Starting a new venture such as an online university is a risky affair under any circumstance. In fact, the risks are further aggravated when the new venture has few precedents.
In addition to the risks associated with a new venture, an online university must raise capital from cynical sources, hire inexperienced staff, and establish a new market for its services (Greenwood & Suddaby, 2006, p.29). This paper will address two problems associated with a novel venture and the different types of legitimacies that need to be garnered in relation to online universities.
There are two main challenges that an online university must face in new populations. First, it must devise efficient practices and capabilities under conditions of ambiguity and ignorance. Second, an online university must create relations with an environment that is ignorant to their existence.
In nutshell, an online university faces legitimacy issues as it strives to curve a niche in the market. The question that arises is: what is legitimacy? A number of social scientists have given different definitions of legitimacy. According Suchman, legitimacy is “a generalized perception that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values…and definitions” (1995, p.574).
Legitimacy is socially constructed in the sense that it mirrors an analogy between the activities of the legalized entity (online university) and the common values of a particular social group (Suchman, 1995, p.574). There are three main types of organizational legitimacy that are relevant to the existence of an online university.
Pragmatic legitimacy entails the direct exchanges between the entity (online university) and its immediate audiences (Suchman, 1995, p.578). It also refers to the process where the public, main stakeholders, government officials and other influential leaders accept a venture as suitable and right (Aldrich & Fiol, 1994, p.648).
Moral legitimacy, on the other hand, mirrors a normative assessment of the online university and its activities. It is mainly concerned with whether the activities of the online university support the welfare of the society. Thus, moral legitimacy gives credence to the social welfare of the society over the organization’s self-interests (Thornton & Ocasio, 2008, p.103).
Cognitive legitimacy involves the spread of knowledge concerning a novel technology. It can be ascertained by assessing the level of public knowledge regarding a new technology. An example is the introductions of online universities that have enable millions of students around the world to access education from their homes (Suchman, 1995, p.581).
Lack of adequate sociopolitical legitimacy is a major barrier to the introduction of novel technology. For example, online universities may fail to secure approval from vigilant government agencies because the society lacks knowledge about its activities and the related long-term effects (Aldrich & Fiol, 1994, p.661).
Government agencies can make a major contribution by restructuring the inter-organizational atmosphere of new entities (such as online universities) in order to foster understanding between firms. The methods for developing and sustaining trust, reputation, trust and institutional legitimacy are interrelated.
Obtaining the trust of stakeholders within and around the new entity creates a foundation from which to develop a knowledge base through mutual exchange rules with other comparable organizations. These interactions eventually enable member organizations to organize as a group and to create an expansive reputation of their industry as a permanent reality. Trust is an important element that facilitates a smooth flow throughout the legitimacy-building process (Aldrich & Fiol, 1994, p.663).
References
Aldrich, H.E., & Fiol, C.M. (1994). Fools rush in? The Institutional Context of Industry Creation. Academy of Management Review, 19, 645-670.
Greenwood, R., & Suddaby, R. (2006). Institutional Entrepreneurship in Mature Fields: The Big Five Accounting Firms. Academy of Management Journal, 49: 27-48
Suchman, M.C. (1995). Managing Legitimacy: Strategic and Institutional Approaches. Academy of Management Review, 20, 571-610.
Thornton, PH & Ocasio, W. (2008). Institutional Logics. New York: Ashgate Publishing.