Share:

Entrepreneurs competing between legitimacy and financial sustainability in times of COVID-19: The role of family and friends’ support

Downloads

Download data is not yet available.

Abstract

Entrepreneurship plays a significant role in a country’s development, through new ventures and innovation. In recent times, entrepreneurs have incorporated sustainability into their practice to become more competitive and productive. However, during the COVID-19 pandemic, entrepreneurship has faced the challenge of deciding to allocate limited resources to maintain legitimacy. This paper analyzes the relationship between legitimacy and financial sustainability in COVID-19 times among Colombian entrepreneurs, moderated by family and friends’ support. Primary data was collected through a survey of 219 Colombian entrepreneurs. The structural equation model technique was used to validate the model. The study findings revealed that legitimacy positively affects financial sustainability and is positively enhanced by the family’s support of Colombian entrepreneurs while being negatively moderated by friends’ support.

Keyword : COVID-19, entrepreneurship, financial sustainability, organizational legitimacy, social capital COVID-19, empreendedorismo, sustentabilidade financeira, legitimidade organizacional, capital social

How to Cite
Bohorquez, N. D. P., Cabañas, M. A., & García, L. D. G. (2023). Entrepreneurs competing between legitimacy and financial sustainability in times of COVID-19: The role of family and friends’ support. Brazilian Business Review, 21(2). https://doi.org/10.15728/bbr.2022.1192.en

