From entrepreneurship to established business: duration, challenges and coping tactics according to resource providers and successful entrepreneurs

Abstract

Purpose

This paper aims to explore the perception of successful entrepreneurs and resource providers regarding the minimum operational time necessary to legitimize an enterprise as an established company, as well as the tactics used by the entrepreneurs to minimize the distrust of society during this initial period of the life cycle of the organization.

Design/methodology/approach

Data collection from two groups: (i) interviews with 62 entrepreneurs and founders of established companies; and (ii) a questionnaire completed by 77 sales managers of companies that provide businesses with resources (they practice business-to-business). Regarding analyses: (i) to analyze information, this study applied the content analysis technique; and (ii) for data, this study applied the one-sample t-test, mean comparison t-test, Pearson’s correlation test, chi-square test of association, Mann–Whitney U test and correspondence analysis technique.

Findings

In this study, a period of 42 months was identified for the legitimization of enterprises by society, in other words, the time necessary for enterprises to be recognized as an established company and a company of low risk by customers and resource providers. A set of managerial and behavioral actions practiced by successful entrepreneurs to face the difficulties they experience during the legitimization period was also identified.

Practical implications

In addition to establishing a period of 42 months for the legitimization of an enterprise in the eyes of society, a set of 15 strategies used by successful entrepreneurs was identified to combat the prejudice associated with the youthfulness of their companies. Of these, 12 are linked to managerial actions and 3 to the entrepreneur’s behavior. It should be highlighted that eight of these strategies are innovative and have yet to be addressed in the literature on mitigating risks associated with the liability of newness principle.

Originality/value

The authors discuss the legitimization of enterprises based on the perception of actors who play a fundamental role regarding entrepreneurial action: resource providers for companies, customers and successful entrepreneurs. This is a triangulation of sources, as well as a triangulation of collected data and qualitative and quantitative techniques, which sought to ensure the accuracy and reliability of the information that resulted from this analytical process.