Skip to main content
SpringerLink
Log in
Book cover

Entrepreneurship pp 105–127Cite as

Fools Rush in? The Institutional Context of Industry Creation*

  • Chapter

Abstract

Now organizations are always vulnerable to the liabilities of newness, but such pressures are especially severe when an industry is in its formative years. We focus on one set of constraints facing entrepreneurs in emerging industries-their relative lack of cognitive and sociopolitical legitimacy. We examine the strategies that founders can pursue, suggesting how their successful pursuit of legitimacy may evolve from innovative ventures to broader contexts, collectively reshaping industry and institutional environments.

Keywords

These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

*Originally published in Academy of Management Review, 1994, 19(4): 645–670. Reprinted by permission of Academy of Management Review via the Copyright Clearance Center.

This is a preview of subscription content, log in via an institution.

Chapter
USD   29.95
Price excludes VAT (Canada)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD   84.99
Price excludes VAT (Canada)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD   109.99
Price excludes VAT (Canada)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD   109.99
Price excludes VAT (Canada)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Learn about institutional subscriptions

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  • Aldrich, H. E. 1979. Organizations and environments. Englewood Cliffs, NJ: Prentice Hall.

    Google Scholar 

  • Aldrich, H. E. 1989. New paradigms for old: The population perspective’s contribution to health services research. Medical Care Review. 44: 257–277.

    CrossRef  Google Scholar 

  • Aldrich, H. E. 1992. Methods in our madness? Trends in entrepreneurship research. In D. L. Sexton and J. D. Kasarda (Eds.), The state of the art of entrepreneurship: Boston: PWS-Kent. 191–213.

    Google Scholar 

  • Aldrich, H. E., and Staber, U. H. 1988. Organizing business interests: Patterns of trade association foundings, transformations, and deaths. In G. R. Carroll (Ed.), Ecological models of organization: 111–126. Cambridge, MA: Ballinger.

    Google Scholar 

  • Anderson, P., and Tushman, M. 1990. Technological discontinuities and dominant designs: A cyclical model of technological change. Administrative Science Quarterly. 35:604–633.

    CrossRef  Google Scholar 

  • Andrews, E. L. 1992. House votes to put stricter rules on “900” pay-call phone services. New York Times, February 25: 1.

    Google Scholar 

  • Astley, W. G. 1985. The two ecologies: Population and community perspectives on organizational evolution. Administrative Science Quarterly, 30: 245–273.

    Google Scholar 

  • Barney, J. B. 1986. Types of competition and the theory of strategy: Toward an integrative framework. Academy of Management Review 11:791–800.

    CrossRef  Google Scholar 

  • Bateson, P. 1988. The biological evolution of cooperation and trust. In D. Gambetta (Ed.), Trust: Making and breaking cooperative relations: 14–30. New York: Blackwell.

    Google Scholar 

  • Bolton, M. K. 1993. Organizational innovation and substandard performance: When is necessity the mother of innovation? Organization Science, 4: 57–75.

    CrossRef  Google Scholar 

  • Brophy, D. 1992. Financing the new venture: A report on recent research, In D. L. Sexton and J. D. Kasarda (Eds.), The state of the art of entrepreneurship: Boston: PWS-ent. 387–401.

    Google Scholar 

  • Carroll, G. R., Preisendoerfer, P., Swaminathan, A., and Wiedenmayer, G. 1989. Brewery and Brauerei: The comparative organizational ecology of American and German brewing industries. Working paper OBIR-34, Center for Research in Management, University of California, Berkeley.

    Google Scholar 

  • Coleman, J. S. 1957. Community conflict. New York: Free Press.

    Google Scholar 

  • Dasgupta, P. 1988. Trust as a commodity. In D. Gambetta (Ed.), Trust: Making and breaking cooperative relations: 49–72. New York: Blackwell.

    Google Scholar 

  • Dees, J. G., and Starr, J. A. 1992. Entrepreneurship through an ethical lens: Dilemmas and issues for research and practice. In D. L. Sexton and J. D. Kasarda (Eds.), The state of the art of entrepreneurship: 89–116. Boston: PWS-Kent.

