Marketing Insights
The quarterly board review is going sideways. Your CEO has just asked, for the third time this year, whether the company should "invest in brand." The VP Sales wants more pipeline. The investor board
The quarterly board review is going sideways. Your CEO has just asked, for the third time this year, whether the company should "invest in brand." The VP Sales wants more pipeline. The investor board member wants stronger category positioning. Your content marketer wants to build a narrative around the company's values. Everyone nods when the CEO says "brand." Nobody is talking about the same thing.
So the conversation goes in circles. Sales argues that brand spending can't be justified without attribution. The investor argues that the company needs to "be known" in the market. Marketing argues for thought leadership. The CEO splits the difference: a bit of brand, a bit of demand. Everyone leaves dissatisfied, having agreed to nothing actionable. Three months later, the same conversation happens again.
This failure isn't about budget. It isn't about strategy. It's about vocabulary. The word "brand" is doing triple duty. It refers to three fundamentally different processes that require different capabilities, serve different audiences, and operate on different timelines. Until you disaggregate the word, every conversation about brand investment is a conversation where people talk past each other.
Institutional legitimacy theory provides that disaggregation. Replace "brand" with "legitimacy" (social acceptance from an audience that matters), and what looked like one amorphous challenge becomes three distinct, sequenceable processes. That changes what you build, when you build it, and how you justify the investment.
Key Concepts in This Article
Pragmatic Legitimacy: One of three legitimacy types identified by Suchman (1995). Social acceptance based on audience self-interest calculations: "does this firm serve my needs?" Built through track record, evidence, and direct relationships. This research applies the typology to B2B SaaS developmental sequencing, finding pragmatic legitimacy to be the dominant requirement during the Builder phase.
Cognitive Legitimacy: The second of Suchman's (1995) legitimacy types. Social acceptance based on comprehensibility and taken-for-grantedness: "do I understand what this firm is?" Built through category positioning, messaging architecture, and identity consistency. In this research, cognitive legitimacy emerges as the critical transition point during the Validation phase and the most frequently coded single type, suggesting it is the dimension leaders find most problematic.
Moral Legitimacy: The third of Suchman's (1995) legitimacy types. Social acceptance based on normative evaluation: "does this firm operate in ways I endorse?" Built through values articulation, community leadership, and cultural alignment. In this research, moral legitimacy emerges as a differentiator during the Scaling phase when product advantages converge, the least commonly constructed type in early-stage firms.
Legitimate Distinctiveness (Navis & Glynn, 2011): The tension between being comprehensible enough to fit a recognised category and distinctive enough to stand out within it. The balance shifts across developmental phases.
Legitimacy Spanning: Building on Fisher et al.'s (2017) multi-audience legitimacy framework, this concept describes activities that produce signals valued by multiple audiences simultaneously, building cognitive legitimacy with customers while generating pipeline metrics investors recognise. This research treats this as the practical path through the multi-audience dilemma in B2B SaaS.
Activation Trap: The systematic under-investment in long-term legitimacy construction, building on the long-vs-short investment literature (Binet & Field, 2013), caused by structural pressures, such as board evaluation cycles, investor power asymmetry, quarterly reporting, that make demand generation the rational short-term response. Explored in depth in The Activation Trap.
When I studied how 13 B2B SaaS marketing leaders across startup-native and corporate-transplant backgrounds describe and approach brand-building, the data revealed something the branding literature mostly misses. Leaders aren't talking about the same phenomenon when they say "brand." They're describing fundamentally different processes. Confusing them creates real strategic cost.
Here's what the three processes actually look like.
Process 1: Trust through evidence (pragmatic legitimacy). This is the most foundational layer. Your customers trust you because you deliver. It's evidence-based, relational, and built through track record.
Consider what that looks like in practice. One CEO in the research runs a Dutch SaaS company focused exclusively on the Benelux. When asked what a well-funded competitor copying their product couldn't replicate, the answer had nothing to do with features or pricing. It was ten years of presence in a single market. The accumulated reliability of having been there, consistently, through every market shift. But it went deeper than track record. Being Dutch, serving Dutch customers, providing support in Dutch. This created what the leader described as "the feeling of buying at the local market, trusting your local vendor". An international competitor could match the product. They couldn't manufacture a decade of local presence or the trust that comes from engaging with a support team in your native language. That's pragmatic legitimacy in its purest form. Not a campaign, not a message, but an accumulated body of evidence that the market recognises.
