A new meta-study reviewing 40 years’ of research spanning 82 countries has established that entrepreneurs are ‘happier’ than employees. They typically have higher levels of positive wellbeing than employees and this is particularly the case where entrepreneurship was a positive choice, rather than being forced by circumstance. The study also identified which specific aspects of wellbeing are affected by entrepreneurship, and how, as well as the environmental factors that affect how happy, or otherwise, an entrepreneur feels.
Ute Stephan, Professor of Entrepreneurship at King’s Business School worked with colleagues Andreas Rauch, Professor at Audencia Business School and Isabella Hatak, Professor at the University of St Gallen to synthesize the evidence collected in 94 different studies. The source data included studies from a range of disciplines and encompassed both research specifically on entrepreneurship and broader studies on wellbeing where data had been gathered on respondents’ occupations. In total the research included findings from 6.7 million individual respondents.
Being able to study data from such a long period enabled the international research team to understand longer term changes. Most notably, the research highlighted the fact that entrepreneurs’ happiness has decreased slightly since 2000 as the growth of digital communications has increasingly meant that entrepreneurs are ‘always on’.
If you are thinking of leaving your job to set up a new business, the data suggests that you will ultimately be happier. But you need to learn how to manage the high degree of stress that comes with being an entrepreneur and which takes its toll on your mind and body silently and over the long-term. If you succeed, this will also fuel your creativity. The economic value of entrepreneurial wellbeing is one of the reasons why, for instance, Venture Capitalist funds are increasingly interested in entrepreneurs’ wellbeing: they want to protect their investments.– Professor Ute Stephan
Where you are an entrepreneur also matters
Most of the world’s entrepreneurship activity takes place in lower income countries, yet it is relatively under-represented in entrepreneurship research. Professor Stephan’s research helps address this gap by including what the researchers believe is one of the largest and most diverse range of countries of any study of this nature.
The research found that one of the clearest influences on entrepreneurs’ wellbeing was the effectiveness of the rule of law rather than economic development (as measured by GDP). Countries with a strong rule of law have effective and fair legal systems, secure property rights, low corruption and are more democratically governed. In such countries, entrepreneurs can be sure that they can reap the fruits of their effort and investment and self-actualize through their business to experience high wellbeing. Conversely, when rule of law is weak entrepreneurship becomes more stressful and individuals are happier as employees.
Creating a supportive environment for economically successful entrepreneurs is only one reason why a strong rule of law is desirable. It is interesting to see how critical a role it plays for entrepreneurs’ wellbeing. Our research suggests that it trumps other factors such as higher GDP, regulation, or culture.– Professor Ute Stephan