The downside of legitimacy building for a new firm in a nascent industry
By: Tiona Zuzul, Amy C. Edmondson
Contributors: Edmondson, Amy C.; Harvard Business School
Edition: Revised edition
Series: Working paper / Harvard Business School -- 11-099; Working paper (Harvard Business School) -- 11-099
Publisher: Harvard Business School
Published: 2013
Place of publication: Boston]
Language: eng
Number of pages: 46
Work titles: Ambiguity squared
Description: This paper explores how entrepreneurs' efforts to legitimate a firm and a nascent industry at the same time affect the internal development of the firm. We analyze qualitative data from a three-year study of a new firm in the nascent smart cities industry, and find that firm leaders engaged in a set of legitimation activities intended to help external stakeholders understand and appreciate the firm and its industry. Our analysis uncovers three unintended cognitive consequences of legitimation activities for firm employees--constrained attention, overconfidence, and identity commitments--that affected the firm's ability to learn: that is, to attend to, reflect on, and dynamically respond to information and changes in its environment. Our longitudinal research thus reveals a downside of legitimacy building, contributes to the literature on behavioral strategy, and highlights unique challenges of starting a new firm in a nascent industry. Further, by identifying the mechanisms through which legitimation activities affect learning, we develop actionable propositions to help leaders and entrepreneurs manage the tension between the two sets of activities.
Notes: "March 2011. (Revised October 2013.)"--Publisher's Web site.

Revised edition of Ambiguity squared: growing a new business in a nascent industry.

Includes bibliographical references (pages 40-44).