An analysis of new venture performance: Linking product innovation and legitimation
This dissertation research examined how competitive and institutional factors jointly affect young firms’ performance. More specifically, the study investigated the relationships among new ventures’ different types of abilities to introduce new products, abilities to manage internal and external contexts, the characteristics of institutional environment, and firm performance. Although young firms’ abilities to carry out innovation and to secure organizational legitimacy have been recognized as important variables to explain entrepreneurial outcomes, their joint impacts have not been fully explored. Moreover, strategic and institutional perspectives have yielded conflicting arguments. While the former emphasizes the distinctiveness to obtain competitive advantage, the latter highlights the alignment with institutional environment to gain social acceptance. By synthesizing strategic and institutional perspectives, the model was developed and tested with a sample of 300 young companies in various manufacturing industries across the U.S. The findings support the study’s central propositions that a new venture’s product innovation capabilities and legitimation capabilities jointly affect new venture performance and that those effects are contingent upon the level of institutional pressure posed by external environments. The results further reveal that not all types of product innovation capabilities contribute equally to enhancing performance in the same manner. They are conditioned by legitimation capabilities and institutional pressure in different ways.
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