Entrepreneurship is economically important. Entrepreneurs—the founders, owners, and managers of businesses large and small—contribute to economic growth, create new jobs, and provide employment. For instance, small and medium-sized enterprises, which are typically entrepreneur-led, account for 60 percent of employment and over 50 percent of economic value added across the world’s major economies. In the EU, they created 85 percent of all new jobs over the past five years. At the same time, high-growth ventures innovate the way we work, travel, eat, and many other parts of our lives.
While entrepreneurship’s economic impact is well recognized, the human element of entrepreneurship remains largely overlooked. For most entrepreneurs, success extends beyond money—they seek autonomy, personal fulfilment, and well-being alongside financial returns.
This human element isn’t just a feel-good footnote; it has measurable business consequences. Emerging evidence makes a connection between entrepreneurs’ well-being and their business performance. Entrepreneurs with higher well-being display enhanced creativity, improved persistence, and greater productivity. Conversely, stressed or unhappy entrepreneurs tend to make poorer strategic choices, diminishing their business’s performance. There also appear to be ripple effects beyond the business, whereby happy entrepreneurs contribute more positively to their local communities.
But a key question remains: Do entrepreneurs achieve the well-being they seek through entrepreneurship? To answer this, we need to examine the key sources of both well-being and suffering in the entrepreneurial journey.
Entrepreneurship Drives Meaning
In many ways, entrepreneurship represents an ideal career that supports both happiness and satisfaction (called hedonic well-being) as well as thriving and flourishing (called eudaimonic well-being). Entrepreneurs’ work uniquely combines many features that support well-being.
Entrepreneurs enjoy significant autonomy—they are truly “their own bosses” who make all key decisions—and experience their work as deeply meaningful. Their work is also inherently challenging, requiring decision-making and skill development across diverse areas from product development and logistics to marketing, HR, finance, and IT. This breadth creates abundant opportunities for personal growth.
Because entrepreneurs invest deeply in their businesses and make personal sacrifices along the way, their ventures become part of their identity. When the business succeeds, entrepreneurs can experience a profound sense of achievement and identity confirmation, knowing that successes stem directly from their efforts and choices.
Most research on entrepreneurs’ well-being focuses on hedonic well-being (happiness and satisfaction). However, entrepreneurship may be uniquely suited for experiencing eudaimonic well-being (thriving and flourishing). By creating their own businesses, entrepreneurs can design their work and organization to align with their values, skills, and preferences. This enables them to express themselves through their work and create a sense of meaningfulness and purpose that drives their eudaimonic well-being.
Entrepreneurship Increases Stress
However, entrepreneurship simultaneously has great potential to undermine well-being because it is uniquely stressful in different ways. With business ownership and control comes personal and legal responsibility, which can become burdensome when entrepreneurs must make decisions, often under time pressure, based on limited information, and with great uncertainty about future trends.
Personal responsibility for and investment in the business mean entrepreneurs feel setbacks and crises more acutely than employees do. These challenges take a greater toll on their well-being and can even lead entrepreneurs to question their identity. Other work stressors well-documented to undermine well-being—such as workload, time pressure, loneliness, and work-life interference—are present at more extreme levels for entrepreneurs.
Indeed, work-life boundaries are often blurry or non-existent for entrepreneurs. Work can become all-encompassing when the business represents “you” and when technology enables working whenever and wherever.
So, Are Entrepreneurs Happier Than Employees?
The short answer is: yes. On average, being an entrepreneur and working for yourself, as opposed to working for someone else as an employee, comes with higher well-being. However, the full picture is more nuanced, depending on the type of entrepreneur and, importantly, where in the world one pursues entrepreneurship.
In a comprehensive statistical review of over 40 years of research covering more than 6 million individuals across 82 countries, entrepreneurs had higher well-being than employees—but only if they weren’t forced into entrepreneurship due to a lack of alternative employment options (necessity entrepreneurship).
In the same review, my co-authors and I found that context mattered significantly for entrepreneurs’ well-being. Entrepreneurs in countries with low-quality institutions, especially a weak rule of law, still had higher well-being than employees but simultaneously experienced higher ill-being (more psychological distress). This occurs because a weak rule of law intensifies the uncertainty entrepreneurs already face by further decreasing predictability. Weak institutions can undermine entrepreneurs’ agency and investment in their businesses, as entrepreneurs cannot be sure whether they will reap the rewards of their labor or whether corrupt officials or criminals might absorb their returns.
In other words, the well-being paradox of entrepreneurship—simultaneously high well-being and ill-being—becomes most visible in adverse contexts. Recent research has started to explore what well-being strategies entrepreneurs in challenging environments can employ. This research reinforces the importance of strong social ties and social support, as well as maintaining realistic expectations about what entrepreneurship can and cannot achieve.
The Hidden Costs of Entrepreneurship
Despite encouraging evidence that entrepreneurship can be a great source of well-being and flourishing, it’s important to acknowledge that research has not yet fully explored the long-term well-being consequences of entrepreneurship and the varied negative emotions and distress that entrepreneurship can evoke.
Such research is crucial, because some evidence suggests that while entrepreneurs report happiness and satisfaction with work and life, they simultaneously appear to be more physiologically stressed than employees. This points to important hidden well-being costs to entrepreneurship and draws attention to another entrepreneur well-being paradox: higher subjective happiness and physiological stress.
How might this paradox be explained? It likely results from the personality traits that tend to be common among entrepreneurs, especially their achievement orientation, proactivity and self-efficacy, which combined with entrepreneurs’ demanding, self-organized work, may lead entrepreneurs to continuously stretch and over-stretch themselves.
Unlike traditional jobs, entrepreneurship has no fixed goals or finish line—there’s always room to improve market share, develop new offerings, expand geographically, enhance employee support, or contribute to the community. The personality traits noted above mean that entrepreneurs are not only motivated to meet these challenges and work hard, they also feel capable and sometimes overly confident that they will succeed. This extra effort and hard work pays off in the short term by boosting performance, but in the longer-term it erodes entrepreneurs’ health.
The reason behind the long-term negative effect on entrepreneurs’ health is the lack of recovery in the face of ongoing stressful work, which means that the physiological stress response (allostatic load) builds up cumulatively over time. This eventually manifests as illness—ranging from burnout and anxiety to serious physical conditions such as cardiovascular diseases.
Such build-up of physiological stress can be interrupted through regular and frequent recovery that helps bodies unwind and reset the effects of stress. Entrepreneurs should inoculate themselves against stress and develop such routines early in their entrepreneurial journey, because research indicates that recovery becomes increasingly difficult over time as entrepreneurs spend more years in entrepreneurship.
How to Promote Entrepreneurial Well-Being
Entrepreneurs and their supporters should view investments in safeguarding entrepreneurs’ well-being not just as “nice to have” or an “add-on,” but as investments in the sustainability of their businesses. After all, there is no business without the entrepreneur.
My colleague and I have summarized key strategies for entrepreneurs and their supporters here. The Founder Mental Health Pledge, a global non-profit dedicated to entrepreneur mental health, curates a wealth of materials to support entrepreneurs and their supporters in safeguarding entrepreneurs’ mental health.