References

Abughniem, M. S., & Hamdan, A. (2019). Corporate sustainability as an antecedent to the financial performance: An empirical study. Polish Journal of Management Studies, 20(2), 35–44. https://doi. org/10.17512/pjms.2019.20.2.03 Acquah, I. S. K., Essel, D., Baah, C., Agyabeng-Mensah, Y., & Afum, E. (2021). Investigating the efficacy of isomorphic pressures on adopting green manufacturing practices and its influence on organizational legitimacy and financial performance. Journal of Manufacturing Technology Management, 32(7), 1399–1420. https://doi.org/10.1108/JMTM-10-2020-0404 Ahmed, M. R. M., & Kayat, K. (2020). Examining the moderating effect of entrepreneurship education on the relationship between entrepreneurial self-efficacy, family support, friends support and entrepreneurial intention of final year female tourism undergraduate students in Egypt. Journal of Global Economics, Management and Business Research, 12(1), 1–21. https://www.ikppress.org/ index.php/JGEMBR/article/view/4918 Al-Omoush, K. S., Simón-Moya, V., & Sendra-García, J. (2020). The impact of social capital and collaborative knowledge creation on e-business proactiveness and organizational agility in responding to the COVID-19 crisis. Journal of Innovation & Knowledge, 5(4), 279–288. https:// doi.org/10.1016/j.jik.2020.10.002 Ameer, R., & Othman, R. (2012). Sustainability practices and corporate financial performance: A study based on the top global corporations. Journal of Business Ethics, 108(1), 61–79. https://doi. org/10.1007/s10551-011-1063-y Anon. (2021). Managing the reputation risk of unethical supply chain behavior: One bank’s example of how sustainable procurement initiatives save money. Annals in Social Responsibility, 7(1), 1–3. https://doi.org/10.1108/ASR-01-2021-0007 Baah, C., Agyabeng-Mensah, Y., Afum, E., & Mncwango, M. S. (2021). Do green legitimacy and regulatory stakeholder demands stimulate corporate social and environmental responsibilities, environmental and financial performance? Evidence from an emerging economy. Management of Environmental Quality: An International Journal, 32(4), 787–803. https://doi.org/10.1108/ MEQ-10-2020-0225 Barney, J. (2014). Gaining and sustaining competitive advantage. Pearson Bukonda, C., Disashi, L., & Mbiye, B. (2012). Health care entrepreneurship in the Democratic Republic of the Congo: An exploratory study. Journal of African Business, 13(2), 87–100. https:// doi.org/10.1080/15228916.2012.693433 Camargo Calderón, A. Y., Latorre Carrillo, L. F., & Gómez Contreras, J. L. (2020). Sustainable entrepreneurship in Colombia: Strengths and opportunities. Cuadernos de Administración, 36(68), 190–203. https://doi.org/10.25100/cdea.v36i68.9468 Campbell, J. R., & De Nardi, M. (2009). A conversation with 590 nascent entrepreneurs. Annals of Finance, 5(3), 313–340. https://ideas.repec.org/a/kap/annfin/v5y2009i3p313-340.html Cantele, S., & Zardini, A. (2018). Is sustainability a competitive advantage for small businesses? An empirical analysis of possible mediators in the sustainability–financial performance relationship. Journal of Cleaner Production, 182, 166–176. https://doi.org/10.1016/j.jclepro.2018.02.016 Cardozo, E., Velásquez de Naime, Y., & Monroy, R. (2012, July). La definición de PYME en América: Una revisión del estado del arte Definition of SMEs in Latin America: A review of the state ofthe art. In 6th International Conference on Industrial Engineering and Industrial Management (pp. 1345–1352). https://oa.upm.es/19398/ Caussat, P., Prime, N., & Wilken, R. (2019). How multinational banks in India gain legitimacy: Organisational practices and resources required for implementation. Management International Review, 59(4), 561–591. https://link.springer.com/article/10.1007/s11575-019-00387-6 Cohen, J. (1992). A power primer. Psychological Bulletin, 112(1), 155–159. https://doi.org/10.1037/0033- 2909.112.1.155 Colovic, A., & Schruoffeneger, M. (2021). Entrepreneuring for deprived urban communities: Exploring the role of micro‐entrepreneurship. European Management Review, 19(3), 450–461. https://doi.org/10.1111/emre.12458 Confecámaras. (2020). Report of company creation dinamics in