwa, & von
Rittman, 2003) if members of the target audience show conflicting demands (cf.
Pache & Santos, 2010) or demand detail on certain aspects of the venture
proposition.

4.4. DISCUSSION

We set out to theorize how managers create a legitimating narrative at the back-
stage of their new venture. We argued that new ventures are dependent on
perceptions of legitimacy in their target audience to acquire resources, survive and
grow. Following impression management theory (e.g. Elsbach, 1994; Elsbach &
Kramer, 1996), we argued that legitimacy follows from the association of the venture
with categories that their target audience understand and value, which in turn yields
comprehensibility and thus cognitive legitimacy as well as normative appropriateness
and thus normative legitimacy (e.g. Aldrich & Fiol, 1994; Suchman, 1995).

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As actors primarily create impressions about their organizations through deploying
narratives in public (cf. Elsbach, 2006) when facing their target audience “front-stage”,
some managers seem particularly skillful in deploying legitimating narratives of their
venture to resource-holders (Aldrich & Fiol, 1994; Lounsbury & Glynn, 2001; Martens
et al., 2007; Navis & Glynn, 2010; 2011; Santos & Eisenhardt, 2009; Zott & Huy, 2007).
Yet, while these studies have been truly groundbreaking in determining which
narratives work for managers to elicit impressions of legitimacy for their venture
“front-stage” when facing their target audience, we do not know how managers
create those narratives that are so consequential for the survival of their venture
“back-stage” and remote from their resource-holders’ view. (cf. Benford & Snow,
2000).

We drew on work from cognitive linguists (cf. Gentner, 1983; Holyoak, 1985; Holyoak
& Thagard, 1989) to fill this void within impression theory. We highlighted the role of
analogies in the creation process of a new venture’s legitimating narrative. We
argued that analogies may be central for new venture managers as they enable them
to associate their new venture with audience-specific identity categories, that is, with
categories from domains that new venture managers deem to be understood and
valued by their target audience. By associating their new venture with audience-
specific identity categories, we argued that managers strive to gain cognitive and
normative legitimacy for their new venture. We thus followed and extended recent
studies that have provided evidence that analogies may be important for managers in
familiarizing their target audience with their unfamiliar venture and creating
impressions of cognitive legitimacy (Cornelissen & Clarke, 2010; Etzion & Ferraro,
2011; Hargadon & Douglas, 2001; Santos & Eisenhardt, 2009).

We then derived three sequential sub-processes involved in the creation of a

legitimating narrative by introducing two targets (i.e. a ‘systematic’ and the
‘pragmatic’ target) that have been reported by cognitive linguists to shape how
actors generate associations (Holyoak & Thagard, 1989; cf. Holoyoak, 1985; Gentner,

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1983) and by drawing on the insight that actors generate associations in incremental
ways thus gradually increasing their comprehensiveness and coherence (Gentner et
al., 2001): First, (1) Narrative conceptualization involves for the managers to create an
array of individual audience-specific identity categories that comprise selective
‘superficial associations’ of characteristics with audience-specific identity categories
which thus provide initial points of reference in the creation of the legitimating
narrative about the venture. Subsequently (2) narrative extension entails the creation
of individual audience-specific identity models out of the previously created
audience-specific identity categories. As “narrative segments”, these extended
“structural associations” of certain new venture characteristics with certain demands
of their target audience form the central, individual “building blocks” of the
legitimating narrative. Finally, (3) narrative integration involves for the managers the
creation of a consistent legitimating narrative by creating a coherent “compound” out
of the previously created individual “narrative segments”. At this final stage,
managers may deem the created narrative about their venture to be high in both
comprehensibility and normative appropriateness and thus in cognitive and
normative legitimacy (cf. Aldrich & Fiol, 1994; Suchman, 1995).

Our study on the role of analogies in the creation of a legitimating narrative

contributes to scholarship on organizational impression management; on the role of
analogies in new venture legitimation, and to perspectives on analogical processing:

4.4.1. Implications for Impression Management Theory

We offer two contributions to scholarship on organizational impression management

research. First, our study highlights the important role of what Goffman (1959) had
famously referred to as “back-stage” for impression management in general and for
research on legitimating narratives in particular. Prior research has almost exclusively
focused on how managers respond to resource-holders’ demands for legitimacy by
engaging in public performances and by deploying legitimating narratives about their
scrutinized ventures and organizations “front-stage”, i.e. when facing these resource-

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holders (e.g. Aldrich & Fiol, 1994; Clarke, 2011; Lounsbury & Glynn, 2001; Martens et
al., 2007; Navis & Glynn, 2011; Zott & Huy, 2007; Elsbach, 2006). Yet, due to a focus of
these studies on which narratives work for actors in publicly creating impressions of
their organizations’ legitimacy in a target audience, these studies were not designed
to uncover the process that would help us understand how these patterns come to
be in the organizations’ private, back-stage area remote from their resource-holders
view.

