Why and When Are the Self‐Employed More Satisfied with Their Work?

Abstract

Analysis confirms that the self-employed are more satisfied with their jobs because their work provides more autonomy, flexibility, and skill utilization and greater job security. These underlying mechanisms have been stable over the last 30 years and are not due simply to personality differences. The self-employed job satisfaction advantage is relatively small or nonexistent among managers and members of the established professions-occupations where organizational workers have relatively high autonomy and skill utilization.WHY, AND UNDER WHAT CIRCUMSTANCES, IS IT MORE SATISFYING to be self-employed rather than work for an organization? For several reasons, these questions are becoming more important. Self-employment is a common mode of organization for entrepreneurial activities and is common among contingent workers and subcontractors. The incidence of self-employment has been increasing over the last quarter century, and if trends toward flexible, more focused organizations continue, selfemployment is likely to become even more prevalent. 1 The effect of self-employment on psychological health is a controversial issue, since there are strong but conflicting messages about the nature of self-employed work and how it affects individuals. Politicians and entrepreneurship advocates frequently portray self-employment as the route to independence and personal growth. 2 Many U.S. workers view 293

Necessity and Opportunity Entrepreneurs and Their Duration in Self-employment: Evidence from German Micro Data

“…For many entrepreneurs, however, it seems to be that money is only part of what matters. They gain utility from greater autonomy, from broader skill utilization, and from the possibility of pursuing their own ideas (Benz, 2005;Benz and Frey, 2004;Hundley, 2001). There is empirical evidence that even after controlling for job and personal characteristics, self-employed individuals tend to be more satisfied with their jobs than paid employees (e.g., Blanchflower, 2000;Frey and Benz, 2003 these non-monetary returns go away (e.g., the entrepreneur finds herself less independent than she had originally assumed), the entrepreneur might be more willing to quit her business and search for new opportunities either in a wage-earning job or as a serial entrepreneur.…”

“…On the other hand, the same argument can also be used to motivate the opposite case. Once the non-monetary returns from entrepreneurship go away, a "richer" business owner can afford to stay away from entrepreneurship (for more on the non-monetary returns of entrepreneurship, see Benz, 2005;Benz and Frey, 2004;Hundley, 2001). In light of these two conflicting arguments, the impact of the entrepreneur's capital endowment on survival in self-employment remains unclear.…”

Slipping the surly bonds: The value of autonomy in self-employment

“…Prottas (2008) examined whether reported job autonomy provides more value or bene…t to the self-employed than it does to employees. Consistently, selfemployed individuals have been found to report greater job autonomy (Hundley 2001, Thompson et al 1992 and that the desire for greater autonomy was an important motive in their pursuing self-employment (Feldman and Bolino 2000). Also, Hackman and Oldham (1975) suggested that job that provide autonomy are more intrinsically motivating (for most individuals) than those which are not.…”

Investor protection and business creation

“…Strong investor protection, however, means that the freedom of entrepreneurs to run their own firms is constrained. Such reduced entrepreneurial freedom can severely discourage entrepreneurship, which has important non-pecuniary benefits such as "being one's own boss" (Hamilton 2000, Hundley 2001, and Moskowitz and Vissing-Jørgensen 2002. This potential trade-off raises the central question of our study: How does investor protection affect entrepreneurship and business creation?…”