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The effect of perceived legitimacy on new venture growth in Japan: a moderated mediation approach

Norifumi Kawai (Faculty of Economics, Sophia University, Tokyo, Japan)
Mirela Xheneti (University of Sussex Business School, Brighton, UK)
Tomoyo Kazumi (School of Commerce, Senshu University, Tokyo, Japan)

Journal of Small Business and Enterprise Development

ISSN: 1462-6004

Article publication date: 21 April 2020

Issue publication date: 9 June 2020

465

Abstract

Purpose

This article seeks to theorize and empirically examine the conditional mechanisms through which entrepreneurial legitimacy determines the success or failure of new ventures by building upon Zimmerman and Zeitz's (2002) causal process model of legitimacy.

Design/methodology/approach

We gathered cross-sectional data from 266 Japanese new venture owners running their businesses across a variety of sectors and empirically examined whether, how and when legitimacy positively affects new ventures' performance by employing the SPSS PROCESS macro for moderated mediation analysis.

Findings

The results indicate that rich access to a pool of valuable resources fully mediates the positive effects of legitimacy on new venture growth. Furthermore, this study offers robust empirical evidence that prior entrepreneurial experience and competitive intensity as the internal and external contingency factors significantly moderate the indirect effect of legitimacy on new venture growth through resource accessibility.

Research limitations/implications

Although our analysis provides clear support for the view that important resources for new venture performance are gained through legitimacy, it does not offer precise clarifications for the type and sources of legitimacy and for the strategies that could be deployed to achieve legitimacy. Future studies should clearly distinguish tangible assets (e.g. financial resources) from intangible assets (e.g. tacit knowledge, networks and reputation) in terms of resource accessibility. Therefore, it should be worth scrutinizing the multiple dimensions of resources as potential mediators of the legitimacy-new venture growth relationship in greater depth.

Practical implications

From a policy perspective, this study suggests that a special emphasis needs to be placed on designing and carrying out policies aimed at increasing the visibility and credibility of entrepreneurship as a positive career path since public acceptance of entrepreneurship is essential to new venture growth. Furthermore, it is logical to conclude that achieving greater legitimacy is a pivotal strategic tool not only to overcome resource barriers but also to maximize a probability of survival, specifically for those entrepreneurs without prior experience and those operating in a fiercely competitive market environment.

Originality/value

Unlike previous studies that have mostly presented the direct effect of entrepreneurial legitimacy on venture outcomes (Capelleras et al., 2019; Kibler and Kautonen, 2016; Pindado and Sánchez, 2017), our research empirically identified the potential complexities inherent in this relationship by performing a conditional indirect effect analysis.

Keywords

Acknowledgements

This study was financially supported by a Grant-in-Aid for Scientific Research (C) (No. 19K01810) from the Japan Society for the Promotion of Science (JSPS).

Citation

Kawai, N., Xheneti, M. and Kazumi, T. (2020), "The effect of perceived legitimacy on new venture growth in Japan: a moderated mediation approach", Journal of Small Business and Enterprise Development, Vol. 27 No. 3, pp. 427-447. https://doi.org/10.1108/JSBED-07-2019-0242

Publisher

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Emerald Publishing Limited

Copyright © 2020, Emerald Publishing Limited

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