We contribute to filling this gap by highlighting and conceptualizing how the gradual
and reflexive process of privately preparing impression management performances in
general and of creating legitimating narratives in particular may unfold on the back-
stage out of sight of the target audience. Accordingly, it may be back-stage that
managers may to try get into the eye of the targeted beholder – a competence that
has been regarded as central for the strategic acquisition of impressions of legitimacy
(cf. Fligstein, 2001; Suchman, 1995; Zimmerman & Zeitz, 2002). These back-stage
processes that we contributed to theorizing may thus largely structure, enable, and
constrain how actors subsequently deploy legitimating narratives when publicly
facing a target audience such as a scrutinizing resource-holder on the front-stage.
Emphasizing the back-stage is an important contribution as a focus on the – yet
widely under-researched – formation process of impression management strategies
complements prior literature by creating a more holistic and complex picture of
processes of impression management and of acquiring legitimacy and support.

Second, by drawing on perspectives on analogies from cognitive linguistics, our

theoretical framework has the potential to provide a more nuanced and fine-grained
perspective on the construction of legitimating narratives than previous work on
organizational impression management. Due to an underlying theoretical framework
of either theories of categorization and social attribution or narrative theory, prior
organizational impression management research has either focused on and analyzed
managers’ broad identity categorizations of their organizations (e.g. Elsbach &

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Kramer, 1996; Staw, McKechnie, & Puffer, 1983) or their fully fledged narrative
accounts (cf. Elsbach, 2006; Aldrich & Fiol, 1994; Lounsbury & Glynn, 2001; Martens et
al., 2007; Navis & Glynn, 2011). Our study extends the dichotomous notion of initial
identity categorizations and fully fledged narratives. Accordingly, integrating
organizational impression management theory with perspectives on analogies
enabled us to deduce a framework of how fully fledged narrative accounts will be
incrementally created. We thus contribute to the body of research on organizational
impression management by theorizing how initial identity categorizations are
transformed (i.e. ‘extended’ and ‘integrated’) into fully fledged identity narratives.

4.4.2. Implications for Research on New Venture Legitimation

Moreover, we outline two contributions to research on the role of analogies in new

venture legitimation and resource acquisition. First, relying on managers’
systematicity target (cf. Gentner, 1989) when creating analogies, prior research has
produced evidence of how managers increase the comprehensibility and thus the
cognitive legitimacy of their venture (cf. Aldrich & Fiol, 1994; Suchman, 1995) by
associating their new venture with categories from domains that their audiences may
be familiar with (e.g. Cornelissen & Clarke, 2010; Leblebici et al., 1991; Etzion &
Ferraro, 2010; Hargadon & Douglas, 2001; Navis & Glynn, 2010; Santos & Eisenhardt,
2009). Yet, comprehensibility and familiarity alone may be too rough a guide for how
and which associations ‘stick’ with resource holders and thus, more broadly, for
success in legitimation and resource acquisition (Cornelissen et al., 2012).

In addition to actors’ systematicity target which has been highlighted in prior

research, we also included a complementary focus on managers’ pragmatic
requirements (cf. Holyoak, 1985; Holyoak & Thagard, 1989) when creating
associations in general and when creating legitimating narratives in particular.
Integrating perspectives on the processing of analogies with impression management
theory enabled us to theorize that managers may equally strive to create associations
in their legitimating narratives that they deem normatively appropriate for their

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targeted resource-holder. This enabled us to augment the focus on comprehensibility
(i.e. cognitive legitimacy) of prior research with an additional focus on created
associations’ normative legitimacy (cf. Aldrich & Fiol, 1994; Suchman, 1995). A
combined focus on the cognitive and normative legitimacy of analogies may thus
facilitate the creation of more fine-grained pictures of how new ventures succeed or
fail in acquiring the resources they require desperately to grow and survive in the
market environments they entered.

