Frontiers of Entrepreneurship
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.