Colombia. https://www.confecamaras. org.co/phocadownload/2020/Analisis_Economicos/Informe%20Din%C3%A1mica%20de%20 Creaci%C3%B3n%20de%20Empresas%20III%20Trimestre%202020.pdf Confecámaras. (2021). Report of company creation dinamics in Colombia. https://www.confecamaras. org.co/phocadownload/2020/Informe_Din%C3%A1mica_de_Creaci%C3%B3n_de_Empresas___ Prime_trimestre_2021_002.pdf Csikósová, A., Janošková, M., & Čulková, K. (2020). Providing of tourism organizations sustainability through Tripple Bottom Line approach. Entrepreneurship and Sustainability Issues, 8(2), 764–776. https://doi.org/10.9770/jesi.2020.8.2(46) Czinkota, M., Kaufmann, H. R., & Basile, G. (2014). The relationship between legitimacy, reputation, sustainability and branding for companies and their supply chains. Industrial Marketing Management, 43(1), 91–101. https://doi.org/10.1016/j.indmarman.2013.10.005 DANE –– Departamento Administrativo Nacional de Estatística. (2020). Principales indicadores del mercado laboral, Diciembre de 2020. Boletín Técnico GEHI.https://www.dane.gov.co/files/ investigaciones/boletines/ech/ech/bol_empleo_dic_20.pdf Danes, S. M., & Jang, J. (2013). Copreneurial identity development during new venture creation. Journal of Family Business Management, 3(1), 45–61. https://doi.org/10.1108/20436231311326481 Danes, S. M., Craft, S. M., Jang, J., & Lee, J. (2013). Liability of newness: Assessing couple social support when starting a new business venture. Journal of Marital and Family Therapy, 39(4), 515–529. https://doi.org/10.1111/j.1752-0606.2012.00308.x Danso, A., Adomako, S., Amankwah‐Amoah, J., Owusu‐Agyei, S., & Konadu, R. (2019). Environmental sustainability orientation, competitive strategy and financial performance. Business Strategy and the Environment, 28(5), 885–895. https://doi.org/10.1002/bse.2291 Davidsson, P., & Gordon, S. R. (2016). Much ado about nothing? The surprising persistence of nascent entrepreneurs through macroeconomic crisis. Entrepreneurship Theory and Practice, 40(4), 915–941. https://doi.org/10.1111/etap.12152 D’cruz, M., & Banerjee, D. (2020). ‘An invisible human rights crisis’: The marginalization of older adults during the COVID-19 pandemic–An advocacy review. Psychiatry Research, 292, 113369. https://doi.org/10.1016/j.psychres.2020.113369 De Massis, A., Audretsch, D., Uhlaner, L., & Kammerlander, N. (2018). Innovation with Limited Resources: Management Lessons from the German Mittelstand. Journal of Product Innovation Management, 35(1), 125–146. https://doi.org/10.1111/jpim.12373 Del-Castillo-Feito, C., Blanco-González, A., Díez-Martín, F., & Cachón-Rodríguez, G. (2022). Social capital and organizational legitimacy as competitive advantages in the information and communications technology sector. The Journal of High Technology Management Research, 33(2), 100441. https://doi.org/10.1016/j.hitech.2022.100441 Dhama, K., Patel, S. K., Kumar, R., Rana, J., Yatoo, M. I., Kumar, A., Tiwari, R., Dhama, J., Natesan, S., Singh, R., & Harapan, H. (2020). Geriatric population during the COVID-19 pandemic: Problems, considerations, exigencies, and beyond. Frontiers in Public Health, 8, 574198. https:// doi.org/10.3389/fpubh.2020.574198 Dhewanto, W., Ratnaningtyas, S., Permatasari, A., Anggadwita, G., & Prasetio, E. A. (2020). Rural entrepreneurship: Towards collaborative participative models for economic sustainability. Entrepreneurship and Sustainability Issues, 8(1), 705. https://doi.org/10.9770/ jesi.2020.8.1(48) Díez-De-Castro, E., & Peris-Ortiz, M. (2018). Organizational legitimacy. Springer. Elkington, J. (2013). Enter the triple bottom line. In A. Henriques & J. Richardson (Eds.), The triple bottom line: Does it all add up? (pp. 1–6). Routledge. Ferro, S., & Vocciante, M. (2021). Sustainable environmental solutions. Applied Sciences, 11(15), 6868. https://doi.org/10.3390/app11156868 Field, A. (2018). Discovering statistics using IBM SPSS statistics (5th ed.). SAGE. Galbreath, J. (2005). Which resources matter the most to firm success? An exploratory study of resourcebased theory. Technovation, 25(9), 979–987. https://doi.org/10.1016/j.technovation.2004.02.008 Ge, B., Jiang, D., Gao, Y., & Tsai, S.