How Do New Forms of Organizations Manage Institutional Voids? Social Enterprises’ Quest for Sociopolitical Legitimacy

Abstract

This study draws on institutional theory to provide insights into how new forms of organizations gain legitimacy under institutional voids. Based on interviews with leaders of 42 Chinese social enterprises (SEs), we find that dominant stakeholders—the state—are ambivalent about new ventures’ agendas and practices, which is displayed in their being sometimes supportive and other times skeptical, even hostile. SEs favor the contingent engagement political strategy to develop mutually beneficial relationships with the state while keeping a healthy distance. This enables them to gain sociopolitical legitimacy in a nonthreatening and acceptable way for survival and growth. The findings further highlighted the individual, organizational, and environmental factors that condition SE legitimation approaches, including the form of state control, leaders’ political capital, organizational social mission, and regional political environment. This study makes theoretical contributions to the institutional and SE literatures, highlighting stakeholder ambivalence as an essential characteristic of an institutional context fraught with institutional voids.