When Safe Spaces Turn Violent: How Managers Secure and Defend New Business Unit Legitimacy

Abstract

New Business Units (NBUs) are commonly perceived as a legitimate innovation mechanism. While many corporations have introduced NBUs to help facilitate internal corporate venturing, NBUs often prematurely close long before ventures can demonstrate success. Moving beyond existing literature on NBUs, we study the internal dynamics of NBU legitimation work by managers inside a multinational conglomerate. At the large corporation, we find that mid-level managers played a critical role in attaining strategic and political legitimacy through molding and signaling as two legitimation building strategies. Following a legitimation crises, we find that mid-level managers sought to overcome strategic incongruence and political hostility through organizing a countermovement and functional disobedience as two defensive legitimation strategies. These findings uniquely shed light on legitimacy dynamics of NBUs and advance our understanding of how managers create NBUs and how they may respond when internal and external factors threaten the NBUs’ survival.