The Social Construction of Legitimacy Through Signaling Social Capital: Exploring the Conditional Value of Alliances and Underwriters at IPO

33 Pages Posted: 18 Apr 2013

See all articles by Theodore A. Khoury

Theodore A. Khoury

Organizations, Strategy & International Management

Marc Junkunc

Washington and Lee University

David L. Deeds

University of St. Thomas - Opus College of Business; Case Western Reserve University - Department of Marketing and Policy Studies

Date Written: May 2013

Abstract

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 allianceā€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.

Suggested Citation

Khoury, Theodore A. and Junkunc, Marc and Deeds, David L., The Social Construction of Legitimacy Through Signaling Social Capital: Exploring the Conditional Value of Alliances and Underwriters at IPO (May 2013). Entrepreneurship Theory and Practice, Vol. 37, Issue 3, pp. 569-601, 2013, Available at SSRN: https://ssrn.com/abstract=2253127 or http://dx.doi.org/10.1111/etap.12030

Theodore A. Khoury (Contact Author)

Organizations, Strategy & International Management ( email )

P.O. Box 830688
Richardson, TX 75083-0688
United States

Marc Junkunc

Washington and Lee University ( email )

Lexington, VA 24450
United States

David L. Deeds

University of St. Thomas - Opus College of Business ( email )

1000 LaSalle Avenue
TMH 443
Minneapolis, MN 55403
United States

Case Western Reserve University - Department of Marketing and Policy Studies ( email )

Cleveland, OH 44106
United States

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