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A New Venture's Cognitive Legitimacy: An Assessment by Customers

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  • Dean A. Shepherd
  • Andrew Zacharakis

Abstract

Many legitimacy problems associated with new ventures appear to stem from a lack of customers’ knowledge and understanding of the new venture. Of particular concern to entrepreneurs is cognitive legitimacy. The findings of this article suggest that customers appear to have a preference for greater rather than lesser information about a new venture's product, organization, and management (holding the content of that information constant). Furthermore, customers appear to use a contingent decision policy. For an independent startup business that is perceived as new on all three dimensions, priority should be given to building customer knowledge in the product, followed by building customer knowledge in the organization. Less attention should be given to building the customer's knowledge in the management team, although such actions still will build cognitive legitimacy.

Suggested Citation

  • Dean A. Shepherd & Andrew Zacharakis, 2003. "A New Venture's Cognitive Legitimacy: An Assessment by Customers," Journal of Small Business Management, Taylor & Francis Journals, vol. 41(2), pages 148-167, April.
    • Handle: RePEc:taf:ujbmxx:v:41:y:2003:i:2:p:148-167
    DOI: 10.1111/1540-627X.00073
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    Cited by:

    1. Lukas Maier & Christian V. Baccarella & Jörn H. Block & Timm F. Wagner & Kai-Ingo Voigt, 2023. "The Legitimization Effect of Crowdfunding Success: A Consumer Perspective," Entrepreneurship Theory and Practice, , vol. 47(4), pages 1389-1420, July.
    2. Sonia S. Siraz & Björn Claes & Julio O. De Castro & Eero Vaara, 2023. "Theorizing the Grey Area between Legitimacy and Illegitimacy," Journal of Management Studies, Wiley Blackwell, vol. 60(4), pages 924-962, June.
    3. Espasandín-Bustelo, Francisco & Rufino-Rus, José Ignacio & Rodríguez-Serrano, M. Ángeles, 2023. "Innovation and performance in social economy enterprises: The mediating effect of legitimacy for customers," Journal of Business Research, Elsevier, vol. 158(C).
    4. Lindelöf, Peter & Hellberg, Roland, 2023. "Incubation - An evolutionary process," Technovation, Elsevier, vol. 124(C).
    5. Peprah, Augustine Awuah & Atarah, Bede Akorige & Kumodzie-Dussey, Makafui Kwame, 2024. "Nonmarket strategy and legitimacy in institutionally voided environments: The case of Jumia, an African e-commerce giant," International Business Review, Elsevier, vol. 33(2).

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