Entrepreneurship is in need of gaining legitimacy for attracting of resources and clients, which is complicated because of their liability of newness (Täuscher et al.
2020). For the question of entrepreneurs can achieve legitimacy we have to consider the fundamentals of institutional theory which broadly defines an institution a set of rules that govern behavior of actors (Selznick
1996). The multiple schools (Mahoney and Thelen
2010) cover institutional arrangements that range from legal-formal institutions (e.g. political or history institutional theory) to cognitive constructions and patterns (e. g. social constructive institutionalism). Especially sociological institutionalism concentrates on shared informal and tacit conventions that regulate behavior of humans (Schmidt
2008). Institutions require at least a partial shared understanding of individuals. Institutional organization theory explains why institutions emerge and spread occurring as similar institutions because influence each other and are influenced by similar or common external and internal influences (DiMaggio and Powell
1983). The development of similar institutions has many formal and informal sources, culminating in three core forms of institutional isomorphism: (1) coercive isomorphism out of political players and the problem of legitimacy, (2) normative isomorphism imitated by professionalization, (3) mimetic isomorphism resulting from customary and commonly shared reactions to uncertainty (DiMaggio and Powell
1983: 150).
Coercive isomorphism results from formal and informal pressures on others (DiMaggio and Powell
1983). When actors or organizations have limited access to resources or have to adhere to compliance rules they feel coercion directly or indirectly (Beckert
2010). Coercive isomorphism can pull actors towards existing models that become more common. It can inspire new models that then turn into increasingly common ones over time. Normative isomorphism explains to what the social context assumes appropriate or morally correct (Suchman
1995). Mimetic isomorphism focuses on uncertain situations and explains changes through the imitation of organizations that aim to achieve legitimacy (DiMaggio and Powell
1983). Hambrick et al.
2004 provide an overview about studies in different fields attributing importance of inter-organizational social networks for mimetic isomorphism. Mimetic pulls actors towards toward prevailing institutional models (Beckert
2010). Still, imitation and legitimation depend on its environment, especially on cultural identities and the on political and economic system (Beckert
2010).
Institutional theory and its different variants generally lay emphasis on the supremacy of existing models, scripts around institutions in channeling behavior, thus constraining change (Clemens and Cook
1999). Sociological institutionalists focus on exogenous change by importing other, typically cultural frames or the emergence of broader political, legal, and market fields (Fligstein
1996). Where is the border, what is exogenous and what is endogenous? Hambrick and Mason
1984 use cognitive processes of managers to explain imitation. Managers use cognitive simplification processes when the environment is uncertain, complex and dynamic (Rosa et al.
1999). Managers in their simplification processes develop cognitive groups in which they categorize similarities and specify actions for those in category or group. Managerial decisions then follow on ‘characteristics’ or ‘reference points’ for a specific strategic group (Fiegenbaum et al.
1996). Legitimization needs influences managerial decisions. Legitimacy can be defined as an actor’s perception or the assumption that actions will be “desirable, proper, or appropriate” concerning a socially constructed set of “norms, values, beliefs, and definitions” (Suchman
1995, p. 574). This develops a generalized perception about legitimacy often influenced by legitimacy providers which strongly interact in personal communication with others, use facts, and use or influence information sources (Barreto and Baden-Fuller
2006). Such actors influence the constitution of legitimacy-based groups against which other actors and firms are compared (Barreto and Baden-Fuller
2006). Legitimization forces might bring inefficient decisions following ‘normative rationality’, based on social justification less efficient then ‘economic rationality’ (Barreto and Baden-Fuller
2006. Barreto and Baden-Fuller
2006 assume that under high significant uncertainty and high legitimacy pressures, firms apply in mimetic behavior even to previously marked as inferior decisions. Among firms, symbolic organizational characteristics that are more deeply hidden in the firm (Hambrick et al.
2004). Further, especially discursive institutional theory explains change by ideas and discourse (Schmidt
2008). Researchers explained processes of symbolic ceremonial transformation of organizations, for example by changes from myths in the institutional environment that move beyond the calculus of costs and benefits being associated by the diffusion of rituals and of roles (Meyer and Rowan
1977).