Experiments on Social Ventures’ Legitimacy: The Role of Digital Identity and Legitimation Strategies

Abstract

Social ventures are promising vehicles to address longstanding societal issues like poverty and long-term unemployment while at the same time generating money. Yet, such organizations encounter several challenges and a lack of credibility often causes stakeholders to doubt such businesses’ legitimacy. A promising avenue to become perceived as credible and legitimate is to provide stakeholders with information on the businesses’ identity, for example, via their online presence. Building on established theoretical concepts of founder and organizational identity, legitimate distinctiveness, and organizational credibility, we apply a vignette study and an online experiment (2 × 2 factorial design) to investigate how different forms of social ventures’ digital identities and legitimation-seeking behaviors affect stakeholder evaluations of credibility and legitimacy. Our results show that social businesses’ legitimacy highly depends on well-orchestrated identity components. Furthermore, the pursuit of credibility demands leaders of social ventures for a delicate balance between emphasizing their ability to act like conventional for-profit entrepreneurs (to be perceived as competent), while at the same time being forced to meet the company’s social objectives and to avoid mission drifts (to remain trustworthy). Finally, our study shows that social businesses are no homogeneous phenomenon and should thus be distinguished from another theoretically and empirically.