Rethinking New Venture's Cognitive Legitimacy: An Experimental Study

Xueling Li, Chong Wang and Xiaobo Xu

Systems Research and Behavioral Science, 2014, vol. 31, issue 3, 437-446

Abstract: New ventures' legitimacy problems, including cognitive legitimacy, appear to stem from ‘legitimacy threshold’ and ‘the liability of newness’. Based on the legitimacy model proposed by Shepherd and Zacharakis, we extended their cognitive legitimacy from the customer's perspective in this paper. A theoretical framework is proposed to build cognitive legitimacy from new ventures' product, organization, and managers by differentiating customers' positive perception and negative perception. 100 samples were collected in an experimental study to analyze 900 decision values. The findings suggest that a company's cognitive legitimacy is related to both quantity of information and quality of information owned by customers. Specifically, customers' positive cognition will improve cognitive legitimacy, whereas the negative will decrease it. Therefore, cognitive legitimacy includes not only corporate recognition but also corporate reputation. Copyright © 2014 John Wiley & Sons, Ltd.

Date: 2014
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