Results of a two-year inductive field study of British ven-tures show that entrepreneurs are more likely to acquireresources for new ventures if they perform symbolicactions—actions in which the actor displays or tries todraw other people’s attention to the meaning of an objector action that goes beyond the object’s or action’s intrin-sic content or functional use. We identify four symbolicaction categories that facilitate resource acquisition: con-veying the entrepreneur’s personal credibility, profession-al organizing, organizational achievement, and the qualityof stakeholder relationships. Our data show that entrepre-neurs who perform a variety of symbolic actions fromthese categories skillfully and frequently obtain moreresources than those who do not. Our data also suggestthree factors—structural similarity, intrinsic quality, anduncertainty—that moderate the relationship betweensymbolic management and resource acquisition. We the-orize how the various symbolic action categories shapedifferent forms of legitimacy that help entrepreneursacquire resources.•Acquiring resources—finding investors, employees, associ-ates, or customers—is a challenge for nascent organizationsbecause they lack resources and proven competencies.Given the typically high uncertainty and substantial hazards ofthe entrepreneurship process (Stinchcombe, 1965), and with-out a reliable track record, the performance and quality of anew business are hard to establish. This difficulty is exacer-bated by a potential information asymmetry between entre-preneurs and resource holders, so that entrepreneurs maypossess superior information about the intrinsic quality oftheir ventures (Amit, Brander, and Zott, 1998). Resource hold-ers are therefore reluctant to commit their preciousresources to new ventures (Bhide, 2000: chap. 3;Schoonhoven and Romanelli, 2001; Hellmann, 2002).Resources refer to input factors such as human capital (e.g.,employees, board members) and financial capital (e.g., exter-nal equity investment, revenues) that entrepreneurs need tocreate organizations. Some entrepreneurs recombine theresources that they have at hand in a process of “entrepre-neurial bricolage” (Baker and Nelson, 2006). Most entrepre-neurs, however, even those who engage in bricolage, will befaced at some stage in the creation of their organizationswith the need for resources from external stakeholders tolaunch or grow their ventures.

Researchers have shown the importance of a number ofenabling conditions and entrepreneurial actions that can helpentrepreneurs obtain resources. These factors include thecaliber of the founding team (Eisenhardt and Schoonhoven,1990); financing, location, and competitive conditions(Schoonhoven, Eisenhardt, and Lyman, 1990); business plan-ning techniques (Delmar and Shane, 2004); the reputation ofaffiliated firms and institutions (Stuart, Hoang, and Hybels,1999; Higgins and Gulati, 2003); social capital, such as direc-torships in other firms (Florin, Lubatkin, and Schulze, 2003);and legitimating certification contests (Rao, 1994). Researchon entrepreneurial actions, moreover, has identified a numberof ad hoc activities, such as looking for facilities, organizing atop-level team, seeking financial support, and developing a

© 2007 by Johnson Graduate School,Cornell University.0001-8392/07/5201-0070/$3.00.

•Both authors contributed equally to thisarticle. We gratefully acknowledge finan-cial support from the Rudolf and ValeriaMaag Fellowship in Entrepreneurship andthe Kolendorf Fund for Entrepreneurshipat INSEAD. We would like to thank ASQ’sAssociate Editor Elaine Romanelli andthree anonymous reviewers for their veryhelpful comments, and Wendy Smith,Marie Françoise Piquerez, and MartinaSaada for their research assistance. Weacknowledge the valuable feedback onearlier versions of this article that wereceived from Thomas D’Aunno, DeborahDougherty, Nicola Dragonetti, KathleenEisenhardt, Charles Galunic, MichaelLounsbury, Morten Hansen, Monica Hig-gins, Ha Hoang, Filipe Santos, and theparticipants of the 2004 Harvard BusinessSchool Conference on Entrepreneurshipand Innovation. Any errors are our own.

How Entrepreneurs UseSymbolic Managementto Acquire Resources

Christoph ZottQuy Nguyen HuyINSEAD

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prototype, which can occur in various orders (see Aldrich,1999: chap. 4).

Despite these contributions, two important issues are stillinsufficiently addressed. First, research has yet to provide uswith an empirically grounded understanding of the distinctactions that entrepreneurs take to acquire resources. Manyactivities identified as important to entrepreneurship, such asorganizing a top team or developing a solid operating plan,seem germane to the management of any business, new orestablished, and apply even to large companies with ade-quate resources. Moreover, as many entrepreneurs seem tobe engaging in more or less similar activities, it is unclearwhat resource-poor entrepreneurs actually do to distinguishthemselves from their competing peers to acquire resources.Second, the theoretical rationale for the suggested actions toacquire resources remains underdeveloped (Aldrich, 1999). Inmany instances, researchers have tended to look at theseactions as a kind of checklist but have not really exploredwhy and how performing them would have a differentialimpact on acquiring resources. This leads us to ask howentrepreneurs can perform these various actions effectivelyto increase their chances of acquiring resources from exter-nal stakeholders.

An emerging stream of mainly conceptual research on self-presentation and social influence offers some clues to theseissues (Schoonhoven and Romanelli, 2001: 389). A fewscholars have suggested that building legitimacy to acquireresources during the early stages of venture creation is criti-cal (Aldrich and Fiol, 1994; Lounsbury and Glynn, 2001; Zim-merman and Zeitz, 2002). Legitimacy is socially constructedand refers to “a generalized perception or assumption thatthe actions of an entity are desirable, proper, or appropriatewithin some socially constructed system of norms, beliefs,and definitions” (Suchman, 1995: 574). These scholars haveproposed various strategies for entrepreneurs, such asmanipulating and creating rules, norms, and values (Zimmer-man and Zeitz, 2002), creating identities through “story-telling” (Lounsbury and Glynn, 2001), and leveraging friend-ship and obligations (Starr and MacMillan, 1990). Thesestudies have often focused on how entrepreneurs presentinformation to resource holders, that is, how they manageimpressions (Gardner and Avolio, 1998).

Using the impression management approach, severalresearchers have hinted at symbolic action—behavior thatseeks to convey subjective social meanings—as a means ofcreating the legitimacy that enables entrepreneurs to acquireresources. Aldrich and Fiol (1994: 652) posited that symboliccommunication could facilitate cognitive legitimacy (i.e.,being taken for granted). Similarly, Lounsbury and Glynn(2001: 549) theorized that stories are important organizationalsymbols that help legitimate new firms. Focusing on non-ver-bal symbols, Higgins and Gulati (2003) found that in biotech-nology firms, the upper echelon’s previous affiliation withprominent organizations could appeal symbolically to presti-gious underwriters and encourage them to create initial pub-lic offerings (IPOs).

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These studies have tended to suggest either general symbol-ic behaviors (e.g., Aldrich and Fiol, 1994; Lounsbury andGlynn, 2001) or to focus on a particular type of symbol orsymbolic action, such as certification contests (Rao, 1994).Taken together, they point to the potential importance ofsymbolic action for resource-needy entrepreneurs. But westill a lack an empirically grounded understanding of the vari-ous categories of symbolic action that entrepreneurs use,how they use them, and how effectively they do so. Missingfrom the literature is a close examination of the causal linkbetween acting symbolically and attracting resources. In thisstudy, we explore the following questions: which symbolicactions entrepreneurs perform to attract resources and whensymbolic action is effective for acquiring resources and why.We used grounded research in a two-year field study toexplore these questions because we believed that notenough was known about entrepreneurs’ actions to developtestable hypotheses.

SYMBOLIC ACTION

A symbol is something that stands for or suggests some-thing else; it conveys socially constructed meanings beyondits intrinsic content or obvious functional use (Morgan, Frost,and Pondy, 1983). Objects can display both intrinsic and sym-bolic dimensions (Lievens and Highhouse, 2003; Rafaeli andVilnai-Yavetz, 2004). The intrinsic dimension corresponds toobjective or tangible functions that are recognized indepen-dently of the symbolic dimension. For example, an officeserves the intrinsic purpose of being a place where peoplework. This interpretation of functionality is unlikely to differmuch from one culture to another. A prestigious officeaddress, however, could symbolically suggest prosperity andhigh status (Oldham and Rotchford, 1983). The symbolicdimension thus refers to evoked meanings—people makeinferences about objects on the basis of shared interpreta-tions.

Actions as well as objects can display both intrinsic and sym-bolic dimensions. For example, an entrepreneur speaking atprestigious conferences to disseminate knowledge (intrinsicdimension) is also conveying the message that establishedpeople recognize and value his or her expertise (symbolicmeaning). Defining an action as a social expression that canincorporate both intrinsic and symbolic dimensions extendsthe view of a symbol as either a rhetorical device with littlesubstantive action or as a socially legitimate verbal statementdecoupled from any implementation (Westphal and Zajac,1998; Zbaracki, 1998).

Symbolic actions may take into account how various displayswill be observed and interpreted by particular groups. Sym-bolic management, that is, the performance of symbolicactions, is a distinct form of impression management (Arndtand Bigelow, 2000). Impression management refers to anybehavior that has the purpose of controlling or manipulatingattributions formed by others (Tedeschi and Riess, 1981) byregulating the information that is presented about people ortheir organizations (Schlenker and Weigold, 1992; Ashford etal., 1998). Gardner and Avolio (1998), however, have identi-

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fied the development and manipulation of symbols as a par-ticular subset of impression management, which they call“staging.” Moreover, some impression management actionsmay have little symbolic meaning and suggest little beyondintrinsic use. Symbolic management can at best be con-strued as a subset of impression management, but not allforms of impression management are symbolic. Symbolicmeaning is culturally specific and has to be subjectively inter-preted as such by actors who are familiar with the culturalnorms of a given social milieu. For example, a sales presenta-tion that conveys how an entrepreneur can serve customers’needs (intrinsic dimension) may be particularly well done, butif actors in this particular cultural milieu cannot decode anydistinctive symbolic meaning, the smooth delivery will haveserved mainly an intrinsic purpose.

Although the intrinsic content or functional use of an action isoften measured by economic or performance yardsticks (e.g.,speed, defect rate), its symbolic meanings in a particular cul-tural milieu are evaluated according to subjective dimensionssuch as emotions, preferences, and values (Rafaeli and Vilnai-Yavetz, 2004), as well as logic and precedence, which caninfluence the decisions of resource holders (Brown, 1994).1The intrinsic dimension of entrepreneurship could involveorganizing actions to enact a novel idea, such as developingbusiness plans, finding investors, hiring employees, andattracting customers (Aldrich, 1999; Delmar and Shane,2004). Meanwhile, the symbolic dimension of these actionscan make the new venture familiar and credible to keygroups (Lounsbury and Glynn, 2001). Hargadon and Douglas(2001), who studied Thomas Edison’s introduction of theelectric lighting system, suggested that entrepreneurs designand present their innovations to mediate between the novelfeatures of their offerings and the expectations, norms, andrules of their institutional environments. In this way, they usesymbolic action to create the legitimacy they need to acquireresources.

