Seeds of demand-side legitimacy: when do existing companies procure from B2B startups?

Abstract

The purpose of this study is to investigate potential lenders of legitimacy for business-to-business (B2B) startups as reflected in the willingness of potential customers to do business with startup firms. This study theorizes the role of familiarity with B2B startups, their founding teams and their product offerings in influencing perceptions about legitimacy among potential customers.

Design/methodology/approach - Data are collected from key decision-makers involved in B2B procurements in large Indian companies and analyzed using conjoint analysis.

Findings - Results suggest that familiarity with product/service offerings from B2B startups is the most salient factor in forming favorable assessments for the venture, followed by the awareness of the startups and their founding teams, in that order.

Practical implications - The research makes several contributions to understanding the legitimacy of B2B startups from the customers’ perspective. The study provides a nuanced view of the factors impinging on legitimacy. The conceptualization of legitimacy as a reflection of willingness to buy (in other words, willingness to do business with) provides a useful lens with which to study the interactions between B2B startups and potential customers.

Originality/value - The strong empirical support the study finds for the predicted relationships in an international context, specifically India, enhances theory development, providing a solid foundation for future knowledge generation around the demand side legitimacy concept.