Legitimation Strategies for Clean Technology Entrepreneurs Facing Institutional Voids in Emerging Economies

INTMAN-00579; No of Pages 13 Journal of International Management xxx (2016) xxx–xxx

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Journal of International Management

Legitimation Strategies for Clean Technology Entrepreneurs Facing Institutional Voids in Emerging Economies Deborah E. de Lange Ted Rogers School of Management, Ryerson University, 55 Dundas St. West, Toronto, ON M5B 2K3, Canada

a r t i c l e

i n f o

Article history: Received 10 January 2016 Received in revised form 20 June 2016 Accepted 22 June 2016 Available online xxxx Keywords: Entrepreneurship Institutional theory Organizational fields Legitimation Clean energy Institutional voids Sustainable development

a b s t r a c t This research develops theory on the legitimation of firms in the context of new entrepreneurial clean technology ventures attempting to grow and develop in emerging economies where they face institutional voids. Where there are conditions of inadequate or non-existent energy infrastructure, this is often a symptom of a lack of market oriented institutions or institutional voids. This research clarifies how organizational fields, potentially supportive of new industries, form through local entrepreneurs' efforts at legitimating their start-ups. It proposes that organizational fields can substitute for the institutional voids so that the new firms can develop. Legitimation strategies that foster the supportive organizational fields include endorsements from notable local individuals such as an iconic local entrepreneur or a community leader, and by broader acknowledgement, gained through well recognized non-market partnerships and validation by exporting to wealthy markets. © 2016 Elsevier Inc. All rights reserved.

1. Introduction Renewable energy firms in emerging markets (EMs) face hurdles in starting up and survival. Building legitimacy is crucial for any new firm (DiMaggio and Powell, 1983; Oliver, 1991; Scott, 2001; Suchman, 1995). However, the entrepreneurial legitimation strategies that will work for EM start-ups facing institutional voids are different variations of those used by firms in developed countries where entrepreneurial supports are more prevalent, and this has implications for theory building. Institutional voids exist where there are a lack of market institutions. This research considers this situation and addresses the research question, “How may an EM entrepreneur build legitimacy by developing or influencing an organizational field so that the field becomes supportive of the start-up, thereby filling institutional voids?” First, legitimacy is defined as, “a generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, and definitions.” (Suchman, 1995: 574). Also, Scott (2001): 84) describes an organizational field as “a community of organizations that partakes of a common meaning system, and whose participants interact more frequently and fatefully with one another than with others outside the field.” Additionally, fields may be “… formed around the issues that become important to the interests and objectives of a specific collective of organizations” (Hoffman, 1999: 352). When the participants in the field accept a start-up as an important and legitimate entity, it will be able to derive resources for survival and growth (Suchman, 1995). The aim of this work is to build on previous theory related to organizational field formation and legitimacy building for startups (Hoffman, 1999; Rao, 1994; Stuart et al., 1999; Suchman, 1995). It shows how, contrary to some previous research on legitimacy, entrepreneurs can manipulate their environments under the EM conditions, as described in this work. Some illustrations

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http://dx.doi.org/10.1016/j.intman.2016.06.002 1075-4253/© 2016 Elsevier Inc. All rights reserved.

Please cite this article as: de Lange, D.E., Legitimation Strategies for Clean Technology Entrepreneurs Facing Institutional Voids in Emerging Economies, J. Internat. Manag. (2016), http://dx.doi.org/10.1016/j.intman.2016.06.002