Institutional theory suggests that organizations that want toappear credible must act in ways that conform to prevailingsocietal beliefs, otherwise they risk failing to obtain sufficientresources because of a perceived lack of legitimacy (Pfefferand Salancik, 1978; DiMaggio and Powell, 1983; Zucker,1986). As Feldman and March (1981) and Pfeffer (1981)noted, using symbols so that actions will be interpreted inways that are compatible with prevailing norms and values isespecially important when stakeholders find it hard to assessand control precisely what they might get from an organiza-tion. Symbols suggest categorizations that help people framesocial situations or interpret ambiguous ones (Ashforth andHumphrey, 1997), and they are important for entrepreneurs,who often work in highly uncertain contexts. Before a prod-uct is fully developed and marketed, for example, no oneknows if it will be successful (Gort and Klepper, 1982).Because of this uncertainty, perceptions of the credibility of aprospective course of action will depend on subjective socialbeliefs (Krueger, 2000) and on the actions of the entrepre-neurs who shape these beliefs. As a result, entrepreneurshipinvolves “enactment”—that is, part of the environment that

1We thank one of our reviewers for theinsight about logic and precedence.

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symbolic actors face is created by the actors themselves(Weick, 1995).

Consistent with these ideas, an emerging stream of researchsuggests that successful entrepreneurs are not passive par-ticipants in their cultural context but, rather, are skilled cultur-al managers who use culture strategically to deal with thelow level of credibility and legitimacy that stems from a lackof supporters and performance history (Aldrich and Fiol,1994; Hargadon and Douglas, 2001). According to Suchman(1995), an organization’s legitimacy can be anchored in dis-tinct but interrelated dimensions, such as the personal legiti-macy of the founding entrepreneurs, the organizational legiti-macy of the organization’s structures and processes, and therelational legitimacy of the other involved people and organi-zations. But new firms face a serious conundrum: how canthey establish legitimacy to attract enough resources to buildand sell their first products? DiMaggio (1991) and Rao (1994)suggested that legitimizing consists of creating an account ofan organization and embedding it in a symbolic universe. Yetwe know very little about the nature of symbolic universesand how entrepreneurs actually use them. In particular, weknow little about the variety of symbolic actions that entre-preneurs use, how they use them, and what effects theyhave on resource acquisition. It was these issues that wefocused on in our study of young firms.

METHODS

We began our research without formalizing any expectationsof what actions entrepreneurs take to acquire resources. For-mulating precise hypotheses seemed premature becausecurrent entrepreneurship theories are underdeveloped(Venkataraman, 1997), partly due to the dearth of longitudinalresearch designs and theory-building efforts in entrepreneur-ship research (Chandler and Lyon, 2001; Schoonhoven andRomanelli, 2001).

Sample Selection and Data Collection

Our research was based in the U.K. To identify entrepreneurswho had recently launched new firms or were in the processof creating them, we searched a business school’s data baseof alumni who had become involved in entrepreneurial ven-tures after they graduated. We identified 230 people, whomwe contacted by e-mail to explain the purpose of ourresearch. We asked for entrepreneurs who (1) had launcheda company within the past 18 months or were planning to doso in the next six months, (2) had their headquarters in theGreater London area, and (3) were willing to participate in aresearch project that might involve a substantial time com-mitment. We guaranteed participants complete confidentialityand anonymity. We aimed to study entrepreneurs in the earlystages of creating a company for two reasons. First, wewanted to avoid sampling based on outcomes, and second,these early stages have been given little attention until now(Zimmerman and Zeitz, 2002). We focused on a confinedgeographical area to minimize sample variation due to envi-ronmental factors (e.g., sociopolitical context, business cli-mate, available resources).

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We received 83 replies, of which five were negative and therest were split between “I am potentially interested” and“This sounds interesting, but my venture probably does notfit the research criteria.” Of these leads, 40 seemed to fit ourthree criteria, and the rest were dropped for a variety of rea-sons—for example, 10 operated outside the U.K. We thenconducted telephone conversations with 20 respondents todetermine if they really met our selection criteria. We fol-lowed up with the other 20 cases by e-mail. Many of theserespondents clearly suited our criteria; they were based inLondon and started during the time period we specified (weallowed some older ventures when the founders plausiblyexplained why they were still in an early stage). This processallowed us to retain 26 ventures.

We did not expect significant bias due to non-response dur-ing the initial selection stage. First, we proposed to studyentrepreneurial behavior broadly—our focus on symbolicaction and its importance for attracting resources emergedonly during our iterative data analysis process, as we explainlater. Second, most of the ventures in our sample startedbetween 1999 and 2001 and were at such an early stage ofdevelopment that predictions about their eventual perfor-mance (e.g., success in attracting resources) werepremature.

We recorded entrepreneurial behavior (in real time and retro-spectively), mostly by interviewing the founders. Here, werefer to the lead entrepreneur—the person who was clearlydriving the effort—as the founder or entrepreneur and toother members of the founding team as co-founders. Mostfounders had graduated from the same top-tier businessschool, had very high average GMAT test scores (around700), had an average of five years’ professional experiencebefore enrolling in the Master’s of Business Administration(MBA) program, and could access the school’s vast and high-powered alumni network. Our selection thus controlled foraspects of human capital such as educational background,analytical skill, and managerial experience, as well as aspectsof social capital, all of which are usually sources of hetero-geneity in entrepreneurial ventures. We thus followed Gart-ner’s (1985) suggestion to increase the homogeneity of sub-groups of entrepreneurs and look for variances within themto develop precise mid-range theories.

Beginning in February 2002, we conducted face-to-face inter-views, mostly at work sites, with all 26 entrepreneurs in oursample to establish a personal rapport with them. Each first-round interview lasted one to two hours. For the next rounds(the second round of interviews was conducted betweenOctober and December that year), we relied mainly on tele-phone interviews, which lasted between 30 and 90 minutes.We interviewed resource holders (whom we also refer tohere as “potential resource providers”) between July 2003and February 2004. We recorded and transcribed all inter-views and made extensive handwritten notes. During thefirst round of interviews in particular, we asked the intervie-wees to provide us with a comprehensive account of theiractions since the earliest days of their ventures. We askedopen-ended questions and prompted respondents to provide

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concrete examples of actions and events with questions like“Did you focus on key processes when building your compa-ny?” “Which ones?” “What were the key resources that youacquired?” “How did you acquire them?” and “How did youpresent yourself to the resource holders?”

To reduce bias from recall and rationalization, we collecteddata from other sources as well. We regularly monitored thevarious ventures’ Web sites and collected information fromthe business press, business plans, and presentations. Wealso collected mini-cases written by entrepreneurs to pro-mote their products, press announcements, and cash-flowforecasts (if available). These sources enabled us to triangu-late our findings to build stronger interpretations (Yin, 1984).

On the basis of the data analysis discussed below, we identi-fied seven extreme cases that featured noticeably high orlow levels of symbolic action. We decided to look moreclosely at these actions and how they influenced resourceholders. We followed Eisenhardt’s (1989: 537) recommenda-tion for a theoretical sampling approach (cf. Strauss andCorbin, 1998) that involves between four and 10 extremecases in which the phenomenon of interest is “transparentlyobservable.” Using a finite number of cases enablesresearchers to find some balance between generating a rea-sonably textured theory and having to cope with largeamounts of data (Brown and Eisenhardt, 1997; Huy, 2002).As Eisenhardt (1989: 545) argued, “the goal of theoreticalsampling is to choose cases which are likely to replicate orextend the emergent theory.”

Focusing on these seven cases helped us to reach a satisfac-tory level of theoretical saturation, in that the other 19 casesthat we considered did not seem to yield any new importanttheoretical insights. In particular, we could not find any evi-dence that would have suggested we should produce anynew categories of symbolic action other than the ones wehad already identified. Rather, we found more evidence thatconfirmed these categories. As a result, we have includedlater in this paper, among our findings, some illuminatingquotes from the 19 other cases in the larger study toenhance the descriptive richness of our findings. Nor did wefind evidence that modified or contradicted our theoreticalclaims. For example, we could not find a single case amongthe 26 venture projects in which a low level of symbolicactions correlated with a high level of success in consistentlyattracting resources, nor could we find a case in which a highlevel of symbolic actions correlated with a low level of suc-cess.

For the seven extreme cases, we also interviewed importantstakeholders, including co-founders, investors, employees,suppliers, customers, and board members. Some of thequestions that we asked stakeholders other than co-foundersincluded “What resources did you provide to the venture,and why?” “Can you give us some examples of how theentrepreneurs approached and interacted with you?” and“What did you like, or like less, about the way the entrepre-neur approached you and dealt with you?” For all the ven-tures except one, we interviewed at least one third party

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who had denied them resources. Interviews with these thirdparties lasted between 15 minutes and two hours.

Data Analysis

We used the case-replication method, in which cases serveas independent experiments that either confirm or disconfirmemerging insights (Eisenhardt, 1989). We analyzed our datain three steps. In our first exploratory analyses, the salienceof what we generally viewed as impression managementbehavior emerged; we found noticeable differences in thequantities and textures of accounts of impression manage-ment. We first tried a theory-elaboration approach (Lee,Mitchell, and Sablynski, 1999) in which we analyzed a sampleof ventures that displayed high and low levels of impressionmanagement actions, according to the taxonomy proposedby Gardner and Avolio (1998), which includes categories suchas ingratiation, intimidation, supplication, and facework. Ouraim was to find any association between high or low impres-sion management actions and resource acquisition. Wecoded forms of impression management behavior (e.g., “Weprepared meticulously for meetings with investors, to theextent that my partner and I went to some consultants toteach us how to present during meetings, how to move dur-ing meetings, how to talk”) and compared the results todetermine if differences in behavior could be related to differ-ences in acquisition outcomes. The general pattern suggest-ed that high impression management activity may be posi-tively associated with high resource acquisition, but we werenot fully satisfied, because a few ventures with high impres-sion management actions experienced moderate to low suc-cess, so the impression management findings were impre-cise. This dissatisfaction led us to reanalyze our data in asecond step and focus on symbolic action as a subset ofimpression management.

We coded an action as symbolic if it met at least one of thefollowing conditions: (1) it was clearly intended by the entre-preneur as a symbolic action, in that the actor displayed ortried to draw other people’s attention to a meaning that wentbeyond its intrinsic content or functional use; (2) it was per-ceived as symbolic by the resource holder; or (3) we saw itas symbolic. Initially, one of us coded all the actions thatentrepreneurs performed to acquire resources. Then each ofus independently went through the codes to identify thoseactions that were symbolic, according to our definition. Wethen compared them and discussed any disagreements. Ifwe could not reach consensus on any symbolic action, wedropped it. As a result, final coding agreement was 100 per-cent. In this second analytical stage, we applied both theoret-ical elaboration and theory building (Lee, Mitchell, and Sablyn-ski, 1999) to develop the model. Theoretical elaboration ofthe literature on symbols enabled us to recognize that anaction can have many intrinsic functions and symbolic mean-ings. Theory building, moreover, enabled us to induce cate-gories of symbolic action in the entrepreneurial context.

