However, a common cause of identity conflict in the context of entrepreneurship begins at the intersection of the family identity and firm identity. Thus, family business identity conflict occurs when the individual activates both his or her family identity and business identity, but acting in a way consistent with one identity concurrently necessitates behaviors that are incompatible with the other identity.
Building on identity control and social identity theory, my (Dean) colleague and I (Shepherd and Haynie 2009b) concluded that the family and business identities are combined within a meta-identity—what we termed the family business meta-identity. This family business meta-identity is a higher-level identity that delineates “who we are as family” and “who we are as a business” such that it captures these occasionally competing identities. Thus, through this meta-identity, individuals can resolve conflict where family and firm overlap. Focusing on opportunity evaluation as an activity that likely generates conflict between one’s family identity and his or her business identity, we illustrate how the meta-identity can resolve identity conflict by employing prior solutions from other conflicts that have been similar in nature , or by changing the meta-identity (by negotiation) to mitigate new conflicts.
While we recognize that the heterogeneity of viewpoints, knowledge , and experience that lead to conflict can improve decision comprehensiveness (Bantel 1993), we also theorize on the “dark side” of conflict for family firms—namely, the notion that time periods of prolonged identity conflict can result in negative outcomes for family members’ psychological health (e.g., Frone et al. 1992), family disfunction (e.g., Kinnunen and Mauno 1998), and deterioration of firm performance (e.g., Beckhard and Dyer 1983). Thus, “lingering” identity conflict can be a barrier to efficient decision making in the entrepreneurial context.
Identity, Identity Conflict, and the Entrepreneurial Firm
We must consider the larger context in which people work and pursue all types of human interaction in order to fully understand how they conceptualize their own identities (Burke 2003; Fiske and Taylor 1991). Theories of social identity have typically centered on the premise of social categories (Tajfel and Turner 1979a, b, 1986). Social categories are based on similarity within the group in terms of the behaviors and attributes that are ideal for the particular social group (Cantor and Mischel 1977; Fiske and Taylor 1991). For instance, when someone is described as a “business owner,” it calls to mind a specific meaning and specific characteristics that describe and limit the social category of “firm owners,” such as the ways those individuals behave, dress, and talk; with whom they associate; their educational level; and so on. People who share more characteristics with other members in a category will be viewed as a member of the group more quickly, consensually, and consistently (Fiske and Taylor 1991). This social categorization is crucial for groups for two main reasons: (1) social categories provide “order” in the social context, and (2) social categories situate groups within that context (Ashforth and Mael 1989; Turner 1987). In other words, social categorization enables individuals to develop an identity that is based on a social comparator (Burke 2003). However, groups generally maintain multiple identities, thus making the idea of a socially situated identity more complex than it may initially seem (Ashforth et al. 2000).
The various identities that can represent membership in a given group when taken together tend to be associated with specific expected behaviors. These expectations are largely defined by the standards and traditions dictated by the overall social environment (Stryker and Burke 2000; Stryker and Statham 1985). Compared to non-family business, in family businesses, individuals often have to balance competing expectations regarding their behaviors for at least the family role and the entrepreneurial role. Because one’s identity is characterized by expectations of behaviors for a socially attributed role (Stryker and Burke 2000), we define the family identity as the set of behavioral expectations associated with the family role (Shepherd and Haynie 2009b). Psychologists and sociologists in general contend that the family role embodies expectations about behaviors related to nurturing (Giordano 2003), protection (Goldberg et al. 1999), care giving (Lechner 1993), loyalty and commitment to the family (Knoester et al. 2007), and perceptions of collective gain/loss (Berger and Janoff-Bulman 2006). Families may outline their specific behavioral expectations in various forms, such as in a family creed or culture, which is manifest in traditions, stories, and artifacts.
In a similar way, we define the business owner identity as the set of behavioral expectations associated with the business owner role (Shepherd and Haynie 2009b). Both psychological and business perspectives generally state that the role as a business owner is associated with expectations about behaviors that yield extrinsic returns (e.g., growth, financial earnings, public recognition ) (Kuratko et al. 1997), commitment to the firm and its members (Muse et al. 2005), legitimacy in a social context (Malach-Pines et al. 2005), and security and prosperity for the family (Kuratko et al. 1997). Businesses may convey their specific behavioral expectations in their mission statement and/or the firm’s culture (Anderson et al. 2008).
