We seek to address the question of how entrepreneurial firms can leverage online social networking communities to establish legitimacy. We propose that one measure of a firm's legitimacy is the size of its online community, and we hypothesize about the specific ways that the use of online symbolic actions can facilitate growth in a firm's online social community, and therefore, its legitimacy.
We test the impact of four categories of online symbolic actions on online social community growth. We find that online symbolic actions that i) show product and industry knowledge, a component of actions reflecting credibility, are positively associated with online social community growth, ii) show firm accomplishments, a component of actions reflecting organizational achievements, are also positively associated with online social community growth, and iii) seek opinions have a negative impact on online social community growth.The failure rate for new businesses is staggering. A full quarter of new ventures don't make it past the first year, 44% of ventures fail by the end of the third year, and 55% of ventures fail by the end of the fifth year from founding (Shane 2008). Institutional theorists associate legitimacy, that is, the acceptance of an organization's actions as proper or appropriate (Suchman 1995), with new venture success and survival Rowan, 1977, DiMaggio andPowell 1983). Stinchcombe (1965) suggests that legitimacy helps new ventures, particularly new forms of Working paper. Please do no not redistribute or cite without author's permission. 2 organization, overcome the liability of newness. Aldrich and Fiol (1990) refer to new venture legitimacy as "especially critical". Legitimacy is viewed as a resource that can be used to acquire other resources, to gain unrestricted access to markets (Brown, 1994), to thwart questions about an organization's competence, and to raise the status of an organization in its community (Oliver 1991). Meyer and Rowan (1977) note that organizations that lack legitimacy "are more vulnerable to claims that they are negligent, irrational or unnecessary."Managers can purposely seek legitimacy through specific actions (Suchman 1995) and previous literature has provided insights into some of these actions. Suchman (1995) suggests the use of symbolic actions and public discussion as approaches to enhance legitimacy. Zimmerman and Zietz (2002) theorize that new ventures can gain legitimacy by adherence to socio-political regulations, norms and widely held beliefs within a venture's domain. Lounsbury and Glynn (2001) propose that new ventures can increase their legitimacy through the use of stories that reflect the firm's stock of entrepreneurial capital, which includes patents, credentials, endorsements, prior performance, and social connections. Further, the features of social networking sites lead us to four arguments about why such sites are potentially effective channels for establishing new venture legitimacy.Firstly, social networking sites allow a firm to communicate with i...