Responsible Entrepreneurship and Social Legitimacy in Turbulent and Demanding Market Environments

Abstract

This article explores the effect of responsible entrepreneurship on social legitimacy and contingent factors influencing this relationship. While research on responsible entrepreneurship is expanding, studies addressing the boundary conditions affecting its impact on legitimacy are scarce. Moreover, little is known about how these dynamics operate in markets characterized by high customer demandingness and turbulence, particularly in emerging economies. We extend legitimacy theory by proposing a model that examines the impact of responsible entrepreneurship on social legitimacy and the moderating roles of customer demandingness and market turbulence on this linkage. Using time-lag survey data from 231 firms in Vietnam, we find that responsible entrepreneurship positively influences social legitimacy. Furthermore, this relationship is amplified under high levels of customer demandingness, where customers expect firms to demonstrate ethical and socially responsible behaviors. Similarly, market turbulence strengthens the impact of responsible entrepreneurship on social legitimacy by making responsible practices more visible and impactful in addressing societal and environmental challenges. Our findings contribute to the literature by advancing the understanding of responsible entrepreneurship's role in legitimacy building, particularly in demanding and dynamic market environments. This study provides nuanced insights for entrepreneurs and policymakers seeking to enhance corporate legitimacy through socially responsible practices.