    Google Scholar 

  • Delacroix, J., and Carroll, G. R. 1983. Organizational foundings: An ecological study of the newspaper industries of Argentina and Ireland. Administrative Science Quarterly 28(2): 274–291.

    CrossRef  Google Scholar 

  • Delacroix, J., and Rao, M. V. H. 1993. Externalities and ecological theory: Unbundling density dependence. In J. V. Singh and J. Baum (Eds.), Evolutionary dynamics of organizations: 255–268. Oxford, England: Oxford University Press.

    Google Scholar 

  • Delacroix, J., Swaminathan, A., and Solt, M. 1989. Density dependence versus population dynamics: An ecological study of failings in the California wine industry. American Sociological Review, 54: 245–262.

    CrossRef  Google Scholar 

  • DiMaggio, P. J., and Powell, W. W. 1983. The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields. American Sociological Review, 48: 147–160.

    CrossRef  Google Scholar 

  • Dosi, G. 1988. Sources, procedures, and microeconomic effects of innovation. Journal of Economic Literature. 26: 1120–1171.

    Google Scholar 

  • Elsbach, K. D., and Sutton, R. I. 1992. Acquiring organizational legitimacy through illegitimate actions: A marriage of institutional and impression management theories. Academy of Management Journal, 35: 699–738.

    CrossRef  Google Scholar 

  • Fiol, C. M. 1991. Managing culture as a competitive resource: An identity-based view of sustainable competitive advantage. Journal of Management, 17: 191–211.

    CrossRef  Google Scholar 

  • Fiol, C. M., Harris, D., and House, R. 1992. Charismatic leadership. Working paper, College of Business, University of Colorado at Denver.

    Google Scholar 

  • Fisher, L. M. 1992. Biotechnology industry rejoices with caution. New York Times, February 26: C2.

    Google Scholar 

  • Fisher, W. R. 1985. The narrative paradigm: An elaboration. Communication Monographs 52: 347–367.

    CrossRef  Google Scholar 

  • Fransman, M. 1990. The market and beyond: Cooperation and competition in information technology development In the Japanese system. Cambridge, England: Cambridge University Press.

    CrossRef  Google Scholar 

  • Gambetta, D. 1988. Can we trust? In D. Gambetta (Ed.), Trust: Making and breaking cooperative relations: 213–238. New York: Blackwell.

    Google Scholar 

  • Gartner, W. B., and Low, L. 1990. Trust as an organizing trope. Paper presented at the annual meeting of the Academy of Management, San Francisco.

    Google Scholar 

  • Halliday, T., Powell, M. J., and Granfors, M. W. 1987. Minimalist organizations: Vital events in state bar associations, 1870–1930. American Sociological Review. 52(4): 456–471.

    CrossRef  Google Scholar 

  • Hannan, M. T. 1986. Competitive and institutional processes in organizational ecology. (Tech. Rep. 86–13). Ithaca, NY: Cornell University, Department of Sociology.

    Google Scholar 

  • Hannan, M. T., and Carroll, G. R. 1992. Dynamics of organizational populations. Density, legitimation. and competition. New York: Oxford University Press.

    Google Scholar 

  • Hannan, M. T., and Freeman, J. H. 1986. Where do organizational forms come from? Sociological Forum. 1: 50–72.

    CrossRef  Google Scholar 

  • Hannan, M. T., and Freeman, J. H. 1989. Organizational ecology. Cambridge, MA: Harvard University Press.

    Google Scholar 

  • Haveman, H. 1990. Firm size, slack, and rates of change: The savings and loan industry after deregulation. Durham, NC: Duke University, Fuqua School of Business. Unpublished paper

    Google Scholar 

  • Hawthorn, G. 1988. Three ironies in trust. In D. Gambetta (Ed.), Trust. Making and breaking cooperative relations: 111–126. New York: Blackwell.

    Google Scholar 

  • Hilts, P. J. 1992. Bush to ease rules on products made by altering genes, New York Times, February 25: A1, B7.

    Google Scholar 

  • Howell, J. M., and Higgins, C. A. 1990. Champions of technological innovation. Administrative Science Quarterly, 35: 317–341.

    CrossRef  Google Scholar 

  • Kaplan, T. J. 1986. The narrative structure of policy analysis. Journal of Policy Analysis and Management, 5: 761–778.

