Entrepreneurial misconduct is a persistent and societally important problem, and while the phenomenon is widely recognized, theoretical understanding of its causes has lagged behind. Furthermore, theoretical examinations of misconduct have focused on external factors, and prior work that has considered internal factors has not considered identity. This is a notable omission given both the importance of identity to entrepreneurship, and its established potential to drive negative behaviors. We propose a model grounded in identification which suggests that well-meaning entrepreneurs can become “entangled” with their ventures through overidentification with them. This in turn causes the entrepreneurs to view threats to their ventures as threats to important components of their identities, and strongly motivates action that is intended to save their ventures, even if these actions that are unethical or illegal. We then explore various boundary conditions that begin to explain why some entrepreneurs succumb to the motivation to commit such acts while others are able to resist. In theorizing a role for identity in entrepreneurial misconduct, we contribute to the literatures on misconduct, identification and identity, and ethics.
