Abstract
This paper examines the determinants of an entrepreneurial firm's legitimacy and the impact of legitimacy in the amount of capital raised by biotechnology firm's IPO. The authors present a model of the determinants of firm level legitimacy, which includes measures of firm level characteristics and actions, and industry legitimacy. The model is then tested on a sample of 108 initial public offerings from biotechnology firms using structural equation modeling. The results indicate that amount of capital raised by a biotechnology firm's IPO is positively related to firm level legitimacy and the legitimacy of the industry at the time of the offering.