    CrossRef  Google Scholar 

  • Klepper, S., and Graddy, E. 1990. The evolution of new industries and the determinants of market structure. RAND Journal of Economics, 21: 27–44.

    CrossRef  Google Scholar 

  • Krieger, M. H. 1981. Advice and planning. Philadelphia: Temple University Press.

    Google Scholar 

  • Jovanovic, B. 1982. Selection and the evolution of industry. Econometrica. 50: 649–670.

    CrossRef  Google Scholar 

  • Levine, A. G. 1982. Love canal: Science, politics, and people. Lexington, MA: Lexington Books.

    Google Scholar 

  • Link, A. N., and Bauer, L. L. 1989. Cooperative research in U.S. manufacturing: Assessing policy initiatives and corporate strategies. Lexington, MA: Lexington Books.

    Google Scholar 

  • Link, B. G. 1987. Understanding labeling effects in the area of mental disorders: An assessment of the effects of expectations of rejection. American Sociological Review. 52: 96112.

    CrossRef  Google Scholar 

  • Meyer, I., and Rowan, B. 1977. Institutionalized organizations: Formal structure as myth and ceremony. American Journal of Sociology, 83: 340–363.

    CrossRef  Google Scholar 

  • Moe, T. N. 1980. The organization of interests. Chicago: University of Chicago Press.

    Google Scholar 

  • Nagel, E. 1961. The structure of science: Problems in the logic of scientific explanation. London: Routledge and Kegan Paul.

    Google Scholar 

  • Naj, A. K. 1991. Defending the turf: Medical-gear makers take harsh measures to keep service jobs. Wall Street Journal, October 8: 1, 6.

    Google Scholar 

  • Nelson, R., and Winter, S. 1982. An evolutionary theory of economic change. Cambridge, MA: Belknap Press.

    Google Scholar 

  • Olson, M., Jr. 1965. The logic of collective action. Cambridge, MA: Harvard University Press.

    Google Scholar 

  • Phillips, A. 1960. A theory of interfirm organization. Quarterly journal of Economics, 74: 602–613.

    CrossRef  Google Scholar 

  • Powell, W. W. 1990. Neither market nor hierarchy: Network forms of organization. In L. L. Cummings and B. M. Staw (Eds.), Research in organizational behavior. 295–336. Greenwich, CT: JAI Press. Vol.12:

    Google Scholar 

  • Prentiss, S. 1984. Introducing cellular communications: The new mobile telephone system. Blue Ridge Summit, PA: Tab Books.

    Google Scholar 

  • Rao, H. 1993. Certification mechanisms and trust: Reliability competitions in the American automobile industry. 1895–1912. Unpublished paper, Emory University Business School, Atlanta, GA.

    Google Scholar 

  • Ranger-Moore, J., Banaszak-Holl, J., and Hannan, M. T. 1991. Density-dependent dynamics in regulated industries: Founding rates of banks and life insurance companies. Administrative Science Quarterly, 36: 36–65.

    CrossRef  Google Scholar 

  • Rappa, M. 1987. The structure of technological revolution: An empirical study of the development of 111-V compound semiconductor technology. Unpublished dissertation, University of Minnesota, Carlson School of Management, Minneapolis.

    Google Scholar 

  • Reed, R., and DeFillippi, R. J. 1990. Causal ambiguity, barriers to imitation, and sustainable competitive advantage. Academy of Management Review. 15: 88–102.

    CrossRef  Google Scholar 

  • Regur, N. M. 1992. Japan loses faith in American branch campuses but its students still flock to universities in U.S. Chronicle of Higher Education, September 16: A43–44.

    Google Scholar 

  • Romanelli, E. 1989. Organization birth and population variety: A community perspective on origins. In B. M. Staw and L. L. Cummings (Eds.), Research in organizational behavior, vol. 11: 211–246. Greenwich, CT: JAI Press.

    Google Scholar 

  • Scott, W. R., and Meyer, J. 1983. The organization of societal sectors. In J. Meyer and W. R. Scott (Eds.). Organizational environments: Ritual and rationality: 129–154. Beverly Hills. CA: Sage.

