TY - GEN A1 - Mochkabadi, Kazem A1 - Kleinert, Simon A1 - Urbig, Diemo A1 - Volkmann, Christine T1 - Innovativeness and Legitimacy in Equity Crowdfunding T2 - Academy of Management Proceedings N2 - In this study, we examine the link between new venture innovativeness and legitimacy. While legitimacy research often assumes that all new ventures suffer in the same way from the liability of newness, entrepreneurial ventures may differ substantially in their degree of innovativeness, introducing either highly new or relying on established technologies. We argue that radically innovative new ventures face severe liability of newness and therefore are less successful when raising early stage equity financing. Further, we argue that this negative effect should turn positive if the new ventures are able to showcase legitimacy. An observational and a complementary experimental study support our arguments. Surprisingly, for non-innovative or incremental innovative ventures establishing legitimacy seems to provide little gains. KW - New ventures KW - legitimacy KW - innovation KW - crowdfunding Y1 - 2020 UR - https://journals.aom.org/doi/pdf/10.5465/AMBPP.2020.49 U6 - https://doi.org/10.5465/AMBPP.2020.49 N1 - best paper proceedings, that is, a 6 pages version of the study VL - 2020 IS - 1 SP - 1 EP - 6 ER - TY - GEN A1 - Mochkabadi, Kazem A1 - Kleinert, Simon A1 - Urbig, Diemo A1 - Volkmann, Christine T1 - From distinctiveness to optimal distinctiveness: External endorsements, innovativeness and new venture funding T2 - Journal of Business Venturing N2 - We examine how external endorsements help new ventures with varying degrees of innovativeness to attract funding. According to optimal distinctiveness theory, new ventures should be as different from competitors as legitimately possible. However, initial research suggests that new ventures can also buffer their legitimacy through external endorsements. We clarify that effects of such legitimacy buffers depend critically on an audience's unique legitimacy-distinctiveness relationship. Specifically, external endorsements lead to different predictions about shifts in optimal distinctiveness for return-seeking audiences compared to novelty-seeking audiences as relevant new venture funders. For return-seeking audiences, new ventures are perceived as less legitimate when they are non-innovative or radically innovative so that incrementally innovative new ventures are most attractive without endorsements. External endorsements can thus buffer the legitimacy of non-innovative and radically innovative new ventures, but they lead to different performance implications for a return-seeking audience. While non-innovative new ventures increase their attractiveness, only radically innovative new ventures can become optimally distinctive and outperform other distinctiveness configurations. In contrast, novelty-seeking audiences already have a higher tolerance for radically innovative new ventures, so the effects of external endorsements are less pronounced. Four empirical studies, using observational data and experiments in equity and reward-based crowdfunding, provide strong support for this theory and account for alternative explanations such as risk perceptions. In turn, we shed new light on the crucial, audience-specific function of external endorsements, namely, as a means to alter optimal distinctiveness levels. KW - Entreprenuership KW - Crowdfunding KW - Legitimacy KW - Optimal distinctiveness KW - innnovation KW - radical innovation Y1 - 2024 U6 - https://doi.org/10.1016/j.jbusvent.2023.106340 SN - 0883-9026 VL - 39 IS - 1 ER - TY - GEN A1 - Urbig, Diemo A1 - Mochkabadi, Kazem T1 - Legitimizing non-innovative and radically innovative products and services on crowdfunding platforms T2 - 46th EBES Conference, Rome, Italy, January 10-12, 2024 : Program and Abstract Book N2 - Whether reward crowdfunding backers perceive a product or service as legitimate depends on many factors, including its innovativeness. However, studies offer conflicting results on how different levels of innovativeness influence perceived legitimacy. Some report that less innovative and only incrementally innovative products and services suffer from legitimacy challenges. Other research indicates that incrementally innovative products or services might be the most legitimate cases, at least as long as they are not receiving additional endorsements. Endorsements, such as strategic alliance partners, professional investors, or media coverage, may change whether or not lower levels of innovativeness threaten legitimacy in the eyes of the crowd. Using a vignette study approach with a sample of people experienced with crowdfunding investments, this study tests, first, how innovativeness affects legitimacy and, second, how external endorsements influence what level of innovativeness is most legitimate. The analyses reveal that without additional external endorsements, incrementally innovative products and services are most legitimate, while radically innovative ones just slightly outperform non-innovative ones. Results also reveal that threats to legitimacy posed by non-innovativeness and radical innovativeness can be buffered. However, not all three external endorsements display the same effects. Media coverage seems to help everyone, but it helps those who are already legitimate the most. The slightly negative effect of additional legitimacy through alliances and investors for incrementally innovative products is surprising but might be explained by redundant legitimacy. KW - Entrepreneurship KW - Crowdfunding KW - Legitimacy KW - Endorsements Y1 - 2024 SN - 