The road to legitimacy: a study of startups and their established competitors in the Australian wine industry

Clay Dibrell, Oregon State University
Aaron Johnson, Oregon State University
Peter Davis, The University of Memphis
Ken Moores, Bond University
Justin Craig, Bond University

Abstract

A barrier to startup success is the liability of newness. One strategy to overcome this obstacle is through gaining venture legitimacy. Legitimacy is defined as acceptance, suitability, and appeal of the startup as judged by external and internal stakeholders such as the marketplace, industry competitors, and employees. Through attainment of legitimacy, a startup now has increased opportunities to access resources required for survival and growth. Drawing from institutional theory, a startup should heed external institutional forces and adapt to isomorphic pressures to gain legitimacy in an industry. Alternatively, a resource-based view perspective suggests that internal coordination and marshaling of resources will lead a startup to not only survive, but to a competitive advantage. Hence, the following research questions are proposed: 1) What external strategies (e.g., mimetic behaviors) and internal strategies (e.g., innovation) can startups employ to gain legitimacy? and 2) What roles do external stakeholders (e.g., government) and internal stakeholders (e.g., human capital) play in enabling or constraining startups to obtain and to maintain legitimacy?