Abstract
In order to obtain a better understanding why some entrepreneurs retain more control over their venture than others, this article analyzes the relationship between the social identity of the entrepreneur and her/his desire for control. In fact, entrepreneurs face an important tradeoff between attracting resources required to build company value and retaining decision-making control. Yet, we currently lack insight into whether and how entrepreneurs’ social motivations shape this trade-off. This study draws on social identity theory and a unique sample of 148 buyout entrepreneurs, as this setting confronts aspiring entrepreneurs directly with the value–control tradeoff. In our logistic regression, we find that entrepreneurs with a strong missionary identity, where venture creation revolves around advancing a cause, hold a higher desire for control. We do not observe a significant relationship between entrepreneurs having a Darwinian (driven by economic self-interest) or communitarian (driven by the concern for the community) identity and the desire to control their venture. When adding the moderating role of the portion of personal wealth the entrepreneur is willing to invest in her/his venture, the relationships between having a Darwinian or missionary social identity and the desire for control become significantly positive when the entrepreneur is looking to invest a larger portion of her/his wealth.
Highlights
Prior work contends that entrepreneurs are motivated by economic objectives and personal wealth, and highly value the autonomy, independence, and control related to entrepreneurship (Amit et al 2001; Douglas and Shepherd 2002; Schwienbacher 2008; Souitaris et al 2020; Shepherd et al 2015)
According to social identity theory, people define themselves as part of social groups, which provide them with social orientation and feelings of psychological connectedness to the fate of the groups (Tajfel and Turner 1979)
Prior to running our regressions, we examined the variance inflation factors (VIFs) of the variables that were included in our models
Summary
Prior work contends that entrepreneurs are motivated by economic objectives and personal wealth, and highly value the autonomy, independence, and control related to entrepreneurship (Amit et al 2001; Douglas and Shepherd 2002; Schwienbacher 2008; Souitaris et al 2020; Shepherd et al 2015). Entrepreneurs rarely control all resources required to build company value and, may need to attract resources such as human, social, and financial capital from other parties like co-founders, hires and/or investors (Brush et al 2008; Colombo and Grilli 2010; Evans and Jovanovic 1989; Ruef et al 2003; Sapienza et al 2003; Schwienbacher 2007) Attracting those resources typically comes at the cost of ownership stakes and/or decision-making control (Fattoum-Guedri et al 2018; Hellmann 1998; Wasserman 2012, 2017). While some entrepreneurs consistently forego attracting external resources to the benefit of control, others consistently attract valuable external resources but typically hold less control
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