How Institutions Shape Entrepreneurs’ Happiness Around the World

What is it about?

This study explores how national institutions shape the relationship between entrepreneurship and life satisfaction. Drawing from person–environment fit and institutional theories, it examines why entrepreneurs may feel more satisfied with their lives than employees in some countries but not others. The underlying idea is that life satisfaction improves when individuals’ occupational choices align with the formal and informal institutions of their country—that is, when being an entrepreneur “fits” the surrounding social and economic context. Using data from over 70,000 entrepreneurs and employees across 43 countries, the study finds that the life satisfaction gap between entrepreneurs and employees varies by national context. Entrepreneurs report higher satisfaction in countries with greater power distance, lower uncertainty avoidance, supportive entrepreneurship policies, lighter tax burdens, and weaker worker protections. These institutional conditions create environments that reward initiative and risk-taking, enhancing entrepreneurs’ overall well-being. For policymakers and institutions, the findings highlight how formal and informal structures can shape the personal benefits of entrepreneurship. Reducing barriers such as high taxation and excessive regulation while promoting cultural acceptance of entrepreneurial risk-taking could make entrepreneurship more fulfilling. Conversely, in rigid or highly regulated contexts, entrepreneurship may be less personally rewarding.

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Photo by Filip Rankovic Grobgaard on Unsplash

Photo by Filip Rankovic Grobgaard on Unsplash

Why is it important?

This study makes a significant contribution to understanding the contextual side of entrepreneurial well-being. By integrating cross-country institutional factors with psychological theories of person–environment fit, it shows that entrepreneurs’ happiness depends on where they operate, not just on who they are or what they do. At a time when entrepreneurship is promoted globally as a path to innovation and self-realization, this research provides a nuanced, evidence-based view: the personal payoffs of entrepreneurship are deeply tied to the institutional and cultural settings in which it unfolds. It underscores that to truly empower entrepreneurs, countries must cultivate environments that fit and support entrepreneurial aspirations.