Exploring the Impact of Identity Fusion on Managerial Decision-Making in Eponymous Firms

Abstract

This study examines how identity fusion influences managerial decision-making in family-owned businesses, with a particular focus on eponymous firms. Using a controlled experimental design, we exogenously manipulate identity fusion to mitigate selection biases commonly associated with archival data. Our findings demonstrate that self-identification with the firm significantly impacts managerial behavior: eponymous participants exhibit heightened optimism in gain scenarios, while reputational concerns temper this optimism, leading to more cautious decisions in loss scenarios. To validate and extend these results, we complement the experiment with a survey of executives from both eponymous and non-eponymous firms. Together, these findings highlight the critical role of psychological attachment and reputational considerations in shaping corporate decision-making within family businesses.

Keywords: Identity fusion, experimental finance, behavioral biases, family-owned businesses, eponymous firms, managerial decision-making, corporate forecasts.