The business founder's social identity is crucial to explaining his or her behaviour and attitude in business decision-making. Drawing on three types of entrepreneurial social identity identified by Fauchart and Gruber (2011), this study examines how social identities influence the entrepreneur's way of managing his/her firm and its consequences for business performance. Based on a survey of newly created firms, the results support the conclusion that effectuation channels the effects of specific identities – Darwinian and missionary – on business performance.
The decisions the entrepreneur makes in the first years of activity are crucial, as they can limit the firm’s evolution (Boeker, 1989; Cardinal, Sitkin, & Long, 2004) and have implications for its performance (Bamford, Dean, & Douglas, 2004; Boeker, 1989; Park & Bae, 2004). Further, although entrepreneurs’ way of understanding the business in its initial stage impacts firm-level results significantly, this relationship received little study (Fern, Cardinal, & O’Neill, 2012). Contrary to what one might think, limited growth is not always associated with inability to grow; it may actually reflect the entrepreneur’s lack of desire to grow his/her firm (Cliff, 1998). For example, Baum and Locke (2004) propose that the goals businesspeople establish for firm growth are significantfactors that influence the firms. Specific findings (Barringer, Jones, & Neubaum, 2005) suggest the importance of incorporating entrepreneurs’ different attitudes and aspirations for growth in research. Our study examines the impact of these aspirations on the growth of newly created firms (Davidsson & Honig, 2003). Aspirations are desires, goals, or ambitions—something desired thatthe individual does not possess at the moment. How we want to see ourselves, or whom we wish to resemble, strongly influences our behaviour. Various studies highlight identity as an important predictor of entrepreneurs’ decisions and actions (Cardon, Wincent, Singh, & Drnovsek, 2009; Conger, York, & Wry, 2012; Hoang & Gimeno, 2010), but only a few tackle social identity in the context of entrepreneurship. Since firm creation is an inherently social activity (Whetten & Mackey, 2002), entrepreneurs’ behaviour is shaped by how they perceive themselves in relation to others (Fauchart & Gruber, 2011). Alsos, Clausen, Hytti, and Solvoll (2016) argue that a key aspect of entrepreneurship research studies the activities and behaviours undertaken (Davidsson & Honig, 2003). Itis precisely Social Identity Theory that helps us to understand and explain the heterogeneous behaviours that founders pursue in the process of setting up a firm. Although different patterns exist, these authors stress effectuation and causation as two different focuses for new firm creation (Sarasvathy, 2001)—focuses described as one ofthe mostimportant contemporary perspectives in entrepreneurship research (Fisher, 2012; Perry, Chandler, & Markova, 2012).