The family and business roles in an entrepreneurial firm can mutually reinforce each other but also lead to role expectations that are conflicting. The expectations and demands from work and family often lead to such conflict, which has led many scholars to explore mechanisms to mitigate conflict between conventional work and family roles via compartmentalization (Bird et al. 1983). Unlike for traditional employment, for family business entrepreneurs, compartmentalization strategies are likely an insufficient and unsuitable mechanism to deal with or prevent conflict stemming from competing expectations related to identities of being a family member and a business owner. First, for most entrepreneurial ventures, the physical and temporal boundaries underlying effective compartmentalization are generally not appropriate or practical. Discussion of business matters pops up at dinner, work times have to be coordinated with kids’ baseball schedules, and plans for a weekend spent with the family likely overlap with moving stock at the family firm, for example. In these types of situations, the self-regulation needed to compartmentalize these closely linked identities is likely to cause mental stress (Baumeister et al. 2000), thus resulting “in poor performance on subsequent tasks requiring self-control” (Seeley and Gardner 2003: 104).
Second, compartmentalization prevents the entrepreneur or the family firm from taking advantage of synergies between the family and business identities. These synergies could positively contribute to the performance of the family firm (Kellermanns and Eddleston 2004) and to the entrepreneur’s and family members’ psychological well-being (Shepherd and Haynie 2009b). Research has suggested, for instance, that systemic family influences can enhance firm success (Habbershon et al. 2003; Kellermanns and Eddleston 2004). Characteristics that are generated and strengthened through family relationships, such as trust, loyalty, and commitment, often serve the business aims as well. Additionally, the families’ unique knowledge about members’ specific skills, limitations, and belief systems may help family businesses more effectively implement their strategies compared to businesses that do not have such strong family involvement.
Importantly, in terms of identity conflict in entrepreneurial businesses, identity at a higher level represents the identities of family and business as well as their intersection. We take this focus because for many entrepreneurial businesses, this intersection is likely to represent a distinct case defined by the shared meaning between the family and business owner identities. The intersection of these two identities is activated and shared at the same time and regularly. We now return to identity control theory and the notion of a meta-identity to manage the family and business identities as well as the intersection between the two.
A Meta-Identity Perspective on the Family Business Role Identity
Drawing on social identity theory, identity control theory (ICT) (Burke 2003) focuses on how one’s identity influences behaviors. T
hat is, the roles individuals take on connect themselves to the social environment and others within that environment, thus creating a socially situated identity “standard.” In other words, how individuals view their identity and how they act are relative to a socially derived standard. The focus of ICT is on how individuals’ identity and behavior connect. For instance, the teacher role is connected to students, the father role is connected to children, and interactions between these groups are assessed as being either consistent or inconsistent with a social standard. ICT diverges from other social identity theories, however, because it stresses identity change.
According to Burke (2003, see also Deaux 1992, 1993), when identities share meanings, intersect, and are activated together, there will be a hierarchy of meaning, in which identities higher in the hierarchy “control the meanings of identities lower in the hierarchy.” For many entrepreneurial businesses, the family business meta-identity is a higher-level identity that not only conveys to family members “who we are as a family” and “who we are as a business” but also details the intersection of the these identities. A defined family business meta-identity can help ease identity conflicts between the (lower-level) family and business identities when the conflicts are similar to those experienced in the past. In addition, this meta-identity changes as individuals engage in “negotiating, modifying, developing, and shaping expectations through interaction” (Burke 2003). The process of role transformation unfolds when people confront environmental situations that initiate identity conflict between the competing roles of family member and business owner that are unlike past identity conflicts. Because of the negative outcomes associated with prolonged and intense periods of identity conflict, it is particularly important to delineate changes of the family business meta-identity.
Family, Business, Opportunities, and Identity Conflict
While many actions and tasks entrepreneurs undertake could lead to conflict between the family and business identities, identity conflict is particularly likely to arise from the important task of opportunity evaluation . Opportunity evaluation can instigate identity conflict in entrepreneurial ventures for two main reasons: (1) the task is prolonged and is a chance to pursue novel paths, thus suggesting a highly uncertain environment (Knight 1921; McMullen and Shepherd 2006), and (2) opportunity evaluation makes the entrepreneur imagine the future activities and behaviors that may be necessary to effectively take advantage of that opportunity, thus making those activities and behaviors explicit. Explicit future activities and behaviors can be compared to the current expected behaviors related to the family firm identity.
Decisions about taking action on a particular opportunity and when to do so are vital for a growing venture’s ultimate survival (Bourgeois and Eisenhardt 1988). In the end, entrepreneurship is about acting “upon the possibility that one has identified an opportunity worth pursuing” (McMullen and Shepherd 2006). Action results from the development of a belief that an opportunity for someone is actually an opportunity that the family firm can, and wants to, exploit . Thus, one must believe that pursing the potential opportunity is both desirable and feasible for the family business. When evaluating a novel opportunity, the family firm must answer questions with a joint understanding of and belief in “who we are” as a family firm. For instance, evaluating an opportunity requires the family business to determine whether “this [is] an opportunity for us,” which likely often includes other questions: “Is this opportunity desirable for the family and for the firm?” “Can we successfully exploit this opportunity given our current knowledge, resources, and capabilities?”