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from the clean technology industry in EMs are provided as firms in this industry often face the described difficult conditions (Gadl and Knobloch, 2011; Talukdar et al., 2010; UNDP, 2000; UNEP, 2011; World Bank, 2010). Certain areas outside of major EM cities offer vastly different conditions than those found in more industrialized areas. In the developed world, new clean energy firms have faced resistance from entrenched interests who have challenged start-ups' legitimacy and value (Energy and Policy Institute, 2014). In these industrialized regions, it is expected that newer substitute technologies will be contested by strong incumbent industries with a preference to diminish competition (Porter, 2008). Much research has examined the controversy of adoption of various sustainable solutions in developed country contexts by large firms (Hoffman, 1999; Delmas and Montes-Sancho, 2010; Delmas and Toffel, 2008; Reid and Toffel, 2009). For example, earlier institutional theory research examined the US chemical industry that had a long history of polluting (Hoffman, 1999). This prior work in organizational field change, suggesting that fields form around issues provides a basis for this research (Hoffman, 1999). However, rather than studying firms in mature stages of their lifecycles, i.e., large corporations within established markets (Delmas and Montes-Sancho, 2010; Delmas and Toffel, 2008; Hoffman, 1999; Sanders and Tuschke, 2007), this research considers small entrepreneurial firms, “that start from weak market positions with few resources” (Katila et al., 2012: 117). Clean energy firms, as part of the larger clean technology industry, tend to be exemplary of this description so this work focuses on them, but this research could be applied to many other clean tech subsectors and industries with similar characteristics. This study examines new clean (renewable) energy firms that have no other similar local competition because they grow out of smaller emerging market communities lacking reliable electricity supplies, a symptom of institutional voids (Martinot et al., 2002). Thus, they are much more embedded in their organizational fields than are large firms and they find it difficult to make unilateral decisions that also affect the community (Greenwood and Suddaby, 2006; Martinot et al., 2002). Because these areas are not industrialized, path dependence is not a factor here so that new firms are not imprinted by historical conditions, as in previous research (Farjoun, 2002; Katila et al., 2012). While these new firms have an advantage in avoiding a history of incumbents, regulations, and local norms associated with corporate governance and power structures (Delmas and Toffel, 2004; DiMaggio and Powell, 1983; Kitchener, 2002), they also lack direction due to the non-existence of previous models and a paucity of available supports due to institutional voids. Institutional voids exist in some places in EMs because these countries are in the process of industrializing and this process is regionally uneven. An institutional void means that there are weakened or non-existent socio-political structures, norms, and institutions, such as legal, regulatory, and consumer protection mechanisms that usually facilitate market operations (Khanna and Palepu, 1997, 2010; Liu, 2011; Mair and Marti, 2009; North, 1990; Tracey and Phillips, 2011). Some specific examples of barriers that inhibit entrepreneurs' progress when they face institutional voids include poor communication systems, lack of infrastructure, and difficulty accessing intellectual capital (Cavusgil et al., 2002; Tracey and Phillips, 2011). In developed areas, the internet often enables entrepreneurs because everyone has a fast internet connection. Also, available expertise abounds, not only because of general familiarity with technology, but also because universities are usually nearby. None of this is present for entrepreneurs in the contexts of this research. Mair and Marti (2009) suggest that although contexts with institutional voids lack sufficient institutions to support markets, they may abound in other types of institutional arrangements. For example, informal systems may substitute for formal institutions (Liu, 2011; Puffer et al., 2010). This latter research is a prelude to this work's specific description of how an entrepreneur may develop or influence an organizational field to become supportive, so as to substitute for institutional voids, through several legitimation strategies related to endorsements. This approach to using existing circumstances for filling institutional voids, which could be termed as “bricolage” (Mair and Marti, 2009), and building a supportive organization field may also be considered as developing an alternative institutional ecosystem. EM entrepreneurs attempt to shape or transform a developing organizational field so as to resolve the barriers they face. In a general sense, previous research has named this type of enactment “institutional entrepreneurship” (DiMaggio, 1988; Tracey and Phillips, 2011). Fig. 1 depicts a general process where a start-up (#1 in the figure), led by a founding entrepreneur, implements one or more legitimation strategies (#2 in the figure) which may include/lead to other important supporting actors entering the field (#3 in the figure), which then creates reasons (legitimation) for many others to engage (#4 in the figure), resulting in wider and longer term adoption in a supportive organizational field. The propositions explain these dynamics in more detail. Prior studies also suggest that there are benefits in new markets for new technology firms because they may have more control than if they were to arise in established markets, by avoiding competitors and entrenched consumers (Hart and Christensen, 2002; Katila et al., 2012; Morey et al., 2011). Some research has suggested that EM entrepreneurs have some power to shape environments and even take advantage of institutional voids (DiMaggio, 1988; Pongeluppe and Saes, 2014; Tracey and Phillips, 2011). Entrepreneurs could do this by acting as brokers so as to reduce uncertainty, by spanning institutional voids through proto-institutions, and by bridging institutional distances by translating institutions from developed to emerging economies (Tracey and Phillips, 2011). In contrast, this research explains how the entrepreneurs are solving the problems they face in institutional voids for adoption of their new technology offerings, through the antecedent legitimation processes required for microenterprises' initial start-up, survival and growth. Only a very small body of work has considered the rise of new firms where they face institutional voids (Ahlstrom and Bruton, 2006; Ahlstrom et al., 2008; Alvarez and Barney, 2014; Mair and Marti, 2009; Puffer et al., 2010; Tracey and Phillips, 2011). Thus, this context is opportune for not only extending theory on legitimation and change in organizational fields, but also for making the link between institutional theory and the international business literature on institutional voids. This research will contribute by theorizing on how the new EM ventures develop legitimacy and a supportive organizational field, a field that ultimately fills those institutional voids that would otherwise stunt the growth of these firms. Please cite this article as: de Lange, D.E., Legitimation Strategies for Clean Technology Entrepreneurs Facing Institutional Voids in Emerging Economies, J. Internat. Manag. (2016), http://dx.doi.org/10.1016/j.intman.2016.06.002

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Fig. 1. The relationship between legitimacy building and the formation of supportive organizational fields where there are institutional voids.

Other research has theorized on how new social objects, at individual and collective levels, become legitimate such that there are four stages: innovation, local validation, diffusion, and general validation (Johnson et al., 2006). New innovations gain acceptance in organizational fields through local validation. This means that they become linked to the existing cultural framework of beliefs in the minds of local actors either by explicit justifications or through implicit acceptance without challenge. After the innovation becomes a social fact, it is used to explain how things are done. It diffuses and becomes viewed as generally valid. The original literature described this process in the context of the diffusion of arts organizations, an elite context, where a supportive organizational field pre-existed from the start (Johnson et al., 2006). Thus, this research will use this staged process as a framework for legitimacy building in a very different and more difficult context. Local validation, diffusion, and general validation will be necessary for the new innovations, but how this occurs differs in the context of this research (see Fig. 2). The following set of four EM legitimating strategies (marked as 1–4 in Fig. 2), which are described in more detail later, support the aforementioned process. They are endorsements where local validation is achieved by 1) symbolic social connections with local iconic entrepreneurs. Local validation and diffusion are achieved by both 2) non-market partnerships with well-known organizations and 3) local community leaders coupled with corporate social responsibility initiatives. Also, general validation is achieved by 2) non-market partnerships with well-known organizations and 4) internationalization through exports to a developed country customer. Thus, some of the strategies serve more than one stage of the overall legitimation process. As depicted in the diagram (Fig. 2), some strategies may be linked and others may feedback to support other earlier stages. Past research agrees that a new firm gains legitimacy through endorsements and improves its reputation and its chances of survival (Rao, 1994; Stuart et al., 1999; Suchman, 1995). Therefore, to summarize, this research will make contributions to the previous literature: 1) by addressing how legitimacy building may occur in the more difficult EM context, as described, 2) by conjoining concepts from institutional and IB theories, and 3) by demonstrating the usefulness of a staged process framework, linking legitimation strategies to it, in a more difficult context. Next, additional theory is reviewed and propositions are developed. Conclusions and suggestions for future research follow the theoretical development. 2. Theory and proposition development This research combines institutional theory and international business (IB) theory on institutional voids to address an important gap: It has not been clearly articulated as to what legitimation mechanisms will help new firms, representing new industries, to shape supportive organizational fields when facing institutional voids in EMs. The term “institutional void” portrays a broad set of barriers to industrial development in EMs. EMs are in the process of building the usual institutions and related organizations that support market activities in developed countries (Cavusgil et al., 2002; Khanna and Palepu, 2006; Tracey and Phillips, 2011). Legitimation processes in organizational fields have been over generalized such that most research implicitly assumes a developed country context where institutional supports are substantial (DiMaggio and Powell, 1983; Miller, 2012; Oliver, 1991; Suchman, 1995; Turcan, 2011; Zimmerman and Zeitz, 2002). In contrast, IB theory has recognized contextual differences between Please cite this article as: de Lange, D.E., Legitimation Strategies for Clean Technology Entrepreneurs Facing Institutional Voids in Emerging Economies, J. Internat. Manag. (2016), http://dx.doi.org/10.1016/j.intman.2016.06.002

