Legitimacy and the financing of Chinese technological start-ups

This paper applies the legitimacy perspective to examine the financing of technological start-ups in a transitional economy. In particular, this study identifies five key factors that help technological start-ups build up their legitimacy: R&D investment, conformity to ISO9000, affiliation with research institutions, state-owned enterprise, and firm size. Empirical findings from 11,154 new technological ventures in the Zhongguancun Science Park show that investment in R&D, conformity to ISO9000, and large firm scale improve a focal firm´s capability in absorbing external debt and research funds. This study contributes to the legitimacy literature and extends the understanding about the financing of technological start-ups in emerging economies.