New venture legitimacy diffusion beyond the local entrepreneurial ecosystem: the transformative role of brokerage and network activities

Abstract

PurposeNew ventures often encounter legitimation challenges due to their liability of newness and foreignness. This particularly applies to the legitimacy beyond the local entrepreneurial ecosystem (EE). The present study examines how new ventures’ local legitimacy influences legitimacy diffusion beyond the local EEs. It considers both the direct relationship between new venture local legitimacy and its diffusion beyond the EE and the moderating effects of legitimacy brokerage and network activities on this relationship.Design/methodology/approachA hierarchical multiple linear regression is employed to test a series of hypotheses using the data of 228 Finnish firms which was collected with an online survey.FindingsFirms that garner active local legitimacy have a greater chance to diffuse that legitimacy beyond an existing ecosystem. Results also reveal that network activities and legitimacy brokerage enhance (positively moderate) the association between (passive and active) local legitimacy and its diffusion.Originality/valueThe present study contributes to and extends the literature at the intersection of new venture legitimacy and legitimacy diffusion beyond the existing EE – an aspect which has not been sufficiently studied.