A corporate-transplant leader in a long-established firm described the same dynamic through accumulated expertise and reputation that competitors cannot directly imitate. This is what most early-stage leaders are actually doing when they say they're "doing brand." Collecting testimonials, documenting outcomes, building personal relationships, ensuring responsive service. It's not glamorous. It doesn't look like what the branding textbooks describe. But it's the right work at the right time, because pragmatic legitimacy is what your earliest customers use to evaluate you.
Process 2: Trust through comprehensibility (cognitive legitimacy). This is what most people actually mean when they say "brand." The market understands what you are, where you fit, and what makes you distinct. It's about category membership, consistent identity, and comprehensibility to people who haven't yet experienced your product.
One startup-native leader described this precisely. Brand isn't just advertising. It's making sure everything is aligned with a single voice, a single look and feel, working in unison with top-of-funnel awareness activities. A corporate-transplant leader stated the consequence of failure bluntly. In B2B, nobody buys from somebody they don't know properly. If your brand isn't on point, you're probably not going to make it.
Cognitive legitimacy was the most frequently coded single type in the research. It appeared in roughly a third of all legitimacy-coded passages. That frequency is itself significant. It suggests that comprehensibility is the dimension of "brand" that leaders find most problematic. This is the one they discuss most because it's the one they struggle with most.
Process 3: Trust through values (moral legitimacy). This is the deepest layer, and the least common in early-stage firms. You stand for something people endorse. It's about organisational DNA, purpose, and cultural alignment. This is the dimension of brand that transcends product features and market positioning.
A corporate-transplant leader articulated this dimension most directly. Notably, while discussing the organisational challenges of brand advocacy: it really does come down to the DNA and what are the true values of the organisation. The argument runs deeper than positioning. Most product advantages are replicable. Most positioning strategies can be copied. But genuine values (embedded in how an organisation operates, not just what it says) create differentiation that resists imitation.
The Benelux SaaS CEO example illustrates how pragmatic and moral legitimacy can intertwine. Native language support and local market presence aren't just evidence of reliability. They're an expression of what the company values: proximity, accessibility, cultural embeddedness. For ventures competing against international entrants, that combination of local pragmatic trust and local moral alignment provides a defensible position that no amount of product differentiation can replicate.
Only about 12% of coded passages described purely moral legitimacy. That lower frequency doesn't mean moral legitimacy is less important. It means it's less commonly constructed in early-stage firms, which is precisely the problem this framework helps diagnose.
These three legitimacy types aren't a menu you choose from. They're a developmental sequence you move through. Or you get stuck in.
Builder phase: pragmatic legitimacy dominates. Just deliver. Prove you work. Your earliest customers evaluate you through direct experience. The marketing capabilities you need are relational and evidentiary. Customer evidence capture, product demonstration, responsive relationship management. One startup-native leader described the approach: doing search engine optimisation, managing the website, working within zero budget. The capabilities required at this stage are fundamentally different from what the branding literature describes.
Critically, this means that leaders who defer "brand" during the Builder phase are not making an error. They're correctly prioritising the legitimacy type that matters most at their developmental stage. The same leader articulated an important nuance. All good demand creates brand and all good brand creates demand. Some leaders intuitively weave cognitive legitimacy into their pragmatic activities from the start. Not through dedicated brand campaigns, but through the quality and consistency of their evidence-based work. This embedded approach suggests the transition need not wait for a discrete "brand moment."
Validation phase: cognitive legitimacy becomes critical. This is where the transition happens, and the research data confirms it's the critical juncture. Over half of all legitimacy-coded passages fell in the Validation phase. More than Builder and Scaling combined. The trigger is audience expansion. When your prospects can no longer evaluate you through direct experience (because you're moving upmarket, entering new segments, or simply growing beyond referral networks), they need market signals, category fit, and identity consistency to make purchase decisions.
One startup-native leader described the trigger explicitly. As you start going upmarket and filling your appetite for short-term thinking and starting to think long-term, you immediately have to start shifting budgets to brand.
Another startup-native leader saw the consequences of failing to make this transition. The company had been a front runner in their market. They had a strong customer base and the expertise to try new approaches. But when they reduced their brand investment (pulling back on brand name advertising, stopping event attendance), growth suffered. Looking back, the leader's assessment was direct: "I think we underestimated the value of brand". What makes this significant is the mechanism. The company hadn't lost product quality or customer service capability. What eroded was their cognitive legitimacy: the market's comprehension of who they were and what they stood for. Without consistent signals (visible presence at events, brand name recognition in search, the ongoing reinforcement of identity), the market's understanding of the company degraded. Pragmatic legitimacy (the product still worked) couldn't substitute for cognitive legitimacy (the market couldn't see them anymore).
