The Emergence and Evolution of an Industry
Studies of entrepreneurs in new industries have traditionally focused on the activities of the entrepreneurs in question, with too little attention paid to other economic players whose activities may bear directly on the entrepreneurs’ success. These prior studies have therefore tended to focus on pioneer-entrepreneurs’ attempts at the appropriate cognitive framing of their new activities and at building a critical mass of attention to gain legitimacy.
In this exploratory and inductive study of the emergence and evolution of the Indian high-end fashion industry and the actions of entrepreneurs in the early days of this industry, I seek to redress these shortcomings of prior organizational research. Based on interviews with pioneer-entrepreneurs as well as members of the ecosystem of a new industry, and fieldwork I find that, although legitimacy-seeking is indeed an important activity for pioneer-entrepreneurs, they are aided, often without their knowledge or invitation, by other actors pursuing their own self-interests rather than directly intending to help these entrepreneurs.
This paper adds to the literature of institutional and collective action perspectives on industry emergence and evolution by explicitly considering the role of the entire field of production in enhancing the legitimacy of a new industry. The paper’s findings refine our understanding of
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e. entrepreneurs starting new firms in new industries or engaged in new economic activities-experience a more acute lack of legitimacy. Such pioneer-entrepreneurs need to establish simultaneously the legitimacy and credibility of both their individual firms as well as the broader product offering, since the latter is unfamiliar to customers and other observers (Aldrich, and Fiol, 1994).
Past research has highlighted that pioneer-entrepreneurs can gain legitimacy by shaping their institutional context, by using appropriate cognitive frames to describe their activities (Hargadon, and Yellowlees, 2001;Lounsbury, and Glynn, 2001), by engaging in symbolic actions at various levels (Rao, 1994;Zott, and Huy, 2006), and by establishing partnerships and linkages with existing legitimate entities (Hargadon and Yellowlees, 2001).
All of these studies assume the legitimacy-enhancing tactics to be targeted towards an audience that is composed of other economic players, customers, and regulatory agents, who are believed to be unaware of the new offering, or worse, hostile towards any proposed new activity that could potentially change the status quo (Aldrich & Fiol, 1994). Therefore, one important aspect of this process of gaining legitimacy is the role of the audience and stakeholders.
However, we neither know much about the relationship between other external stakeholders and the pioneer-entrepreneurs nor do we fully understand the stakeholders’ role in the pioneer-entrepreneurs’ efforts to gain legitimacy. Past research has devoted a lot of attention to pioneer-entrepreneurs’ cognitive framing of their activities to overcome observers’ and stakeholders’ hostilities and to reduce the uncertainty surrounding their unfamiliar activities.
While this perspective is useful in deepening our understanding of the tactics employed by entrepreneurs, there are other significant factors that it neglects. Entrepreneurs, firms, and even industries are situated within a social, economic, and cultural context. Therefore, not only are the actions of pioneer-entrepreneurs influenced by external entities, but external entities also react to their very existence as well as to their actions.
In order to achieve a more complete view of industry emergence, we need to consider both the framing adopted by pioneer-entrepreneurs and their other legitimacy-seeking activities as well as the role of external stakeholders. By taking this more comprehensive view, we stand to gain a better understanding of the interactions between entrepreneurs and firms, and their economic and socio-cultural contexts. This in turn would deepen our understanding of the institutional context of industry emergence and entrepreneurship.
In this paper, I take a broader view of industry emergence by considering entrepreneurs in the focal industry, as well as other actors in the ecosystem of the industry. Because the interplay between entrepreneurs and other entities is difficult to quantify, a richly-detailed, qualitative description of a specific case of industry emergence is the best way (Eisenhardt, 1989;Eisenhardt, 1991;Yin, 2003) to study the role of external players in pioneer-entrepreneurs’ quests for legitimacy.