Organizational Legitimacy and the Liability of Newness

This study explores whether external legitimacy or internal coordination processes more prominently underlie the liability of newness, the higher propensity of younger organizations to die, in a population of voluntary social service organizations. The findings show more support for the external legitimacy than for the internal coordination argument. Indicators show that forms of external legitimacy - the acquisition of a Community Directory listing, the acquisition of a Charitable Registration Number, and board size at birth - all significantly depress organizational death rates, whereas most internal organizational changes are unrelated to death rates. The exception is chief executive change, which lowers death rates, suggesting that chief executive turnover may be adaptive. The lack of institutional support experienced by young organizations is one important reason underlying the liability of newness in organizations.