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Fig. 2. A legitimation process framework.

emerging markets and developed countries related to their relative market oriented institutional development. It has even recognized differences between nations within the same development classification to advocate for a comparative analysis approach (Luo et al., 2011). IB theory has also recognized how context matters for new small firms. For example, environmental turbulence and national culture have been found to affect a firm's entrepreneurial orientation (Engelen et al., 2015). Hence, it is recognized that a start-up should adopt unique strategic behavior that is consistent with the demands of its environment (Rosenbusch et al., 2013). Thus, the research question addressed here is: How may an EM entrepreneur build legitimacy by developing or influencing an organizational field so that the field becomes supportive of the start-up, thereby filling institutional voids? This research proposes a set of legitimation strategies that could lead to a coalescing of supportive forces to enable the formation of, or to shape, an organizational field, thus supporting a start-up's survival. A supportive organizational field can somewhat substitute for institutional voids, as will be illustrated. Also, different types of constituents are involved in the transforming organizational fields that legitimate the EM start-ups (Freeman, 1984; Oliver, 1991). These various constituents may be more or less related to success at the different stages of the framework (Fig. 2), for example, for local or wider general validation. Legitimacy helps new firms get over the liabilities of newness and foreignness and is considered a critical facet for a young firm's survival (Stinchcombe, 1965; Turcan, 2011; Zaheer, 1995). Previous research has considered mechanisms such as conformance, selection, manipulation, creation, and mimicry that support legitimation (DiMaggio and Powell, 1983; Miller, 2012; Oliver, 1991; Suchman, 1995; Turcan, 2011; Zimmerman and Zeitz, 2002) and some are possibly operative whereas others are not in the general context of this research. For example, conformance to rules when there really are no relevant rules for such a new industry cannot, therefore, build a firm's legitimacy (Suchman, 1995). A boundary of this research is that it more likely applies to open rather than transition economies. Although transition economies may also be classified as EMs, having been communist, such countries have had many very strict rules that often oppose market institutions and include tensions over property rights (Puffer et al., 2010). Legitimation strategies under these circumstances are very different than in the EM context of this research and have also been explored (Ahlstrom et al., 2008). Although the entrepreneurs in the types of locations of this research are not as restricted as in transition economies, they are also assumed to lack the financial freedom to select their environment. They might rather choose, for example, Silicon Valley, where they would find a supportive business ecosystem for their innovations (Suchman, 1995). Instead, they aim to improve the environment that they face and from which they often originate. Therefore, manipulation becomes a possible approach, characterized by developing relationships with other entities (Oliver, 1991; Suchman, 1995). Manipulation has been discussed as unlikely for new ventures (Yamakawa et al., 2008), but the small village context in an emerging market alters this likelihood since a local entrepreneur who originates from that village can have significant influence. In fact, previous research has noted that entrepreneurs may be able to take advantage of institutional voids and this is like a kind of manipulation or shaping of their local environments (Liu, 2011; Pongeluppe and Saes, 2014; Tracey and Phillips, 2011). Also, creating new innovations can build legitimacy and this is addressed later in conjunction with a new venture's attempts at internationalization. Please cite this article as: de Lange, D.E., Legitimation Strategies for Clean Technology Entrepreneurs Facing Institutional Voids in Emerging Economies, J. Internat. Manag. (2016), http://dx.doi.org/10.1016/j.intman.2016.06.002

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Last of the aforementioned legitimation mechanisms to consider, mimetic isomorphism is difficult because there are few or no relevant previous models to copy when there is no pre-existing industry (Eyring et al., 2011). After an organizational field emerges, theory suggests that organizations homogenize through mimicry (DiMaggio and Powell, 1983). Organizations adopt the same innovations and as the innovations spread they gain legitimacy thus, leading to more adoption (DiMaggio and Powell, 1983). The innovations are normatively sanctioned such that higher performance is not necessarily legitimized (DiMaggio and Powell, 1983). However, in the locations of interest in this research, there are no previously established renewable energy sources and often, no reliable energy sources at all. Previous literature characterizes emerging industries as uncertain and full of causal ambiguity (DiMaggio and Powell, 1983; Lippman and Rumelt, 1982; Miller, 2012; Starr and MacMillan, 1990), and these aspects are heightened in a context where there is no modern industry at all. Few institutional theory studies have been conducted in such an emergent, turbulent and uncertain context. The legitimation mechanisms proposed here include endorsements related to: 1) a symbolic local leader entrepreneur, 2) a well-recognized nonmarket funder, 3) relationships with local leaders coupled with corporate social responsibility activities, and 4) international recognition. Four propositions are developed (see Fig. 3) and examples are provided in the context of entrepreneurial renewable energy in off-grid or poorly connected (rural) areas of emerging economies where institutional weaknesses are evident. 2.1. Symbolic social connections: Iconic local entrepreneurs A symbol “is that which draws together and unites experience” (May, 1975: 703). While we often discuss the use of symbols in management, in this case, the entrepreneur becomes a symbol that unites a local organizational field over adoption of a new technology. Previous studies have elaborated on symbolic management. It is behavior that communicates subjective social meanings, used to build legitimacy and ultimately attract resource flows which become more dependable within a supportive organizational field (Feldman and March, 1981; Zott and Huy, 2007). According to previous research, symbolic actions can elicit cognitive and behavioral change (Armenakis et al., 1995). They fall into categories including: building personal credibility, professional organizing, organizational achievement, and stakeholder relationships (Zott and Huy, 2007). Also, a myth is a “cluster of symbols set in dramatic form” (May, 1975: 703). Thus, a story about a local entrepreneur and his/ her new technology may together become connected symbols and myth-like. Research suggests that myths can become so influential that they go unquestioned (Kitchener, 2002). Myth construction could be a viable approach that entrepreneurial leaders use to influence local EM communities to adopt their high tech energy solutions, most notably at the stage of local validation. A myth-like image of an entrepreneur built around his or her personal credibility (and connected with the new technology) that concurs with local stakeholders' knowledge and familiarity with the entrepreneur may work in the EM context. In remote areas of EMs, villagers are more closely knit than are city people, while institutions and organizations are often not as well developed (Kajisa, 2007; Oliver, 2000; Wirth, 1938). Since organizations are unlike those in developed regions, the influence mechanism of the power of an ‘executive office’, as discussed in previous research, is not available to an EM entrepreneur