Second, we aimed to highlight that analogies not only figure prominently when
managers deploy the legitimation strategies aimed at convincing their targeted
resource-holders of the nature and potential of their new venture (cf. Etzion &
Ferraro, 2010; Lounsbury & Glynn, 2001; Santos & Eisenhardt, 2009). Rather,
elaborating on Santos and Eisenhardt’s (2009) insight that the most successful
managers invest considerable time and energy into the process of creating these
strategies on their subsequent deployment may be based, we theorized that and how
the back-stage creation of a new venture’s legitimating strategies also involves for
managers the systematic and goal-directed process creating, extending, and
integrating analogies.

4.4.3. Implications for Perspectives on the Processing of Analogies

We also seek to contribute to scholarship on the processing of analogies. First,

following the case examples of others (e.g. Tsoukas, 1991; Gentner et al., 2001), we
have outlined a perspective on the processing of analogies that is socially and
temporally situated (cf. Clarke & Cornelissen, 2011). We thus follow suit on references
to, for instance, how his processing of analogies gradually structured how the
physicist Johannes Keppler arrived at his path-breaking theoretical insights over a
stretch of years (Gentner et al., 2001) or how a collective of scholars may gradually
and incrementally progress from sketchy insights that are based on superficial
associations to fully blown theorizations (Tsoukas, 1991). When specifying a process
model of how actors progress from initial individual categorizations on the basis of

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superficial associations to a fully-fledged narrative that integrates a number of
conceptual models into a holistic compound, we have both argued and urge future
research to regard the “learning process” that is triggered by the processing of
analogies not only as operating within single individuals in a strength of milliseconds,
but also as potentially including collectives of individuals and as potentially extending
over longer periods of time.

To conclude: a socially and temporally situated focus on the processing of analogies

calls for more in-depth research on how actors and collectives arrive at compounds
of associations in general and on how managers create those legitimating narratives
that are so consequential for their ventures in particular.

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5. DISCUSSION OF DISSERTATION

Abstract. This chapter concludes the dissertation. The chapter begins with a review
of the main assumptions and definitions that the dissertation was built on.
Subsequently, a concise summary will be provided of how the previous chapters of
this dissertation addressed 2 central research foci – i.e. (1) how normative new
venture legitimation strategies evolve and (2) how normative new venture
legitimation strategies are formed. Finally, the contributions of this dissertation will
be discussed. Its main contribution is the elaboration of a detailed perspective on
antecedents, processes and outcomes of normative new venture legitimation.

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5.1. BACKGROUND ASSUMPTIONS AND CONCEPT DEFINITIONS

CHAPTER 1 provided an introduction to this dissertation by demarcating its broader

theoretical context and its key concepts, i.e.: new ventures, legitimacy, resources,
resource-holders, legitimation, and legitimation strategy. We started by highlighting
the critical role of legitimacy for new ventures which we defined as encompassing
both independent- and corporate ventures in their first years of existence (e.g.
Zimmerman & Zeitz, 2002). Grounded in neo-institutional theory (cf. DiMaggio &
Powell, 1983; Meyer & Rowan, 1977) and commensurable theoretical perspectives, a
new venture can be regarded to ‘have’ legitimacy when it appears consistent with the
rules, norms, and beliefs, that are shared in its (typically external) social and cultural
environment and when its audiences (including such resource-holders as investors,
consumers, or certification authorities) consider it appropriate, acceptable, and/or
desirable (e.g. Bitektine, 2011; Suchman, 1995). These theoretical perspectives
conceive of legitimacy as most important asset for a new venture in order to acquire
urgently needed but scarce resources from resource-holders and to thereby
overcome those liabilities that lead to their frequent failure (e.g. Singh et al., 1986).

We distinguished 3 important types of a new venture’s legitimacy – that is, its

regulative legitimacy (its alignment with rules and laws), its normative legitimacy (its
alignment with cultural norms and values), and its cognitive legitimacy (its alignment
with widely shared beliefs and ideas). Finally, we also made the distinction between
legitimacy as potential outcome and property of new ventures and legitimation as the
actual process of acquiring legitimacy for a new venture between the managers of a
new venture and a certain audience (e.g. a resource-holder) (Bitektine, 2011). In this
regard, we defined new venture legitimation strategies most generally as legitimation
practices mobilized by managers of a new venture that are purposive and calculated
(Suchman, 1995: 576).

