It is often believed that those who engage out of necessity do not report the same well-being as those who do it out of opportunity, but a new study denies this.
January 20, 2021
4 min read
The opinions expressed by the collaborators from Entrepreneur they are personal.
By: Dr. José Ernesto Amorós, National Director for Doctoral Programs at the EGADE Business School at Tecnológico de Monterrey
One of the indicators of a company’s development is its level of entrepreneurial activity (creating new businesses). More than the number of entrepreneurs, the quality of the businesses generated by these individuals matters more than the number of entrepreneurs, which is closely linked to both their motivation at the time of employment and their long-term well-being.
Thus, first of all, it is worth asking what motivates entrepreneurs to get hired. In this sense, entrepreneurs are usually divided into two large groups: those who work out of necessity (to get out of a job they don’t like or unemployment) or those who do it as an opportunity (to get more much autonomy, financial success or personal development).
Entrepreneurs ‘motivation may be relevant to understanding their aspirations, which may have an impact on companies’ performance. In addition, entrepreneurial activity can be closely related to the well-being of these individuals. In fact, various studies have shown that many of these entrepreneurs and the self-employed tend to report greater subjective well-being and a more satisfying life than employees.
But do entrepreneurs whose motivation is opportunity report greater subjective well-being than those who engage out of necessity? Most researchers believe that the association of “entrepreneurs by opportunity” with positive traits, such as rational risk-taking, tolerance for ambiguity, self-efficacy and goal setting, while “entrepreneurs by necessity” stands out. possible limitations of resources or abilities or your lack of vision for growth.
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However, the study “Entrepreneurship and subjective well-being: Does motivation to start a company matter?“In which we collaborated, he concludes that the levels of subjective well-being among entrepreneurs by opportunity and necessity are similar. Published together with professors Oscar Cristi, from the University of San Sebastián (Chile), and Wim Naudé, from RWTH Aachen University and the IZA Institute for Labor Economics (Germany), our research uses data from the Global Entrepreneurship Monitor (GEM) from about 160 thousand entrepreneurs from 70 countries.
The study reflects the fact that entrepreneurs’ motivations can change over time and that both need and opportunity are entrepreneurial factors, not necessarily mutually exclusive. Therefore, the results undermine the supposed dichotomy between “entrepreneurs by necessity” and “entrepreneurs by opportunity”, showing that they do not differ so much in terms of their companies’ aspirations, risk-taking or survival. Other studies have found differences in the profitability of their companies.
The main contribution of this research is that entrepreneurship, even motivated by necessity, contributes to the subjective well-being of entrepreneurs. This well-being is not only material or financial, but can come from prioritizing psychological needs such as autonomy, achievement or family-work balance.
Finally, the results for Latin American countries suggest that higher subjective well-being may increase the likelihood of being an entrepreneur in general, but also of being an entrepreneur by opportunity, while people with a high degree of subjective well-being are less likely to get involved. in entrepreneurial activities out of necessity.
