Clay Dibrell Associate Professor of Entrepreneurship and Strategy Start-Up Challenges and Solutions: Legitimacy Strategies for Burgeoning Companies Clay Dibrell Associate Professor of Entrepreneurship and Strategy

Research Questions How do start-up firms overcome liability of newness? How do start-up firms capitalize on being new? How do start-up firms gain legitimacy? Who are the key stakeholders enabling or preventing a firm to attain legitimacy? What role does family play in a firm gaining legitimacy?

Anecdotal Evidence Food Processor Exec You have to be at trade shows 3-5 years before people notice you. Former HP Exec in charge of working with start-up firms Most start-ups just do not understand what customers want. The product is often cool, but commercially unviable. If do get it, then they are often unable to meet demand. It is very frustrating to work with a start-up. Former Ralph Lauren Exec My experience has been that startups need to hang on until some fortunate event that takes them over the top.

Legitimacy defined “a social judgment of acceptance, appropriateness, and desirability, [enabling them]…to access other resources [including customers] needed to survive and grow” (Zimmerman and Zeitz, 2002)

Legitimacy – Food Business Recognized approval and acknowledgement by food processing industry suppliers, buyers, competitors, and regulatory agencies that a given firm is a business with staying power A viable partner and competitor within the fraternity of food processing entities

Theory Surrounding Legitimacy Institutional Theory Resource-Based View Strategies for gaining legitimacy Conformance – be like everyone else Selection – locate a start-up in a growing area Manipulation – innovation of new products Creation – creating a new industry

Theory Surrounding Legitimacy Different forms of legitimacy Regulative, normative, cognitive, industry Different levels of legitimacy Regional, company, individual Resources for the start-up Incremental accumulation of human, financial, intellectual, other resources

LEGITIMACY PROCESS MODEL (Zimmerman and Zeitz, 2002) Firm Strategies Firm Legitimacy Firm Resources Survival Growth