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5.2. REVIEW AND FOCUS

The subsequent CHAPTER 2 then provided the actual foundation of this dissertation
with a comprehensive review of the literature on the role of legitimacy for new
ventures. This was achieved through a systematic data base survey which yielded a
total of 54 high-impact articles from the fields of organization theory and strategy,
entrepreneurship, and sociology. Based on a careful examination of these articles, we
found that prior research can be effectively categorized into four main research
trajectories, each depending on the assumed degree of agency of a new venture
(low/high) and the explored level of analysis (individual venture/collectives of
ventures). As follows, these trajectories are: (1) ‘Legitimate New Venture
Characteristics’ (low/new venture), (2) ‘Legitimate Industry Characteristics’
(low/collective), (3) ‘New Venture Legitimation Strategies’ (high/new venture), and (4)
‘Industry Legitimation Strategies’ (high/collective). We then analyzed how the 3 types
of legitimacy which we outlined above (i.e. regulative, normative, cognitive) have
been explored within each trajectory.

On the basis of this review, we focused this dissertation on advancing scholarship on

‘new venture legitimation strategies’ (trajectory 3), that is on the attempts of new
ventures to acquire legitimacy from a targeted resource-holder in purposive,
calculated, and ideally in controlled ways (cf. Suchman, 1995: 576). In this regard, we
observed that while studies on new venture legitimation strategies have already
started uncovering which patterns of strategic action work for managers in order to
acquire legitimacy for their new ventures (e.g. Lounsbury & Glynn, 2001; Navis &
Glynn, 2011; Zott & Huy, 2007), these studies were not intended to uncover how
these patterns of strategic action come to be (cf. Langley, 2007: 273). The most
general motivation of this dissertation was thus to develop process theories of new
venture legitimation in general and, in particular, on:

RESEARCH FOCUS 1: How New Venture Legitimation Strategies Evolve

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RESEARCH FOCUS 2: How New Venture Legitimation Strategies are formed

To add further specificity to these 2 research foci, we further zoomed in on how

normative new venture legitimation strategies (i.e. how new ventures aim to achieve
alignment with the norms and values in the cultural environment of their resource-
holders) evolve and emerge. Prior research on the strategic actions that organizations
engage in to acquire normative legitimacy has predominantly drawn on the
complementary perspectives of symbolic management and impression management
(for new ventures: Aldrich & Fiol, 1994; Zott & Huy 2007; for other contexts: e.g.
Elsbach, 1994; Westphal & Zajac, 1994). We defined impression management as
involving managers’ purposeful attempts to construct an identity for their new
venture that will be regarded positively by a targeted audience (e.g. a resource-
holder such as a consumer, investor, or prospective employee) (cf. Elsbach & Kramer,
1996) and symbolic actions as attempts to appear consistent with values and
expectation in the cultural environment of targeted resource-holders while pursuing
one’s own, divergent interests (Ashforth & Gibbs, 1990: 180).

As shortcoming of the first – i.e. the application of symbolic management

perspectives to new venture research – we observed that prior research has
concentrated on the symbolic management of new ventures while insufficiently
attending to its frequently studied opposite – i.e. “substantive management” (e.g.
Ashforth & Gibbs, 1990; cf. Brown, 1994; Westphal & Zajac, 1994).

As shortcoming of the second – i.e. the application of impression management

perspectives to new venture research – we uncovered that prior research had
concentrated on how managers of new ventures deploy impression management
strategies “front-stage” when facing targeted resource-holders to the detriment of
explicating how they develop these strategies “back-stage” and remote from
resource-holders’ view (cf. Goffman, 1959).

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We geared each of our two research foci towards addressing one of these two central
gaps in the literature on normative new venture legitimation.

5.3. FINDINGS

5.3.1. Research Focus 1: How Normative New Venture Legitimation

Strategies Evolve24

CHAPTER 3 derived a first fine-grained process perspective on normative new venture

legitimation. It addresses THEORETICAL GAP 1 by specifically exploring symbolic and
substantive new venture legitimation practices (i.e. Ashforth & Gibbs, 1990). The
chapter addresses RESEARCH QUESTION 1: How do legitimation practices25 of a new
venture evolve across repeated resource acquisition attempts? This question is aimed at
resolving ambiguity between institutional theory- and cultural theory-perspectives on
the potential of new ventures to engage in ‘skillful symbolic action’ in general and at
the early time of new venture creation and market entry in particular. Addressing this
question is of significant importance to more clearly specify how new ventures
acquire legitimacy and resources.

We aimed to explore this question and to elaborate existing theory (cf. Bluhm et al.,
2011) by drawing on the longitudinal qualitative study of a new venture in its first 6
years in a public sector outsourcing market. We analyzed data on its 6 sequential
resource acquisition attempts (i.e. its bidding processes for public sector outsourcing
contracts) as embedded cases to uncover new venture legitimation practices within
each of these demanding resource acquisition attempts.