Regarding identity conflict between the family and business identities, the opportunity-evaluation process is likely to result in either (1) an opportunity that does not generate identity conflict, or (2) an opportunity that generates identity conflict that shows similarity to prior identity conflicts, or (3) an opportunity that generates conflict without similarity to prior identity conflicts.
Opportunities That Do Not Cause Identity Conflict
Sometimes, opportunity evaluation is not associated with identity conflict because the family firm believes the opportunity aligns with both the family identity and the business identity. For instance, pursing an opportunity to develop and market a new high-quality toy for education purposes may align with the expectations associated with the role of a business owner and the role of a family member. In this case, no identity conflict develops as the expected behavior of the family member role does not hinder the entrepreneur from meeting the expectations of the firm owner role. In a similar vein, a potential opportunity could be at odds with the role expectation of both identities. An example could be the opportunity to introduce a toy that has no market (i.e., children do not want to use it) and in addition is produced cheaply and coated in toxic paint. In this case as well no identity conflict exists since opportunity exploitation would be incompatible with the expectations of the business owner role as it represents a detrimental business decision and would also be inconsistent with expectations of the family role associated with the child safety and care. Indeed, both decisions are likely to be quick because in the first hypothetical case, the family business can easily decide to exploit the opportunity, while in the second hypothetical case, the family business can easily choose to forego the potential opportunity.
On the other hand, when the family business perceives a potential opportunity to be consistent with one identity but inconsistent with the other, identity conflict arises. When this occurs, the conflict consumes individuals’ capacity to process information, thus making the decision process slower (Weick 1990; Staw et al. 1981). Moreover, there may well be procrastination—namely, postponing a behavior that one feels is emotionally unattractive although it is cognitively important because it can lead to desirable future results (Van Eerde 2000). In case the individual experiences a new form of identity conflict, that conflict is likely to continue (i.e., not be resolved immediately). This persistent identity conflict stemming from opportunity evaluation will likely affect the family business in a negative way by causing the entrepreneur to delay the decision to abandon the opportunity search and either exploit or reject the opportunity.
Opportunities That Cause Identity Conflict Similar to the Past
The degree to which identity conflict postpones the emergence of opportunity beliefs hinges on how similar the conflict is to prior conflicts. Identity conflict triggers reference to his or her family business meta-identity, which attempts to align identities lower in the hierarchy (family and business identities) as well as reconcile their individual meanings. This meta-identity embodies the shared meaning between the family and business identities as well as their intersection. The meta-identity also captures known practices to overcome conflict based on prior incidences that caused conflict between family and business identities. Thus, the meta-identity enacts routines to compare the present conflict with prior conflicts to evaluate whether and how the conflict is similar or different from those that have been resolved in the past. When the current identity conflict is consistent with one encountered in the past, the identity conflict is considered “similar.” Similar means that no matter what the source of conflict is, it is “located” at the same intersection point of the family identity and the business identity as the prior conflict to which it was compared. For instance, say a family firm assessed an opportunity that requires higher family commitment to the business in the form of more work time and weekends at the firm. This new commitment level also affects the family, requiring the children to quit their weekend sports programs, for instance. In this case, the intersection of the family and business identities is embodied in the conflict’s nature —namely, the most suitable (for this specific family) balance of commitment to both family and business activities. If the entrepreneur faces a future opportunity that causes identity conflict over a similar matter, he or she can resolve the conflict by referencing a past solution. These past solutions to identity conflict exist a
s an element of the larger family business meta-identity (i.e., as content).
Opportunities That Cause Conflict Dissimilar to the Past
Individuals will not always have past experience that can be applied to mitigating identity conflict caused by a new opportunity. Every opportunity is different and carries its own uncertainty that can be a new point of intersection between the family and business identities. When a new intersection forms, the family firm’s meta-identity repertoire will not include a routine that can help resolve the identity conflict. (Many new family businesses likely encounter this situation often.) To overcome this new identity conflict, the family has to alter its current family business meta-identity by changing its underlying belief of “who we are as a family business.” Modifying the family business meta-identity entails role transformation, or the process of “negotiating, modifying, developing, and shaping expectations through interaction” (Burke 2003). This role transformation has to occur within existing structures of the family and through interactions between family members.
The dynamic role-transformation process takes place in a social setting and includes behaviors that align perceptions of the types of behaviors which are (or are not) suitable given the existing identity standard. The identity standard for the family firm is shaped by a shared understanding of the expected behaviors for both the family and business roles as well as for the interaction of the two. Thus, to change (i.e., modify or extend) that standard, the family must craft a new collective understanding of “who we are.” Consider the earlier example when the family evaluated an opportunity that was inconsistent with their shared understanding of balancing activities related to work and family, respectively. To exploit the opportunity, the family would need to undertake role renegotiation to transform their collective understanding of the family firm identity.
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