Fig. 3. Endorsement mechanisms for legitimation.

Please cite this article as: de Lange, D.E., Legitimation Strategies for Clean Technology Entrepreneurs Facing Institutional Voids in Emerging Economies, J. Internat. Manag. (2016), http://dx.doi.org/10.1016/j.intman.2016.06.002

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(Kitchener, 2002). An executive office, in a developed country, has top down authority and may support and disseminate a new approach, thereby legitimating it quickly and widely with relatively low cost. In contrast, an EM entrepreneur in a village where social networks are more tightly knit may develop influence by becoming a local hero, thus, building symbolic social connections that are myth-like. A local change maker or institutional entrepreneur can be influential through a shared identity with the local people combined with demonstrations of personal involvement to improve the community (Bord, 1975). Research in social psychology has found that building a shared collective identity is a basis for sustainable action (Thomas et al., 2016). In addition, the costly personal efforts made by the entrepreneur invested into the creation of the innovative solution(s) are perceived as a commitment to the community as well as a personal endorsement of the solution(s) thus engendering trust in it (Bord, 1975). Previous research has explained that trust is built when one acts in another's best interests and, moreover, that trust can be a substitute for information (McLain and Hackman, 1999). In other words, a new technology may not be well understood by those who are being asked to adopt it, but its association with a trusted other, the entrepreneur in this case, provides a basis for a positive decision. In combining these and the aforementioned ideas we see that the trusted myth-like iconic entrepreneur can create a symbolic social connection between the adopter communities and the technology solution. Thus, the local entrepreneur, who has built this local trust through visible personal efforts to local development, is held in heroic regard prior to the establishment of the organizational field that coalesces around the start-up and substitutes for missing market oriented institutions. The organizational field, which could be termed an alternative institutional ecosystem because it is unlike many traditional organizational fields consisting of larger, established institutions, is made up of local actors supportive for promoting local validation and adoption of the entrepreneur's solution. As an example, Simon Mwacharo, the entrepreneur behind Craft Skills, East Africa Limited is a local hero. Craft Skills is a startup in Kenya that builds wind power generation devices from local materials to supply energy to small, dispersed off-grid African villages (Schmidt, 2009). By building local social assets and trust through his efforts to improve his own community, Simon became locally renowned (Starr and MacMillan, 1990). In the process, he built a wider supportive organizational field that filled institutional voids for his own business and the locals (a missing utility) (Chung and Luo, 2013). Moreover, a cell phone provider was attracted to the area because it could now offer customers the phones and service because they had power. Thus, the organizational field became more developed and established through multiple actors having reinforcing interests. However, this only happened after trust was established in the myth-like local hero-entrepreneur, which enabled him to be the endorser of his own product. It was legitimized through his association with it. In contrast to the example of Craft Skills, in South Africa, electricity users in rural areas do not accept solar energy even though the country has one of the best solar regimes in the world (Niez, 2010). Renewable energy in South Africa is labeled “rural energy” such that all applications are perceived negatively, as second class (Niez, 2010). Convincing rural citizens to accept new technology over a grid connection is a common problem (Wimmer, 2002). Positive local community beliefs in these projects are crucial for their longterm adoption (Thiam, 2011). However, in South Africa no local entrepreneurial leader has arisen to build a symbolic social connection between the people and the new systems, as there was in the successful Craft Skills story. International development organizations, also supporting the introduction of off-grid renewable energy, view the visionary entrepreneur as necessary (Dutz and Sharma, 2012; Graham and Johnson, 2000). The following proposition reflects the aforementioned theory. Proposition 1. The stronger the symbolic social connection that an iconic local entrepreneur can build between the local community and the new technology solution, the greater the likelihood of the new technology's local adoption.

2.2. Well recognized non-market partnerships In remote parts of EMs where there are institutional voids, small firms often must seek investment through means different from the standard approaches in the developed world (Alvarez and Barney, 2014; Haselip et al., 2014). The usual bootstrapping approaches used in developed countries when a firm is at the early seed stage include borrowing from family and friends, finding shared work space, borrowing on credit cards, and, crowd funding using web platforms (Harrison et al., 2004). Also, previous research has highlighted partnerships for technology start-ups with universities or research institutes and participation in venture associations (Lee et al., 2001). These partnerships are not considered endorsements by the literature. Instead, universities provide development knowledge and an employee resource pool, whereas, venture associations build a founder's network through social capital construction (Lee et al., 2001). However, in many places these supports are non-existent. Family and friends do not have the resources to offer and offices do not exist so shared space is not possible (Alvarez and Barney, 2014). Also, in many locales, credit cards are only for those at the top of the wealth pyramid (Alvarez and Barney, 2014). If one can gain access to a computer and the internet, internet connections are painfully slow (Stork et al., 2013). In some instances, governments may support and, thereby, endorse small business by, for example, supplying easier access to funding. Some governments like India's as of 2013 require firms to make corporate social responsibility (CSR) investments (CSR Wire, 2014; Haselip et al., 2014; Lee et al., 2001). However, more often, firms in this context are not supported this way. Thus, EM entrepreneurs have to be very creative (Alvarez and Barney, 2014). Moreover, obtaining funding is only one barrier and, given the small amounts possibly attainable, it is rarely sufficient for firm success (Alvarez and Barney, 2014). Because communication systems are often not well developed or widely accessible, and/or language is a barrier, increased awareness and understanding by the broader population necessary for adoption and diffusion Please cite this article as: de Lange, D.E., Legitimation Strategies for Clean Technology Entrepreneurs Facing Institutional Voids in Emerging Economies, J. Internat. Manag. (2016), http://dx.doi.org/10.1016/j.intman.2016.06.002

