Dee

Frontiers of Entrepreneurship Research
1997 Edition

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THE QUEST FOR LEGITIMACY: A STUDY OF BIOTECHNOLOGY IPO'S David L. Deeds, Temple University Paul Y. Mang, The University of Texas at Austin Michael Frandsen, The University of Texas at Austin

INTRODUCTION
THEORETICAL BACKGROUND
HYPOTHESES
METHODOLOGY
The Sample and Data
Variables
RESULTS
CONCLUSION
REFERENCES
TABLE 1
FIGURE 1

ABSTRACT

This paper examines the determinants of an entrepreneurial firm's legitimacy and the impact of legitimacy in the amount of capital raised by biotechnology firm's IPO. We first present a model of the determinants of firm level legitimacy, which includes measures of firm level characteristics and actions, and industry legitimacy. The model is then tested on a sample of 108 initial public offerings from biotechnology firms using structural equation modeling. Our results indicate that amount of capital raised by a biotechnology firm's IPO is positively related to firm level legitimacy and the legitimacy of the industry at the time of the offering.

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