The structure of consensus: network ties, legitimation, and exit rates of U.S. feature film producer organizations

Abstract

Recent research emphasizes that legitimacy depends on consensus among agents (audiences) about the features and activities of organizations (candidates) that become taken-for-granted elements in a social domain. This study examines how consensus is affected by the structure of interaction in the network connecting social audiences to candidate organizations. It analyzes how audience members reach, reinforce, and preserve consensus about candidates' features and behavior, affecting a crucial organizational outcome, survival. The findings show that survival is enhanced by the degree of connectivity and the repeated interactions between audience members and candidate organizations and is reduced by the degree of turnover of audience members. We situate our analysis in the U.S. motion picture industry, where we trace the interorganizational network between feature film producer organizations (candidates) and distributor organizations (the audience) and its influence on producer organizations' exit rates over the period 1912-1970. We find strong support for the claim that the legitimation process has a relational foundation that involves ties between organizational entities and the external others with whom they interact. The results contribute to the dialogue between ecological and network theories of organizations and support the claim that legitimation has a relational foundation involving ties between organizations and audiences.