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of the new technology is often a challenge (Stork et al., 2013). Many technologies are described in widely used languages such as English or French (and others) such that people speaking local dialects of other languages find it difficult to find documentation in their own languages. After hearing about a technology, they might not be able to look it up on the internet and/or in their own language for further information and understanding, as many of us would in other places with fast internet connections to websites in our dominant languages. Without a general understanding of the technologies and their usefulness, they cannot be accepted, utilized properly, maintained, shared, and diffused. Word-of-mouth becomes a critical facet of the local marketing campaign and each individual is important in a very relationship-oriented chain of communication (Pauwels et al., 2013). Non-market partnerships can be helpful because they can provide funds (Alvarez and Barney, 2014), but they also may have the charitable motivation to aid in other ways including the diffusion process. A recent study on partnerships in development finance and sustainable energy records multiple cases of successful alliances between microfinance and technology firms (Devine et al., 2010). The report defines development finance as funds offered to institutions and projects intending to lessen poverty and provide access to financial and other required services for poor and low-income households (Devine et al., 2010). The funds may be in the form of loans, equity or grants. Social investors, including the public and multilateral investors, have provided funds for new technology firms (Devine et al., 2010). Also, more specifically to clean tech, the International Energy Agency reports that secure and dedicated funds are required after initial implementation of stand-alone systems or else there is likely to be deelectrification (Niez, 2010). The IEA report also emphasizes the importance of the private sector in electrifying remote villages when stand-alone systems are required (Niez, 2010). As an example of a multi-pronged approach, the Samta Samriddhi Foundation, the Acumen Fund, and The Shell Foundation are joint investors in Husk Power Systems (HPS), a clean energy firm in a location of India that no utility has supplied (Dichter, 2010; Norbu, 2011). Niez (2010) explains that in India the costs of rural electrification, corruption, a lack of political will, and mismanagement have prevented utilities from engaging in rural projects, making this an exemplar of institutional voids. In the successful HPS scenario, charitable funding, extensive CSR initiatives and good will building are offered in concert with the business solution. Dahlsrud's (2008) analysis of definitions of CSR finds that while there are many, they are fairly consistent in their overall meanings. One that is short and consistent with this work is chosen as: “Actions that appear to further some social good, beyond the interests of the firm and that which is required by law.” (McWilliams and Siegel, 2001: 117). The Samta Samriddhi Foundation helps HPS with CSR initiatives such as offering children's education. These activities build trust with the local population who are the target customers. Also, with its funding partners, HPS can give away free light bulbs and unlimited cell phone charging so, by word-of-mouth, the good news spreads. This pull, rather than push, marketing strategy is more cost effective for a budding firm (Walsh et al., 2002). Engaging in the good will initiatives is still costly, but also necessary to encourage adoption in more populous areas where direct communication with each household is time consuming, if not impossible. Thus, customers become part of the marketing initiative to aid in distributing and maintaining HPS's energy solution (Zott and Huy, 2007). Although, as in the first proposition, local technology entrepreneurs can be endorsing leaders themselves, they also may need responsible investment partners to help support wider local adoption, diffusion, and general adoption (see Fig. 2). A hero entrepreneur buoyed by a local general consensus that the venture is worthwhile contributes to the development of a supportive organizational field where there are institutional weaknesses. Funding agencies' involvement signals an additional wider consensus because they are often large international bureaucracies that require internal consensuses to release funds on behalf the new ventures they support (Afful-Koomson, 2015). Each funding agency has its version of due diligence. This not only enables the small firm in terms of resources to build customer word-of-mouth endorsement, but also the well-known funder provides it with a legitimating endorsement (Rao, 1994; Suchman, 1995). Although many locals may be more interested in the direct benefits they receive and may not pay heed to the larger bureaucratic endorsement, other larger regional and government players could pay notice, giving the small firm a boost. They form an organizational field that crystalizes long-term support and substitutes for missing market oriented institutions. HPS did gain government notice afterwards and a government carbon credit initiative was set up. Thus, the following proposition recognizes the importance of non-market partnerships for building an organizational field that can support some local validation, diffusion, and some general validation. Proposition 2. The more support that well known non-market partners supply to EM founders, the greater is the likelihood that the start-up will be able to reach the wider marketplace with its innovation.

2.3. Relationships with locally influential leaders Often in smaller, less populous locales (incidentally, also where institutional weaknesses occur) the opinion of local community elders and trusted leaders is important (Mbele, 2004; Sisco and Stewart, 2009). In contrast, in large densely populated metropolitan areas politicians are often viewed as part of a larger institutionalized bureaucratic machinery; they are not necessarily trusted and their opinions are less likely to resonate with locals (John and Cole, 1999; Litt, 1963). In some less developed areas, however, traditional hierarchies have remained intact and the leaders are trusted because they are understood as taking a longer term view of their roles in terms of protecting their communities for generations to come. For example, research has stated that, “Aboriginal leadership is about meeting the needs of the entire community, about connecting with one's past and having a deeper appreciation that the actions of the leader will have an impact for seven generations in the future.” (Sisco and Stewart, 2009: 16). Please cite this article as: de Lange, D.E., Legitimation Strategies for Clean Technology Entrepreneurs Facing Institutional Voids in Emerging Economies, J. Internat. Manag. (2016), http://dx.doi.org/10.1016/j.intman.2016.06.002

