Rule-breaking entrepreneurs in times of institutional instability: Seeking forgiveness for surviving

Abstract

Entrepreneurs are often considered rule-breakers who pursue opportunities that exploit institutional contradictions while also seeking an institutional response that deems these violations acceptable. We investigate this phenomenon during institutional instability, where entrepreneurs face severe restrictions imposed by an exogenous crisis, though they cannot draw upon a largely shared consensus to achieve legitimacy, thereby threatening their economic survival. Investigating 55 micro-small Italian enterprises which deliberately violated regulatory restrictions during the COVID-19 pandemic, we built a grounded model of three important contributions at the crossroads of rule-breaking entrepreneurship and legitimacy in times of institutional instability. First, we extend the concept of ‘forgiveness’ from evaluators, which aims to suspend rather than change evaluators’ judgements. Second, we show how entrepreneurs seek a ‘selected’ rather than a ‘generalised’ consensus to be at least tolerated by some key evaluators. Third, we document socio-cognitive strategies to attract consensus when a shared judgement of object legitimacy is missing.