    Google Scholar 

  • Shan, W., Singh. J., and Amburgey, T. L. 1991. Modeling the creation of new biotechnology firms, 1973–1987. In J. L. Wall and L. R. Jauch (Eds.). Academy of Management Best Papers Proceedings: 78–82.

    Google Scholar 

  • Staber, U. H. 1989. Organizational foundings in the cooperative sector in Atlantic Canada: An ecological perspective. Organization Studies, 10: 383–405.

    CrossRef  Google Scholar 

  • Staber, U. H., and Aldrich, H. E. 1993. Trade association stability and public policy. In R. Hall and R. Quinn (Eds.), Organization theory and public policy: 163–178. Beverly Hills, CA: Sage.

    Google Scholar 

  • Stinchcombe, A. 1965. Social structure and organizations. In J. G. March (Ed.), Handbook of organizations: 142–193. Chicago: Rand McNally.

    Google Scholar 

  • Teece, D. 1987. Profiting from technological innovation: Implications for integration, collaboration, licensing, and public policy. In D. Teece (Ed.), The competitive challenge: 185–219. Cambridge, MA: Ballinger.

    Google Scholar 

  • Torres, D. L. 1988. Professionalism, variation, and organizational survival. American Sociological Review, 53: 380–394.

    CrossRef  Google Scholar 

  • Tversky, A., and Kahneman, D. 1981. The framing of decisions and the psychology of choice, Science, 211: 453–458.

    CrossRef  Google Scholar 

  • Van de Ven, A. H. 1991. A systems framework for studying the process of entrepreneurship. Paper presented at a conference on Theories of Entrepreneurship, University of Illinois, Champaign-Urbana.

    Google Scholar 

  • Van de Ven, A. H., and Garud, R. 1991. Innovation and industry development. The case of cochlear implants. Unpublished paper, University of Minnesota, Strategic Management Research Center, Minneapolis.

    Google Scholar 

  • Webster’s New Collegiate Dictionary. 1981. Springfield, MA: G. and C. Merriam Company.

    Google Scholar 

  • Wholey, D. R., Christianson, J. B., and Sanchez, S. M. 1990. The diffusion of health maintenance organizations: Density, competitive. and institutional determinants of entry. Unpublished paper, University of Arizona, Department of Management and Policy, Tucson.

    Google Scholar 

  • Winter, S. 1984. Schumpeterian competition in alternative technological regimes. Journal of Economic Behavior and Organization 5: 287–320.

    CrossRef  Google Scholar 

  • Zelizer, V. A. 1978. Human values and the market: The case of life insurance and death in I 9th-century America. American Journal of Sociology, 84: 591–610.

    CrossRef  Google Scholar 

  • Zucker, L. G. 1986. Production of trust: Institutional sources of economics structures, 1840–1920. In B. M. Staw and L. L. Cummings (Eds.), Research in organizational behavior, vol. 8: 53–122. Greenwich, CT: JAI Press.

    Google Scholar 

  • Zucker, L. G. 1989. Combining institutional theory and population ecology: No legitimacy, no history. American Sociological Review, 54: 542–545.

    CrossRef  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. University of North Carolina, North Carolina, USA

    Howard E. Aldrich

  2. University of Colorado at Denver, Denver, USA

    C. Marlene Fiol

Authors
  1. Howard E. Aldrich
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. C. Marlene Fiol
    View author publications

    You can also search for this author in PubMed Google Scholar

Editor information

Editors and Affiliations

  1. Department of Business Economics, University Complutense of Madrid, Campus de Somosaguas, 28233, Madrid, Spain

    Álvaro Cuervo

  2. Department of Economics, University of Valencia, Av. de los Naranj os s/n, 46022, Valencia, Spain

    Domingo Ribeiro  & Salvador Roig  & 

Rights and permissions

Reprints and permissions

Copyright information

© 2007 Springer-Verlag Berlin Heidelberg

About this chapter

Cite this chapter

Aldrich, H.E., Fiol, C.M. (2007). Fools Rush in? The Institutional Context of Industry Creation* . In: Cuervo, Á., Ribeiro, D., Roig, S. (eds) Entrepreneurship. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-540-48543-8_5

Download citation

Publish with us

Policies and ethics

search

Navigation