Abstract

Underperforming firms refer to firms whose performance is below owners’ expectations for a long period of time (DeTienne et al., 2008). According to population ecology theory, underperforming firms will be eventually forced out of the market. Why, then, do owner-managers persist with underperforming ventures? In this research, we draw on identity theory and social identity theory, and seek to explain how individual, relational, and social identities influence owner-managers’ decisions about underperforming ventures. Furthermore, we examine how these three types of identities interact with the availability of alternative opportunities to influence the above decisions.

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