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Does entrepreneurship cause stress and burnout? True or false: five claims about entrepreneurs’ wellbeing

Professor Ewald Kibler examines common beliefs about entrepreneurship in light of his recent research
Slush 2022 laser visual
Slush 2022. Photo: Aalto University / Kristian Presnal

1. Entrepreneurs have higher levels of burnout than employees.

FALSE. Although entrepreneurs might be at risk of burnout because they’re very engaged with their work and don't get much daily recovery after regular working hours – typical signs of workaholism – they actually show significantly lower levels of burnout than employees. Researchers identified a psychological explanation in the form of ‘positive entrepreneurial workaholism’. On average entrepreneurial work produces significantly fewer daily work stressors (e.g., time pressure and admin tasks) than employed work. It also offers higher levels of beneficial personal job autonomy, since entrepreneurs enjoy more freedom to design and execute their work the way they want.

2. Entrepreneurs have more stressful work demands than employees. 

FALSE. Entrepreneurs might be better protected from burnout because they have better work resources, such as autonomy and psychological capital. But the likelihood of burnout also depends on work demands, and entrepreneurs experience fewer demands that are linked to burnout (e.g., administrative tasks). This finding contradicts the assumption in earlier literature that entrepreneurs experience particularly stressful work demands. It underscores the idea that entrepreneurship instead generally represents a positive demands-resources pattern.

3. Self-employed individuals are less stressed than entrepreneurs who employ people. 

TRUE. Solo entrepreneurs can benefit from a particularly positive pattern of work demands and resources. Solo entrepreneurs and employer entrepreneurs both have high work engagement levels, but employer entrepreneurs don’t have the same positive demand-resource pattern. As a result, they are more likely to burn out than solo entrepreneurs.

From a utility perspective, psychological utility is an important driver of entrepreneurship, particularly for solo entrepreneurs. Exceptional psychological utility might be one of the main reasons that solo entrepreneurs choose to run a business and persist in the face of challenges, and this psychological utility might compensate them for lower economic utility compared with running a larger business with employees. 

4. Serial entrepreneurs are better equipped to cope with stress than entrepreneurs who are running a business for the first time.

FALSE. Although serial entrepreneurs who have already started several businesses in their career are expected to deal better with the challenges of starting a new business, findings show that serial and novice entrepreneurs experience the same levels of stress and burnout when launching a business. The age of the firm also doesn’t matter – for example, burnout and stress are not more prominent among novice entrepreneurs who run young firms.

There are several explanations for this. Every business venture comes with its unique set of challenges and obstacles, regardless of whether the entrepreneur is a novice or a serial entrepreneur. Novice entrepreneurs face difficulties navigating a new industry, building networks, and understanding the regulatory environment, while serial entrepreneurs may face challenges from managing multiple ventures, scaling businesses, and dealing with more complex organizational issues. 

Entrepreneurs also have different coping strategies. Some entrepreneurs may have better support networks, access to resources, or more effective coping mechanisms than others, regardless of whether they are novice or serial entrepreneurs.

5. Employees often have no opportunity to turn strong work engagement into protection from burnout.

TRUE. This is true, and that’s why organizations should consider more entrepreneurial arrangements for jobs to reduce high burnout risks and stress spirals. This could be especially important in many high-risk jobs that demand strong, persistent work engagement, such as nursing, teaching, or policing. High-engagement jobs could be designed to resemble the work environment of solo entrepreneurs – bringing the positive effects of a more entrepreneurial spirit and work design into existing organizations. Managers and staff should consider promoting individual job crafting, where employees are involved in co-designing their job and work processes to better align them with their personal needs, goals, and skills – something that many entrepreneurs do quite naturally.

Source:
Obschonka, M., Pavez, I., Kautonen, T., Kibler, E., Salmela-Aro, K., & Wincent, J. (2023). Job burnout and work engagement in entrepreneurs: How the psychological utility of entrepreneurship drives healthy engagement. Journal of Business Venturing, 38(2), 106272.https://doi.org/10.1016/j.jbusvent.2022.106272

Photo of Associate Professor Ewald Kibler, photo by Mikko Raskinen
Ewald Kibler is a Professor of Entrepreneurship at the Department of Management Studies of the School of Business. Photo: Aalto University / Mikko Raskinen

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