Initially, the category labels closely followed the data. Forexample, we categorized the display of a top-tier businessschool degree as an action to convey personal capability and

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a demonstration of a partially working prototype as an actionto convey partially working products. We were able to dis-cern eight subcategories of symbolic action, conveying (1)personal capability, (2) personal commitment, (3) professionalstructure, (4) professional processes, (5) a partially workingproduct/technology, (6) age, size, or performance, (7) pres-tige, and (8) individual attention, as described below. Gradual-ly, we grouped our eight subcategories into four, according tothe symbolic meaning of each. For example, we groupedaction conveying professional structures and processestogether because both seek to convey professional organiz-ing. Similarly, we grouped displaying a working product andadvertising the age of the firm together because theseactions seek to convey organizational achievement.

In the third step, we analyzed more closely how various sym-bolic actions influenced resource holders in the extreme highand low symbolic action cases. We asked the founders ofseven companies (our extreme cases) to allow us to inter-view several of their resource holders to increase the nuanceand validity of our findings. We requested the names andcontact details of these third parties from the founders,because the latter might have worried about the potential dis-ruption of their business activities, for example, that potentialcustomers would not want to be contacted and questionedby researchers without being introduced to them first by theentrepreneurs. Because the entrepreneurs did not know pre-cisely what we were investigating, their selection of contactswas less likely to be biased.

Table 1 presents short descriptions of the seven focal cases(the names of the companies and respondents are disguisedto ensure confidentiality) and information on the stakeholdersthat we interviewed for each case. The ventures in this sam-ple are active in many industries, including software (Claim,Mobile), tourism (Travel), investment banking (Market), finan-cial services (Fina), renewable energy (Wind), and communi-cations (Wire). Although most engage in varying degrees ofinformation technology (IT) development for their productsand services, some rely very little on IT (e.g., Fina is primarilya human-capital-driven services business, Wind developswind farms). Thus our sample includes many distinct product-market contexts. Most entrepreneurial teams were first-timefounders (Fina, Market, Mobile, and Wire). One was a first-time entrepreneur cooperating with an experienced co-founder (Travel). And two had some earlier, albeit limited,entrepreneurial experience in the same industry (Wind) or adifferent one (Claim).

Although it is possible that the more successful entrepre-neurs and their potential resource holders envisaged andreported more symbol-laden accounts than the less success-ful ones, we believe that we have done everything possibleto control for potential bias by not mentioning symbolic con-cepts to our contacts. Because most of our entrepreneurshad been analytically trained, moreover, they would havebeen equally or even more likely to emphasize or rationalizetheir achievements with analytical business logic than withsymbolic action. In addition, we used many data sources totriangulate their accounts, as we show in table 2.

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Our analysis of individual actions at this stage suggested acausal link between acting symbolically and attractingresources. To confirm our assertions, we examined theresource acquisition of our seven extreme cases. Resourceacquisition as an interim outcome of venture building medi-ates the ultimate fate of a venture, such as financial success,growth, survival, or longevity. These ultimate outcomes areco-determined by factors that are often beyond the immedi-ate control of founders, such as business cycles, consumerpreferences, or demographic trends. Building onSchoonhoven, Eisenhardt, and Lyman’s (1990) notion of thespeed at which new companies develop their first productsfor market, we characterized medium-term achievements bythe progress that ventures made in acquiring human capital,external financial capital, and customers (Bhide, 2000; Brush,Greene, and Hart, 2001). We considered overall progress inacquiring these resources “good” when there was adequate

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Table 1

Cases and Interviews per Case

XCase

Claim

Fina

Travel

Market

Mobile

Wind

Wire

Total* Others include co-founders. Because some stakeholders provided more than one interview, the interview count ineach cell of this column may be greater than the total number of stakeholders.

Business description

Provides expense-claim solutions for medium-sizedorganizations; supplies Web-based expense-claimsoftware and consulting-related services.

Provides services for special-purpose vehicles in aniche of the finance industry; directs and managesproject finance, public/private-sector partnershipprojects, professional and accountable secretarialservices.

Provides online, real-time reservations for the travelindustry; promotes clients to retailers (travelagents and distributors) worldwide, many ofwhom are market leaders in online travel.

Delivers an integrated online solution for tradingamong dealer banks; offerings are based on anonline trading technology that provides a platformfor trading over-the-counter derivatives.

Installs and manages wireless communication net-works for businesses; brings together interiordesign, building surveying, project management,radio frequency technology, voice and data net-work design; specializes in wireless technologiesbased on Bluetooth technologies.

Develops wind power projects for generating elec-tricity. Wind farms have minimum environmentalimpact and provide an efficient way of generatingpower but are highly capital intensive. Offices inseveral European and U. S. cities.

Provides wireless telephony and personal digitalassistant (PDA) solutions for businesses. Turnsmobile phones, headsets, and PDAs into exten-sions and gives portable data devices and smartphones access to local area networks (LAN).When in the office, the mobile phone or headsetconnects to the corporate network, acting as aninternal extension, and carries the call over theLAN.

Founderinterviews

03

03

03

02

02

02

03

18

Interviewswith others*

4 (2 co-founders,supplier, cus-tomer)

6 (board mem-ber, co-founder, cus-tomer, 3suppliers)

5 (angelinvestor, co-founder, 2venture capi-tal investors)

5 (2 co-founders,supplier, 2venture capi-tal investors)

2 (angelinvestor, co-founder)

4 (board mem-ber, corporateinvestor,employee,venture capi-tal investor)

6 (board mem-ber, co-founder, 3venture capi-tal investors)

32

Interviewtotal

07

09

08

07

04

06

09

50

or better than adequate success in attracting each of thethree key resources (employees, capital, and customers) andwhen the customer base could be defined in terms of thenumber of paying customers or sales. This evaluation tookinto account success in (1) attracting and retaining high-quali-ty employees, managers, and board members, given the ven-ture’s growth strategy; (2) attracting enough external capitalto fund current operations and planned development, such asresearch and development (R&D); and (3) developing the cus-

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Table 2

Illustration of Triangulation of Symbolic Action in Four Examples of Symbolic Action Categories

Symbolic action

Action conveying per-sonal credibility ofentrepreneur:Emphasizing MBAdegree (Travel)

Action conveying pro-fessional organizing:Providing excep-tionally responsiveand fast customerservice (Fina)

Action conveying orga-nizational achieve-ment: Winning anddisplaying industryaward (Wire)

Actions conveyingquality of stakehold-er relationships: Tak-ing prestigiousinvestor along tosupplier negotiations(Market)

Founder

“It helps the credibility a lot. I think they quitelike the fact that I have an MBA. The previ-ous track record helped. You know, I amPeter Smith, I’ve got an MBA from afamous business school—again, MBAswere very fashionable at the time.”

“And if somebody calls back they get theiranswer today. If I get a quote, that sheetwill be on e-mail to that guy within 24 hoursof being asked. I will have that in hard copyin his hands within 48 hours, and if I cantake it round by hand, it will be there thatevening. Why? Impression management.”

“We got this nice little trophy. It was goodhaving competition, because we tried reallyhard to beat them, and we tried so hard weactually got more votes than anybody elseat the whole show. So we won the best ofshow award as well. So we went out ofstealth mode with a big bang, and got thisnice award, which is great. It helped usbasically capture a couple of early field trialcustomers.”

“We were probably helped in our negotiationsby the fact with these guys that we have,even physically in some of those crucialmeetings, we had our investor with us. Hewas a very imposing kind of person. I thinkeven having that physical presence in thenegotiations helped us drive a better bar-gain. It was quite obvious as well that hewas a well-keeper, somebody who con-trolled a lot of resources. He had that man-ner about him. When they saw us and theysaw our venture capitalist beside us, theyreally felt we’ve got to win this deal. I thinkperhaps if he hadn’t been with us, we mayhave got a deal but it may not have been asgood a deal.”

Partners/cofounders

“Peter had good educational credibility interms of getting into Cambridge; he gothis Ph.D. and an MBA at [famous busi-ness school]. So the combination ofPeter’s background and my track recordwas reasonably convincing so that wehad the ability to pull together the rightteam to make it happen, and they allsay you should invest in teams, notideas.”

“We show our clients we know their busi-ness; we find the right people in theirorganizations and try to avoid negativepeople. There are three keys to our suc-cess: trust, timing, and being price com-petitive. We also try to show ourselvesas friendly and helpful. We tried torelate to clients as if we have been withthem for an extended period of timeand know their business; you integrateyourself as part of their company. Ser-vice, service, service; this is key to ourbusiness.”

X

“The fact that we were negotiating for theimportant supplier deal together withthat famous VC firm was a major plus.Without this VC firm, none of thiswould have happened. The supplier waswilling to sell out, but without the VCfirm, we as Market had no credibility.”

tomer base (in terms of either the number of paying cus-tomers or the amount of absolute revenues) quickly enoughto break even within a reasonable time. In evaluating thesethree dimensions, we relied on our own assessments, aswell as those of the founders and stakeholders for each ven-ture. Table 3 provides evidence pertaining to the resourceacquisitions of our seven cases. As the table shows, ourcases formed two subsets: one in which the ventures wereclearly successful in terms of acquiring resources, and anoth-er in which they were less successful. The former corre-

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Table 2 (continued)

Investors, suppliers, board members

VC (venture capitalist) investor: “I am sort of skeptical of MBA qualifica-tions. The fact he [let us know that he] was from [famous businessschool] did help.”

Supplier: “You intuitively liked the guy i.e., the lead entrepreneur,straight, trustworthy, he did what he said he would. He worked veryhard and inspired confidence. He under-promised, and over-delivered.”

Customer: “Transactions need to be turned around quickly. The entre-preneur provides quick response time. As an entrepreneur, he is per-sistent, professional, and carries things through.”

Investor: “The founder was a terrific promoter. We won best of show ata couple of prestigious shows, and we were one of Time Magazine’s25 hottest start-up companies in Europe. We got a lot of thoseawards.”

Supplier: “If the lead entrepreneur had turned up in our office and said Iwant to do this, I want to use your platform, I want to use your organi-zation, I want to use your authorization, and I’ll pay you with the profit,I would have turned him down. But the VC firm that backed Market isextremely renowned and we were quite impressed because we knewabout them prior to the meeting with the founder. It was quite impres-sive when this venture capitalist turned up in his own private jet. Sothe financial backing was of course the number one issue for us. Wewere aligned with their thoughts, but the backing, the financial back-ing was key for our decision processes, naturally.”

VC Investor: “I think the credibility came with the fact that we invested,right. It was all part of the deal. This is hypothesis on my side, but Ithink they could simply walk in and say look, a top tier Silicon Valleyinvestor has invested in us.”

Other sources

X

Company Web site prominently displaysawards won at trade shows and otherrecognitions.

In his presentations to resource holders(e.g., investors) the founder displayedthe most prestigious awards (e.g.,selection in Time Magazine’s Europe’shottest tech firms award) on the titlepage.

