Identity Fusion and New Venture Performance: Team Average and Dispersion Effects

The present paper studies the relationship between entrepreneurial identity on new venture performance through a group level analysis. It expands on the concept of identity with a metric of identity fusion for the new venture team context and uses a longitudinal field design with repeated survey responses of multiple members in knowledge-intensive new venture teams from Sweden, Denmark, and Russia. Results from multilevel structural equation modeling (MSEM) showed that while there was significant dispersion in intensity of identity fusion among members within a new venture team, there was no direct effect between average team identity fusion and venture performance, as represented by external funding, customer acquisition status and product advancement status. The results run contrary to recent findings of a positive effect between identity fusion and firm performance and makes the case for further explorations into the consistency of the relationship between identity fusion and venture outcomes. The study is among the first to consider venture outcomes of group-level identity in entrepreneurship, highlighting the salience of identity fusion as one of several potential forms of group identity.