The concept of legitimate distinctiveness (Navis & Glynn, 2011) is particularly relevant here. You need to be comprehensible. You need to belong to a recognisable category. But you also need to be distinctive within that category. A corporate-transplant leader described this through creative differentiation. Their brand is completely different from competitors because creativity is a core organisational capability. A startup-native leader described the competitive pressure that makes distinctiveness essential. When competitors arrive with similar pricing and sometimes better options, the response is finding new differentiators and repurposing capabilities to segment correctly.
Scaling phase: moral legitimacy emerges. When product differentiation converges across competitors (as it inevitably does in maturing markets), values become the defensible position. The capabilities required shift to brand values articulation, community leadership, employer brand construction, and impact communication.
One startup-native leader captured the budget logic with clarity. Even if you need to cut budget, even if budget is tight, keep a small allotment on brand for the long-term vision. The "chasing leads forever" outcome is a legitimacy trap. It's permanent residence in pragmatic legitimacy mode, unable to build the cognitive and moral legitimacy that would generate market pull rather than requiring constant push.
The conventional advice splits into two camps. One says "invest in brand early." The other says "you can't afford brand yet. Focus on pipeline." Both are wrong because both treat brand as a single thing.
The legitimacy framework resolves the debate. Deferring cognitive and moral legitimacy during the Builder phase is correct. You're correctly prioritising pragmatic legitimacy. But never transitioning creates a different problem. You remain permanently dependent on direct-evidence trust-building, which doesn't scale. The experience demonstrates the endgame. Growth declined following the cessation of brand activities. This shows what happens when you permanently defer cognitive legitimacy.
The transition trigger is audience expansion. As long as all your prospects know you personally or can evaluate you through direct experience, pragmatic legitimacy suffices. The moment your market extends beyond that (upmarket moves, new segments, geographic expansion), cognitive legitimacy becomes essential. New prospects can't assess you through direct experience. They need category signals and identity consistency.
Here's where the legitimacy framework reveals something that generic brand advice cannot. Different audiences apply different legitimacy criteria, and those criteria conflict.
Your customers evaluate you through pragmatic and cognitive legitimacy. Reliability, responsiveness, comprehensibility, category fit. Your investors evaluate you through a different pragmatic lens. Growth trajectory, pipeline metrics, return potential. Your employees evaluate you through moral and pragmatic legitimacy. Values alignment and career development. Your partners evaluate you through cognitive and pragmatic legitimacy. Your market position and reliability as a collaborator.
In the research data, customers were the most frequent target audience. They appeared in 86% of legitimacy-coded passages. Investors appeared in 29%, partners in 20%, and employees in 14%. But the critical finding is what happens when these audiences compete for attention. Seven of 8 activation trap cases involved coordination failure across two or more audience types.
One corporate leader described what that coordination failure looks like from the inside. The company had world-class expertise. Neuroscientists, qualitative research specialists, people integrating AI into research methods. Their win-loss analysis showed clearly that they won deals because of the knowledge they brought to the table. But they weren't communicating those stories. They weren't bringing that expertise to market. The expertise existed. The evidence of its value existed. What was missing was the narrative infrastructure. They needed to convert pragmatic legitimacy (we win when prospects experience our expertise) into cognitive legitimacy (the market knows we have this expertise before they experience it).
Why was that narrative infrastructure missing? Because the institutional environment made it structurally difficult to build. The leader identified the root cause easily enough. Private equity investors, the leader argued, "have no clue about marketing and yet come to the table fully convinced that they understand it. And they set the terms”. When investors control funding and impose their legitimacy criteria (pipeline metrics, quarterly returns, fast ROI) on marketing allocation, customer-facing cognitive legitimacy investment gets crowded out. The marketing team finds itself in a bind. They need to get commercial leads. The sales team needs food on their plate fast. In that environment, the time and creative space required to identify your strongest stories and build them into a strategic narrative simply doesn't materialise. As the same leader put it: "that kind of work doesn't happen when your forecast has been pulled down four times and you need something that drives traffic tomorrow."
This is the activation trap viewed through the legitimacy lens. It's a multi-stakeholder alignment problem, not a knowledge problem. The solution isn't "do less demand generation." That would undermine investor-facing legitimacy. It's finding legitimacy-spanning activities that produce signals valued by multiple audiences simultaneously. One corporate-transplant leader articulated this directly. The opportunity to position the firm as a leader or a capable partner has a direct impact on pipeline generation. That's legitimacy spanning in practice. Thought leadership that builds cognitive legitimacy with customers while producing pipeline metrics investors recognise. The legitimacy framework suggests you should be looking for these spanning activities. Choose one audience or the other? No. Build activities that work for both.
