Theodore A. Khoury is an assistant professor of management and strategy at Portland State University, School of Business Administration, P.O. Box 751, Portland, OR 97207-0751, USA.
The Social Construction of Legitimacy Through Signaling Social Capital: Exploring the Conditional Value of Alliances and Underwriters at IPO
Article first published online: 26 MAR 2013
© 2013 Baylor University
Entrepreneurship Theory and Practice
Special Issue: Social Capital and Entrepreneurship
Volume 37, Issue 3, pages 569–601, May 2013
How to Cite
Khoury, T. A., Junkunc, M. and Deeds, D. L. (2013), The Social Construction of Legitimacy Through Signaling Social Capital: Exploring the Conditional Value of Alliances and Underwriters at IPO. Entrepreneurship Theory and Practice, 37: 569–601. doi: 10.1111/etap.12030
We thank Curt Moore, Mike Wright, and two anonymous reviewers for their comments and expert guidance to help improve this work. We also thank the special issue editor team and seminar participants at Portland State University, Simon Frasier University, and the University of Oregon for their valuable feedback. Earlier versions of this paper have also benefited from feedback received from Howard Aldrich, Melissa Appleyard, S. Trevis Certo, David Deephouse, Greg Dess, Henrich Greve, J. Richard Harrison, Jean Helwege, Robert Kieschnick, Peggy Lee, Christine Oliver, Mike Peng, Hayagreeva Rao, Klaus Weber, and David Whetten.
- Issue published online: 16 APR 2013
- Article first published online: 26 MAR 2013
Focusing on a firm's signaling of social capital through their alliances, we explore how socially constructed signals convey legitimacy and enable greater initial public offering (IPO) proceeds. We examine the concepts of absolute and relative social capital signals with a sample of 266 biotechnology IPOs from 1980 through 2006. Leveraging a dynamic framework, we uncover that the interpretations of quality signals vary over time and are nonadditive; rather, affiliating with prestigious underwriters limits the positive reward of signaling alliance-based social capital. These relationships vary according to whether social capital is evaluated relative to the industry norms and according to the alliance's vertical position.