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This paper bridges work on neighborhood effects with social psychological research on perceptions of groups. Neighborhood effects studies consider the question of how social context affects individual outcomes and behaviors. In this paper, I investigate the effects of the clarity of social context, or the extent to which a neighborhood or community is perceived as a coherent, bounded social unit, by testing its impact on residents’ level of community involvement. Clarity of context can be defined as entitativity, which is the property of a collection of individuals that defines it as a social unit having a coherent social reality—it is the “thingness” of a group. Entitativity has been found to enhance cooperation and commitment in groups, suggesting it may also motivate greater participation in cooperative collective action in communities. This study examines the relationship between entitativity and community involvement in small towns, where resident participation may be especially crucial to community success. Using survey data on 99 small towns in Iowa, I examine how variations in three aspects of entitativity—boundaries, interaction, and corporate actor capacity—relate to resident participation in two types of community involvement: membership in community organizations and volunteering for community improvement activities. Results indicate entitativity is positively related to both forms of community involvement. This study builds on other work on the importance of context to individual and group outcomes by indicating that clarity of the context has an important impact on individual behaviors, which can have an important impact on individual and group outcomes.