The brand-building space is crowded with frameworks. This one can be mistaken for several things it isn't. The differences matter because misidentifying the framework leads to misapplying it.
It's not traditional brand building. Brand architecture, logo design, visual identity systems, messaging hierarchies. These are outputs of cognitive legitimacy construction, not the process itself. The legitimacy framework operates upstream of brand deliverables. It asks which type of social acceptance you need to construct for which audience at which developmental stage. A question that traditional brand-building assumes has already been answered. You might conclude that a visual identity refresh is the right investment. But you might equally conclude that customer evidence capture or values articulation is the answer. The framework is the diagnostic. Brand building is one possible prescription.
It's not the brand-versus-demand binary. The brand-vs-demand debate assumes brand is a single thing you either invest in or defer. The legitimacy framework replaces the binary with a typology. You're always building some form of legitimacy. The question isn't "brand or demand" but "which legitimacy type does our current developmental stage and audience composition require?" A leader who invests exclusively in customer evidence capture isn't "deferring brand." They're building pragmatic legitimacy, which is the right work at the right time during the Builder phase.
It's not brand equity theory. Keller's (1993) customer-based brand equity model treats brand as a unitary psychological construct residing in the consumer's mind. A pyramid from awareness through associations to resonance. The legitimacy framework operates at the institutional level, not the psychological level. It's about social acceptance from multiple audiences with potentially conflicting criteria, not about building mental associations in a single audience. And where brand equity theory is essentially static (you build equity and then have it), the legitimacy framework is explicitly developmental. The type of social acceptance you need changes as your firm evolves.
It's not purpose-driven branding. Moral legitimacy (trust through values) is one of three legitimacy types, not the whole framework. Purpose-driven branding treats organisational purpose as the foundation of brand strategy. The legitimacy framework argues that purpose is the third layer. It's appropriate when pragmatic and cognitive legitimacy are established and product differentiation is converging. Leading with purpose before you've established operational trust and market comprehensibility is a sequencing error. It's building the roof before the walls.
The reconceptualisation of brand-as-legitimacy draws on four interconnected theoretical streams.
Suchman's (1995) legitimacy typology provides the foundational architecture. Suchman distinguishes three forms of legitimacy: pragmatic (based on audience self-interest calculations: "does this firm serve my needs?"), cognitive (based on comprehensibility and taken-for-grantedness: "do I understand what this firm is?"), and moral (based on normative evaluation: "does this firm operate in ways I endorse?"). The typology is analytically productive because it disaggregates what the branding literature typically treats as a unitary construct.
Navis and Glynn's (2011) concept of legitimate distinctiveness addresses the fundamental tension in brand positioning. You need to be comprehensible enough to fit a recognised category while being distinctive enough to stand out. The data suggests this tension shifts across developmental phases. In the Builder phase, distinctiveness within pragmatic domains matters most. Demonstrably delivering better than alternatives. In the Validation phase, conformity within cognitive domains becomes critical. Being recognisable as a category member. In the Scaling phase, distinctiveness within moral domains emerges. Values that differentiate when products converge. P\_4's creative differentiation and P\_11's competitive repositioning both occur in Validation-phase contexts where cognitive distinctiveness is the competitive battleground. This is consistent with this trajectory.
Fisher et al.'s (2017) multi-audience framework explains the mechanism of the activation trap at the institutional level. New ventures face multiple audiences. Customers, investors, employees, partners. Their legitimacy criteria may conflict. The framework predicts exactly the pattern the data shows: investor-audience criteria dominate resource allocation under power asymmetry, crowding out customer-audience legitimacy investment.
Lounsbury and Glynn's (2001) cultural entrepreneurship perspective specifies the narrative and storytelling mechanisms through which legitimacy is constructed. The research data confirms that demonstration and narrative are the two dominant legitimacy mechanisms. They appear in 57% and 51% of coded passages respectively. The most effective legitimacy construction combines evidentiary and storytelling approaches simultaneously. The P\_9 case is particularly revealing. Win-loss analysis showed expertise won deals. But that expertise wasn't being communicated at market scale. This gap between pragmatic legitimacy (proven in sales interactions) and cognitive legitimacy (communicated to the broader market) represents a cultural entrepreneurship deficit. The performative routine of expertise demonstration exists but has not been formalised into the narrative production that Lounsbury and Glynn describe as essential for legitimacy construction.
The legitimacy re-coding of the interview data produced 49 coded passages across all 13 participants, providing empirical grounding for the three-process reconceptualisation.