24
Please note that we explore symbolic and substantive legitimation practices (cf. Ashforth & Gibbs,
1990) in this chapter! Symbolic legitimation involves gaining an appearance of normative legitimacy
while pursuing one’s own divergent interests and substantive legitimation involves full (rather than
symbolic) conformance to the legitimacy criteria of resource-holders (ibid.). As symbolic legitimation
has been frequently referred to as a “highly strategic” legitimation practice (e.g. Crilly, Zollo, & Hansen,
2012, for a review) whereas substantive legitimation has been referred to as a “the least strategic”
legitimation practice (e.g. Zimmerman & Zeitz, 2002: 423), we thus explore legitimation practices rather
than legitimation strategies in this study.
25
For reasons of convenience and readability, we referred to “normative legitimacy“ as “legitimacy”
throughout this study.

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Perhaps most importantly, we identified the new venture’s evolving knowledge about
the norms and values in its target environment (i.e. the public sector) as ‘change
engine’ of the new venture’s legitimation practices. Following cultural theorists, we
referred to such knowledge as cultural knowledge (e.g. Howard-Grenville, 2007;
Molinsky, 2007; 2013). We further delineated 3 types of cultural knowledge
(knowledge of cultural contents, audiences, and rituals) and showed how cultural
knowledge determined the legitimation practices mobilized within 3 distinct temporal
phases:

In phase 1, due to its limited cultural knowledge, the new venture was forced to
engage in substantive legitimation practices (i.e. full conformance to resource-
holders’ demands). As these practices yielded heterogeneous outcomes and
endangered the survival of the new venture (i.e. substantive legitimation led both to
an inflow of resources as well as an immense outflow of resources), in phase 2, the
venture engaged in repeated experimentation to yield a more beneficial repertoire of
legitimation practices. As follows, it was only in phase 3, after the venture had
accumulated extensive cultural knowledge during 4 years in the market, that the new
venture could engage in symbolic legitimation which finally yielded the favorable
outcomes (i.e. resource inflow but little resource outflow) that may help secure long
term new venture survival and persistence. Table 5-1 provides definitions of the
normative legitimation practices observed in this study.

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 Table 5-1: Normative New Venture Legitimation Practices

Legitimation Definitions References

practices
Substantive Acquiring legitimacy by compromising own interests cf. Ashforth & Gibbs
legitimation and scarce resource endowments (1990)
– caused “resource dissipation” and may ultimately
lead to failure of new venture (cf. Bruederl &
Schuessler, 1990)
- conforming Obeying in full to resource-holders legitimacy criteria cf. Zimmerman & Zeitz
(2002)
- coopting Including a resource-holder into the venture’s policy cf. Selznick (1948)
making structure and sharing potential future returns
Symbolic Acquiring legitimacy in a targeted audience without cf. Ashforth & Gibbs
Legitimation compromising own interests and scarce resource (1990)
endowments
– may ultimately lead to survival of new venture
(cf. Meyer & Rowan, 1977)
- selecting Targeting resource-holders in positions and regions cf. Zimmerman & Zeitz
with favorable legitimacy criteria (2002)
- decoupling Ceremonially signaling compliance to resource- cf. Meyer & Rowan
holders’ legitimacy criteria while pursuing divergent (1977)
interests

- manipulating Influencing resource-holders’ legitimacy criteria in an cf. Zimmerman & Zeitz

unobtrusive way (2002)
- tailoring Highlighting legitimate aspects of the new venture cf. Elsbach & Kramer
while hiding illegitimate aspects thus creating a (1996)
socially desirable identity for the new venture

5.3.2. Research Focus 2: How Normative New Venture Legitimation

Strategies are formed

CHAPTER 4 derives a second fine-grained process perspective on normative new

venture legitimation. Addressing THEORETICAL GAP 2, the chapter theorizes the
“back-stage” of impression management (cf. Goffman, 1959). The chapter thus
addresses RESEARCH QUESTION 2: How managers create a legitimating narrative at
the back-stage of their new venture? While we know that legitimating narratives –
written documents or oral accounts deployed by actors to explain the nature and
potential of their organization in a coherent and ordered manner (cf. Elsbach, 2006;
Martens et al., 2007) – are a decisive tool in the arsenal of managers’ impression

153
management strategies for gaining legitimacy for their new venture “front-stage” (i.e.
when facing targeted resource-holders), this question is aimed to theorize the
underexplored terrain of how managers create these legitimating narratives, that are
so important for their venture’s fates, “back-stage” (i.e. temporally and spatially
remote from resource-holders) (cf. Goffman, 1959).

