The Legitimacy Threshold Revisited: How Prior Successes and Failures Spill Over to Other Endeavors on Kickstarter

The Complexities of New Venture Legitimacy

“…Within the context of evolving market categories, two interrelated levels of legitimation are important: the legitimation of the market at the category level and of the venture at the organizational level. These two aspects of legitimation may at times be so interrelated that they become almost analytically indistinguishable due to recursive effects between actions at each level (Soublière & Gehman, 2019). At the market category level, legitimation is shaped by the interplay between actors internal to the category (e.g., entrepreneurial ventures that engage in strategic and symbolic actions) and actors external to the category (e.g., interested audiences who judge its feasibility, credibility, and appropriateness).…”

“…Overall, there is consensus that market category evolution has some impact on new venture legitimation, yet the extent to which an entrepreneur or a venture has agency over and control within such evolution is still being debated. The true nature of that evolution may be more complex than previously conceptualized; it is questionable whether a market category is ever really settled (see Soublière & Gehman, 2019). Yet the broader impact of market category evolution is thought to work as follows: in the early phases of category development, entrepreneurial ventures may work together to legitimate the new market space through a distributed effort.…”

Collective Action Problems and Resource Allocation During Market Formation

“…However, if these feedback loops operate in a vicious direction, then resource allocations remain low or dwindle to the point that the market fails to form. This means that resources must surpass a collective action threshold (Zimmerman andZeitz 2002, Soublière andGehman 2019) for the market to form (illustrated in Figure 1, right panel). In other words, the collective action threshold is the level of resources above which actors perceive it beneficial to continue to allocate additional resources and that sustains the ongoing functioning of the market.…”

“…Market-related characteristics influence collective action problems. Extant literature (Marwell and Oliver 1993, Gurses and Ozcan 2015, Lee et al 2018, Soublière and Gehman 2019 suggests that returns to contributions, degree of collective benefits, and degree of resource substitutability influence value creation, and they may be particularly important in shaping collective action in new markets (Figure 1, market-related characteristics).…”

“…However, given the uncertainties that actors face during early market formation, these mitigating actions may be premature because value creation possibilities are often still ambiguous and therefore, less knowable. As a result, spillovers may be especially prevalent during early market formation (Lee et al 2018, Soublière andGehman 2019). We refer to these spillovers from actors' efforts as the degree of collective benefits in a market.…”