Creating Stakeholder Legitimacy in the Eyes of Stakeholders: The Case of Havana’s Paladares

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Author Information : Arielle Newman (Martin J. Whitman School of Management, Syracuse University)
Sharon Alvarez (Joseph M. Katz Graduate School of Business, University of Pittsburgh)
Jay Barney (University of Utah David Eccles School of Business)
Alexander Plomaritis (Ph.D. student)

Year of Publication : Entrepreneurship Theory and Practice, 2021

Summary of Findings : This work follows the emergence of in-home restaurants, Paladares, in communist Cuba utilizing archival data, in addition to firsthand interviews with various stakeholders. This work brings a nuanced understanding of how stakeholders evaluate the legitimacy of entrepreneurial endeavors in contexts that are changing and emerging and how these evaluations are co-created in an iterative process between stakeholders and the endeavor.

Research Questions : How do stakeholders evaluate the legitimacy of entrepreneurial endeavors? How do these evaluations change over time? What happens if these evaluations conflict both between and within stakeholder groups?

What we know : This work brings a nuanced understanding of how stakeholders evaluate the legitimacy of entrepreneurial endeavors in contexts that are changing and emerging, and how these evaluations are co-created in an iterative process between stakeholders and the endeavor. Legitimacy is the gateway to resources, and in order to access important stakeholder resources for survival and growth, entrepreneurs and their endeavors must be perceived as legitimate. This paper demonstrates what entrepreneurs must do if there are competing perceptions of legitimacy from powerful stakeholders.

Novel Findings : Paladar owners were driven by many of the market objectives common to entrepreneurs around the world —accessing critical supplies, efficiently operating a restaurant, attracting customers, making a profit, and so forth. On the other hand, the Cuban government’s commitment to the bureaucratic state logic of socialism, communism, and collective ownership stood in remarkable contrast to these entrepreneurial concerns. Driven by both internal and external factors, the Cuban government has sometimes supported the creation and operation of paladares, sometimes tried to close them down completely, at times allowed them to continue in highly restricted ways, and at other times let them prosper as independent entrepreneurial enterprises. In each of these cases, the Cuban government adapted its laws to either provide or withdraw forms of legitimacy for the paladares. In turn, the paladar entrepreneurs created new perceptions of legitimacy through their actions. This paper demonstrates—in the case of the Cuban paladares—that conflicts among and within these forms of legitimacy across stakeholders do exist and what entrepreneurs can do to navigate these conflicts.

Full Citations : Alvarez, S., Newman, A. B., Barney, J., & Plomaritis, A. (2021). Creating stakeholder legitimacy in the eyes of stakeholders: The case of havana’s paladares. Entrepreneurship Theory and Practice. https://doi.org/10.1177/10422587211020673

Abstract : In desperation for survival, the Cuban government legalized limited forms of self-employment in the fall of 1993, and the Paladar industry (in home restaurants) was born and their numbers proliferated. For the next 25 years, the state oscillated between legalizing entrepreneurship to outright forbidding it; yet, the paladares thrived. This work explores and documents how different stakeholder evaluations of legitimacy of an entrepreneurial endeavor change over time and how these endeavors shape stakeholders’ evaluations of legitimacy. Utilizing archival data, in addition to firsthand interviews with various stakeholders, this paper documents key stakeholder evaluations of legitimacy in an endeavor’s context, the differences in these evaluations, how they change over time, and how these endeavors responded to and shaped these conflicts. The endeavors in our context shaped stakeholder views of legitimacy in ways that enabled them to gain access to the resources they needed to survive and prosper. This work brings a nuanced understanding of how stakeholders evaluate the legitimacy of entrepreneurial endeavors in contexts that are changing and emerging and how these evaluations are co-created in an iterative process between stakeholders and the endeavor.

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Arielle Newman
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