The Impact of Entrepreneurs’ Social Identity and the Mediation Effect of the Decision-Making Logic on the Bootstrapping Behavior of Nascent Ventures

Abstract

Purpose – This article studies the impact of entrepreneurs’ social identities on bootstrapping behaviors, and the mediation effect of the decision-making logic. Theoretical framework – This article uses the theory of social identity and the theory of effectuation as its theoretical approach. Design/methodology/approach – We used regressions and structural equation modeling based on a survey of 365 newly-created firms in China’s Hangzhou Economic and Development Area (HEDA). Findings – Our findings suggest that entrepreneurs who have a Darwinian identity prefer payment-related bootstrapping and owner-related bootstrapping, while those who have a missionary identity prefer joint-utilization bootstrapping. The empirical study also finds that causation mediates the relationship between Darwinian identities and payment-related bootstrapping, Darwinian identities and owner-related bootstrapping, and missionary identities and joint-utilization bootstrapping. Practical & social implications of research – By exploring the influence of entrepreneurs’ social identity on bootstrapping behaviors and the mediation effect of the decision-making logic, this study might help entrepreneurs choose suitable bootstrapping behaviors according to their corresponding social identity. Originality/value – The findings contribute to our understanding of factors that drive the bootstrapping behaviors of nascent ventures from the perspective of entrepreneurs’ social identity, and they provide a richer and more complete way of explaining bootstrapping behavior from the perspective of identity theory. The findings also contribute to the literature on the relationship between entrepreneurs’ social identity and bootstrapping behaviors by depicting and empirically testing the mediation mechanisms of the decision-making logic. Keywords – entrepreneurs’ social identity, bootstrapping, effectuation, causation.