Contending with Perceived Legitimacy Tensions: Impact Investing in Pluralistic Institutional Environments

Abstract This study advances our understanding of new venture legitimacy and resource acquisition by broadening the epistemological scope of our theory to be inclusive of non‐Western contexts. We conducted a qualitative study of entrepreneurs from India, Kenya, and Mexico seeking impact investments from Western impact investors to better understand how entrepreneurs in non‐Western contexts contend with perceived legitimacy tensions that arise when pursuing financial resources from non‐local investors. In contrast to the prevailing assumption that non‐Western entrepreneurs are resource‐constrained and adhere to existing strategies to seek legitimacy from financial resource providers, we find that such entrepreneurs perceive their local institutional environment to have important non‐financial resources that impact how they seek legitimacy from financial resource providers. This study offers a novel conceptualization of new venture legitimation by acknowledging non‐Western and Western institutional environments as important considerations in how entrepreneurs navigate legitimacy with both financial and non‐financial audiences over time.