Regional Legacy Effects on Radically Innovative New Ventures’ Risks

Abstract

Innovative new ventures (INVs) cope with the lack of legitimacy and liability of newness that may hinder their likelihood of survival. Those risks increase with the novelty introduced by the INV. Radically INVs are the ones that have the highest degree of novelty, and, consequently, face the highest risks. Understanding the elements and mechanisms that sustain radically INVs is of paramount importance due to the great benefits they bring to society. This article explores how the regional legacy, defined as the combined effect of regional business and industrial practices and culture, supports those ventures in facing those risks. The regional culture and tradition create a sense of familiarity in stakeholders that facilitates the understanding of the radically INV, lowering the lack of legitimacy. Meanwhile, the shared culture within a region favours the creation of a collaborative climate that allows the radically INVs to access relevant resources and, finally, reduce the liability of newness.