-B. (2016). The influence of legitimacy on a proactive green orientation and green performance: A study based on transitional economy scenarios in China. Sustainability, 8(12), 1344. https://doi.org/10.3390/su8121344 Giacomini, D., Martini, M., Sancino, A., Zola, P., & Cavenago, D. (2021). Corporate social responsibility actions and organizational legitimacy at the peak of COVID-19: A sentiment analysis. Corporate Governance: The International Journal of Business in Society, 21(6), 1043–1058. https://doi.org/10.1108/CG-09-2020-0389 Guthrie, J., & Parker, L. D. (1989). Corporate social reporting: A rebuttal of legitimacy theory. Accounting and Business Research, 19(76), 343–352. https://doi.org/10.1080/00014788.1989.9728863 Hair, J. F., Anderson, R. E., Tatham, R. L., & Black, W. C. (1998). Multivariate data analysis. Prentice Hall. He, J., He, L., Zhou, W., Nie, X., & He, M. (2020). Discrimination and social exclusion in the outbreak of COVID-19. International Journal of Environmental Research and Public Health, 17(8), 2933. https://doi.org/10.3390/ijerph17082933 Hollos, D., Blome, C., & Foerstl, K. (2012). Does sustainable supplier co-operation affect performance? Examining implications for the triple bottom line. International Journal of Production Research, 50(11), 2968–2986. https://doi.org/10.1080/00207543.2011.582184 Hulsink, W., & Koek, D. (2014). The young, the fast and the furious: A study about the triggers and impediments of youth entrepreneurship. International Journal of Entrepreneurship and Innovation Management, 18(2–3), 182–209. https://doi.org/10.1504/IJEIM.2014.062876 Iakovleva, T., & Kickul, J. (2011). Beyond social capital: The role of perceived legitimacy and entrepreneurial intensity in achieving funding success and superior venture performance in women-led Russian SMEs. International Journal of Entrepreneurship and Small Business, 14(1), 13–38. https://doi.org/10.1504/IJESB.2011.042161 Jupp, V. (2006). The sage dictionary of social research methods. Sage. Kim, J., & Kraft, E. (2017). The effects of dedication to environmental legitimacy on HEI-wide innovativeness and applications for admission: From natural resource-based view. Journal of Cleaner Production, 168, 105–117. https://doi.org/10.1016/j.jclepro.2017.08.218 Klyver, K., Honig, B., & Steffens, P. (2018). Social support timing and persistence in nascent entrepreneurship: exploring when instrumental and emotional support is most effective. Small Business Economics, 51(3), 709–734. https://doi.org/10.1007/s11187-017-9964-5 Kotha, R., & George, G. (2012). Friends, family, or fools: Entrepreneur experience and its implications for equity distribution and resource mobilization. Journal of Business Venturing, 27(5), 525–543. https://doi.org/10.1016/j.jbusvent.2012.02.001 Kushnirovich, N., & Heilbrunn, S. (2008). Financial funding of immigrant businesses. Journal of Developmental Entrepreneurship, 13(2), 167–184. https://doi.org/10.1142/S1084946708000910 Lanis, R., & Richardson, G. (2013). Corporate social responsibility and tax aggressiveness: A test of legitimacy theory. Accounting, Auditing & Accountability Journal, 26(1), 75–100. https://doi. org/10.1108/09513571311285621 Li, D., Zheng, M., Cao, C., Chen, X., Ren, S., & Huang, M. (2017). The impact of legitimacy pressure and corporate profitability on green innovation: Evidence from China top 100. Journal of Cleaner Production, 141, 41–49. https://doi.org/10.1016/j.jclepro.2016.08.123 Lightman, N. (2021). Caring during the COVID‐19 crisis: Intersectional exclusion of immigrant women health care aides in Canadian long‐term care. Health & Social Care in the Community, 30(4), e1343–e1351. https://doi.org/10.1111/hsc.13541 Lightstone, K., & Driscoll, C. (2008). Disclosing elements of disclosure: A test of legitimacy theory and company ethics. Canadian Journal of Administrative Sciences: Revue Canadienne des Sciences de l’Administration, 25(1), 7–21. https://doi.org/10.1002/cjas.50 Maama, H. (2021). Achieving Financial Sustainability in Ghana’s Banking Sector: Is Environmental, Social and Governance Reporting Contributive? Global Business Review, 09721509211044300. https://doi.org/10.1177/09721509211044300 Malhotra, N. K., & Dash, S. (2011). Marketing research: