Abstract

New ventures seeking to establish a presence in emerging industries face conflicting challenges. On the one hand, they need to legitimize themselves in accordance with industry standards to mitigate perceived adoption risk and enhance organizational legitimacy. On the other hand, they must display sufficient distinctiveness to differentiate themselves from the competition. Start-ups possess the initial knowledge endowments of their founders, but the founding team’s knowledge is often insufficient for new ventures to survive. Navigating the fine line between survival-driven conformity and value-capturing novelty in an emerging sector requires the ability to identify and leverage external resources through collaborations with suppliers, competitors, customers and complementors. Using novel data from the emerging micro-satellite industry, we develop and test a new bifurcated sorting mechanism in which start-ups employing legitimization strategies will be most successful aligning with competitors and complementors in an emerging industry, while start-ups pursing a differentiation strategy will produce superior performance by pursuing alliances with their customers and suppliers.

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