How can New Ventures Build Reputation? An Exploratory Study

Abstract

In this paper, we explore the processes and mechanisms of reputation-building by new ventures (NVs), using a grounded theory-building approach from case studies. Based on interviews with experienced entrepreneurs, supplemented by secondary data on their NVs, we identify several types of activities that may help NVs build their initial reputations. We find that NVs accumulate one of two types of reputation: generalized reputation with large groups of distant stakeholders or local reputation with a small group of local stakeholders. Our analyses suggest that using symbolic activities, as well as investments in human capital and social capital may help an NV accumulate generalized reputation, whereas investments in product quality together with building close relationships with customers may help an NV build local reputation. What type of reputation an NV would try to achieve and what activities it would emphasize appear to be related to the type of product that the NV offers.