Understanding how legitimacy is acquired among informal home-based Pakistani small businesses

  • Monica LentEmail author
  • Alistair Anderson
  • Mohammad Sohail Yunis
  • Hina Hashim


The informal business sector has been garnering attention from governments and researchers. In countries where this sector plays a significant role in business activity and employment, policymakers are eager to have entrepreneurs enter or transition to the formal economy. However, with research in its infancy, there is little basis for developing effective policy. In Pakistan, there is a preponderance of informal enterprises, many of which are home-based and invisible. A key challenge for entrepreneurs in this context is gaining stakeholder legitimacy to acquire the resources they need. With the aim of ascertaining and better understanding legitimacy, this qualitative study draws upon the two dominant theoretical perspectives -institutional and strategic - to conceptually guide an exploration of the legitimation process among a cohort of Pakistani informal home-based businesses. Using the institutional lens, the primary influences on action were found to be coercive and mimetic isomorphic mechanisms. For example, the entrepreneurs stressed how essential it was to their customers that societal norms be adhered to when doing business (coercive mechanism). A surprising discovery was that the entrepreneurs deemed action countering prevailing business practice to be the best response to uncertainty (coined anti-mimetic isomorphism). Using the strategic lens, two main strategies were identified – following cultural norms such as those regarding appropriate behavior for women (conforming); and attempting to create new audiences and legitimating beliefs through business activities that advanced women’s rights (manipulating). The interactive influence of pressures from the environment and entrepreneurial action is considered, along with implications for theory and policy.


Legitimacy Informal home-based businesses Institutional and strategic perspectives Isomorphism 