Company Web site touts the venturecapital investor as an important partner.

sponds to the cases that featured high levels of symbolicaction, whereas in the latter, the levels of symbolic actionwere low.

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Table 3

Ventures’ Resource Acquisition (£1 is approximately US$1.80)

X

Date of incorporation

Co-foundersNumber of employees

6 months after incorporation

—12 months after—18 months after—24 months after—30 months afterAssessment of success

in attracting and retaining high-quality human capital

Paying customers 6 months after incorporation

—12 months after—18 months after—24 months after—30 months afterSales Q1–Q4 2001 (£)Sales Q1–Q4 2002 (£)Assessment of success

in developing the customer base

Cumulative external fundinguntil Q4 ’02

Assessment of success in attracting enough financial capital to fund operations and development

Overall progress in acquiring resources (during 30 months after incorporation)*

* We considered overall progress in acquiring resources “good” when there was good or at least adequate successin attracting each of the three key resources listed: human capital, customer base (defined in terms of the number ofeither paying customers or sales), and financial capital. Otherwise, we considered overall progress “slow.”

Travel

April 199925

20204050

Good:Manymotivatedpeoplejoined,hardly anydepartures

500

500150020002500

5,000,00020,000,000Good:Accordingto aninvestor,companyhas been“on aroll.”

£3,650,000

Good:Raisedignificantamountseven invery diffi-cult fund-ing envi-ronment

Good

Fina

October1999

22

2344

Adequateto good:Added afew com-petentprofes-sionals; inline withintendedorganicgrowth

3

21304754

754,000915,000

Good:Steadilyincreasingdeal flow

£12,550

Adequate:Largelyself-funding;no exter-nal fundsneeded

Good

Wire

December1999

415

15253540

Good:Signed onmanyhighlyskilledengineers

0

000000

Adequate:Signed ontrial cus-tomers;yet ven-ture focuswas onR&D, noton sales

£13,600,000

Good:Continuedventurecapitalsupporthelpedcompanythroughcashcrises

Good

Mobile

June 200023

4332

Low:Shrinkingemployeebasedespiteefforts toexpandthe busi-ness

1

25610

173,000104,000

Low: Verydisappoint-ing cus-tomerresponseto ven-ture’sofferings

£292,000

Low: Lackof successin fundrais-ing beyondangelinvestordespiteefforts toraise muchmorecapital

Slow

Claim

March 200045

5667

Adequate:Few newhiresbeyondfoundingteam; yetconsistentwith lowfixed-costapproach tostarting up

3

10203040NA

50,000Adequateto low:Wonsomegood cus-tomers,but muchfewer thanfounderexpected

£558,080

Low: Did notraise asmanyfunds ashad expect-ed and aswere need-ed for prod-uct andmarketdevelop-ment

Slow

Wind

200010

0033

Low: Hiredtwoemploy-ees, whocausedsevereproblems

NA

NANANANANANA

Low: Beganto developwind farmsites butdid notsell any

£500,000

Low: Need-ed butfailed toraise sev-eral millionpounds

Slow

Market

October2000

58

5497

Low: Co-foundersdeparted;highfluctua-tions

4

12162230

23,00022,000

Low: Num-ber of cus-tomerswho trad-ed on thefirm’s plat-formremainedbelowcriticalmass$6,500,000

Good:Raised sig-nificant VCfunds veryearly onand alsoreceivedlaterbridgefinancing

Slow

Relying on these dimensions of resource acquisition enabledus to compare inherently different business organizations(e.g., a service business such as Fina and a product businesssuch as Wire) and transcend the particularities of each ven-ture (e.g., strategy, industry context). To illustrate, we consid-ered the overall progress of Fina good, though it was largelya self-funded and small-scale niche player, because, given itsscale and ambition, it performed adequately in getting exter-nal capital and made good progress in attracting employeesand expanding its customer base. Similarly, we consideredthe progress of Wire good, even though it had no paying cus-tomers for its first two years, because we knew that it wasR&D intensive and first needed resources, such as externalfunding and employees, to develop its product.

SYMBOLIC MANAGEMENT

Our data, based on both founders’ and resource providers’accounts, suggest that symbolic management enhancedentrepreneurs’ odds of acquiring resources, though we foundsignificant variation in the use of symbolic action amongentrepreneurs, both in terms of quality and quantity of use.Although all entrepreneurs in our study practiced symbolicmanagement to influence potential resource holders, someentrepreneurs appeared more skillful and imaginative thanothers in performing symbolic actions. They were acutelyaware of the advantages of using symbols to overcome thevarious liabilities of creating a business.

Skillfulness in Taking Symbolic Action

Our findings reveal that entrepreneurs in all four low-resource-acquisition ventures (Claim, Market, Mobile, Wind)performed symbolic actions with less skill than entrepreneursin high-resource-acquisition ones (Fina, Travel, Wire). The for-mer tended to follow a more technical/analytical approach,focusing their actions on developing their product or perfect-ing their technological capabilities. The founders underinvest-ed in the skillful presentation of their products, their organiza-tions, and themselves. Skillful symbolic action can besubsumed under the more general description of social skill(Fligstein, 2001) and is hard to define accurately by any singlemeasure, so we propose several dimensions, which arebased on the accounts of both entrepreneurs and resourceholders. Our data suggest that this concept could involve atleast four dimensions: reflexivity, enactment, customization,and complementarity. Table 4 illustrates how we coded them.

Reflexivity. According to our data, the quality of symbolicactions hinges on whether entrepreneurs consider their ownconstraints and abilities when taking symbolic action. Oneconstraint to which most entrepreneurs in our study wereexposed was that they had precious few resources withwhich to enact expensive symbols. They faced the challengeof approaching resource holders with symbolic actions thatdid not require a lot of money. Some entrepreneurs, whowere eventually successful in attracting resources, managedthis challenge well. At Fina, awareness of staging an appear-ance of professional organizing at the front of the organiza-

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tion (Goffman, 1959) was paired with strict cost conscious-ness in its “back stage” operations. As the founder told us,

I think cash is absolutely king and you have to be very, very parsi-monious with your cash. If you can get a discount, like second-handcomputers—why do you want new computers? You don’t. I’ve gotsecond-hand computers. Okay, fine. Have a small office. What mat-ters is the external presentation, your perceived office. External per-ception is important.

Other entrepreneurs were overwhelmed by their constraintsand either could not think of any cash-preserving ways togenerate credibility by acting symbolically, as indicated in

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Table 4

Illustrations of High and Low Skillfulness in Symbolic Action along Four Dimensions

XDimension

Reflexivity

Enactment

Customization

Complementarity

Fina (selected evidence + interpretation):High skillfulness

Founder: “I also have a database where we haveaccumulated people over the last ten years.It’s something in the order of 7,000 people. Itry to keep myself in their cognitive memoryby sending out electronic Christmas cards to4,200 people every year. Look, how many peo-ple send Christmas cards to their clients?Every time that we’ve completed a transac-tion, we e-mail to everybody just to promoteand advise them that we have succeeded.”

Considers cash constraints, uses technology towork around them

Founder: “I built a database and put all my busi-ness cards into it. It now has ten and a halfthousand people in it, which is quite a lot. I gothrough conference lists; I go through all sortsof lists and maintain that database. It’s beenthe most incredibly powerful tool for market-ing that I’ve found.”

Founder understands how important database isfor performing symbolic actions and is able tobuild and maintain it conscientiously.

Founder: “What you haven’t got here is theclient name up here, so it’s an immediate asso-ciation between the client’s name, and thisjust happens to be a law firm, and our ownlogo. We put that thing right in the middlehere. Why? Because it makes them feel com-fortable.”

Founder pays attention to other people’s percep-tions.

Founder: “We have a marketing brochure, andwe go around and see people, and we showthem what our company looks like and how it’sgrown in three years and that we’ve now gotoperations in various countries. Then we say,look, we’ve just done this .|.|. deal—that’s a bil-lion dollars.|.|.|. That sells itself, really.”

Founder combines symbolic action with a per-sonal, face-to-face communication style.

Mobile (selected evidence + interpretation):Low skillfulness

Founder: “Gaining credibility .|.|. we should havedone a lot more. I’m just not too sure becausePR (public relations) costs money, and I’m notprepared to spend any money on PR. So ouroptions are limited by what we can do forfree.”

Reflects on constraints, yet not sure how towork around them.

Founder: “We were just still a bunch of clownswandering around with PowerPoint presenta-tions.”

Is not even aware of factors that enhance credi-bility.

Founder: “So we kind of knocked up a wirelessbusiness plan. Looking back on it, it’s quiteembarrassing. We didn’t really know the indus-try that well. Made all sorts of like, really hor-rendous assumptions that really weren’t quitevalid. They did enable us to raise a whole£20,000 which is like absolutely nothing.”

In the early days, founder failed to take resourceholders’ perceptions into account; investorsexpected industry-specific knowledge.

Founder: “We realized that the cold callingapproach was just not working at all.|.|.|. Youcan’t kind of go out to industries and say, youknow, we think that they will be earlyadopters, let’s go out and cold call them. I thinkin the early days they find you.”

Founder realizes now that initial process basedon cold-calling potential customers did notwork yet did not consider a more proactiveapproach; adopted a passive stance instead.

table 4, or were simply unaware of the need (or of their ownabilities) to act symbolically. One Claim co-founder, for exam-ple, indicated that at the time he and his business partnerswere raising funds, they did not consider symbolic manage-ment for approaching investors: “If you could be very flashand talk about wireless and all that type of stuff you stoodout, and possibly that’s something that we didn’t do. Wedidn’t really stand out as a business.” Our data thus suggestthat entrepreneurs who were less aware of their constraintsand abilities in taking actions with both intrinsic and symbolicdimensions were less effective in performing symbolicactions.

Enactment. Some of the entrepreneurs we studied werealso less successful than others in translating their conceptu-al awareness of symbolism into actual symbolic actions.Jeremy, the founder of Wind, was aware of the symbolicimportance of interesting Web sites, nice furniture, andappropriate dress codes. Jeremy and his senior employee,Luke, even took lessons from a coach who specialized in pre-sentation skills. But they were not very successful in enact-ing their conceptual knowledge. Luke kept neglecting impor-tant symbols such as dress, and Jeremy did not interfere. Aboard member commented, “Luke was always scruffy. I sug-gested Jeremy could tell him to look smarter.” Most peopleknow intuitively how hard it is to translate conceptual knowl-edge into skillful action (Pfeffer and Sutton, 2000). Failure toenact knowledge of symbolic action can lead to banal or awk-ward actions that backfire if people perceive them as sociallyinappropriate (Ashforth and Gibbs, 1999). By contrast, skillfulsymbolic actions can convey social efficacy (Feldman andMarch, 1981).

