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Self-Employment Identities

Self-employment identity lays a base to answering the questions, “Who are the self-employed?” and “What distinguishes them from those in paid labor?” Moreover, how the self-employed are seen by others and see themselves advances our understanding of their behavior as well as their structural position in the socioeconomic system.

Conceptual Overview

Formation of Social Identities

Social identification processes can address various levels of analysis. They describe the self-structure of the individual, the character of intergroup relations, and the relation of the individual to the broader social structure. At the individual level, social identities are formed through a hierarchical categorization of group memberships based on shared idiosyncratic attributes. In 1979, Henry Tajfel and John Turner developed a theoretical model of identity that linked self-categorization of the individual with intergroup discrimination, proposing that social identity requires not only attributes shared within a group, but also attributes that discriminate from other groups. The formation and maintenance of boundaries shaping social identities is a process of continuous interaction within and between groups. The in-group interaction reinforces the criteria of community and shared values, but this internal process needs to be recognized by outsiders as well. Otherwise the boundary is indistinguishable and therefore permeable from the outside and an identity cannot emerge.

Do the self-employed form a categorical group that facilitates the formation of a social identity? To answer this question, one needs to address the following issues: (1) Do the self-employed share common attributes and values? (2) Are there clear boundaries between the self-employed and those in paid labor? (3) Does a continuous interaction among the selfemployed reinforce and institutionalize their identity?

Classical Accounts of Self-Employment

Richard Cantillon in the mid-18th century introduced the term entrepreneur for an arbiter taking advantage of discrepancies in supply and demand. In 1803, Jean-Baptise Say distinguished two types of entrepreneurs, those who fund a business (the capitalists) and those who exercise direction, control, and judgment to ensure smooth operations (the managers or leaders). Frank Knight distinguished risk and uncertainty in 1921. He characterized entrepreneurs as risk takers who more effectively bear uncertainties that cannot be insured, capitalized, or salaried; entrepreneurs are responsible for economic development through technological and social innovations. According to Joseph Schumpeter, entrepreneurs create system disequilibria through introducing new products or methods of production, detecting new demand and supply markets, or initiating the new organization of an industry. Notably, Schumpeter saw investing resources under uncertainty as a characteristic not of the entrepreneur, but of the capitalist who funds the entrepreneur. In 1973, Israel Kirzner came back to Cantillon, arguing that entrepreneurs take advantage of existing disequilibria. Common to these classical accounts is that they use the role and function of entrepreneurs within the socioeconomic system to define them as a distinguishable group. As the self-employed fulfill equivalent roles and functions, they have common interests and shared characteristics forming a potential basis for developing a social identity. The differences in the classical accounts above, however, already point at strong subgroup identities, such as (venture) capitalists who fund new businesses, people detecting new market niches and taking the risk to start a business, innovative business owners shaking up existing industries, and firm founders, who mainly imitate an already existing business idea.

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