New here? Lawyer up, please: Differences in external legal expenditure between new ventures and established firms in emerging economies

Q1 Business, Management and Accounting

Journal of Business Venturing Insights Pub Date : 2025-03-28 DOI:10.1016/j.jbvi.2025.e00531

Bibek Bhattacharya

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Abstract

This study examines the differences in external legal expenditure between new and established firms in emerging economies and nuances the dominant view that firms in emerging economies primarily rely on relational strategies to tackle legal and regulatory challenges. Unlike established firms, new ventures lack legitimacy, making relational strategies less viable. Consequently, I theorize that relative to established firms, new ventures in emerging economies will invest more in formal legal strategies, such as hiring external legal services. However, due to financial constraints, their ability to do so will be contingent on financial slack. Analyzing a longitudinal dataset of 23,039 firms in India (1989–2022) using linear panel regression models, I confirm the presence of a positive relationship between new ventures and external legal expenditure, moderated by financial slack. This study contributes to the literature on emerging economies as well as the legal and regulatory aspects of entrepreneurship.

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新来的?请找律师：新兴经济体中新企业与老牌企业外部法律支出的差异

本研究考察了新兴经济体中新公司和老牌公司在外部法律支出方面的差异，并对新兴经济体公司主要依靠关系战略来应对法律和监管挑战的主流观点进行了细微的调整。与老牌企业不同，新企业缺乏合法性，使得关系战略不太可行。因此，我的理论是，相对于老牌公司，新兴经济体的新企业将更多地投资于正式的法律策略，例如聘请外部法律服务。然而，由于财政限制，他们这样做的能力将取决于财政松弛。我使用线性面板回归模型分析了印度23,039家公司（1989-2022）的纵向数据集，证实了新企业与外部法律支出之间存在正相关关系，并受到财务宽松的调节。这项研究为新兴经济体以及创业的法律和监管方面的文献做出了贡献。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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