As impression management perspectives per se do not enable to theorize how

legitimation narratives are created back-stage, we built process-theory deductively
thus drawing on perspectives on analogies from cognitive linguistics (c.f. Cornelissen
& Clarke, 2010) as an adequate complement in order to fill this void. We argued that
(1) legitimating narratives will be based on a set of analogies – associations of the
new venture with ‘audience-specific identity categories’ (i.e. identity categories
perceived as familiar and valuable to the target audience by new venture managers) –
and (2) that the creation of a legitimating narrative involves for new venture
managers the (a) incremental, (b) systematic and (c) goal-directed process of
creating, extending, and integrating these analogies. Drawing from the literature on
analogies, we thus infer that managers incrementally create legitimating narratives
according to two central targets: the ‘systematic’ target (cf. Gentner, 1983) to create a
comprehensive and coherent narrative and the ‘pragmatic’ target (Holyoak & Thagard,
1989) to create a normatively appropriate narrative. On this basis we theorized that
the incremental process of creating a legitimating narrative may involve 3 descriptive,
sequential back-stage sub-processes:

(1) Narrative conceptualization involves (a) creating an array of initial associations

between the new venture and audience-specific identity categories (systematic) as
well as (b) hiding of those associations that make the identity appear socially
undesirable (pragmatic). Subsequently, (2) narrative extension involves (a) extending
the remaining associations into ‘narrative segments’ that explain each identity-
category in more detail (systematic) while (b) hiding socially undesirable attributes
and relationships of these narrative segments (pragmatic). Finally, (3) narrative

154
integration involves the (a) causal integration of these narrative segments (systematic)
and (b) the reduction of ensuing contradictions (pragmatic). The result of these 3
descriptive back-stage-processes will be a legitimating narrative that managers deem
to represent the identity of their new venture in a coherent and normatively
appropriate way and that they may subsequently mobilize to strategically legitimate
their new venture when facing a targeted resource-holder on the front-stage of
impression management.

5.4. CONTRIBUTIONS OF DISSERTATION

This dissertation offers a number of important contributions to the literature on the

role of legitimacy for new ventures. In this regard, the chapters 3 and 4 complement
the existing literature on new venture legitimation in general and on normative new
venture legitimation in particular in that both chapters spell out the processes and
practices of how legitimation strategies that may be so crucial for resource
acquisition (cf. Lounsbury & Glynn, 2001; Navis & Glynn, 2011; Martens et al., 2007;
Zott & Huy, 2007) and new venture survival (cf. Khaire, 2010; Zimmerman & Zeitz,
2002) come to be, that is, how they emerge and how they are formed. Moreover,
when taken together, chapters 3 and 4 hold promise to create a more detailed
conceptualization of antecedents, processes and outcomes of normative new venture
legitimation (see Figure 5-1). As depicted in the conceptual model, our dissertation
establishes an argumentative chain from the cultural knowledge of a new venture,
which may affect the formation and execution of its normative legitimation strategies,
which may in turn affect new venture outcomes. In the following, we work through
the depicted model, to elaborate on those 3 aspects that demarcate the dissertation’s
core contributions.

155
 Figure 5-1: Antecedents, Processes and Outcomes of Normative New Venture Legitimation

Contribution 3 Contribution 2 Contribution 1

Formulation of
Cultural Normative
Normative Outcomes
Knowledge Legitimation
Legitimation Strategies
- Content Knowledge - Coherence
- Symbolic Legitimation - Resources
- Audience Knowledge - Comprehensiveness
- Substantive Legitimation - Survival
- Ritual Knowledge - Social Desirability

156
5.4.1. Contribution 1: How Normative Legitimation Affects New
Venture Outcomes

First, a dominant theme across the disciplines of organization theory and strategy,
entrepreneurship, and sociology is that acquiring legitimacy in general and normative
legitimacy among key resource-holders in particular is beneficial for new ventures in
that (normative) legitimacy may facilitate resource acquisition (e.g. Lounsbury &
Glynn, 2001; Navis & Glynn, 2011; Zott & Huy, 2007) and – by overcoming the new
venture’s “liability of newness” in this way – thus also new venture survival
(Stinchcombe, 1965; cf. Aldrich & Fiol, 1994; Singh et al., 1986; Zimmerman & Zeitz,
2002).

