Abstract

New ventures often suffer from liabilities of newness. To overcome these liabilities and help establish legitimacy new ventures are encouraged to conform to institutional pressures (Deephouse, 1996). Failure to adapt to these norms will lead to poor performance (Zimmerman & Zeitz, 2002). At the same time, new ventures are also encouraged to stand out from the crowd and offer differentiated products/services (Zhao et al., 2013), which allows them to achieve satisfactory performance (Wiklund, Patzelt & Shepherd, 2009). Combined, new ventures are asked to face a double-edged sword: be different enough to be noticed but not different enough to challenge norms. We argue that both conforming institutional pressures (i.e., coercive, normative and mimetic pressures) and pursuing for differentiation strategy (i.e., product and price) collectively have positive on new venture performance. Thus, collectively examining the impacts of two different behaviors provides a novel view in the context of entrepreneurial firms.

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