978-605-71739-6-6 SP - S. 94 PB - EBES Publications ER - TY - GEN A1 - Mochkabadi, Kazem A1 - Kleinert, Simon A1 - Urbig, Diemo A1 - Volkmann, Christine T1 - Innovativeness and legitimacy in equity crowdfunding T2 - G-Forum conference 2020 - Virtual Edition, 24th Annual Interdisciplinary Conference on Entrepreneurship, Innovation and SMEs N2 - We examine how radical innovativeness affects how new ventures can establish legitimacy. While legitimacy research often assumes that new ventures similarly suffer from the liability of newness, radically innovative new ventures face stronger liabilities and are less successful when raising early-stage equity financing. Consequently, they may benefit more from identity-related, associative, and organizational legitimacy-building mechanisms, which mitigate the adverse effect and may turn radical innovativeness into an asset. Campaign-level observations for technology ventures and complementary individual-level experimental analyses of financial resource providers’ legitimacy assessments suggest that legitimation mechanisms are less effective for less radically innovative ventures and might even be counter-productive. KW - new venture KW - legitimacy KW - innovation KW - crowdfunding Y1 - 2020 UR - https://www.fgf-ev.de/wp-content/uploads/2020/10/G-Forum-2020-Virtual-Edition-Programm.pdf VL - 24 SP - 2 ER - TY - GEN A1 - Mochkabadi, Kazem A1 - Kleinert, Simon A1 - Urbig, Diemo A1 - Volkmann, Christine T1 - Turning extreme distinctiveness into an asset? How radically innovative ventures can achieve optimal distinctiveness in early-stage funding contexts T2 - Frontiers of entrepreneurship research 2022: Proceedings of the forty-second annual Babson College Entrepreneurship Research Conference N2 - This study relies on optimal distinctiveness theory to investigate how radically innovative ventures might attract funding. Conforming with existing norms can help new ventures gain legitimacy from resource providers, yet radically innovative ventures instead feature extreme distinctiveness. The results of three complementary empirical studies affirm that these radically innovative ventures suffer from reduced funding chances among equity crowdfunders. Contributing to optimal distinctiveness theory, the authors show that extremely distinctive ventures can shift to become optimally distinctive. Thus, radically innovative ventures can reverse the negative effect and avoid the downsides of non-conformity by leveraging external legitimacy sources, such as endorsements from alliance partners or professional investors. The optimal level of distinctiveness also varies by audience, such that radically innovative ventures’ extreme distinctiveness evokes more negative judgments among equity crowdfunders who expect returns than among reward crowdfunders who seek novelty. Surprisingly though, without external legitimacy sources, radical innovativeness is never favored, even by novelty-seeking audiences. This fresh evidence that radical innovativeness constitutes both a liability and an asset, contingent on new ventures’ external endorsements and audience expectations, points to important boundary conditions for optimal distinctiveness theory. KW - Entrepreneurship KW - Crowdfunding Y1 - 2022 SN - 978-0-910897-00-6 SP - 73 EP - 78 PB - Arthur M. Blank Center for Entrepreneurship CY - Babson Park, Massachusetts ER - TY - GEN A1 - Mochkabadi, Kazem A1 - Kleinert, Simon A1 - Urbig, Diemo A1 - Volkmann, Christine T1 - From distinctiveness to optimal distinctiveness: External endorsements, innovativeness and new venture funding T2 - 26th Annual Interdisciplinary Conference on Entrepreneurship, Innovation and SMEs, 2023 N2 - To maximize their performance, new ventures should be optimally distinctive, that is, as differentiated from competitors as is legitimately possible. External endorsements, through affiliations with reputable third-parties, might alter the level of optimal distinctiveness for new ventures among different resource-providing audiences. To develop and test this prediction, the authors study new ventures with varying degrees of innovativeness that seek funding from return- and novelty-seeking resource providers. The former expect some distinctiveness but reject too little or too much (e.g., non- or radically innovative new ventures). External endorsements can buffer the legitimacy of these non-innovative and radically innovative ventures, but they lead to different performance implications. For non-innovative ventures, external endorsements function as a shield against low legitimacy, so they are less penalized for their lack of novelty. For radically innovative ventures, external endorsements function as a performance booster; they can become even optimally distinctive and outperform other distinctiveness configurations. In contrast, novelty-seeking audiences already have a higher tolerance for more innovative new ventures, so these effects are less pronounced among these resource providers. Four empirical studies, using observational data and experiments in equity and reward-based crowdfunding, provide strong support for this theory and account for several alternative explanations. In turn, this study sheds new light on the crucial, audience-specific function of external endorsements, namely, as a means to alter optimal distinctiveness levels. KW - Entrepreneurship KW - Finance KW - Crowdfunding KW - Optimal distinctiveness KW - Legitimacy KW - Platform Y1 - 2023 UR - https://www.researchgate.net/publication/379155882 UR - https://www.fgf-ev.de/wp-content/uploads/2023/09/G-Forum-2023-Programmgeruest_18-09-2023_Internet.pdf ER -