Customization. Our data show that the quality of symbolicactions often hinges on whether entrepreneurs customizedtheir symbolic displays to particular audiences. Some of theentrepreneurs we studied used dress codes to symbolize for-mal structures and adapted the way they presented them-selves to their various audiences’ perceptions of professional-ism. They conveyed to their audiences that they understoodspecific contexts. As a founder of an information technologyconsultancy firm in our larger study told us:

If we’re going to the City and talking to finance companies in Lon-don, we’ll dress in the way that finance company people dress: for-mal suits, good quality shirts, the double cuff or French cuffs, cufflengths, etc. You know, you’re wearing a smart pair of polishedshoes. You really make the effort. Having said that, we also just solda project a few months ago to a construction company, and we didexactly the opposite: we dressed down.

Entrepreneurs who paid less attention to their audiences’perceptions were less successful in attracting resources.Jeremy, the founder of Wind, for example, sent his senioremployee, Luke, who was from Italy, to a crucial negotiationwith potential Spanish investors who had never invested out-side their home territory before, let alone in a British venture.The employee tried a mainly analytic, quantitative approachto convince the Spanish investors, but he was unable to rec-ognize or address these investors’ concerns. A member of

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the advisory board of Wind, who recounted this incident,believed it was a serious mistake:

Here was a Spanish company that had not made an investment in anon-Spanish company; therefore, Spanish-speaking involvementshould certainly have been part of it. But the entrepreneur sent anItalian whose skills are mostly analytical and numerical, and also hewas from the wrong industry.

As a result, the negotiations with the Spanish firm brokedown. Wind’s lack of success in raising equity capital fromexternal sponsors was partly due to the lack of customizationin symbolic management by members of the organization.

Complementarity. The quality of an interaction betweensymbolic actors and their audiences also depends on thelevel of complementarity between the content of symbolicactions and the processes used to display it. Some ways ofcommunicating symbolic content do not allow entrepreneursto display the symbolic value of an action fully. The foundersof Claim, for example, initially relied exclusively on telephonesales. This constrained the range of symbolic actions theycould make and made it harder to display the symbolic valueof their product. One investor commented, “Cold-calling isgreat, but warm-calling potentially works better.” With hind-sight, one of Claim’s co-founders acknowledged the point:

We pretty much found out that we had to go and visit customers.We had to give them a face, we had to give them comfort, and wehad to show them that we understood what they needed. We hadto make sure that these finance people felt very, very comfortablewith us and that essentially we were not going to fail. If we failed,they were going to look stupid to their senior management, andbecause they had relatively less power, people were going to bevery, very hard on them. So one of the ways to mitigate their con-cerns was to be there in front of them and to make sure they trust-ed us and that they built a relationship. That’s something weweren’t doing originally.

Complementarity, however, is more than face-to-face interac-tions. It can also involve dynamically adjusting a symbol-ladenpitch to achieve optimal fit between the symbolic actors andtheir audience. As one co-founder of Travel explained:

I’m not sure that we could ever pre-categorize it, but when we pre-sented together, it was actually a very good combination becausesome people completely warmed to the other Travel co-founder anddidn’t talk to me for the entire discussion, in which case I’d just shutup and he presented. Other people did exactly the opposite, youknow, and he’d just shut up and I presented. It was kind of 50-50,but we could almost never predict which way it was going to go.

This quote illustrates a subtle form of symbolic interaction:the resource holder not only has to understand what theentrepreneur wants to say but must also personally like theentrepreneur’s way of saying it.

We thus view skillfulness in performing a symbolic action asthe quality of action that displays (1) reflexivity, that is, thesymbolic actor is aware of his or her own constraints andabilities, (2) enactment, in which the actor transforms aware-ness into symbolic action, (3) customization, in which theactor adapts symbolic actions by paying attention to resource

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holders’ perceptions, and (4) complementarity, in which theactor aligns the content of symbolic actions and the processof performing them. Symbolic actions are skillful when theyare mindful of the interacting parties’ beliefs and do not blind-ly mimic others’ behavior.

Our data also revealed what kind of symbolic actions entre-preneurs took to acquire resources, given their lack of a trackrecord, reputation, and collateral assets. We found that entre-preneurs emphasized a wide variety of symbolic action cate-gories that conveyed personal credibility, professional orga-nizing, organizational achievement, and the depth ofrelationships between founders and stakeholders.

Symbolic Actions Conveying the Entrepreneur’sCredibility

Entrepreneurs in our study, particularly those who madegood progress in attracting resources, conveyed their abilitiesas credible company builders by symbolically displaying per-sonal capability and personal commitment to the venture.

Personal capability. Some founders made explicit use oftheir business school degree as a symbol of personal capabil-ity. Although the degree represents an intrinsic certificationof past academic accomplishments, it also projects businesscapability, especially if it comes from a reputable businessschool. Although all of our lead entrepreneurs had graduatedfrom the same top-tier business school, the most successfulin attracting resources made sure that potential resourceproviders knew which school they had graduated from.Investors appreciated this symbolic gesture, as the followingcomment from one of the venture capital investors in Travelattests:

The MBA degree obviously showed a level of intellect, and it wasvery clear from dealing with them that they were very bright, well-thought-out individuals. I am sort of skeptical about the MBA qualifi-cations. The fact [that he let us know that] he was from a presti-gious business school did help.

The symbolic action of displaying the degree from a presti-gious business school increased the confidence of theresource holder in the entrepreneurs’ competence. Waibeland Wicklund (1994) have found that people who are unableto assess the actual performance of another person tend torely on displays of personal attributes to make inferencesabout the person’s level of competence (e.g., successfulartists have long hair, MBA graduates from a certain schoolare competent business people), even if these stereotypeshave little bearing on actual abilities.

The founder of Fina had been laid off in his mid-40s andspent two years without a job. He became interested in start-ing a company in a niche area of the financial services sector,which was where he had gathered considerable technicalexpertise, but he lacked industry-specific knowledge and con-tacts. He overcame these shortcomings by meeting prospec-tive clients and stating that he was doing “research” (intrin-sic dimension), an activity that is generally well respected inEnglish society (symbolic dimension):

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I remember thinking to myself, “What am I going to do? How am Ieven going to see people?” I sat down and thought, “Well, play itby private finance initiative. That’s flavor of the month, that’s linkedto the niche in financial services that I wanted to target.” So Iinvented a client who didn’t exist, and I then decided I was going togo around and find out about private finance initiatives. So I used toring people up and say, “I’m doing a research project.|.|.|. I’d like tocome and interview you and find out exactly how this works, andwhat you do.”

As a result of this symbolic initiative, the entrepreneur wasable to portray himself as a competent technical expert in thespecific area that he was targeting. He made valuable con-tacts and acquired consulting work, too, which generatedenough cash to start his firm.

Personal commitment to the venture. Some founders inour study accepted financial sacrifice and delayed personalgratification through a variety of imaginative schemes thatnot only preserved precious cash for their firms (intrinsicdimension) but also emphasized their personal commitmentto them (symbolic dimension). This symbolic emphasis even-tually convinced some outside financiers to invest, as one ofthe co-founders of Travel noted:

Early on in the investment round, we started to include the fact thatmy partner was going to work for the first six months without anypay which the investors were very impressed with. In fact, itshowed a lot of commitment. What the investors didn’t want to dowas just basically be supporting our lifestyle. They said, “OK, youdecide to start this company and you want us to put money into it—what are you putting into this?”

At Wire, the employees as well as the founders voluntarilymade substantial financial sacrifices, agreeing to have twomonths’ wages deferred to help their firm endure an acutecash shortage. This symbolic demonstration of commitmentimpressed existing investors, who decided to make furtherfinancing available. The founder of Wire explained:

We asked people to defer salary at the time. People turned backand wanted to defer more than we’d asked for. It was very moving,actually, for the management team. The investors were awe-struckby the fact that people had such commitment to the business. Theywere very impressed by that. They said that after they closed thefinancing round, it was one of the key things that really gave thembelief in the business.

A board member and investor in Wire confirmed that thisgesture gave him confidence and “a great feeling of team-work as a result of doing it.” One investor in an executiverecruitment service firm in our larger study explained why ademonstration of commitment was so important to him:

Anyone can make a good business plan. But the fact is that it’s gotto be the people behind the business plan. It’s got to be their com-mitment—that is what helps you make the hard decisions aboutinvesting. It tells you that when the chips are down, these are peo-ple who are not going to jump ship. They’re going to stay fighting.

These data suggest that symbols of personal credibility,including symbols of personal competence and commitment,are important for convincing potential resource providers

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because they inspire confidence that the organization mem-bers (particularly the founders) are willing and able to manageand build the business, even under adverse conditions. Inparticular, symbols of commitment reassure resourceproviders that the entrepreneurs are able to endure adversityand not “jump ship” and abandon their projects when facedwith difficulties.

Symbolic Actions Conveying Professional Organizing

Our data showed that founders conveyed the quality of theirorganizing efforts by displaying and drawing the attention ofpotential investors and employees to the professional natureof their company’s structures and processes.

Professional structures. Conveying professional structuresrefers to ways of presenting the visible attributes of the com-pany that are usually taken for granted, for example, its legalstatus and corporate hierarchy (Meyer and Rowan, 1977), orformal roles such as chief financial officer and vice presidentof human relations (Sine, Mitsuhashi, and Kirsch, 2006).According to our data, other important structural attributesthat entrepreneurs displayed as symbols included the compa-ny’s Web site, its offices, or its dress code. A Web siteserved not only as the online tool for distributing companyinformation (intrinsic dimension) but also as the symbol of anestablished, professionally run company—one that can “helpthe entrepreneur pitch to the [venture capital] world to raisefunds,” as one supplier of marketing services to Claimremarked.

To convey professional structures symbolically, some entre-preneurs in our study received resource providers in fashion-ably decorated front offices and/or impressive buildings(intrinsic dimension), receiving guests in places where onecould meet and work, to suggest reliability (symbolic dimen-sion). A founder of an executive recruitment service firm inour larger study elaborated on the symbolic importance ofimpressive offices “to give people confidence that we havebeen around for some time and we will be around for sometime.” He explained how this display of formal structurehelped his venture entice customers:

A very major company came to see us when we were only two orthree months established, and we were very delighted to win a sig-nificant amount of work from them. When we asked them sometime down the line why they had given us the chance to do thisrather than some of our perhaps better established competitors,they told us that they were so impressed that we were obviously abusiness of substance because we had such a large, well-appointedoffice. They didn’t know that we had a very, very small office, just ina large building.

Recent research on established organizations indicates thatmany people think of office décor as an indicator of identity.Observers draw conclusions about social status and distinc-tiveness on the basis of a few displayed artifacts (Elsbach,2004). They link status (e.g., power and wealth) to furnish-ings, location, and décor. Most people, after all, have a com-mon conception of what high-status environments look like(Dittmar, 1992).

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Professional processes. Professional processes refer toorganizational activities that conform to rules of properbehavior and attitudes with respect to rationality and account-ability (Weber, 1947). As Feldman and March (1981) pointedout, organizational processes may be more important thanthe outcomes they produce. We found that entrepreneursacted symbolically to convey the professionalism of theirorganizational processes, such as hiring staff using verysophisticated recruiting techniques. Obviously, what are con-sidered professional processes depends on the institutionalfields in which the ventures operate. These processes couldtranscend their intrinsic purpose (e.g., ensuring selection ofhigh-quality employees) to convey symbolically professionallyrun enterprises.