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While these socio-political systems are to be respected, they can create barriers for the implementation of new technological systems (de Jonge, 1979; Erazo, 2010; Haalboom and Campbell, 2011; Sisco and Stewart, 2009). The local leadership can influence the wider base of potential support at the adoption stage and over the life of the installed technology. For example, where help for maintenance of systems can be purchased in metropolitan areas and/or government provides it, in many other places, the services are not as readily available and, instead, the users have to maintain their own equipment (Teitel, 2006). If new technology breaks and no one understands it or values it enough to fix it, it is lost and the old ways remain. In the case of HPS, the firm built and maintained good relationships with local influential elders so that the power systems would be well cared for by the locals, collections would go more smoothly, and fraud would be reduced (Mbele, 2004; Starr and MacMillan, 1990; WEC, 2001). These relationships with local leaders are fostered by the CSR initiatives and enabled by the aforementioned partnerships, such as job training and education. Thus, in Fig. 2, the previous proposition and the following one are shown as linked. Previous research has paralleled the long-term community orientation of local leaders with emphasis on and concern for corporate social responsibility by the same leaders (Sisco and Stewart, 2009). Because the CSR activities are less directly associated with business needs and are in line with community needs, a start-up does not appear so purely opportunistic and some trust is built with the local leader who can then endorse the firm with the local people (Kakar, 1971; Matten and Crane, 2005; Rao, 1994; Starr and MacMillan, 1990; Suchman, 1995; Zott and Huy, 2007). Without the CSR activities, the local hierarchy has little demonstrable basis for its endorsement. LG Electronics (LG) is an example of a large firm that has capitalized on CSR to build trust as it has internationalized around the world (Ramaswamy, 2007). LG locates in rural areas and builds schools, health care facilities, and sponsors popular activities like sports, for just a few examples (Ramaswamy, 2007). Ultimately, the positive relationships support increased adoption and increase the likelihood of the longevity of the firm (Carroll and Shabana, 2010). A firm cannot continue to attract more customers if its existing customer base does not sustain it. Other research also supports the contention that having village leaders and users' understanding and involvement in the dissemination process more cost-effectively aids the implementation of sustainable solutions (Erazo, 2010; Haalboom and Campbell, 2011; Karekezi, 2012; Wimmer, 2002). As the firm's ally, the locally trusted hierarchy disseminates information and builds consensus with the local community regarding the importance of the continuance of the entrepreneurial firm. Niez (2010) explains that community decision makers may be required to dispel negative myths about new technologies. However, the firm must demonstrate genuine CSR to gain local leaders' and, by extension, their communities' support (Skinner and Mersham, 2008). When this local trust and understanding of firm value to the community is achieved, customers respond accordingly. Thus, a supportive organizational field within the community develops for lasting support of the firm and one that substitutes for missing market oriented institutions. As shown in Fig. 2, this strategy aids in local validation and diffusion. A proposition conveying this legitimation strategy, related to building local leaders' trust in combination with CSR initiatives, is below. Proposition 3. The more positive are the relationships between a firm founder and local leaders, in combination with CSR initiatives, the wider will be the adoption of the start-up's solution supporting increased longevity of the firm.

2.4. Accessing wealthier markets When resources are not plentiful in local environments and there are institutional voids, small technology firms are likely to struggle unless they build external relationships (McNaughton, 2003). Markets are either not developed, not large enough, or simply not prepared to support a new venture's innovation for lack of belief in the product's viability. External business relationships in wealthier markets are not only beneficial from the standpoint of additional revenue, but also as endorsements that can support general validation (see Fig. 2). Often, the general validation feeds back to the local context, thus building a supportive organizational field that results in more local validation and diffusion. Several approaches to moving into wealthier markets are possible and some may work better than others for firms in the context of this research (Hill and Mudambi, 2010). Generally, selling products into larger, wealthy markets is possible through a variety of routes such as trade, international partnerships, and foreign direct investment (Yamakawa et al., 2008). Research has highlighted the growing prominence of emerging market firms through internationalization to both developing and developed markets (Kumar et al., 2013). The internationalization options may be narrowed down and/or require more specific strategies given the circumstances. The ‘born global’ strategy can help a firm to grow, especially where local markets cannot support sufficient sales for a start-up to survive (McNaughton, 2003). Crick (2009: 455) reports that, “recent studies have identified firms that do not adopt a gradual and incremental approach but instead exhibit rapid internationalization and high-market commitment soon after inception.” Start-ups need international contacts for this to work and this could be difficult, depending on the entrepreneur and the capabilities for building the international connections quickly. Other research on internationalization of new ventures (INVs) discusses how small firms internationalize more incrementally (Coviello, 2006; Turcan, 2011). Pertinent to this research, Turcan (2011) focuses on legitimation through manipulation strategies over the dotcom bubble time period (1999 to 2001) in Scotland, linking legitimation to the environment in which the INV operates. Supportive of this research, that work recognizes the context dependence of legitimation strategies, but the contexts are not similar enough. Other related INV research examines cases where young firms lack a history of trusted alliance partners such that the new firms feel pressured to disclose their inventions to potential corporate partners who desire reassurance (Duschnitzsky and Shaver, 2009). A new venture may fear imitation, thus preferring a venture capital (VC) partner (Duschnitzsky and Shaver, Please cite this article as: de Lange, D.E., Legitimation Strategies for Clean Technology Entrepreneurs Facing Institutional Voids in Emerging Economies, J. Internat. Manag. (2016), http://dx.doi.org/10.1016/j.intman.2016.06.002

