From Plan to Plant: Effects of Certification on Operational Start-up in the Emergent Independent Power Sector

Abstract

In this paper, we study the transition from planned venture to operational start-up in the emergent independent power sector. Planned ventures face tremendous obstacles in assembling the resources necessary to begin operations; we hypothesize and show that formal certification from authorized actors increases the likelihood of making this transition. Moreover, we find that the effects of certification are contingent on the legitimacy of the sector as a whole: Certifications have a stronger effect on start-ups when sector legitimacy is low than when it is high. This research helps us understand a rarely studied organizational transition—from entrepreneurial intention to actual operations—within nascent sectors. It directs attention to the legitimating effects of formal certification, highlights the importance of a multilevel approach to legitimacy, and contributes to the growing rapprochement between entrepreneurial studies and institutional theory.