In one example from our data, the founders of Wire adopteda tough recruiting process not only to select and evaluatestaff (intrinsic dimension) but also to convey to prospectivehigh-quality employees, as potential resource providers, howserious the founders were about their venture (symbolicmeaning). As the founder told us:

We put the job applicants through an absolutely grueling recruitingprocess. The underlying thing was that we tried to capture a lot ofdata about people in a way that signaled that we were absolutelyruthless about screening people and very, very professional aboutdealing with it. So we projected a signal to these engineers that thiswas the toughest interviewing process they were ever going to gothrough. We had people just walking out of there saying, “You hurtmy brain.”

This symbolic value has been confirmed by empirical studiesof recruitment by established organizations (e.g., Lievens andHighhouse, 2003). Although good compensation packages oropportunities for advancement are generally perceived asattractive, these benefits do not markedly differentiate com-panies in the same industry. Job applicants are attracted toorganizational attributes (e.g., innovation) for their symbolicmeanings and self-expressive values. An elaborate evaluationof prospective employees is symbolic because ceremonialprocedures signal to both current and new employees thatmembership is valuable (Trice, Belasco, and Alluto, 1969).Our data suggest that resource holders were favorablyimpressed by these symbolic actions conveying professionalprocesses, as Claim’s supplier of marketing services testified:“They’re a very professionally run organization. I mean, it’s asmall business with big business practices. I think it’s verygood. I get the impression that this business is run on a setof objectives, achieving objectives without deflection.”

Symbolic Actions Conveying Organizational Achievement

Organizational achievement refers to past accomplishments.Because their short histories did not allow the firms in ourstudy to amass long track records of traditional performancemeasures, some entrepreneurs tried to compensate by sym-bolically emphasizing preliminary or interim achievementsthat their firms had realized, such as partially working prod-ucts and technologies or the fact that they had been aroundfor a while and grown.

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Partially working products and technologies. Our datarevealed that entrepreneurs used prototypes, productdemonstrations, trial sites, and awards to represent partiallyworking artifacts. These are symbolic because they conveypreliminary images of the ultimate products. Entrepreneursdisplayed something that appeared to work, although it wasincomplete, to reduce the perceived level of technologicaland business risk. In prototyping, this clearly went beyondthe intrinsic functions of saving costs and designing innova-tive solutions that better fit customers’ needs (Kelley, 2001;Hargadon, 2003). The symbolic display of company achieve-ment helped attract customers, as one investor in Wire con-firmed by describing how Wire won over an important clientduring a product demonstration:

The large company was going to do a formal search through a num-ber of companies, and they really got so excited about Wire—theytruncated that process and they selected Wire because it’s really anexciting vision, and Wire had a product that looked snazzy. This winhappened when the business founder gave what I’ll call a controlleddemonstration. The demo really looked great.

The founders of Wire also won industry awards for theirtechnology development, even though they had not yet pro-duced a commercially viable product. They drew attention tothese awards on the firm’s Web site and in communicationswith the business press. Wire’s chairman of the board, whowas also an investor, explained the symbolic value of theseactions:

The fact that existing investors supported the company in a severecash crisis and stuck with it was very much supported by the win-ning of awards—in other words, the external support for these guysworking on this piece of technology. You know, Entrepreneur of theYear and all those sorts of things.|.|.|. The technology industry con-gress endorsing what Wire was doing helped people to stay withthis concept. Could we prove it worked in the marketplace at vari-ous points? No, we couldn’t. But we needed to get those externalendorsements to help us stay with it.

As Rao (1994: 32) noted, victories in certification contests forearly car manufacturers were actually social tests that legiti-mated these organizations and enhanced their reputationsbecause of two widely held beliefs. First, winners are betterthan losers. Second, contests convey rational and impartialtesting. Participating in competitions and winning awards arecredentials that symbolize capabilities and establish socialstanding.

Venture age and number of employees. Some entrepre-neurs in our study conspicuously displayed the age or num-ber of employees of their ventures (intrinsic dimension), bothto communicate business facts to stakeholders and to con-vey a variety of organizational achievements (symbolic dimen-sion). The older the firm, for instance, the more major hur-dles it had overcome to become an established enterprise,and the probability of going out of business had significantlydiminished. As one founder said, “It made a massive differ-ence to say that we’ve been around for 12 months, we’re nolonger fly-by-night. You could just see it in people’s receptivi-ty.” Thus, on its February 2003 Web site posting, the firm

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underlined that it had incorporated at the beginning of 2000.Legal incorporation has been shown to enhance survivalodds, probably because it enhances the venture’s legitimacy(Delmar and Shane, 2004). The co-founder of Fina explainedhow the founders had created Web site presentations thatmade his venture appear larger than it really was: “We createan illusion. If you looked at our Web site, you’d think wewere 20-something people. You come to this office and younotice we’re actually four.”

Symbolic Actions Conveying Stakeholder RelationshipQuality

Associations with prestigious external stakeholders (e.g., cus-tomers, investors) are important for new companies, whichlack substantive achievements and solid reputations (Stuart,Hoang, and Hybels, 1999; Higgins and Gulati, 2003). Wefound that entrepreneurs drew symbolically on the prestigeof their associates to acquire more resources and that theyalso showed symbolic personal attention to potential stake-holders.

Prestigious stakeholders. As an ongoing concern, a newfirm needs to be seen in good company with high-profileorganizations and individuals. Our data showed that entrepre-neurs attempted to achieve these goals through symbolicactions such as dropping high-profile names, mentioning rela-tionships with famous people or companies, or involvingprestigious outsiders as company representatives in meet-ings. The intrinsic content and functional use of these actionsare that they account for existing and potentially useful rela-tionships, but they also carry symbolic meanings in that tieswith prestigious outsiders enhance legitimacy in the eyes ofthird parties. As an illustration, name-dropping helped thefounders of Travel land their first big customer. They used thename of one hotel chain to get a second to join their net-work. Then the entrepreneur drew attention to these two bignames to recruit other clients and obtain additional funding.As the founder noted, “The fact that we had two internation-al multimillion-dollar companies who supported us gave us alot of credibility and was absolutely critical for getting fund-ing.” In addition, the backing of four high-profile investorsand industry experts who joined the company’s boardbecame an important symbol of prestige to the outsideworld, which the entrepreneurs deliberately displayed in pre-sentations. As the Travel founder indicated, “They’ve been areal asset in terms of credibility, and it helped us forge impor-tant partnerships.” As he explained,

We’ve just got a big deal with the Association of National TravelAgents to promote us to 6000 travel agents, and it’s a huge deal,and we’re only 25 people in the company. The reason they think wecan do it is they look at our board and they see some very bignames on there now.

Personal attention. Entrepreneurs from our various samplefirms remained concerned that the relatively small size oftheir ventures made them easy to overlook or forget. Acutelyaware that larger companies deal with many suppliers, some(but not all) entrepreneurs made conscious efforts to benoticed or remembered. By doing so, they maintained and

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expanded their resource holders’ awareness of them, to gen-erate repeat business or be introduced to other companies.These efforts included sending flowers, delivering cus-tomized e-mail greetings on special occasions, and offeringgifts, usually displaying their corporate logos. These weresymbolic actions in that they reminded recipients of the exis-tence and reliability of the senders. Fina’s founders, forinstance, regularly offered inexpensive artifacts as symbols ofpersonal attention. As one of them told us, “We try to influ-ence the clients’ selective recall. The way we do it is throughsmall gifts like a pen or a ruler with our company name on it.People keep these things on their desk and they use them.You’re laughing at this, but the small things help people toremember us.”

Resource providers appreciated these gestures. As one Finacustomer said, “Fina regards our large investment bank as aprime client. Service is important, and Fina attends to us as ifwe were their most important or only customer, and contin-ues to do so.” Other scholars have suggested that recipientshighly appreciate symbolic actions that are associated withminor intrinsic value (e.g., granting honorary titles), becausethey signify affiliation and offer recognition for valued contri-butions (Salancik, 1977). Moreover, considerable researchsuggests that people who experience positive feelingsbecome more helpful and generous. Even seemingly smallgifts, such as cartoons, cookies, or notepads, can reduceinterpersonal conflict (Isen and Baron, 1991), facilitate negoti-ations (Carnevale and Isen, 1986), and promote helpingbehaviors among strangers (Isen and Levin, 1972).

Many of the symbolic actions described here appear straight-forward, and one might think that all entrepreneurs wouldmake similar use of them and, consequently, little differenti-ating advantage would result. But we found sharp variationsin the variety, as well as the frequency of symbolic actionsperformed. Entrepreneurs did not use symbolic managementuniformly.

Variety and Frequency of Symbolic Actions

In contrasting high and low levels of success in attractingresources, our analysis showed that the most successfulentrepreneurs communicated through the widest range ofsymbolic actions, while less successful entrepreneurs used anarrower range. Market, for example, failed to enact a widerange of symbols. It won a prestigious business plan compe-tition, raised $2 million from a blue-chip venture capital firm,and negotiated a deal with a technology provider, all within afew months during the first half of 2000. Instead of widelypublicizing the symbolic value of these achievements, how-ever, Market used a narrow approach and relied almost exclu-sively on the lead entrepreneur’s presentational skills. Marketrapidly lost steam because of its inability to entice customersto trade actively on its platform. Even though it was slowlybuilding an installed base, the number of active, paying cus-tomers (critical for an online marketplace) remained low forthe first three years.

Table 5 depicts the categories of symbolic action that wehave described and compares high and low resource-acquisi-

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tion ventures. The more categories that are indicated in a col-umn (venture), the greater the variety of symbolic actions.The number of check marks in each cell depicts the frequen-cy of symbolic actions, with each check mark representing adifferent action (rather than a repeated single action, such asoffering a pen with a company logo) used to acquire aresource. The more check marks in each cell, the higher thefrequency of symbolic actions that the founders reported.The table shows that high-resource-acquisition ventures hada higher frequency of symbolic actions than low ones.

Taken at face value, table 5 might suggest that the quantityof symbolic actions (variety and frequency) is enough to pre-dict success in resource acquisition, but we are reluctant todraw that conclusion because of the nuances provided by ourqualitative analysis—those featured in our proposed conceptof skillfulness in taking symbolic action. The skillful and fre-quent use of a variety of categories of symbolic actionsseems to better explain why some entrepreneurs attractedmore resources than others. In addition, our data suggestthat there are other factors that could moderate the relation-ship between symbolic management and resource acquisi-tion in entrepreneurial ventures, specifically, the structuralsimilarity between the venture and the resource holder, theintrinsic quality of the venture, and uncertainty in the market.

