Developing optimal distinctiveness: organizational identity processes in new ventures engaged in business model innovation

Abstract

There is increasing interest in the actions entrepreneurs undertake to shape the organizational identity of new ventures. While studies emphasize the need to focus on the distinctiveness of organizational identity to acquire resources for new ventures, less is known about specific identity-shaping actions or their consequences in the context of new ventures engaged in innovation. Based on a study of four new ventures involved in business model innovation, we theorize about the types of action innovating new ventures undertake to build their organizational identities and the consequences of these actions in terms of identity evaluation by external audiences. Four identity-building actions are identified and discussed: storytelling, use of analogies, procuring social evaluations and establishing alliances. This paper’s main contribution is to show how innovating ventures attempt to reach optimal distinctiveness by developing unique organizational identities embedded in existing market categories, with insights for the literatures on organizational identity and entrepreneurship.

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