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From Plan to Plant: Effects of Certification on Operational Start-up in the Emergent Independent Power Sector

Cornell University, 339 Sage Hall, Ithaca, New York 14850
Faculty of Management, McGill University, Montreal, Quebec H3A 1G5, Canada
Institute of Policy and Planning Sciences, University of Tsukuba, Tennoudai 1-1-1 3F1100, Tsukuba, Ibaraki 305-8573, Japan
wds4{at}cornell.edu
robert.david{at}mcgill.ca
hitoshi{at}sk.tsukuba.ac.jp

In this paper, we study the transition from planned venture to operational start-up in the emergent independent power sector. Planned ventures face tremendous obstacles in assembling the resources necessary to begin operations; we hypothesize and show that formal certification from authorized actors increases the likelihood of making this transition. Moreover, we find that the effects of certification are contingent on the legitimacy of the sector as a whole: Certifications have a stronger effect on start-ups when sector legitimacy is low than when it is high. This research helps us understand a rarely studied organizational transition—from entrepreneurial intention to actual operations—within nascent sectors. It directs attention to the legitimating effects of formal certification, highlights the importance of a multilevel approach to legitimacy, and contributes to the growing rapprochement between entrepreneurial studies and institutional theory.

Key Words: entrepreneurship; institutional theory; legitimacy; certification; new organizational forms; alternative energy