Understanding Legitimacy Formation in Multi-Goal Firms: An Examination of Business Planning Practices among Social Enterprises

The value of business planning to new business ventures and small firms has been the subject of debate among entrepreneurship researchers. In this paper, we examine business planning practices as a function of legitimacy formation among Australian social enterprises, drawing on a mixed-methods study. We find that business planning practices are driven by demands to establish legitimacy with external stakeholders as well as organizational performance imperatives, although legitimacy is the stronger driver. Findings also suggest business planning processes serve unique communicative and relational functions among social enterprises. This has implications for understanding legitimacy formation within multi-goal and multi-stakeholder businesses.