Entrepreneurship, Identity, and the Transformation of Marketing Systems

Abstract

This paper examines how entrepreneurs operating in underground markets come to see laws governing marketing systems as illegitimate and explores the role identity plays in motivating entrepreneurs to challenge existing institutions. Analysis of interviews with 27 cannabis dispensary founders showed that entrepreneurs came to reject medical cannabis prohibition as illegitimate after direct experience with both cannabis and traditional medicines convinced them the factual basis upon which prohibition rested was flawed. Perception of prohibition’s illegitimacy fostered entrepreneur identification as a member of a superior in-group constrained by an illegitimate institution. Pursuing opportunities in illegal markets then became a vehicle for entrepreneurs to enact valued identities by challenging and undermining prohibition. This analysis extends work on informal economy entrepreneurship by showing that dis-identification with formal institutions does more than enable entrepreneurs to recognize economic opportunities ignored by those working within institutional boundaries; it also opens existing marketing systems to decay by providing economic and psychological resources for dismantling the laws that govern them.

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