Measuring New Venture Legitimacy: A Multi‐dimensional Approach Using Computational Textual Analysis

Abstract

Legitimacy is critical for the growth, survival and performance of ventures, yet efforts to measure legitimacy empirically typically focus on a single dimension of this multi‐dimensional construct. In this article, we develop a multi‐dimensional framework for measuring legitimacy using computational text analysis. We begin by elaborating the theoretical foundations of our multi‐dimensional approach, situating it in relation to influential multi‐level perspectives on legitimacy. Using dyads as our unit of analysis, we show how our approach enables simultaneous measurement of multiple dimensions of legitimacy across multiple audiences at scale. This approach provides a methodological bridge between dominant uni‐dimensional approaches to the empirical study of legitimacy, generating both a composite measure of legitimacy and indicators for each dimension individually, which can be incorporated into empirical analyses. We validate the measure using both expert evaluations and by demonstrating its predictive power for venture failure. Our study offers both a methodological advance for legitimacy research and a foundation for new theory building on how legitimacy emerges, evolves and influences outcomes not only across multiple levels but also across multiple dimensions.