Clay Dibrell, Oregon State University Aaron Johnson, Oregon State University

1. The Road to Legitimacy: A Study of Startups and Their Established Competitors in the Australian Wine Industry Clay Dibrell, Oregon State University Aaron Johnson, Oregon State University Peter Davis, The University of Memphis Ken Moores, Bond University Justin Craig, Bond University

2. Motivation • High rate of failure by new firms. • Liability of Newness (Suchman, 1995). • Possible role of legitimacy gaining strategies. • Changing stakeholder salience over time.

3. Research Question • What roles do external stakeholders (e.g., government) and internal stakeholders (e.g., human capital) play in enabling or constraining startups to attain and to maintain legitimacy? • To what extend does the salience of each stakeholder change prior to a startup gaining legitimacy and after a startup attains legitimacy?

4. Theory • Institutional Theory • Legitimacy as “a generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, and definitions” (Suchman, 1995). • Legitimacy enables the firm to conduct business more efficiently and effectively (Zimmerman & Zetiz, 2002).

5. Theory • Resource-Based View • Intangible assets (e.g., managerial human capital, managerial social capital, and managerial social cognition) (Barney, 1991; Penrose, 1959). • Intangible capabilities of coordination and adaptive practices can link to a firm competitive advantage (Dibrell & Craig, 2006).

6. Theory • Stakeholder Salience • Stakeholders are broadly defined as any constituency that has a stake in the company, including a broad range of stakeholders from groups, communities, organizations, or institutions (Mitchell, Agle, & Wood 1997). • Stakeholder salience is the “the degree to which managers give priority to competing stakeholder claims” ( Mitchell et al., 1997: 854)

7. Stakeholder Rankings Pre-Legitimacy • Family • Location • Winemaker • Cellar Room Sales • Staff • Financial Supporters • Awards for Wine Quality from Media and Professional Outlets

8. 4 Strategies to Attain Legitimacy • Conformance • Imitate other competitors • Selection • Locate your firm in a growth industry • Innovation • Create innovative new products or services • Creation • Create a new industry

9. Stakeholder Rankings Pre-Legitimacy • Wine Distribution through Restaurants • Wine Distributors • Suppliers (Growers, Wine Bottles) • Government • Neighboring Winemakers • Trade Shows • Retail Outlets • Professional Trade Associations

10. Implications • A paradox of which resources come first for a startup (e.g., winemaker or financial resources). • Startups rely to a greater extent on internal more so than external sources. • Both are used to gain legitimacy. • Salience of stakeholders by startups in attaining and maintaining legitimacy remains relatively stable over time.