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2009). Although the intellectual property concern is realistic in the context of this research, the very small emerging market startups are unlikely to be on the radar screens of large investors, whether VCs or corporations (Higgins and Gulati, 2006; Lockett and Wright, 2002). Thus, other previous studies considering VCs as legitimizing partners are not applicable here (Lee et al., 2001; Stuart and Sorenson, 2007; Yamakawa et al., 2008). So, short of having the international contacts to be born global, how might a start-up in the context of this research internationalize incrementally? Evidence points to the success of new ventures, originally founded in some challenging contexts, that internationalize early and move into wealthier markets. For example, a report by the Clean Energy Group suggested that developed country markets are destinations for new technology from developing countries (Morey et al., 2011). A World Bank report mentions that nine emerging economies (Argentina, Brazil, China, Hungary, India, Malaysia, Mexico, the Russian Federation, and South Africa) are excelling in green-tech innovation capacity, accounting for almost 80% of all US green patent grants attributed to developing countries between 2006 and 2010 (Dutz and Sharma, 2012; World Bank, 2010). Less developed contexts have been conducive to the invention and scaling of disruptive new technologies in multiple sectors including clean technology, agriculture, mobile communications, and pharmaceuticals. The rationale is that frugal innovations, in the absence of existing infrastructure, can be more rapidly adopted to scale (Govindarajan and Ramamurti, 2011; Hart and Christensen, 2002). Frugal innovations are not necessarily of low quality; rather, these products are designed to different priceperformance characteristics or the manufacturing process is redesigned to drive down costs (The Economist., 2010; Gadl and Knobloch, 2011). Therefore, technology transfer occurs South-to-North and South-to-South, such that South nations have become leading exporters (Brewer, 2008; Govindarajan and Ramamurti, 2011). India, for example, exports oil extraction machines for use in refining feedstocks used in biofuels, Mexico exports solar hot water heaters, Malaysia is strong in solar energy, and Indonesia exports compact fluorescent lamps (Brewer, 2008; Steenblik, 2006; World Bank, 2007). Businesses that begin modestly with frugal innovations may find that business value and scale increases substantially when they create products for the local EM conditions and then adapt them for wealthier markets. This phenomenon has been referred to as reverse innovation (Govindarajan and Ramamurti, 2011). Although a very small firm may not attract investment, its products or services could be interesting to international buyers. Previous research has discussed how new ventures are able to internationalize early through hybrid structures, which entail alliances and network building (McDougall et al., 1994; Coviello, 2006). When a firm's offerings are successful in a wealthier market, they gain an endorsement because the offerings are viewed as comparable with or even better than other competing offerings in the world. The offerings are perceived as valuable locally because wealthy buyers who have many choices have deemed them so by purchasing them. Thus, a young firm gains local legitimacy through international trade with a wealthier market. This is illustrated with the following story of Suzlon. Suzlon is an Indian wind power firm that was started by an entrepreneur, Tulsi Tanti, in 1995, who first ran Suzlon as a textile company (Baker, 2007). His firm needed a lower cost and more reliable alternative source of energy compared to the existing problematic power grid, and he realized that clean energy would benefit all of India (Karmali, 2006). The firm was relatively unknown, but managed to obtain a contract with Dan Mar and Associates in Minnesota, USA in 2003, a couple of years after the textile manufacturing side was sold (Baker, 2007; Karmali, 2006). In gaining this contract, Suzlon had beaten out European rivals' offerings through lower price, higher efficiency technology that better suited the wind environment of the US Midwest (Karmali, 2006). Repeat orders followed. This lent credibility to Suzlon through an endorsement of its quality and technology, not only because it defeated perceived high quality European products, but also because a US firm, from a prominent developed nation, chose its products (Yamakawa et al., 2008). Later, Suzlon accumulated greater successes and is today a multinational corporation, but this earlier international support was important for the local validation and diffusion of its wind energy products in India. By 2006, Suzlon had 35% of the Indian market, representing 90% of its sales (Karmali, 2006). Previous theory has also proposed that FDI entry into a developed country, rather than another emerging economy, builds legitimacy for a new venture at home through a perception of higher quality and credibility (Yamakawa et al., 2008). FDI is too ambitious for a very small firm in the context suggested in this research, but trade is quite viable and adds a ‘world-class’ perception, thus also convincing the locals. This discussion leads to two propositions, as depicted in the figures where Fig. 2 shows a feedback loop related to the increased local validation and diffusion resulting from a supportive local organizational field that has developed after adoption by a wealthier market, representing more general validation. Proposition 4a. When EM founders seek endorsement of their solutions through exports to wealthier markets, the higher is the likelihood of general validation. Proposition 4b. When EM founders seek endorsement of their solutions through exports to wealthier markets, the higher is the likelihood of local adoption. 3. Discussion, conclusions and future research Through an examination of a recent issue - alternative energy adoption in areas of EMs where there is no reliable electricity supply - this work has proposed that organizational field formation is motivated through contextually dependent legitimation strategies, ultimately filling institutional voids in EMs. Various constellations of actors come together to influence the success of a new energy firm, in spite of a lack of the types of institutional supports that would be expected in developed countries. This work extends previous literature that has recognized that fields form around issues, by explaining how this might happen in contexts so different from those in the developed world. This contribution to explaining transformative change, from an institutional Please cite this article as: de Lange, D.E., Legitimation Strategies for Clean Technology Entrepreneurs Facing Institutional Voids in Emerging Economies, J. Internat. Manag. 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theory perspective, is proposed under different circumstances compared to most previous research that has primarily considered large firms in the industrialized world. Also, although this research has used renewable energy firms as illustrations, this theory could be generalized to many other clean tech subsectors and other industries facing similar circumstances. In particular, this work has proposed that organizational field formation can be manipulated by an entrepreneur to become supportive under some circumstances, thus moving an innovation through the legitimation stages of local validation, diffusion and general validation. The legitimation strategies that an entrepreneur may have at his or her disposal for this purpose are contextually dependent. Where institutional voids are a hindrance to new ventures, as can be the case in some areas of EMs, an entrepreneur may need to address the circumstances of the local organizational field so that it becomes workable enough to substitute for institutional weaknesses. Many approaches to legitimation in previous literature have been designed for developed country locations where institutions and local market systems are well established. Moreover, some techniques, like manipulation, have been ruled out for entrepreneurs. With the change in context, however, it becomes quite reasonable that an entrepreneur could manipulate circumstances in his or her favor. In less institutionally and bureaucratically formalized environments, various constellations of actors may come together to influence the success of a new firm. In fact, an informal context can be less restrictive and offer what might be described as a ‘blank slate’. These circumstances may be advantageous for otherwise unconventional solutions and offer entrepreneurial advantages. Thus, this research adds to a small body of work on institutional entrepreneurship in the entrepreneurial SME context where institutional voids are prevalent and a hindrance to the new ventures. The context is turbulent and uncertain, but also open to change (Dosi, 1982; Tushman and Anderson, 1986). This research suggests that the field forms so as to support a start-up through initial entrepreneurial leadership together with endorsements including: 1) symbolic social connections that turn the local heroic entrepreneur into a trusted endorser, 2) prominent non-market partners who can aid in the wider adoption of the offering, 3) alliances with trusted local leaders together with CSR initiatives, and 4) recognition through exports to wealthier markets. This work is instructive for entrepreneurs facing conditions such as those outlined. It sets out a multi-faceted agenda, as suggested by the propositions, that an entrepreneur should address, in addition to product/service and business model development. Adoption, diffusion, and distribution strategies should be tailored to the targeted location(s). A main message for entrepreneurs is that fostering connections to a community can be life giving to a start-up. This research is also encouraging to such entrepreneurs because it demonstrates that even under very difficult circumstances, the “power of one” can be transformative, recognizing that one person can gain the support required, but strategy must be well designed. Also, non-native social entrepreneurs that are seeking to enhance a community may want to consider finding a local business partner. The local partner will often have both social connections and tremendously deep knowledge relating to the local history and culture beneficial for understanding what will work in the particular context. The aforementioned theory has policy implications such that governments may be clearer about the challenges these outback technology start-ups face and attempt to ameliorate them, given limited resources and contextual factors. For example, government could create an introduction process to help these firms find parties interested in getting involved with them, as reflected in the propositions. The resource intensiveness of such a scheme could be prohibitive, but a government could ask for NGO assistance. Also, a government could administer a secure crowd funding site with systems in place to verify the existence and information about the start-ups on them so that donors/investors could be reassured. As mentioned, India has gone so far as to legislate the requirement for CSR funding. A problem with this is that the CSR can no longer signal trust because it is not forthcoming as a result of good will. Thus, government policies will need to be carefully pilot tested, considering how they may skew the context, prior to launching initiatives that may be well intentioned but that could also create other problems. In addition, this theorizing is useful to policy makers in influencing energy supply decisions so that clean alternative energy may be an early outcome decision. Emerging economies such as Brazil, India, Kenya, and South Africa and many others are growing rapidly with large populations to satisfy. In that process of growth, all types of actors including individuals, households, and organizations are using polluting energy sources that result in carbon emissions causing climate change. After polluting utilities are entrenched and firms that supply them with fossil fuels reach a mature stage, it is very hard to change legitimized institutionalized myths and taken-for-granted habits, as we have seen in the West (DiMaggio and Powell, 1983; Meyer and Rowan, 1977). In outback areas of EMs that do not have powerful established energy players, entrepreneurial firms may experiment to discover viable cleaner, alternative energy technologies that match particular local conditions. Some of these successful experiments could be scaled up to become large scale energy systems that gain legitimacy early on so as to become permanent before other polluting power can make inroads. First-mover advantages are won, as long as the new systems are sustained with funding and upkeep. As power monopolies in more developed areas within EMs are broken down through inroads made in the outlying areas of EMs, and other barriers to entrepreneurs are removed, this scenario could entrench clean energy for the long-term. Moreover, reverse innovation could result in additional economic development, creating more and stronger international connections that promote knowledge sharing, improved geopolitical relations, and broader adoption of clean energy through exports and international exchange for improved innovation. Understanding the process of field formation and legitimation strategies, especially in light of institutional voids, can inform broader plans for motivating technological transformations. If a renewable energy choice is desirable from the point of view of a national policy maker facing a weak institutional environment, support for the development of an entrepreneurial ecosystem is important. Broader consensus-building is also required and governments can support information dissemination to all stakeholders so that they may understand and accept a vision of clean alternative energy. Experts have suggested that long-term renewable energy government programs, training, financing mechanisms, and innovative dissemination strategies are needed, but in these contexts, may be difficult to implement in the short term (Dutz and Sharma, 2012; Karekezi, 2012). Please cite this article as: de Lange, D.E., Legitimation Strategies for Clean Technology Entrepreneurs Facing Institutional Voids in Emerging Economies, J. Internat. Manag. (2016), http://dx.doi.org/10.1016/j.intman.2016.06.002