The legitimacy framework connects directly to the activation trap model and the structural causation analysis developed in this research programme. Ten of 13 participants exhibit activation-dominant patterns. These are through personal decisions, organisational dynamics, or observed industry behaviour. They're consistent with prospect theory's loss aversion coefficient (λ ≈ 2.25). The activation trap operates at the routine level. Demand-coded passages outnumber brand-coded passages 2.5:1 across the dataset. But the legitimacy framework adds explanatory depth.
The naive narrative says: "Leaders have cognitive biases, so they under-invest in brand." The structural narrative says something different. The institutional environment (board evaluation cycles, investor power asymmetry, quarterly reporting structures) creates decision environments that produce activation dominance as a rational response. Loss aversion isn't a bug in the entrepreneur. It's a rational response to genuinely asymmetric consequences in an environment where investors control funding and apply pragmatic legitimacy criteria to all marketing investment.
This structural explanation generates a different prescription. Awareness-based interventions ("remember to invest in brand\!") are predicted to fail. The data confirms they do (see The Metacognitive Paradox). Structural interventions work better. Changes that alter the decision environment: longer evaluation windows, brand-specific metrics in board reporting, legitimacy-spanning activities that satisfy multiple audiences. The legitimacy framework specifies what those structural changes should look like. Reframe brand investment not as "long-term branding" (which triggers loss aversion against uncertain, delayed returns) but as specific legitimacy construction with identifiable audience outcomes.
Within the broader Effectual Orchestration framework, the legitimacy transition maps directly onto the developmental phases. Builder phase corresponds to pragmatic legitimacy dominance. Effectual means audit and early bundling produce the evidence-based trust that anchors market entry. Validation phase corresponds to cognitive legitimacy emergence. Routine formalisation produces the identity consistency and category positioning that enables market expansion. Scaling phase corresponds to moral legitimacy emergence. Mature capabilities support the values articulation and community leadership that sustain differentiation.
The transition is not merely parallel. It's causally connected. The marketing routines you build during each phase (see Marketing Routines Under Constraint) are the mechanisms through which legitimacy is produced. Routine emergence corresponds to legitimacy capability formation. Routine maintenance corresponds to legitimacy sustainment. Routine degradation corresponds to legitimacy erosion. When a key team member leaves. When a pivot renders existing processes obsolete. When founder capacity is exceeded. These are the moments when routines degrade and legitimacy erodes. This is why P\_12's experience of growth decline following the cessation of brand activities is theoretically significant. It demonstrates the causal link between routine degradation and legitimacy erosion. The difference between startup-native and corporate-transplant leaders adds further texture. Explored in The Experience Paradox and Cognitive Heterogeneity. Corporate transplants may recognise the need for cognitive legitimacy earlier but apply frameworks ill-suited to the constrained environment. Startup-native leaders may build pragmatic legitimacy effectively but defer the cognitive transition too long.
The practical implication of this framework is simple but consequential: stop having "brand" conversations. Start having legitimacy conversations.
Instead of asking "should we invest in brand?", ask three questions. First, what type of legitimacy does our current growth stage require? If you're in the Builder phase, the answer is pragmatic. Invest in customer evidence, track record, and responsive relationships. If you're entering Validation, the answer is cognitive. Invest in category positioning, messaging architecture, and identity consistency. If you're approaching Scale, the answer is moral. Invest in values articulation and community leadership.
Second, which audiences are we trying to be legitimate with, and do their criteria conflict? If your investors demand quarterly pipeline metrics while your customers need category comprehensibility, you have an audience mismatch. No amount of "brand strategy" will resolve it without structural changes to how marketing is evaluated.
Third, are there legitimacy-spanning activities that serve multiple audiences simultaneously? Thought leadership that demonstrates expertise to customers while producing pipeline metrics for investors. Content programmes that build cognitive legitimacy with prospects while generating leads. These spanning activities are the practical path through the multi-audience dilemma.
The research data suggests that the leaders who manage the legitimacy transition most effectively aren't the ones with the biggest budgets or the most sophisticated brand strategies. They're the ones who recognise, explicitly or intuitively, that "brand" is three different tasks on three different timelines for three different audiences. And they sequence their capability investment accordingly.
Next in this series: Network-Mediated Capability Building — How Relationships Create Marketing Capability.
This post is part of a 10-part foundation series exploring how marketing capabilities emerge under constraint. The concepts draw on an ongoing research programme involving 13 in-depth interviews with B2B SaaS marketing leaders, analysed through the lens of effectuation theory, resource orchestration, and cognitive micro-foundations. Browse all pillars.
References
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