The role of cognitive legitimacy in social entrepreneurship: a multilevel analysis

Abstract

While the role of cognitive legitimacy in new organizational forms’ development has been extensively studied, the cognitive legitimacy of social entrepreneurship (SE) has so far received limited attention. Drawing from legitimacy theory and organizational ecology literature, we theorize and explore how SE obtains cognitive legitimacy via its prevalence and the legitimacy spillovers of the two categories it encapsulates: new business and nonprofit organizations. Using data from the Global Entrepreneurship Monitor, we find evidence for the existence of legitimacy spillovers from both new business and nonprofit organizations to SE activity. Second, the perceived density of social enterprises is significantly related to individuals’ engagement in SE. Third, we find the effect of legitimacy spillover effects is more significant when individuals perceive a lower density of social enterprises. Our study contributes to the research on SE, organizational ecology, and hybrid organizations by exploring the multiple sources for increasing SE’s legitimacy, particularly highlighting the existence of cross-categories legitimacy spillover effect within hybrid organizations.