How the Social Relations Affect Performance in Chinese High-tech New Ventures: The Role of Legitimacy Acquisition and Symbolic Strategy

Existing research on the relationship between social relations and new venture's performance remains inconsistent. From the perspective of institutional theory, we introduce legitimacy acquisition and symbolic strategy to develop a theoretical model to explain the disparities in the Chinese transition economy. Based on the survey data of 242 small and medium-sized enterprises (SMEs) in China's strategic emerging industries (SEIs), this paper (1) investigates the role of legitimacy acquisition as the mediator through which the two sub levels of social relations (political and business) affecting new venture's performance. (2) Explores the moderating role of symbolic strategies to further illustrate the conditional nature of legitimacy acquisition. The results show that legitimacy acquisition plays a complete mediating role in the relationship between social relations and new venture's performance. Symbolic strategy improves the positive effect of political ties on legitimacy acquisition, but weakens the positive effect of business relations on legitimacy acquisition. The findings contribute to the entrepreneurial literature and make significant empirical implications. Social Relations, Legitimacy Acquisition, Symbolic Strategy and Firm PerformancePurpose: The study aimed to understand how social relations impact the performance of new ventures in China, emphasizing the roles of legitimacy acquisition and symbolic strategies. Methods: Through a survey of 242 small and medium-sized enterprises in strategic emerging industries in China, the study examined how legitimacy acquisition mediates the effect of social relations on venture performance, and how symbolic strategies moderate this mediation. Conclusions: It was found that legitimacy acquisition significantly mediates the link between social relations and venture performance. Symbolic strategies, however, had a mixed effect: enhancing the positive impact of political relations on legitimacy acquisition, but diminishing the effect of business relations. Implications: The results suggest that new ventures can improve their performance by gaining legitimacy through social relations. However, employing symbolic strategies may have varied effects depending on the nature of the social relations. Limitations: The study is bound to China, limiting generalizability. Other potential mediators or moderators impacting the relationship between social relations and venture performance were not explored. Additionally, the detailed impact of political versus business relations on legitimacy acquisition was not fully examined.