  1. Adler, P. S., & Kwon, S. W. (2002). Social capital: Prospects for a new concept. Academy of Management Review, 27(1), 17–40.Google Scholar
  2. Aldrich, H. (1999). Organizations evolving. London: Sage.Google Scholar
  3. Anderson, A.R. & Jack, S.L. (2015). An introduction to the constant comparative technique, in The Handbook of Qualitative Research Techniques and Analysis in Entrepreneurship, Leitch, C. and Neergaard, H. (eds), pp. 15–20. Edward Elgar, CheltenhamGoogle Scholar
  4. Anderson, A. & Russell, E. (2009). Small business in economic adversity; impact, affect and responses, Paper presented at ISBE conference, Liverpool, June.Google Scholar
  5. Anderson, A. R., Osseichuk, E., & Illingworth, L. (2010). Rural small businesses in turbulent times; impacts of the economic downturn. The International Journal of Entrepreneurship and Innovation, 11(1), 45–56.Google Scholar
  6. Anderson, A. R., Harbi, S. E., & Brahmen, M. (2013). Enacting entrepreneurship in ‘informal’ businesses. International Journal of Entrepreneurship and Innovation, 14(3), 137–149.Google Scholar
  7. Bensemann, J., Warren, L., & Anderson, A. R. (2018). Entrepreneurial engagement in a depleted small town; legitimacy and embeddedness. Journal of Management & Organization, 1–17 early cite.Google Scholar
  8. Casson, M., & Giusta, M. D. (2007). Entrepreneurship and social capital: Analysing the impact of social networks on entrepreneurial activity from a rational action perspective. International Small Business Journal, 25(3), 220–244.Google Scholar
  9. Chell, E. (2000). Towards researching the opportunistic entrepreneur: A social constructionist approach and research agenda. European Journal of Work and Organizational Psychology, 9(1), 63–80.Google Scholar
  10. Chemin, M. (2010). Entrepreneurship in Pakistan: Government policy on SMEs, environment for entrepreneurship, internationalisation of entrepreneurs and SMEs. International Journal of Business and Globalisation, 5(3), 238–247.Google Scholar
  11. Daniel, E. M., Domenico, M. D., & Sharma, S. (2015). Effectuation and home-based online business entrepreneurs. International Small Business Journal, 33(8), 799–823.Google Scholar
  12. De Clercq, D., & Voronov, M. (2009). Toward a practice perspective of entrepreneurship: Entrepreneurial legitimacy as habitus. International Small Business Journal, 27(4), 395–419.Google Scholar
  13. DiMaggio, P., & Powell, W. W. (1983). The iron cage revisited: Collective rationality and institutional isomorphism in organizational fields. American Sociological Review, 48(2), 147–160.Google Scholar
  14. Diochon, M., & Anderson, A. R. (2009). Social enterprise and effectiveness: A process typology. Social Enterprise Journal, 5(1), 7–29.Google Scholar
  15. Diochon, M., & Anderson, A. R. (2011). Ambivalence and ambiguity in social enterprise; narratives about values in reconciling purpose and practices. International Entrepreneurship and Management Journal, 7(1), 93–109.Google Scholar
  16. Eisenhardt, K. M. (1989). Building theories from case study research. Academy of Management Review, 14(4), 532–550.Google Scholar
  17. Elsbach, K. D. (1994). Managing organizational legitimacy in the California cattle industry: The construction and effectiveness of verbal accounts. Administrative Science Quarterly, 39(1), 57–88.Google Scholar
  18. Fisher, G., Kotha, S., & Lahiri, A. (2016). Changing with the times: An integrated view of identity, legitimacy and new venture life cycles. Academy of Management Review, 41(3), 1–27.Google Scholar
  19. Gartner, W. B., Bird, B. J., & Stan, J. A. (1992). Acting as if: Differentiating entrepreneurial from organizational behavior. Entrepreneurship Theory and Practice, 16(3), 13–31.Google Scholar
  20. International Labour Organization. (2012). Statistical update on employment in the informal economy. Geneva: International Labour Organisation.Google Scholar
  21. International Labour Organization. (2013). The informal economy and decent work: A policy resource guide supporting transitions to formality. Geneva: International Labour Organization.Google Scholar
  22. Kalden, J. N., Cunningham, J., & Anderson, A. R. (2018). The social status of entrepreneurs; contrasting German perspectives. The International Journal of Entrepreneurship and Innovation, 18(2), 91–104.Google Scholar
  23. Kuratko, D. F., Fisher, G., Bloodgood, J. M., & Hornsby, J. S. (2017). The paradox of new venture legitimation within an entrepreneurial ecosystem. Small Business Economics, 49(1), 119–140.Google Scholar
  24. Lincoln, Y. S., & Guba, E. G. (1985). Naturalistic inquiry (Vol. 75). Sage.Google Scholar