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Future research could include case studies that examine the beginnings of firms in their organizational fields, and their evolution as legitimation occurs, to provide more support for this theoretical work. Also, additional legitimation strategies may be discovered through grounded theory building within similar contexts. Large-scale data sets for statistical analyses in these contexts are difficult to collect, partly because of the institutional voids and the prohibitive costs involved, so this is a limitation for future research, as it is now. Thus, a case study approach is encouraged. For example, comparative studies could examine the long-term sustainability of renewable power installations in communities and how they are maintained, altered, or replaced. An additional line of research is how, after sustainable technologies are adopted, they can evolve into technology platforms and broader markets. For example, Broad Group integrated an air pollution meter into a mobile phone, thus acting like an education mechanism building collective awareness among citizens, leading to grass roots change (Wood, 2012). Thus, the organizational field is stabilized with strong and multiple structures - social, technological, institutional, and otherwise - to maintain a particular direction and one that is more sustainable. This research has examined off-grid adoption of renewable energy in outlying areas of EMs where utilities rarely supply energy. Brazil is a case where clean hydro is a major source for grid electrification (Niez, 2010). In contrast, in South Africa, the stand-alone solar program is viewed as temporary and second class even though it is a viable alternative to provide a major portion of its power needs. It is currently using coal for grid electrification (Niez, 2010). 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Please cite this article as: de Lange, D.E., Legitimation Strategies for Clean Technology Entrepreneurs Facing Institutional Voids in Emerging Economies, J. Internat. Manag. (2016), http://dx.doi.org/10.1016/j.intman.2016.06.002