New Ventures Versus Established Firms: Legitimizing Innovations in a Novel Market

Abstract

We study how new ventures and established firms legitimize their innovations for external audiences. While the existing literature has focused on distinguishing between the legitimacy consequences of familiarity and distinctiveness framing, and how this may also depend on the audience, what has been overlooked, however, is the actor who is framing. We therefore lack understanding on how differences between actors framing an innovation affect its legitimization. By following 6 new ventures and 9 established firms in a novel market, we find that the activities of new ventures and established firms to legitimize their innovation differed. For new ventures, gaining attention and acquiring legitimacy was particularly important, for which a distinctiveness frame was mostly effective. Established firms instead were confronted with audiences’ existing expectations about them and had to ensure that their new product aligned with these expectations in order to extend legitimacy for the new product as well. For extending legitimacy, only familiarity framing was effective. Our main contribution is that the consequences of framing do not only depend on the framing strategy or the audience that is being addressed, but also on the actor framing the innovation.