Legitimacy of mature microenterprises: essential dimensions for their stability and growth

Abstract

Purpose Research suggests that the “legitimacy threshold” is surpassed when a company grows. However, many new ventures do not experience significant growth yet operate in the market for many years. In such cases, it remains unclear to what extent legitimacy contributes to their survival as well as which key factors and routines promote legitimacy. The primary aim of our study is to clarify the role of legitimacy in mature microenterprises. Design/methodology/approach To assess the legitimacy of microenterprises and identify the dimensions upon which it is based, a survey was conducted targeting microenterprises that have reached the maturity stage. The analysis was carried out using PLS-SEM. The study was enriched by analysing the necessary conditions (NCA) required to achieve a specific level of legitimacy. Findings The results confirm our hypotheses. First, mature microenterprises generally achieve high levels of legitimacy, indicating that attaining and maintaining legitimacy is a crucial factor for their survival. Second, we found that the essential factor focuses on the management dimension of the microenterprise, whilst other dimensions have significantly less influence. Finally, our findings reveal that the acquisition and enhancement of legitimacy follow a gradual process, whereby various dimensions and routines are progressively incorporated. Originality/value This study highlights the critical role of legitimacy in sustaining microenterprises in the market. Whilst extensive research exists on the relationship between legitimacy and new ventures, we have expanded the understanding of how legitimacy is constructed and maintained in mature microenterprises. This process is cumulative, involving the progressive integration of new routines.