What we add to this debate through our exploration of THEORETICAL GAP 1 (cf.
Chapter 3), is that it may not only be important to observe whether and how new
ventures acquire normative legitimacy. Rather, it may be even more important to
explore the conditions under which new ventures acquire normative legitimacy. In this
regard, we drew on the distinction between symbolic legitimation and substantive
legitimation (cf. Ashforth & Gibbs, 1990) to complement the predominant focus of
prior research on new ventures’ symbolic actions (e.g. Lounsbury & Glynn, 2001; Navis
& Glynn, 2011; Zott & Huy, 2007). On this basis, we could argue that only symbolic
legitimation practices – when employed repeatedly and across resource acquisition
processes – may promote new venture survival due to their effect in enabling the
inflow of resources while preventing the outflow of resources. On the other hand, the
continued use of substantive legitimation practices may even promote new venture

failure rather than survival in that they enable the inflow but also the outflow of
resources. Following a famous historical example, we referred to such substantive
legitimation practices as pyrrhic victories for new ventures when the victory of
acquiring legitimacy and resources leads to such devastating resource outflows that –
in the words of Pyrrhus – “one more such victory will utterly undo us”.

157
Distinguishing symbolic legitimation from substantive legitimation may then refine a
central theme in the literature on new venture survival: On the one hand, substantive
legitimation practices may enable a new venture to overcome its “liability of newness”
(Stinchcombe, 1965) due to the acquisition of initial resources in the market the
venture entered. On the other hand, however, substantive legitimation may also lead
a new venture to its “liability of adolescence” due to the “dissipation” of its scarcely
available resources (Bruederl & Schuessler, 1990). As follows, only the sustained use
of symbolic legitimation practices will enable a new venture to overcome both
liabilities which will be necessary to secure its survival and persistence. The
differentiation between symbolic and substantive legitimation practices and the
counter-intuitive insight that certain legitimation practices may promote failure rather
than survival will thus offer an important contribution to a dominant theme in the
literature.

5.4.2. Contribution 2: How Normative New Venture Legitimation

Strategies are formulated

Second, through our exploration of THEORETICAL GAP 2 (cf. Chapter 4), we have also
theorized how normative new venture legitimation strategies will be formulated, that
is, prepared and developed. Drawing on the arsenal of impression management
theory, we have thus elaborated on the “back-stage” processes (cf. Goffman, 1959),
through which legitimation strategies take shape remote from resource-holders’ view
and prior to their actual deployment. In this way, we draw scholarly attention to the
critical importance of the back-stage in largely influencing subsequent audience-

facing “front-stage” processes and outcomes. In this regard, our dissertation valuably
complements existing research on new venture legitimation in general and
impression management in particular which has predominantly focused on the
deployment of legitimation strategies (e.g. Aldrich & Fiol., 2011; Clarke, 2011; Zott &
Huy, 2007) rather than on their creation.

158
We drew from the literature on analogies to infer that managers of new ventures
incrementally create ‘legitimating narratives’ (cf. Elsbach, 2006) – a specific form and
modality of a legitimation strategy – at the back-stage of their new venture according
to two central targets: the so-called ‘systematic’ target (cf. Gentner, 1983) according
to which managers will aim to create comprehensive and coherent legitimation
strategies and the ‘pragmatic’ target (Holyoak & Thagard, 1989) according to which
managers of new ventures will aim to create normatively appropriate legitimation
strategies. On this basis, we can infer that the strength of these two targets will
largely determine both the formulation process of legitimation strategies as well as
the resulting content and outcome.

In particular, we contribute to the literature on new venture legitimation ‘narrative

conceptualization’, ‘narrative extension’, and ‘narrative integration’ as 3 sequential
processes of how legitimating narratives get made (e.g. Lounsbury & Glynn, 2001;
Martens et al., 2007; Navis & Glynn, 2011; cf. Benford & Snow, 2000). Drawing from
the literature on analogies, we thus offer a perspective that enables to track how
broad individual identity categories will be gradually extended and integrated into a
fully developed normative legitimation strategy. Such a theory of back-stage
processes thus valuably complements existing impression management perspectives
which have either focused on broad individual identity categorizations (e.g. Elsbach &
Kramer, 1996) or on fully fledged narrative accounts as determining actors’
impression management strategies (Elsbach, 1994) rather than focusing – as we did –
on how the former will be ‘extended’ and ‘integrated’ to evolve into the latter.