Moderating Factors

Structural similarity. The relative importance of symbolicactions and their required quantities and qualities depends onfactors that are beyond the scope of our core constructs butthat nonetheless affect the relationship between symbolicmanagement and resource acquisition. For example, therequired skillfulness, variety, and frequency of symbolicactions to attract resources depend on the structural similari-ty between the resource holder and resource seeker. Ourdata show that the smaller the difference between resourceholders’ and founders’ norms, expectations, or status, theless important symbolic management is for bridging it.

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Table 5

Variety and Frequency of Symbolic Actions in Resource Acquisition*

Symbolic action denoting:

Personal credibilityPersonal capabilityPersonal commitment

Professional organizingProfessional structureProfessional processes

Organizational achievementPartially working product/—technologyAge, size, or performance

Stakeholder relationship—qualityPrestigeIndividual attention

* Each check mark represents one distinct symbolic action (rather than a repeated single action) that was used inacquiring one resource. Travel, Fina, and Wire represent cases in which the entrepreneurs were successful in acquir-ing resources.

Travel

X���X

�����

X�

�X

���X

Fina

X���

XX

����X

��

�X

�����

Wire

X���

�X

�����

X���

�X

���

Mobile

XXX

XXX�XX

�

Claim

XXX

XXXX

��X

��X

Wind

X�XX

��XXX

�X

�X

Market

X�XXXXXX

�X

�X

Specifically, if potential resource providers have worked inconditions similar to those of the entrepreneurs and aretherefore familiar and comfortable with the context of a ven-ture, it might take relatively little effort to win support fromthem. One Claim co-founder mentioned this point:

Our first customer was another startup, but one that was funded byOracle and Alcatel. So it’s a slightly different scale, but still thatstartup mentality, and they loved the products, and they weren’tinterested whether we had any customers, because they didn’thave any customers .|.|. you know, it wasn’t an issue. “You’re astartup, we’re a startup, great, yes, what have you got? Fantastic,we like it.” Let’s go. So their attitude toward risk was very differentto that of other companies that wanted to see our balance sheetfrom last year, or something that we couldn’t really furnish becausewe didn’t have it.

Structural similarity can help speed cognitive appraisal andmitigate possible doubts. A supplier for Claim, himself anentrepreneur, admitted, “I’ve been a hopeless businessmanall my life, and if I like people and I like their business idea,I’ll back them, not necessarily financially, but I’ll back them interms of time and effort to help make it work.” Anotherinvestor confirmed, “I like to think of myself as a little entre-preneur, so I’m naturally interested in other people who callthemselves entrepreneurs.” These comments point to empa-thy with the entrepreneur and sympathy for the entrepre-neurial cause as possible explanations for why we expectthat the higher the structural similarity between potentialresource providers and entrepreneurs, the weaker the associ-ation between symbolic management and the acquisition ofresources.

The homophily literature suggests that contacts betweensimilar people occur at a higher rate than dissimilar people(McPherson, Smith-Lovin, and Cook, 2001). Advice, respect,and support networks are strongly shaped by people whoshare similar structural positions or work roles (Ibarra, 1995),such as entrepreneurial work. People who perform similarwork roles often influence one another in the adoption ofinnovations (Burt, 1982). Perceived similarity increases mutu-al attraction, and people associate with similar others forshared preferences and ease of communication (Huston andLevinger, 1978).

Intrinsic quality. The state of venture development also mat-ters for the impact of symbolic management on resourceacquisition. When entrepreneurs can point to impressiveintrinsic track records and achievements, they do not have torely on the symbolic dimension as much as if they have fewsuch resources. Travel, for example, built a broad resourcebase of customers, suppliers, employees, board members,and investors. Doing so significantly reduced its venture liabil-ities after only a few years. Consequently, the co-founderclaimed:

I think endorsements from hotels that work with us are much moreimportant in the early days than they are later, which is unfortunatebecause the early days are when you [need them most]. The earlyendorsements are slightly disingenuous because the hotels onlyworked with you for a couple of weeks, but you asked them for an

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endorsement anyway. It looks like you’ve been around for awhile.|.|.|. We produce quite glossy looking brochures, which annoysme because I don’t actually think they do much good now. But cer-tainly then people would say, “Right, they must be reasonablygood—they can afford a brochure.”

Our data lead us to surmise that the more visible a firm’sintrinsic quality (i.e., the more advanced its state of develop-ment), the weaker the association between symbolic man-agement and resource acquisition. Symbolic actions per-formed for startup organizations lacking a track record orstanding are likely to be more consequential than those per-formed for more established organizations (Rao, 1994: 33).As early symbolic actions help entrepreneurs acquireresources to develop high-quality offerings, a profitable cus-tomer base, and reliable production, these intrinsic achieve-ments are likely to be increasingly sufficient to convincestakeholders to provide more resources. A track record oftechnical performance and intrinsic success increases theorganization’s legitimacy and eases resource acquisition(Lounsbury and Glynn, 2001). Once conferred, legitimacy isreassessed less vigilantly, unless major mishaps occur (Ash-forth and Gibbs, 1990; Suchman, 1995). The relative use ofsymbolic management is likely to decline as a venture’sintrinsic quality becomes more visible.

Uncertainty. Finally, our data suggest that the greater theuncertainty in the marketplace about the value of a compa-ny’s offering, the more important symbolic management islikely to be for attracting resources. Uncertainty can be con-stant if competition is high. As one founder in the executiverecruitment service firm in our larger study told us, “Ourindustry has very few barriers to entry. Anybody can stick abrass plate on their door and announce that they are now inbusiness. So we differentiate ourselves by conveying awhole feel of quality, with good-quality offices in good loca-tions with good-quality furnishings and good people to pro-ject a feel of validity, of a well-established business.”

Despite the heightened uncertainty and nervousness thatbeset international investors following the terrorist attacks ofSeptember 2001 in the United States, the founder of Travelnegotiated hard with financiers and demonstrated to the vari-ous parties that he was a tough and shrewd businesspersonin whom it paid to invest. Investors took notice, as one ofthem testified: “The founders were actually prepared to bequite challenging, when in reality their position was probablynot as strong as it would have been pre-9/11. So they hadthe wherewithal to still negotiate hard, and that was a goodsign in my view.” Another investor confirmed, “We test theentrepreneurs very consciously and very actively during thenegotiation process. People who lie down and take anyterms you’ll offer them are probably not people you want toback.” This finding is consistent with Pfeffer’s (1981: 46)claim that symbolic action becomes important “in contexts inwhich assessment is difficult, involvement is segmented andincomplete, technology or the connections between actionsand results are uncertain, and preferences are ambiguous.”Under these conditions, potential resource providers want tosee some evidence that their preferences and interests are

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well understood (McGrath and MacMillan, 2000). Becauseone function of symbolic action is to mitigate uncertainty, wepropose that the greater the entrepreneurial uncertainty, thegreater the influence of symbolic management on attractingresources (see also Higgins and Gulati, 2003).

DISCUSSION

We motivated this study by asking what kinds of symbolicactions entrepreneurs use, how they use them, and whythey could be effective for resource acquisition. Our empiricalfindings show that performing symbolic actions—conveyingthe entrepreneur’s personal credibility, professional organiz-ing, organizational achievement, and the quality of stakehold-er relationships—can indeed help entrepreneurs acquireresources. Moreover, our data suggest that it matters notonly what symbolic actions entrepreneurs perform but alsohow they perform them. Ventures whose founders skillfullyand frequently performed a variety of symbolic actionsattracted more resources than those whose did not. Finally,our data suggest several factors—structural similarity, intrin-sic quality, and uncertainty—that moderate the relationshipbetween symbolic management and resource acquisition.Figure 1 summarizes these findings.

Our study indicates that variety in symbolic action is impor-tant to resource acquisition. Studies of persuasion haveshown that the credibility of a source (e.g., entrepreneur)affects the credibility of the message (Hovland and Weiss,1951; Petty and Cacioppo, 1986). Because entrepreneursdeal with a variety of resource providers who have differentinterests and values, a symbolic action that appeals to onemight not appeal to another. The “law of requisite variety”(Weick, 1979) is likely to apply here. Furthermore, enacting awide variety of symbols is likely to be more effective thanlimiting one’s range, because symbols might be interdepen-dent and reinforce each other’s meaning. Entrepreneurialfirms need to convey credibility by using many symbols andcannot afford to rely on the effects of only a few.

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Figure 1. Model of entrepreneurs’ symbolic management and resource acquisition.

Skillfulness in Symbolic Action

Variety of symbolic action con-veying:

• Personal credibility

• Professional organizing

• Organizational achievement

• Stakeholder relationship quality

Frequency of Symbolic Action

ResourceAcquisition

• Resource provider’s structuralsimilarity (–)

• Intrinsic Quality of Venture (–)• Uncertainty (+)

+

Frequency in symbolic management is also important,because the extent to which symbolic actions display pat-terns of congruent symbols that can be observed repeatedlycan convince resource providers that the business is legiti-mate. There may well be a critical threshold of legitimacyabove which the new venture will be better able to acquireneeded resources (Zimmerman and Zeitz, 2002), and fre-quency as well as a variety of performed symbolic actionscan help entrepreneurs attain this critical level. Performingthe four categories of symbolic actions can help entrepre-neurs acquire resources because it helps them attain legiti-macy.

Creating Legitimacy through Symbolic Action

Rao (1994: 30) suggested that “legitimacy flows from sym-bols.” Symbols represent an integral part of people’s knowl-edge structures and taken-for-granted assumptions that helpthem make sense of social reality (Weick, 1995). Previousresearch has found that decision makers evaluate the cre-ative potential of unknown applicants by matching the appli-cants’ behavioral, physical, and relational cues with pre-existing mental prototypes (Elsbach and Kramer, 2003).Conceptual studies on the use of symbols in the context ofentrepreneurship have built on these insights and evokedlegitimacy as important for resource acquisition (Aldrich andFiol, 1994; Lounsbury and Glynn, 2001). Moreover, differentcategories of symbolic action can shape different forms oflegitimacy. These forms of legitimacy can represent some ofthe implicit assumptions that resource holders use to makeearly assessments, under conditions of uncertainty and ambi-guity, for a number of reasons.

First, enacting symbols of personal credibility can convey aparticular form of cognitive legitimacy, which Suchman (1995:583) called legitimacy based on “taken-for-grantedness.”Such legitimacy is underpinned by a set of “givens” or taken-for-granted assumptions that displace other questioningviews. Assumptions about professional and scientific bodies(Scott, 1994) serve this purpose. Our data suggest the pres-ence of cognitive legitimacy when investors assume that theentrepreneurs in our study—as graduates of top businessschools or people engaged in “research”—are intellectuallycapable or know how to apply the most effective managerialtechniques, even if the investors could not discern preciselywhat the entrepreneurs knew or if the techniques theyapplied were appropriate.

