Legitimacy-Based Entry Deterrence in Inter-Population Competition

Abstract

Integrating institutional theory with research on competitive entry deterrence strategies, I develop a theory of competitive social norm manipulations and explore the strategies that well-established organizational populations use to build legitimacy-based barriers to entry into their domain. The study shows that, through social norm manipulations, organizational populations can influence not only their own legitimacy but also the legitimacy of their competitors. I develop a typology of legitimacy manipulation strategies that established organizational populations use to prevent, eradicate or palliate the new entrants’ impact by: (1) changing the relative importance of legitimacy dimensions, (2) raising the legitimacy threshold and (3) altering perceptions of competitors’ performance. Successful legitimacy manipulations are shown to lead to institutional immunization of the incumbents against similar competitive challenges in the future.