‘Tests tell’: Constitutive legitimacy and consumer acceptance of the automobile: 1895–1912

Abstract

Constitutive legitimacy can be created through evangelical appeals, the efforts of social movement organizations, the enactment of laws that authorize new products, and advertising by firms.This paper investigates these parallel routes to the legitimacy of the car in the early American automobile industry. The results show that evangelical appeals in the form of reliability contests organized in a focal state and social movement organizations in the shape of automobile clubs significantly increased automobile sales in the focal state. The positive effects of reliability contests on automobile sales increased with the number of automobile clubs. However, the effects of auto clubs and reliability contests declined as advertising by firms grew, and fell with the passage of time since legislation authorizing the car in the focal state. Taken together, these results suggest complex interdependencies among the parallel routes to constitutive legitimacy in the case of new industries.

Citation

Rao, H. (2000), "‘Tests tell’: Constitutive legitimacy and consumer acceptance of the automobile: 1895–1912", Ingram, P. and Silverman, B.S. (Ed.) The New Institutionalism in Strategic Management (Advances in Strategic Management, Vol. 19), Emerald Group Publishing Limited, Leeds, pp. 307-335. https://doi.org/10.1016/S0742-3322(02)19010-3