Dissertation/Thesis Abstract

Knowledge and Legitimacy in Organizing New Ventures
by Stojnic, Miodrag, Ph.D., New York University, 2014, 170; 3614904
Abstract (Summary)

The goal of this dissertation is a better understanding of the factors that lead to a successful establishment of business ventures. Arguably the three most important factors, which I examine here, are the number of organizational milestones achieved, the cost of their development, and acceptance by others as a legitimate business. I use a survey based on a national random sample of individuals who are in the process of establishing a business.

The first chapter asks which organizational identities are most conducive to organizing. Is it the simple identities with their efficiency or the hybrid identities with their flexibility that increase the chances of accomplishing more organizational milestones? The results show that entrepreneurs who strongly commit to either of the two identities are more successful than those who leave their identity undefined. This suggests that organizational identities act more as guides for action rather than constraints.

The second chapter examines the effects of legitimacy pressures on writing a business plan. I consider two situations where we would expect a higher need for legitimating, asking friends and family for a loan and being a black entrepreneur. A business plan lends credence to the entrepreneur as being competent while it presents the business idea as a sound investment. By writing a business plan for friends and family entrepreneurs try to reduce the tension arising from the attempt to exchange a risky item within their own network. Both, black entrepreneurs and potential borrowers were more likely to write a business plan.

Finally, the last empirical chapter looks at racial difference in cost of business development. Black entrepreneurs face lower rates of intergenerational transmission of entrepreneurial knowledge as well as lower rates of financial literacy. Another reason that could lead to higher costs of development for black entrepreneurs is price discrimination. If that is the case then writing a business plan could narrow the black/white gap in costs. The results show that black entrepreneurs pay significantly more per organizing milestone. Writing a business plan leads to an important reduction in the difference in costs but the gap is still sizable.

Indexing (document details)
Advisor: Wu, Lawrence
Commitee: Arum, Richard, Royster, Deirdre
School: New York University
Department: Sociology
School Location: United States -- New York
Source: DAI-A 75/07(E), Dissertation Abstracts International
Source Type: DISSERTATION
Subjects: Business administration, Entrepreneurship, Ethnic studies, Organizational behavior
Keywords: Business plan, Funding, Human capital, Legitimacy, Race, Venture organizing
Publication Number: 3614904
ISBN: 978-1-303-80600-1
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