The impact of different forms of IPO firm legitimacy on the choice of alliance governance structure

We analyze the effects of four different types of firm legitimacy – managerial, technological, local community legitimacy and business press endorsement – on the choice of alliance governance structure in partnerships with newly public biotechnology firms. We expand current research to differentiate between non-equity, minority equity and joint venture alliance structures. We find that initial public offering of stock (IPO) firms with higher levels of managerial legitimacy and local community legitimacy are more likely to enter into joint ventures than minority equity alliances and non-equity alliances. IPO firms with higher technological legitimacy and business press endorsement are more likely to use a less hierarchical governance structure.