Legitimacy - Implications for New Venture Competitiveness
Food is an important industry to the US and Idaho economies, and the food industry has dealt with globalization for many years. A global market place increases the intensity of competition and causes fundamental shifts to occur, making these markets even more connected and competitive (Oyewumi, 2007). Other changes occurring in the industry, like food safety and supply chain security concerns (Degeneffe, et al., 2007, Fritz and Schiefer, 2008) and evolving consumer demands (Johnson and Johnson, 2008) result in a louder voice to industry watch groups as well as greater oversight and regulation by government. In an economic environment defined by market globalization and growing government regulations, increased competition and costs of doing business have left many rural communities, especially those supported primarily by agriculture, struggling
to develop opportunities for economic growth. Because the small-to-medium-sized agricultural producers in these communities lack the economies of scale to compete in the new global marketplace, they are increasingly turning to alternative niche markets in an attempt to survive economically. Growth in rural economies is largely dependent on the efforts of individuals and groups creating these new ventures. Although there is a well-developed body of knowledge about running a small business, and specifically about running a food business, there is far less literature about the initial key activities required for starting a successful rural food processing enterprise. Additionally, the literature lacks tangible information on how a start-up food processing company develops relationships and other business characteristics to earn "a social judgment of acceptance, appropriateness, and
desirability, [enabling them].to access other resources [including customers] needed to survive and grow" (Zimmerman and Zeitz, 2002). This social judgment is termed legitimacy and is considered to be a critical contributor to the success of a start-up company. A better understanding of exactly what new rural-based food processing companies can do to increase their legitimacy early in the start-up process is expected to increase their chances of success, and in turn enhance their rural economy. The long-term goal of this project is to develop start-up strategies that will help assure that new rural-based food processors will meet with success in the least amount of time, while minimizing their exposure to economic risk.