Legitimation through Optimal Distinctiveness: Evidence from Emerging Technology-based Start-ups

Abstract

How can emerging technology-based start-ups attain legitimacy from external stakeholders? This question is critical as emerging technology-based start-ups face dual liabilities of newness arising from both a short history and the radical novelty of emerging technologies themselves. Drawing on optimal distinctiveness perspective, we propose that emerging technology-based start-ups can obtain legitimacy through optimal business proximity to their counterparts. We further construct a multi-level contingency framework at venture (i.e. venture age), third-party (i.e. media attention), and country (i.e. information and communication technology (ICT) development) levels. With a sample of 3670 blockchain start-ups, we discover an inverted U-shaped influence of business proximity on legitimacy attainment of emerging technology-based start-ups. We also reveal that venture age, media attention and country-level ICT development will attenuate the inverted U-shaped relationship. Overall, this study contributes to the literature on legitimation of emerging technology-based start-ups by extending optimal distinctiveness perspective.