5.4.3. Contribution 3: How Cultural Knowledge Affects Normative New

Venture Legitimation

Finally, we have uncovered the preeminent role of cultural knowledge for both the
formulation and execution of normative new venture legitimation strategies (cf.
Chapter 3). Involving the knowledge of a new venture about the norms and values in
the cultural environment of its targeted resource-holders (cf. Molinsky, 2007), we

159
have empirically derived a typology of 3 different types of cultural knowledge: First,
content knowledge, as a new venture’s knowledge about the ideational contents that
structure the collective rationality of resource-holders in a targeted cultural
environment. Second, audience knowledge, as a new venture’s knowledge about how
different groups of resource-holders, depending on their position within a targeted
cultural environment, draw differently on these cultural contents. And finally, ritual
knowledge, as a new venture’s knowledge about the practices that resource-holders
within a targeted cultural environment employ to coordinate their actions and
achieve their ends.

As specific type of “domain knowledge”, cultural knowledge may be critical for a new
venture’s “strategic capacity” (cf. Ganz, 2000). In specific, cultural knowledge may be
necessary for a new venture in order to skillfully “extract” normative legitimacy from
its cultural environment in a strategic – that is, a “purposive, calculated, and
controlled” – way (cf. Suchman, 1995). By shaping a new venture’s pragmatic target to
appear normatively appropriate to resource-holders (cf. Research Focus 2 and
Contribution 2), cultural knowledge will be a critical cultural resource for developing
and skillfully mobilizing legitimation strategies that yield such favorable outcomes as
resource acquisition (Lounsbury & Glynn, 2001; Navis & Glynn, 2011; Zott & Huy,
2007), growth (Khaire, 2010; Zimmerman & Zeitz, 2002), and survival (Singh et al.,
1986; Stinchcombe, 1965).

Specifically, we have uncovered cultural knowledge as antecedent condition for

symbolic legitimation and its opposite – lack of cultural knowledge – as antecedent
condition for substantive legitimation (Ashforth & Gibbs, 1990; Suchman, 1995): We
have thus shown that without cultural knowledge, organizations will be unable to
respond strategically to the legitimacy criteria of their resource-holders (cf. Oliver,
1991) and will thus have to resort to substantive legitimation practices – that is, full
conformance to resource-holders’ legitimacy criteria (cf. Ashforth & Gibbs, 1990) – in
order to acquire desperately needed resources.

160
Highlighting the central role of cultural knowledge for symbolic legitimation, our
study uncovers that those studies that have depicted new ventures as skillful
symbolic actors (e.g. Lounsbury & Glynn, 2001; Zott & Huy, 2007) may have
envisioned or studied contexts with demands that rank low in terms of how new
ventures would experience their complexity and distance to previous experiences (cf.
Molinsky, 2007). Only in such cases would it be comprehensible to ascribe to new
ventures a potential to skillfully mobilize evocative symbols and to engage in
symbolic legitimation in general and at the time of foundation and market entry in
particular.

But if the system of norms and values in the cultural environment that a new venture
has targeted is highly complex and if the founders and managers of the venture were
not able to gain in-depth experience in this cultural domain prior to new venture
creation and market entry – as was the case in our empirical study in chapter 3 – new
ventures may rather have to first mobilize substance and to repeatedly engage in
experimentation in order to generate a repertoire of more beneficial legitimation
practices that may eventually enable them to grow profitably, survive, and persist.

161
162
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CURRICULUM VITAE

DATE AND PLACE OF BIRTH

30 October, 1981 in Salzburg, Austria

EDUCATION

2008-2012 Doctoral Studies (Ph.D. in Management), University of St. Gallen (HSG),

St. Gallen/Switzerland

2002-2008 Diploma studies in Social and Economic Sciences (Mag. rer. soc. oec.),
University of Innsbruck, Innsbruck/Austria

2005-2006 Exchange studies, Trinity College Dublin, Dublin/Ireland

2005 Exchange studies, National Chengchi University, Taipei/Taiwan

2001 School leaving examination (Matura), Handelsakademie I,

Salzburg/Austria

PROFESSIONAL EXPERIENCE

2008- Research Associate, Prof. Claus Jacobs, Ph.D., Institute of Management

(IFB), University of St. Gallen (HSG), St. Gallen/Switzerland

2007-2008 Teaching Assistant, Prof. Dr. Dr. h.c. Ekkehard Kappler, Institute of
Organization and Learning (IOL), University of Innsbruck,
Innsbruck/Austria

2007 Internship, Roland Berger Strategy Consultants, Munich/Germany and

Prague/Czech Republic

2006 Internship, BMW Group, Munich/Germany

2005 Internship, Acer Computers, Taipei/Taiwan

2004 Internship, DPD Logistics, Salzburg/Austria

2003 Internship, University Hospital Salzburg, Austria

182