Moreover, symbols of personal credibility—as displayed inactions that convey personal commitment to the venture(e.g., working without pay or deferring pay to deal with theventure’s cash shortage)—can also convey what Suchman(1995: 581) called “personal legitimacy,” namely, the displayof personal drive, conviction, and vision in ways that mightdisrupt the old social order and initiate a new one. Most peo-ple assume that the management team has a strong influ-ence on any company (Hambrick and Mason, 1984) becauseit represents and shapes the company’s culture, often bymeans of symbolic actions (Pfeffer, 1981). Thus symbols ofthe founders’ personal credibility are likely to influence the

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kind of employees recruited, who in turn participate in shap-ing the company’s character (Selznick, 1957).

Second, enacting symbols of professional organizing canenhance what Suchman (1995) called “structural legitimacy”and “procedural legitimacy.” Formal structures and process-es (e.g., Claim’s “big business” practices) ensure skepticalresource holders that the unproven venture has embracedscientific, state-of-the-art, or professional practices. Procedur-al legitimacy is even more important in the absence of clearoutcome measures (Scott, 1977). In the early days of a ven-ture, when the product is neither fully developed nor provenin the market, symbols of professional organizing can helpreassure stakeholders that the “entire systems of activityrecur consistently over time” and that the venture is “theright organization for the job” (Suchman, 1995: 581).

Third, enacting symbols of organizational achievement (e.g.,Wire’s display of industry awards) can enhance what Such-man (1995) called “consequential legitimacy.” According tothe rationalist “mythology” of the modern order (Meyer andRowan, 1977), organizations should be judged on what theyaccomplish. These intrinsic (technical) dimensions of achieve-ment are socially defined and seldom exist in any objectivesense. In highly ambiguous settings, claims of achievementare primarily signs of disposition or potential achievement(Suchman, 1995: 580). Nascent ventures can start buildingconsequential legitimacy by drawing the attention of resourceholders to early symbols of achievements that may have yetto lead to commercial success.

Fourth, enacting symbols of the quality of relationships withstakeholders through displays of prestige or personal atten-tion (e.g., Travel’s advertisement of its first two big-namecustomers or Fina’s sending of small gifts) foster what Such-man (1995: 578) called “dispositional legitimacy.” The mod-ern institutional order increasingly personifies organizationsand treats them as coherent, morally responsible actors. Peo-ple are likely to accord legitimacy to organizations that appeartrustworthy or decent or wise, but the attribution of goodcharacter generally requires a track record of consistently reli-able performance that new businesses do not have. As Such-man (1995: 588) suggested, though, a firm can “overcomethis obstacle by trading on the reputation of its key personnelin previous endeavors. These dispositional spillovers may bereinforced by the use of character references, who are willingto vouch for the untested entity’s innate reliability.” Forexample, Higgins and Gulati (2003) showed that recruitingsenior managers based on their previous affiliation withprominent organizations enhanced the legitimacy of youngbiotechnology firms.

Finally, taken together, these four categories of symbolicaction can also shape “exchange legitimacy,” defined bySuchman (1995: 578) as “support for an organizational policybased on that policy’s expected value to a particular set ofconstituents.” In the context of nascent ventures, variousgroups of stakeholders may provide resources for differentexpected economic or symbolic benefits. In addition, individ-ual symbolic actions within the described action categories,

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such as paying attention to external stakeholders by beingparticularly responsive to their needs, can foster “influencelegitimacy,” which arises when resource holders perceivethat the organization is responsive to their larger interests(Suchman, 1995: 578). The four categories of symbolicactions that we identified from our data encompass all ofSuchman’s forms of legitimacy and help shape the overalllegitimacy of the nascent organization, thereby enhancing itsability to acquire resources (Zimmerman and Zeitz, 2002).

Contributions and Future Research

To the best of our knowledge, the inductive model that wepresent here is the first to ground empirically a range of sym-bolic actions performed by entrepreneurs. It is also the firstto link theoretically the categories in which these actionsreflect different types of legitimacy that facilitate resourceacquisition in entrepreneurial ventures. Our model is alsomore widely applicable than previous studies on entrepre-neurs’ resource acquisition. These have focused on laterstages, such as the IPO (e.g., Higgins and Gulati, 2003), par-ticular resources, such as sales (e.g., Eisenhardt andSchoonhoven, 1990) or financial capital (e.g., Florin, Lubatkin,and Schulze, 2003), and specific industries, such as biotech-nology (e.g., Stuart, Hoang, and Hybels, 1999) or semicon-ductors (e.g., Schoonhoven, Eisenhardt, and Lyman, 1990).Our model holds for early stages, a broad range of resources,and a variety of industries. For example, we studied firms insoftware, financial services, and renewable energy industries,among others. It centers on entrepreneurial action, ratherthan firm-level or industry characteristics, following the beliefthat theories of the entrepreneur require theories of action(McMullen and Sheperd, 2006).

Unlike prior research, which has examined outsiders’ percep-tions of a firm’s quality associated with specific resourcesthat can be moved across firm ties (Stuart, Hoang, andHybels, 1999) and has characterized organizations as a pas-sive conduit through which resources flow (Podolny, 2001),our model depicts the entrepreneur as an active shaper ofperceptions (Schoonhoven and Romanelli, 2001) and a poten-tially skilled user of cultural tool kits (Rao, 1994; Lounsburyand Glynn, 2001). Although scholars have hypothesized aboutthe importance of symbols (e.g., Aldrich and Fiol, 1994;Lounsbury and Glynn, 2001) or empirically highlighted a fewsymbols relevant to entrepreneurs (e.g., Rao, 1994; Higginsand Gulati, 2003), our empirical study could well be the firstthat systematically analyzes a wide variety of symbolicactions in nascent ventures, how these actions are per-formed, and what effect their use has on resourceacquisition.

We focused on the nascent period of ventures’ lives, wellahead of an IPO. This period, although critical, has beenunderresearched because it is hard to detect emerging ven-tures with traditional data base searches. We have enrichedthe entrepreneurship literature by articulating in a texturedway four categories of symbolic action to overcome the liabil-ity of newness (Stinchcombe, 1965), thereby answering thequestion of what actions resource-poor entrepreneurs can

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take to distinguish themselves from other nascent venturesthat compete for resources. We showed that patterns ofsymbolic actions (skillfulness, variety, frequency) increase thelikelihood of acquiring resources and proposed a theory thatexplains why and how performing these actions has a differ-ential impact on resource acquisition.

Our study also contributes to the literature on symbolic man-agement. Prior research in that domain has examined howcommunication in response to an established organization’simage affects its later performance (e.g., Sutton and Calla-han, 1987; Marcus and Goodman, 1991; Elsbach, 1994) andhow symbolic action and communication affect power andcontrol relationships within firms (e.g., Westphal and Zajac,1998). We extend the latter scholars’ view of symbolic actionas verbal pronouncements that are aligned with social normsbut are not actually carried out. In the context of resourceacquisition, we define symbolic actions as actions that areperformed alongside their intrinsic dimensions, rather thaninstead of them. In so doing, we hope to restore the full rich-ness of symbolic actions in organization studies.

Recently, sociologists have developed theories on whatagency means (Emirbayer and Mische, 1999) and have recog-nized that social skills grounded in symbolic interactions areimportant for institutional entrepreneurs to elicit cooperationfrom other actors and therefore to create new systems ofmeaning (Fligstein, 2001). We contribute to this debate byproviding a more textured understanding of what these socialskills involve, how they are performed, and why they areeffective, drawing particular attention to the importance ofsymbolic actions. This development could stimulate furtherresearch on symbols, including those that are not physicalartifacts (Pratt and Rafaeli, 2001). Researchers could explore,for example, the kind of symbol that sometimes provideslegitimacy and sometimes does not (Glynn and Abzug, 2002;Higgins and Gulati, 2003). Our proposed model can alsobroaden the scope of research on effective subsets of sym-bolic actions in narrower contexts (e.g., specific institutionalfields, industries, or cultures).

Finally, we believe that we have also enriched the legitimacyliterature. As Zimmerman and Zeitz (2002) pointed out, a keygap in that literature is limited understanding of what to do toacquire legitimacy, especially if a new organization has fewresources (Lounsbury and Glynn, 2001). We have contributedto this literature by proposing four empirically grounded cate-gories of entrepreneurs’ symbolic actions that can give riseto various forms of legitimacy (Suchman, 1995). Symbolicmanagement thus represents an effective means forresource-poor nascent organizations to create legitimacyfrom scratch. Prior conceptual work in this domain has oftenfocused on certain types of legitimacy, such as cognitive andsocial-political legitimacy (e.g., Aldrich and Fiol, 1994; Zim-merman and Zeitz, 2002), and then hypothesized generalaction strategies to manipulate and create them. By focusingon concrete symbolic actions first and then asking whattypes of legitimacy they can help create, we have provided adistinct mapping of symbolic action categories onto severalforms of legitimacy. Our theory development points to those

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forms of legitimacy that matter differentially for resourceacquisition in entrepreneurial contexts, namely, personal andcognitive, structural and procedural, consequential, and dispo-sitional legitimacy.

Despite the contributions that we have described, ourresearch is limited in some ways. Our first interviews started,on average, about two years after the ventures were incorpo-rated, and thus there is a possibility of some recall bias. Thisbias was reduced with the subsequent interviews, whichoccurred at shorter time intervals. We also sought to reduceit by basing our analysis not just on the founders’ interviewsbut also on interviews with resource holders, as well as moreobservable and objective data.

In addition, the use of a relatively homogeneous samplereveals some important aspects of entrepreneurship butmight hide others. We have controlled for sources of varia-tion that could turn out to be important contingency factors,such as the quality of human capital, and the cultural, histori-cal, and sociopolitical context: we studied only MBA gradu-ates of a particular business school who founded companiesin one city in the U.K. Our relatively homogeneous samplemight have highlighted the importance of symbolic actions inrelation to other factors (e.g., business experience, socialcapital) that could have been more effectively revealed inmore heterogeneous groups, though it enabled us to discernthe link between symbolic management and resource acqui-sition. In more heterogeneous groups, the importance ofsymbolic management might vary in relation to factors suchas technical business skills, analytical intelligence, or socialnetworks. Furthermore, though our study begins to highlightthe challenges of symbolic management through the notionof skillfulness, researchers should further explore the condi-tions that cause excessive or inappropriate symbolic action.

This study offers researchers and practicing entrepreneurs adeeper appreciation of the challenges of acquiring resourcesfor emerging firms and how these may be overcome. Cre-ative business ideas are valuable but represent only an entryticket to this game. Technical and analytical skills are handy,but before entrepreneurs become successful innovators,they must first be able to master symbolic management.Entrepreneurship scholars hitherto have often focused on theentrepreneurs’ role as innovators who combine resources innovel ways, while our research points to the importance ofsymbolic management in the early phase of organizationbuilding. By enacting symbols effectively, entrepreneurs canshape a compelling symbolic universe that complements theinitially weak and uncertain intrinsic quality of their ventures.In this respect, entrepreneurs face the twin challenges ofperforming skillful symbolic action (to acquire resources) anddelivering substance (combining those resources to offervaluable products). No wonder so few of them can overcomethese formidable hurdles to bring about the innovations thatwe enjoy.

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