An applied orientation. Pearson Education Limited. Martin-de Castro, G. (2021). Exploring the market side of corporate environmentalism: Reputation, legitimacy and stakeholders’ engagement. Industrial Marketing Management, 92, 289–294. https:// doi.org/10.1016/j.indmarman.2020.05.010 Ministerio de Comercio. (2019, June 5). Decreto 957 de Junio de 2019. Ministerio de Comercio, Industria y Turismo. https://www.mipymes.gov.co/temas-de-interes/definicion-tamano-empresarialmicro- pequena-median. Miotto, G., Del-Castillo-Feito, C., & Blanco-González, A. (2020). Reputation and legitimacy: Key factors for Higher Education Institutions’ sustained competitive advantage. Journal of Business Research, 112, 342–353. https://doi.org/10.1016/j.jbusres.2019.11.076 Morgül, G., & Fındıklı, M. A. (2022). When music changes, so does the dance: The role of social entrepreneurship in recovery response to the COVID-19 Pandemic. In M. Khosrow-Pour (Ed.), Research anthology on business continuity and navigating times of crisis (pp. 585–606). IGI Global. Nielsen, M. S., & Klyver, K. (2020). Meeting entrepreneurs’ expectations: The importance of social skills in strong relationships. Entrepreneurship & Regional Development, 32(9–10), 737–756. https:// doi.org/10.1080/08985626.2020.1757159 Nkongolo-Bakenda, J. M., & Chrysostome, E. V. (2020). Exploring the organizing and strategic factors of diasporic transnational entrepreneurs in Canada: An empirical study. Journal of International Entrepreneurship, 18, 336–372. https://doi.org/10.1007/s10843-020-00268-2 Nwoba, A. C., Boso, N., & Robson, M. J. (2021). Corporate sustainability strategies in institutional adversity: Antecedent, outcome, and contingency effects. Business Strategy and the Environment, 30(2), 787–807. https://doi.org/10.1002/bse.2654 O’Donovan, G. (2002). Environmental disclosures in the annual report. Accounting, Auditing & Accountability Journal, 15(3), 344–371. https://doi.org/10.1108/09513570210435870 Oleksiyenko, A. (2013). Organizational legitimacy of international research collaborations: Crossing boundaries in the Middle East. Minerva, 51(1), 49–69. https://doi.org/10.1007/s11024-013-9221-2 Osazefua Imhanzenobe, J. (2020). Managers’ financial practices and financial sustainability of Nigerian manufacturing companies: Which ratios matter most? Cogent Economics & Finance, 8(1), 1724241. https://doi.org/10.1080/23322039.2020.1724241 Pardo, C., & Alfonso, W. (2017). Applying “attribution theory” to determine the factors that lead to the failure of entrepreneurial ventures in Colombia. Journal of Small Business and Enterprise Development, 24(3), 562–584. https://doi.org/10.1108/JSBED-10-2016-0167 Payne, G., Cruz-Suarez, A., & Prado-Román, A. (2018). Legitimacy as competitive advantage: A US airline case study. In E. Díez-De-Castro & M. Peris-Ortiz (Eds.), Organizational legitimacy (pp. 121–140). Springer. Ramlall, I. (2016), Definition of SEM: Applied structural equation modelling for researchers and practitioners. Emerald Group Publishing Limited. https://doi.org/10.1108/978-1-78635-883- 720161001 Ransing, R., Ramalho, R., de Filippis, R., Ojeahere, M. I., Karaliuniene, R., Orsolini, L., Pinto da Costa, M., Ullah, I., Grandinetti, P., Gashi Bytyçi, D., Grigo, O., Mhamunkar, A., El Hayek, S., Essam, L., Larnaout, A., Shalbafan, M., Nofal, M., Soler-Vidal, J., Pereira-Sanchez, V., & Adiukwu, F. (2020). Infectious disease outbreak related stigma and discrimination during the COVID-19 pandemic: Drivers, facilitators, manifestations, and outcomes across the world. Brain, Behavior, and Immunity, 89, 555–558. https://doi.org/10.1016/j.bbi.2020.07.033 Raudeliūnienė, J., Tvaronavičienė, M., & Dzemyda, I. (2014). Towards economic security and sustainability: Key success factors of sustainable entrepreneurship in conditions of global economy. Journal of Security and Sustainability Issues, 3, 71–79. https://doi.org/10.9770/jssi.2014.3.4(7) Rosser, C., Ilgenstein, S. A., & Sager, F. (2022). The iterative process of legitimacybuilding in hybrid organizations. Administration & Society, 54(6), 1117–1147. https://doi. org/10.1177/0095399721105510 Salehi, M., & Arianpoor, A. (2021). The relationship among