The paper asks: How does the legitimacy conferred on entrepreneurial endeavors affect the legitimacy of subsequent ones? We extend the notion of a “legitimacy threshold” to develop and test a recursive model of legitimacy. Whereas extant research has focused on whether entrepreneurial endeavors garner sufficient support from key audiences to cross this threshold, we argue that the order of magnitude by which they succeed or fail is consequential for later entrants, too. Distinguishing “blockbuster” from “unsung” successes, and “path breaking” from “broken path” failures, we contend that recent successes and failures affect related subsequent endeavors in predictable, though sometimes counterintuitive ways. We test our hypotheses by examining 182,358 entrepreneurial endeavors pitched within 165 categories over a six-year period on Kickstarter, one of the most important crowdfunding platforms. We show that individual outcomes, taken collectively, generate legitimacy spillovers, either by encouraging audiences to repeatedly support other related endeavors or by discouraging them from doing so. Our research contributes to understanding the recursive nature of legitimacy, the competitive dynamics of entrepreneurial efforts, and crowdfunding platforms.
An article I co-authored with Ke Cao (a Ph.D. student at the University of Alberta) and Matthew Grimes (Indiana University), was published as the lead chapter of Volume 19 in the Advances in Entrepreneurship, Firm Emergence and Growth series. Edited by Andrew C. Corbett (Babson University) andJerome A. Katz (Saint Louis University), the theme of the volume is Hybrid Ventures.
Abstract: To fulfill their economic and social missions, it is imperative yet challenging for hybrid ventures to demonstrate legitimacy (fitting in) while simultaneously projecting distinctiveness (standing out). One important means for doing so is by adopting and promoting the recent B Corporation certification. Drawing on a comprehensive analysis of the emergence of this certification, we argue that when it comes to promoting their businesses, hybrid ventures should not adopt a one size fits all approach. Rather, their promotion strategies need to be adapted to their specific contexts. We theorize and develop a typology of certification promotion strategies for hybrid ventures based on the relative prevalence of other hybrid ventures in the same regions and industries. We conclude by articulating why the B Corporation movement is a rich and underexplored context for scholarship on hybrid ventures, and highlight several promising future research directions.
I was recently interviewed by Nikki Wiart for a story about “Sustainable Microbreweries.” Other interviewees include my University of Alberta colleague Matthew Grimes, and Neil Herbst, owner and founder of Alley Kat Brewing Company, Edmonton’s oldest microbrewery.
The segment covered a range of issues: the importance of distinctiveness and legitimacy, the liability of newness, and some of the policy considerations related to small and large businesses. Below is one quote from the interview:
A lot of small businesses [and] new startups face a similar set of challenges, which [are]: one, around distinctiveness. What is my point of difference? How do I compete in the marketplace? But then [two] also around legitimacy. So, how is it that my customers and other stakeholders are going to take me seriously and think that I am viable? … Whether you are a microbrewery or some other kind of business, those are the kinds of challenges you are facing.
The interview was broadcast on Terra Informa, a weekly environmental program produced by CJSR and syndicated to about 50 radio stations throughout Canada. The interview starts about 2 minutes into the program and runs about 10 minutes long.
In addition to Alley Kat Brewing Company (which was founded in 1994), two other microbreweries call the Edmonton area home: Amber’s Brewing Company (founded in 2007) and Yellowhead Brewery (founded in 2010). Of note, Yellowhead Brewery is located in the space formerly occupied by Maverick Brewing Company (which was founded in 2005 and went out of business in 2007). The Alberta Small Brewers Association counts 11 members throughout the province.