Entrepreneurship and Subjective Well-Being: The Mediating Role of Psychological Functioning

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.

Self-employment and eudaimonic well-being: Energized by meaning, enabled by societal legitimacy

“…Yet, the economic returns for the individual self-employed or entrepreneur 3 are often limited. The self-employed may not earn more than in wage employment ( van Praag and Versloot, 2007 ), but they may find their work more fulfilling and may be happier ( Nikolaev et al, 2020 ). This has increased researchers' interest in well-being as a benefit that individuals may derive from self-employment ( Stephan, 2018 ; Wiklund et al, 2019 ).…”

“…For instance, life and job satisfaction, which reflect a sense of positive contentment with one's life and job, are frequently used measures of general and work-related hedonic well-being in entrepreneurship research ( Stephan, 2018 ; Wiklund et al, 2019 ). Such research finds that entrepreneurs tend to have higher life and job satisfaction than the wage-employed ( Binder and Coad, 2013 , Binder and Coad, 2016 ) including in cross-country cross-sectional ( Blanchflower, 2000 ; Nikolaev et al, 2020 ) and longitudinal studies ( Hamilton, 2000 ). These findings are typically explained by the higher work autonomy that entrepreneurs enjoy ( Stephan, 2018 ).…”

“…Entrepreneurship scholars have investigated eudaimonia as a composite state of general psychological functioning that affects hedonic well-being ( Nikolaev et al, 2020 ) or have combined measures of hedonic and eudaimonic well-being into one index ( Shir et al, 2019 ). These studies provide valuable first insights into entrepreneurs' eudaimonia.…”

Talent in hospitality entrepreneurship

“…For example, Flanagan et al (2018) suggest cooperative competition or coopetition as a success factor and Hlady-Rispal and Servantie (2018) propose success through social value creation and social entrepreneurship. Further, with the growing recognition of well-being and mental health, scholars posit that psychological well-being has become equally important for successful entrepreneurs (Nikolaev et al, 2019;Rauch et al, 2018). The next section of the paper moves to situate studies of entrepreneurship relative to hospitality as a sector and hospitality work.…”

Caught Between Autonomy and Insecurity: A Work-Psychological View on Resources and Strain of Small Business Owners in Germany

“…Work is essential for gratification of the basic psychological needs of autonomy, competence, and relatedness ( Van den Broeck et al, 2016 ) which in turn foster psychological growth and well-being ( Ryan and Deci, 2001 ; Deci and Ryan, 2008 ; Van den Broeck et al, 2016 ). In terms of self-employment, existing research indicates that entrepreneurs tend to be happier and report high levels of psychological well-being ( Binder and Coad, 2013 ; Baluku et al, 2018a ; Shir et al, 2018 ; Nikolaev et al, 2019 ). In contrast, individuals tend to experience serious mental health challenges such as low self-esteem, substance abuse, and severe mental health concerns when they are out of work ( Blustein, 2008 ; Otto and Dalbert, 2013 ).…”