Entrepreneurial Identity
Social identity theory (SIT) has long been a mainstay of social psychological thinking about politics and human behaviour in general. SIT is at its core a theory about in-groups and out-groups, as easily formed social constructions that can manifest with real consequences. Consider football hooligans beating each other over their team colours.
We all have multiple identities, and some scholars propose that the more central one's entrepreneurial identity, compared with family and other identities, the more likely they will start a venture, grow a startup, or develop a capability (Hayter et al., 2021).
"I am an Entrepreneur"
In entrepreneurship, SIT is pointed at the entrepreneurial identity (EI), defined as a set of attitudes, beliefs and behaviours reinforcing being an entrepreneur. According to Shepherd et al. (2018) "a meaningful self-identity is central to individuals’ psychological functioning and well-being."
The literature suggests that EI is important during early venture formation because it allows the startup to stand out ("I am different"). Yet being an entrepreneur also means finding belonging in the club of entrepreneurs, which can be helpful in an often challenging career path.
EI can persist and continue to influence decision-making and actions when startups grow up into larger organizations. This is why those who view EI as a kind of property view it not only as a potential asset, but also as a potential liability. Consider what happens when CEOs of large companies get too entrepreneurial.
Those who view EI as a process are apt to note that both proactive and reactive approaches could apply. Maybe EI is triggered by something external to the entrepreneur, or maybe it is always there, driving decisions. Perhaps EI is the source of the tremendous energy, passion, and commitment often needed to be successful.
Outcomes and Antecedents
Scholars have looked at how EI is constructed and how it is enacted. Thanks to Radu-Lefebvre et al.'s (2021) review, we know that researchers have examined a stunning array of outcomes from enacting EI, including:
- Passion and Emotion
- Opportunity recognition and Entrepreneurial intention
- Resource acquisition and Venture creation
- Legitimacy and Regional development
They also studied a wide array of antecedents of EI construction including intrinsic/extrinsic motivation, gender, ethnicity, occupation, class, family business, networks, incubators, media, public discourse, and education.
1. Entrepreneurial Identity and Effectuation Theory
There is a fundamental overlap between Entrepreneurial Identity and Sarasvathy’s Effectuation Theory. The first principle of Effectuation is the "Bird in Hand"—starting with who you are, what you know, and whom you know. This explicitly centers the entrepreneurial process on identity ("Who I am"). While Identity Theory explores how this self-concept is constructed and maintained, Effectuation explains how that constructed identity becomes the primary resource for immediate action and venture creation, prioritizing the founder’s unique self over external market predictions.
2. Entrepreneurial Identity and Addiction Theory
The link between Entrepreneurial Identity and Addiction Theory warns of the dangers of over-identification. When "I am an entrepreneur" transitions from a professional role to the sole pillar of one's self-worth, the healthy passion described in Identity Theory can curdle into the "obsessive thoughts" and "withdrawal" of Addiction Theory. If a founder cannot psychologically separate their self-concept from their venture, the potential failure of the business feels like a death of the self, driving the compulsive behaviors characteristic of addiction.
3. Entrepreneurial Identity and Upper Echelons Theory
Upper Echelons Theory posits that an organization is a reflection of its top managers' values and cognitive bases. Entrepreneurial Identity adds depth to this by suggesting that if a CEO retains a strong "founder identity" rather than adopting a "manager identity," they may continue to take startup-level risks even in a mature firm. The "biases" mentioned in Upper Echelons are often rooted in the specific identity the leader clings to, influencing whether the firm creates stable strategies or pursues disruptive, identity-affirming innovations.
4. Entrepreneurial Identity and Social Judgement Theory
While Entrepreneurial Identity focuses on the internal question "Who am I?", Social Judgement Theory addresses the external counterpart: "Is this person legitimate?". A founder acts out their identity to signal credibility to investors and peers. The success of a venture often depends on the alignment between the entrepreneur's internal identity construction and the external audience's judgment of that performance. If the enacted identity violates social norms or lacks consistency, the "legitimacy" outcome highlighted in Identity Theory fails to materialize.
5. Entrepreneurial Identity and Bicultural Theory
Bicultural Theory provides a specific use-case for the "multiple identities" concept mentioned in Entrepreneurial Identity Theory. Just as individuals manage family vs. work selves, bicultural entrepreneurs navigate dual cultural identities (e.g., "ethnic minority" and "majority business owner"). Identity Theory suggests the centrality of the entrepreneurial self can bridge these divides, allowing the founder to leverage their diverse background as a unique asset ("I am different") rather than a source of conflict, turning identity complexity into competitive advantage.