Henri Tajfel created social identity theory in 1979 to explain how people derive self-esteem and identity from the social groups they belong to. People seek to positively distinguish their in-group from out-groups to enhance their self-image. Stereotyping helps categorize people into in-groups and out-groups based on similarities within groups and differences between them, which can lead to prejudice. The theory involves three processes: social categorization where people are stereotyped into groups, social identification where people adopt their in-group identity, and social comparison where in-groups are compared to out-groups to maintain self-esteem.