  25. Mason, C. M., Carter, S., & Tagg, S. (2011). Invisible businesses: The characteristics of home-based businesses in the United Kingdom. Regional Studies, 45(5), 625–639.Google Scholar
  26. McKeever, E., Anderson, A. & Jack, S. (2014). Social embeddedness in entrepreneurship research: The importance of context and community. Handbook of research on small business and entrepreneurship, 222.Google Scholar
  27. Meyer, J. W., & Rowan, B. (1977). Institutionalized organizations: Formal structure as myth and ceremony. American Journal of Sociology, 83(2), 340–363.Google Scholar
  28. Mizruchi, M. S., & Fein, L. C. (1999). The social construction of organizational knowledge: A study of the uses of coercive, mimetic, and normative isomorphism. Administrative Science Quarterly, 44(4), 653–683.Google Scholar
  29. Nagy, B. G., Pollack, J. M., Rutherford, M. W., & Lohrke, F. T. (2012). The influence of entrepreneurs’ credentials and impression management behaviors on perceptions of new venture legitimacy. Entrepreneurship Theory and Practice, 36(5), 941–965.Google Scholar
  30. Navis, C., & Glynn, M. A. (2010). How new market categories emerge: Temporal dynamics of legitimacy, identity, and entrepreneurship in satellite radio, 1990–2005. Administrative Science Quarterly, 55(3), 439–471.Google Scholar
  31. Navis, C., & Glynn, M. A. (2011). Legitimate distinctiveness and the entrepreneurial identity: Influence on investor judgments of new venture plausibility. Academy of Management Review, 36(3), 479–499.Google Scholar
  32. Oliver, C. (1991). Strategic responses to institutional processes. The Academy of Management Review, 16(1), 145–179.Google Scholar
  33. Pakistan Bureau of Statistics (2011). Labour force survey of Pakistan, Pakistan Bureau of Statistics, Government of Pakistan.Google Scholar
  34. Pfeffer, J. (1981). Management as symbolic action: The creation and maintenance of organizational paradigms. In L. L. Cummings & B. M. Staw (Eds.), Research in organizational behaviour (Vol. 13, pp. 1–52). Greenwich: JAI Press.Google Scholar
  35. Qureshi, M.S. & Mian, S. A. (2012) Global Entrepreneurship Monitor, Pakistan Report 2012. file:///C:/Users/mlent/Downloads/1420041780GEM_Pakistan_2012_Report.pdf. Accessed 14 Aug 2018.Google Scholar
  36. Request for Proposals (RFP) For the Development of Revised SME Policy for Pakistan, RFP # SMEARFP-2018-003, Prime Contract Number: AID-391-C-17-00003 Accessed 14 Aug 2018.
  37. Smith, D. A., & Lohrke, F. T. (2008). Entrepreneurial network development: Trusting in the process. Journal of Business Research, 61(4), 315–322.Google Scholar
  38. Stringfellow, L., Shaw, E., & Maclean, M. (2014). Apostasy versus legitimacy: Relational dynamics and routes to resource acquisition in entrepreneurial ventures. International Small Business Journal, 32(5), 571–592.Google Scholar
  39. Suchman, M. C. (1995). Managing legitimacy: Strategic and institutional approaches. Academy of Management Review, 20(3), 571–610.Google Scholar
  40. Thompson, P., Jones-Evans, D., & Kwong, C. (2009). Women and home-based entrepreneurship: Evidence from the United Kingdom. International Small Business Journal, 27(2), 227–239.Google Scholar
  41. Tornikoski, E. T., & Newbert, S. L. (2007). Exploring the determinants of organizational emergence: A legitimacy perspective. Journal of Business Venturing, 22(2), 311–335.Google Scholar
  42. Vorley, T., & Rodgers, P. (2014). Home is where the business is: Incidents in everyday life and the formation of home-based businesses. International Small Business Journal, 32(4), 428–448.Google Scholar
  43. Williams, C. C., Shahid, M. S., & Martínez, A. (2016). Determinants of the level of informality of informal micro-enterprises: Some evidence from the city of Lahore, Pakistan. World Development, 84, 312–325.Google Scholar
  44. Yunis, M., Hashim, H., & Anderson, A. R. (2019). Enablers and constraints of female entrepreneurship on Khyber Pukhrunkawa, Pakistan; institutional and feminist perspectives. Sustainability, 11(1), 27–43.Google Scholar
  45. Zimmerman, M. A., & Zeitz, G. J. (2002). Beyond survival: Achieving new venture growth by building legitimacy. The Academy of Management Review, 27(3), 414–431.Google Scholar
  46. Zott, C., & Huy, Q. N. (2007). How entrepreneurs use symbolic management to acquire resources. Administrative Science Quarterly, 52(1), 70–105.Google Scholar

Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2019

Authors and Affiliations

  1. 1.Schwartz School of BusinessSt. Francis Xavier UniversityAntigonishCanada
  2. 2.Lancaster University Management SchoolLancasterUK
  3. 3.Institute of Management Sciences (IMSciences)PeshawarPakistan
  4. 4.Department of EconomicsSwedish University of Agricultural SciencesUppsalaSweden

Personalised recommendations