Shared identity and entrepreneurship

Document Type

Article

Publication Title

Journal of Economic Behavior and Organization

Abstract

We show that shared identity with elected leaders helps entrepreneurs form new and productive businesses. Following close Indian elections during 2006-2016 , local firm entry by entrepreneurs belonging to the same cultural groups as the winning candidates increases. Despite benefitting from preferential behavior, and in contrast to earlier work, such politically connected entrants are more productive than incumbent in-group firms. Simultaneously, business formation by out-group entrepreneurs does not decline. The high TFP of in-group entrants suggests barriers that previously precluded the entry of potentially high-performing firms. Administrative entry costs seem to be a key barrier that in-group politicians help ease.

Publication Date

1-5-2026

Publisher

Elsevier

Volume

Vol. 245

Issue

May 2026

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