Gaining Legitimacy by Being Different: Optimal Distinctiveness in Crowdfunding Platforms

Karl Taeuscher, Ricarda Bouncken, Robin Pesch

Research output: Contribution to journalArticlepeer-review

152 Citations (Scopus)
65 Downloads (Pure)

Abstract

How do new ventures gain legitimacy and attract critical resources? An increasing body of cultural entrepreneurship research has highlighted an “optimal distinctiveness” trade-off: new ventures need to be distinctive from their peers to stand out, yet distinctiveness counteracts the attainment of organizational legitimacy. In this paper, we challenge the underlying assumption that distinctiveness necessarily counteracts the attainment of legitimacy and propose that distinctiveness can become a source of legitimacy. This proposition matters because it fundamentally alters the relationship between distinctiveness and resource acquisition from certain audiences. We build on these theoretical arguments to examine new ventures’ resource acquisition from crowdfunders, one of the most important audiences for new ventures. Analysis of 28,425 crowdfunding campaigns across 39 market categories strongly supports our arguments, showing that higher levels of distinctiveness lead to superior crowdfunding performance. We further demonstrate that the legitimating effect of distinctiveness intensifies under the absence of alternative sources of legitimacy. Our study contributes by uncovering a new mechanism and three contingencies for the “optimal distinctiveness” trade-off.
Original languageEnglish
Pages (from-to)149-179
JournalAcademy of Management Journal
Volume64
Issue number1
Early online date18 Feb 2021
DOIs
Publication statusPublished - Feb 2021
Externally publishedYes

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