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

Abstract

Purpose 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.

Overcoming the challenges of cooperative startups businesses: insights from a bibliometric network analysis

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“…At the same time, it must be noted, as indicated by Batra et al ( 2022 ), that startups have a customer orientation in which they personalize their products and services on a massive scale and seek to solve problems through innovation to cover new needs in consumers. As indicated by Van Le et al ( 2019 ), startups can be highlighted as companies with high adaptability to change thanks to innovation and technology, so changes in the market or in regulations are generally not a major problem.…”

Microfoundations of dynamic new venture partnering capabilities

“…The literature does not yet provide solutions for how to overcome all of these preformation challenges. However, a recent study by Batra et al (2022) can be seen as a glimpse of what buying firms can do to overcome these challenges and increase the likelihood of successful sourcing from a new venture supplier. Most important is the buying firm's understanding of the new venture's product and service offerings, followed by familiarity with the new venture, and whether the buying firm knows the new venture's founding team (Batra et al, 2022).…”

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“…Batra et al. (2022) cite several criteria that determine buying firms' willingness to source from new venture suppliers (e.g., the buying firm's understanding of the new venture's product and service offerings).…”