Institutional Legitimacy and New Market Emergence: the Case of Bitcoin Trading

Andrew Jay Isaak; Suleika Bort; Michael Woywode

Institutional Legitimacy and New Market Emergence: the Case of Bitcoin Trading

Andrew Jay Isaak
, Suleika Bort
, Michael Woywode

Publication: Chapter in book/Conference proceeding › Contribution to conference proceedings

Abstract

Research has shown that cognitive, normative, and regulative legitimacy are important for new market emergence. Little known, however, are the conditions and dynamics under which these three forms of legitimacy interact over time and in different institutional settings. In this study, we investigate the emergence and development of the new market for cryptocurrencies (i.e., Bitcoin) using a comprehensive dataset on trading in 49 countries between 2010 and 2020. Our study reveals that all three forms of legitimacy drive Bitcoin trading. Surprisingly, we also found increases in trading volume when Bitcoin was declared illegal and when normative support preceded, rather than followed, regulative legitimacy. Our results shed light on the relationship between cognitive, normative, and regulative legitimacy and their interactions in the emergence and development of a new contested market over time.

Original language	English
Title of host publication	Proceedings of the International Conference on Information Systems (ICIS 2021)
Subtitle of host publication	Austin, Texas, December 12-15, 2021
Publisher	AIS Association for Information Systems
Number of pages	10
ISBN (Print)	978-1-7336325-9-1
Publication status	Published - 24 Oct 2021
Externally published	Yes

Keywords

Cryptocurrencies
institutional theory
new market emergence

Access to Document

https://aisel.aisnet.org/icis2021/fintech/fintech/9/

Cite this

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title = "Institutional Legitimacy and New Market Emergence: the Case of Bitcoin Trading",

abstract = "Research has shown that cognitive, normative, and regulative legitimacy are important for new market emergence. Little known, however, are the conditions and dynamics under which these three forms of legitimacy interact over time and in different institutional settings. In this study, we investigate the emergence and development of the new market for cryptocurrencies (i.e., Bitcoin) using a comprehensive dataset on trading in 49 countries between 2010 and 2020. Our study reveals that all three forms of legitimacy drive Bitcoin trading. Surprisingly, we also found increases in trading volume when Bitcoin was declared illegal and when normative support preceded, rather than followed, regulative legitimacy. Our results shed light on the relationship between cognitive, normative, and regulative legitimacy and their interactions in the emergence and development of a new contested market over time.",

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Institutional Legitimacy and New Market Emergence: the Case of Bitcoin Trading. / Isaak, Andrew Jay; Bort, Suleika; Woywode, Michael.
Proceedings of the International Conference on Information Systems (ICIS 2021): Austin, Texas, December 12-15, 2021. AIS Association for Information Systems, 2021. 1690.

Publication: Chapter in book/Conference proceeding › Contribution to conference proceedings

TY - GEN

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AU - Isaak, Andrew Jay

AU - Bort, Suleika

AU - Woywode, Michael

PY - 2021/10/24

Y1 - 2021/10/24

N2 - Research has shown that cognitive, normative, and regulative legitimacy are important for new market emergence. Little known, however, are the conditions and dynamics under which these three forms of legitimacy interact over time and in different institutional settings. In this study, we investigate the emergence and development of the new market for cryptocurrencies (i.e., Bitcoin) using a comprehensive dataset on trading in 49 countries between 2010 and 2020. Our study reveals that all three forms of legitimacy drive Bitcoin trading. Surprisingly, we also found increases in trading volume when Bitcoin was declared illegal and when normative support preceded, rather than followed, regulative legitimacy. Our results shed light on the relationship between cognitive, normative, and regulative legitimacy and their interactions in the emergence and development of a new contested market over time.

AB - Research has shown that cognitive, normative, and regulative legitimacy are important for new market emergence. Little known, however, are the conditions and dynamics under which these three forms of legitimacy interact over time and in different institutional settings. In this study, we investigate the emergence and development of the new market for cryptocurrencies (i.e., Bitcoin) using a comprehensive dataset on trading in 49 countries between 2010 and 2020. Our study reveals that all three forms of legitimacy drive Bitcoin trading. Surprisingly, we also found increases in trading volume when Bitcoin was declared illegal and when normative support preceded, rather than followed, regulative legitimacy. Our results shed light on the relationship between cognitive, normative, and regulative legitimacy and their interactions in the emergence and development of a new contested market over time.

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