Mitra, Jay and Abubakar, Yazid Abdullahi (2007) Seeking legitimacy: new technology firm behaviour in nascent and established environments. In: 30th Institute for Small Business and Entreprenuership (ISBE) Conference: International Entrepreneurship; 7-9 Nov 2007, Glasgow, U.K. ISBN 9781900862035

Abstract

Objectives: This paper explores the capabilities and competencies of early stage owner-managers in the context of both their firms and the region in which these firms are located. Approach: The research is carried-out in the contexts of the geographic regions of Cambridge Silicon-Fen and Birmingham, and of similar or related firms in the information and communications technology (ICT) sector. Based on 4 case studies, we identify the nature of relationships that underpin the development of a new population of firms in specific contexts, and explore the range of competencies in the new ventures. Results: We find that the capabilities and competencies used by entrepreneurs and owner-managers in the early years of developing their businesses are closely tied to the resources available in their local regions. The ability to use resources external to the firm and to absorb and valorise them within the firm, is part of a social process (Low and Abrahamson, 1997) that enables new ventures to acquire legitimacy of the products, services they offer and the standing of the firms in the population. The growth of firms is favoured by the geographic location of entrepreneurs in similar or related firms, especially when they are responding to constraints on the emergence of new organisations (Scott, 2006, Aldrich and Baker, 2001). Our findings further suggest that firms exploiting “radical” technologies are more likely to depend on extensive networks and competencies for growth and acquisition of cognitive legitimacy in contrast to their counterparts (working with “routine” technologies to establish their new businesses) who tend to seek a balance between socio-political and cognitive legitimacy. Implications: This study carries numerous implications for entrepreneurs, as it provides insight into critical capabilities that new firm owner-managers need to acquire and develop to embed their firms in the region. Value: While several studies have examined the impact of local contexts on the growth of firms, we know very little about how the capabilities and competencies of owner managers are linked to resources in their local regions. Therefore, understanding how new firms with new products and services vary their routines, retain key competencies and learn to generate and select new ones in different contexts is critical to our understanding of the way small, new firms learn to grow in their regions.

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