A new organization often encounters the liability of newness that increases its chance of failing as a startup enterprise (Freeman, Carroll, and Hannan 1983). New organizations located in a foreign country also face the liability of foreignness (Zaheer and Mosakowski 1997), as cultural differences make new foreign ventures especially risky. Moreover, according to organizational theory, legitimacy is critical to an organization’s success or failure (Meyer and Rowan 1977; Singh, Tucker, and House 1986; Vanhonackers 2000; Bianchi and Ostale 2006; Diez-Martin, Prado-Roman, and Blanco-González 2013). By gaining legitimacy, organizations can obtain the resources they need to become sustainable. Similarly, a lack of legitimacy can lead an organization to lose (or never establish) its social support, thus increasing its chance of failure.
All Science Journal Classification (ASJC) codes
- Sociology and Political Science