Legitimacy Alignment: The Role of Legitimacy Judgments in the Emergence of New Organizational Forms : An Exploratory Single Case Study about the Angel Investment Organization STOAF and its Emergence into a New Stable Organizational Form.

Abstract: Background:Business Angels (BA) and Angel Investment Organizations (AIO) have become an essential source of capital for entrepreneurs, whereas Business Angel Groups (BAG) are the most recent organizational form in which Business Angels organize themselves. However, BAG still face several issues that prevent them from success in the long term, such as identifying the right members and creating membership engagement. Consequently, why these forms still fail remains unknown. Although, research on how new organizational forms emerge has received considerable attention. There are missing explanations for why they fail. Moreover, the reasons why organizations build legitimacy has been thoroughly investigated. Nevertheless, legitimacy in the emergence of new organizational forms has been neglected. Purpose:This study explores the emergence of a new stable organizational form through the lens of legitimacy. The main goal is to understand how legitimacy judgments can influence the emergence of a new form and how an organization can affect this process. The purpose is to contribute to the literature about AIO, emerging new organizational forms, and legitimacy. Method:Based on a retroactive longitudinal qualitative single case study, the researchers used grounded theory to derive a new theory from data. The study follows the Gioia method, a systematic inductive approach to concept development. The primary data consisted of 18 semi-structured interviews with practitioners, case informants, and context informants, triangulated with secondary data from documents, articles, and websites. Conclusion:The findings indicate that unstable organizations face problems aligning legitimacy judgments. Consequently, if successfully aligned, a new stable organizational form emerges. First, our findings contribute to the literature on the emergence of new organizational forms by including legitimacy processes. Second, we contribute to the framework of legitimacy by highlighting the importance of micro-meso-macro interrelationships. Finally, the findings contribute to the BA literature by providing a new form of AIO, named Business Angel Fund (BAF), that enables legitimacy alignment and solves current issues.