No abstract

Well-being is an essential outcome of engagement in entrepreneurship, but the pathway from self-employment to well-being is poorly understood. To address this, we develop a model in which psychological functioning—purposeful engagement with life, realization of personal talents and capabilities, and fulfillment of intrinsic needs such as autonomy and competence—mediates the relationship between entrepreneurship and subjective well-being. We test our model with data from the European Social Survey using structural equation modeling and a series of robustness tests (e.g., propensity score matching estimators and accounting for model uncertainty). Results suggest that entrepreneurship is associated with substantial benefits in terms of psychological functioning—both personal and social—which almost entirely mediate the relationship between entrepreneurship and subjective well-being. These findings highlight psychological functioning as a critical pathway between entrepreneurship and subjective well-being.

Model uncertainty is one of the most pervasive challenges in the social sciences. Cross‐country studies in entrepreneurship have largely ignored this issue. In this paper, we evaluate the robustness of 44 possible determinants of early‐stage opportunity‐motivated entrepreneurship (OME) and necessity‐motivated entrepreneurship (NME) that are broadly classified in four groups: (1) economic variables, (2) formal institutions, (3) cultural values, and (4) legal origins and geography. The results, which are based on a representative world sample of up to 73 countries, suggest that institutional variables associated with the principles of economic freedom are most robustly correlated with OME and NME. Our findings also identify net income inequality and Scandinavian legal origins as weakly robust predictors of both types of entrepreneurial activity. Furthermore, we find that log GDP per capita is only a weakly robust predictor of NME, but not OME. We discuss implications for future research.