Sustainable firms and legitimacy: Corporate venture capital as an effective endorsement

ABSTRACT

This empirical study investigates the legitimizing effects of the presence of different investor types supporting entrepreneurial ventures. These effects may differ for sustainable ventures that face greater liabilities of newness due to powerful incumbents and negative halo effects of prominent failures. Drawing on institutional theory, this study developed and tested a model of investor legitimization with data on 184 entrepreneurial ventures using negative binomial regression. Findings suggest that the legitimizing effects of investor types for sustainable ventures differ from those of other ventures. In particular, corporate venture capital seems to legitimize sustainable ventures in a manner unlike other venture types.

KEYWORDS:

• Sustainable entrepreneurship
• legitimacy
• cleantech
• greentech
• investment
• signaling
• venture quality
• institutional theory