It is often thought that those who undertake out of necessity do not report the same well-being as those who do so out of opportunity, but a new study denies this.
January 20, 2021
4 min reading
The opinions expressed by the collaborators of Entrepreneur they are personal.
By: Dr. José Ernesto Amorós, National Director of Doctoral Programs at EGADE Business School of the Technological University of Monterrey
One of the indicators of a company’s development is its level of entrepreneurial activity (creation of new businesses). More than the number of entrepreneurs, the quality of the initiatives that these individuals generate is important, which is closely related to both their motivation when it comes to entrepreneurship and their long-term well-being.
So, first of all, we need to ask ourselves what motivates entrepreneurs to undertake. In this sense, entrepreneurs are usually divided into two large groups: those who undertake out of necessity (to get out of a job they do not like or unemployment) or those who do so as an opportunity (to achieve more autonomy, success financial or personal development).
The motivation of entrepreneurs can be relevant to understanding their aspirations, which can impact the performance of companies. In addition to entrepreneurial activity may be closely related to the well-being of these individuals. In fact, several studies have shown that many of these entrepreneurs and self-employed people tend to report greater subjective well-being and more satisfying lives than salaried workers.
But do they report greater subjective well-being of entrepreneurs the motivation is the opportunity than those who undertake out of necessity? Most researchers believe so, associating ‘entrepreneurs by chance’ with positive traits such as rational risk-taking, tolerance of ambiguity, self-efficacy and goal setting, while ‘entrepreneurs by necessity’ highlight their potential. limitations of resources or skills, or their lack of vision of growth.
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However, the study “Entrepreneurship and subjective well-being: does motivation matter to start a business?“In which I have collaborated, he concludes that the levels of subjective well-being among entrepreneurs by opportunity and need are similar. Published with professors Oscar Cristi, from the University of San Sebastián (Chile), and Wim Naudé, from the RWTH Aachen University and the IZA Institute for Labor Economics (Germany), our research uses data from the Global Entrepreneurship Monitor (GEM) from nearly 160,000 entrepreneurs from 70 countries.
The study reflects that entrepreneurs ’motivations can change over time, and that both need and opportunity are driving factors in entrepreneurship, not necessarily exclusive. Therefore, the results underpin the alleged dichotomy between ‘entrepreneurs by need’ and ‘entrepreneurs by opportunity’, proving that they do not differ so much in terms of aspirations, risk-taking or survival of their companies. Other studies have found differences in the profitability of their companies.
The main contribution of this research is that entrepreneurship, despite being motivated by necessity, contributes to the subjective well-being of entrepreneurs. This well-being is not just material or financial, it can come from prioritizing psychological needs such as autonomy, achievement or family-work balance.
Finally, the results for Latin American countries suggest that greater subjective well-being may increase the likelihood of being an entrepreneur in general, but also of being an entrepreneur by opportunity, while individuals who show a high degree of subjective well-being are less likely to get involved. in entrepreneurial activities out of necessity.