financial and non-financial aspects of business sustainability performance: Evidence from Iranian panel data. The TQM Journal, 33(6), 1447–1468. https://doi.org/10.1108/TQM-08-2020-0175 Scalzo, G., & Akrivou, K. (2020). Virtues, the common good, and business legitimacy. In J. D. Rendtorff (Ed.), Handbook of business legitimacy (pp. 263–275). Springer. Schaltegger, S., & Hörisch, J. (2017). In search of the dominant rationale in sustainability management: Legitimacy-or profit-seeking? Journal of Business Ethics, 145(2), 259–276. https://doi.org/10.1007/ s10551-015-2854-3 Schuman, M. C. (1995). Managing legitimacy: Strategic and institutional approaches. Academy of Management Review, 20(3), 571–610. https://doi.org/10.2307/258788 Searcy, C., & Buslovich, R. (2014). Corporate perspectives on the development and use of sustainability reports. Journal of Business Ethics, 121(2), 149–169. https://ideas.repec.org/a/kap/ jbuset/v121y2014i2p149-169.html Slaper, T. F., & Hall, T. J. (2011). The triple bottom line: What is it and how does it work. Indiana Business Review, 86(1), 4–8. Soluk, J. (2022). Organisations’ resources and external shocks: Exploring digital innovation in family firms. Industry and Innovation, 29(6), 792–824. https://doi.org/10.1080/13662716.2022.2065971 Suddaby, R., Bitektine, A., & Haack, P. (2017). Legitimacy. Academy of Management Annals, 11(1), 451–478. https://doi.org/10.5465/annals.2015.0101 Tajudin, P. N. M., Abd Rahim, N. A., Idris, K., & Arshad, M. M. (2021). Weathering the Economic Impact of COVID-19: Challenges Faced by Microentrepreneurs and Their Coping Strategies during Movement Control Order (MCO) in Malaysia. Pertanika Journal of Science and Technology, 29(S1), 1–12. https://doi.org/10.47836/pjssh.29.s1.15 Tarapuez-Chamorro, E., Aristizábal-Tamayo, J. M., & Monard-Blandón, C. (2018). Aspectos sociodemográficos y familiares e intención empresarial en estudiantes de Maestría en Administración en Colombia. Estudios Gerenciales, 34(149), 422–434. https://doi.org/10.18046/j.estger.2018.149.2757 Tung, L. T. (2020). Social responses for older people in COVID-19 pandemic: Experience from Vietnam. Journal of Gerontological Social Work, 63(6–7), 682–687. https://doi.org/10.1080/016 34372.2020.1773596 Varela, R., Soler, J., & Arango, C. (2021). Efectos de la COVID-19 en el ritmo empresarial colombiano. Editorial Universidad Icesi. Wagner, M. (2005). How to reconcile environmental and economic performance to improve corporate sustainability: Corporate environmental strategies in the European paper industry. Journal of Environmental Management, 76(2), 105–118. https://doi.org/10.1016/j.jenvman.2004.11.021 Welsh, D. H., Memili, E., Kaciak, E., & Al Sadoon, A. (2014). Saudi women entrepreneurs: A growing economic segment. Journal of Business Research, 67(5), 758–762. https://doi.org/10.1016/j. jbusres.2013.11.040 Xie, J., Nozawa, W., Yagi, M., Fujii, H., & Managi, S. (2019). Do environmental, social, and governance activities improve corporate financial performance? Business Strategy and the Environment, 28(2), 286–300. https://doi.org/10.1002/bse.2224 Yazici, S., Köseoglu, M. A., & Okumus, F. (2016). Identification of growth factors for small firms: Evidence from hotel companies on an island. Journal of Organizational Change Management, 29(6), 994–1029. https://doi.org/10.1108/JOCM-12-2015-0231 Yeung, R. M., Brookes, M., & Altinay, L. (2016). The hospitality franchise purchase decision making process. International Journal of Contemporary Hospitality Management, 28(5), 1009–1025. https:// doi.org/10.1108/IJCHM-08-2014-0399 Yoo, S., Keeley, A. R., & Managi, S. (2021). Does sustainability activities performance matter during financial crises? Investigating the case of COVID-19. Energy Policy, 155, 112330. https://doi. org/10.1016/j.enpol.2021.112330 Zelditch, M. (2006). Legitimacy theory. Contemporary Social Psychological Theories, 324, 352. Zuluaga, B. B., & Mejía, A. G. (2010). Aspectos conceptuales y empíricos de la financiación de nuevas empresas en Colombia. Cuadernos de Administración, 26(43), 81–98. http://www.scielo. org.co/scielo.php?script=sci_arttext&pid=S0120-46452010000100007

Send mail to Author


Send Cancel