Performance and Legitimacy

New venture performance is often assessed by the successful accomplishment of important milestones such as first sale, breakeven point, or first profitable operating period. Such performance metrics are all linked to the idea of legitimacy in that, once a firm has reached these milestones, the venture has established itself and will maintain successful operations for at least the near term. In essence, the venture has successfully navigated the legitimacy threshold (LT) and is thus able to shift its attention to more traditional performance metrics, such as revenue and profitability targets. Whereas this is clearly a positive development for the entrepreneur, it does pose new issues. It is these issues that will be addressed here.

The Legitimacy Threshold

For new ventures to survive and to prove legitimacy, the ...

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