lesson 11

made with AI

What is legitimacy in entrepreneurship?

Definition: Legitimacy refers to how well a venture aligns with societal norms, values, and expectations.

Why it matters: Legitimate ventures gain access to resources, trust, and freedom to act.

Example: Edison mimicked the gaslight system to gain acceptance for electric lighting by invoking familiarity.

What is an organizational field?

Definition: A community of organizations sharing meaning systems and rules (Scott, 1994).

Impact: Entrepreneurs must navigate expectations shaped by norms, positions, and power dynamics.

Example: In finance, institutions follow strict norms; in AI, norms are still forming.

What are mature vs. nascent fields?

• Mature fields: Clear rules, boundaries, and institutionalization (e.g. healthcare).

• Nascent fields: Ambiguous rules, shifting norms (e.g. biotech, renewable energy).

Relevance: Entrepreneurs in nascent fields face greater uncertainty and legitimacy challenges.

What is the 'liability of newness'?

Definition: High failure rates among new ventures due to lack of experience, trust, and resources (Stinchcombe, 1965).

Example: Startups often fail within the first 5 years due to fragile stakeholder ties and untested models.

What is the 'liability of smallness'?

Definition: Smaller firms struggle with limited resources, attracting talent, and compliance (Aldrich & Auster, 1986).

Contrast: Different from newness—focus is on firm size rather than age.

What is the 'liability of adolescence'?

Definition: Failures occur after the initial "honeymoon" phase when performance expectations rise.

Example: A venture may survive early years but fail when growth doesn't meet market demands.

What are the two types of legitimacy constraints?

• Cognitive: Lack of awareness/understanding.

• Socio-political: Lack of stakeholder approval.

Example: Edison had to frame electric light as familiar and acceptable despite no prior existence of the product.

What is storytelling in entrepreneurship?What is storytelling in entrepreneurship?

Definition: The use of narratives to explain, legitimize, and build confidence in a new venture (Lounsbury & Glynn, 2001).

Requirements:

• Clear plot and structure

• Emotional resonance

• “Happy ending” to build trust

Example: Sirius Radio used analogy ("radio meets cable TV") to explain its novelty.

What is cultural entrepreneurship?

Definition: Entrepreneurs create meaning by framing ventures in culturally resonant ways.

Example: “Kodak moments” created a shared cultural frame to promote snapshot photography (Munir & Phillips, 2005).

What is the problem of 'legitimate distinctiveness'?

Paradox: Ventures must be different enough to stand out, yet similar enough to be trusted.

Solution: Use rhetorical strategies (e.g., analogy, generalization) to frame innovation within accepted categories.

How does imitation and collective action help new ventures?

Definition: Copying elements from peers to save resources and gain legitimacy.

Example: Fintech startups used shared UI design and terminology to create recognizable standards.

What is category creation?

Definition: Entrepreneurs and activists define and promote a new market category (Bajde et al., 2023).

Example: The “sharing economy” emerged through movements like Shareable and Collaborative Consumption.

What is institutional entrepreneurship?

Definition: Strategic efforts to build or change institutions.

Example: Kodak didn’t just sell cameras—it redefined photography through:

1. New user roles

2. New practices (“snapshots”)

3. Cultural meanings (“fun”)

What is 'robust design'?

Definition: Bridging old and new by connecting innovations to familiar elements.

Example: Edison’s electric light design mimicked gas infrastructure to gain social acceptance (Hargadon & Douglas, 2001).