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The role of eudaimonic well-being for entrepreneurial entry and persistence : A quantitative study of eudaimonic well-being as predictor for entrepreneurial tendencies and chances of persistence

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The role of eudaimonic

well-being for

entrepreneurial entry and

persistence

A quantitative study of eudaimonic well-being

as predictor for entrepreneurial tendencies and

chances of persistence

MASTER THESIS WITHIN: Business Administration

NUMBER OF CREDITS: 30

PROGRAMME OF STUDY: Strategic Entrepreneurship AUTHOR: Christian Altenburger

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Master Thesis in Business Administration

Title: The role of eudaimonic well-being for entrepreneurial entry and persistence – A quantitative study of eudaimonic well-being as predictor for entrepreneurial tendencies and chances of persistence

Author: Christian Altenburger

Tutor: Matthias Waldkirch

Date: 5th June 2021

Key terms: eudaimonic well-being, personal functioning, flourishing,

entrepreneurial entrance, entrepreneurial persistence, self-employment

Abstract

Eudaimonic well-being, which leads to personal functioning, finds increasing attention in entrepreneurship research. Its positive effects suggest that eudaimonia helps individuals to overcome difficulties and challenges which the entrepreneurial process brings. Based on the self-determination theory, individuals with higher eudaimonic well-being can also be expected to be more likely to enter self-employment as occupational choice proactively. Thus, this thesis builds a construct which shows the influence of eudaimonic well-being on the process of entering and sustaining in self-employment. The methodological approach to measure eudaimonic well-being is built on existing research. Using eudaimonia to predict entrepreneurial entry and persistence is novel and tested on a large panel dataset from Australia.

The findings show, contrary to the literature, no difference in eudaimonic well-being of those who change from paid employment to self-employment compared to those who stay in paid employment. The results although fail to reject the hypothesis that eudaimonic well-being influences the likelihood of entrepreneurial persistence. Higher eudaimonic well-being shows, statistically not significant, positive impact on the chances to sustain in self-employment. This adds evidence to existing literature on entrepreneurial persistence and eudaimonic well-being. Activities that increase eudaimonia can therefore be seen as beneficial to create long-term persistent entrepreneurs and businesses.

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Acknowledgement

Foreword

To the reader of this thesis, thank you for the interest in the field of entrepreneurial well-being. The following master thesis is the result of months-long work. It adds valuable insights into the psychological effects of individuals in their consideration to become entrepreneurially active and sustain in that occupation. This thesis allowed me to combine my interests in psychology and entrepreneurship and use my existing knowledge as a foundation. During the research process, I gained increased awareness and know-how about the field of eudaimonic well-being, statistics, and of course the research process itself. Writing on this thesis improved my abilities in problem solving, information generation, as well as critical review and cross-linking of academic knowledge. The paper itself is just a small part of the whole process which cannot give the reader the full experience. Still, I hope that the next pages give an understanding of the subject matter and awakens your interest.

Research Data

This paper uses unit record data from the Household, Income and Labour Dynamics in Australia Survey (HILDA). The HILDA survey is conducted by the Australian Government Department of Social Services (DSS). The findings and views reported in this paper, however, are those of the author and should not be attributed to the Australian Government, DSS, or any of DSS’ contractors or partners. DOI: 10.26193/3QRFMZ

Personal Acknowledgement

Without the help of others, the thesis would look very different. I therefore genuinely thank my supervisor Matthias Waldkirch, who guided me through the thesis journey from beginning to end. His continuous feedback helped to me find the right direction and shape the study into a valuable form. Also, his encouragement helped me to extend my possibilities and overcome the accompanying difficulties. Special thanks also goes to Balázs M. Hepp, classmate and incredible friend, who helped especially in the statistical part of this paper. His wide knowledge in advanced statistics and his openness for spontaneous input regarding my thesis was very welcome and helped tremendously to not get stuck in certain areas of the analysis.

Lastly, I also want to sincerely thank my closest friends and family who helped me through this challenging time. Their encouragement and time, through calls around Europe or in person here in Sweden, helped to give me the necessary energy for creating and finishing this studies. They also made this semester and also the time outside the university very bright and filled my life with unforgettable experiences. The awesome time in Jönköping will stay forever in my memories. Thank you very much!

Christian Altenburger Jönköping, 2021

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Table of Contents

1. INTRODUCTION... 1

1.1 INTRODUCTION AND BACKGROUND ... 1

1.2 PROBLEM DISCUSSION ... 2

1.3 PURPOSE AND RESEARCH QUESTION ... 3

2. FRAME OF REFERENCE ... 4

2.1 THE REASONS TO FOLLOW ENTREPRENEURIAL PATHS ... 4

2.1.1 Entrepreneurs’ Contribution to the Economy ... 4

2.1.2 Reasons to Enter Entrepreneurship ... 4

2.1.3 Facets of Entrepreneurial Success ... 5

2.1.4 Entrepreneurial Exit and Failure ... 6

2.2 DEEP-DIVE INTO THE ENTREPRENEURIAL PSYCHOLOGY ... 7

2.2.1 Importance of Health ... 7

2.2.2 Overview of Well-Being ... 7

2.2.3 Well-Being of Entrepreneurs ... 8

3. HYPOTHESIS BUILDING ... 10

3.1 EUDAIMONIC WELL-BEING AS PREDICTOR FOR ENTREPRENEURIAL ENTRY ... 10

3.2 THE IMPORTANCE OF EUDAIMONIA FOR ENTREPRENEURIAL PERSISTENCE ... 12

3.3 CONCEPTUAL FRAMEWORK OF EUDAIMONIC INFLUENCE ON ENTREPRENEURS ... 15

4. RESEARCH DESIGN ... 16

4.1 RESEARCH PHILOSOPHY ... 16

4.2 RESEARCH METHODOLOGY ... 16

4.3 RESEARCH METHOD ... 17

4.3.1 Data and Sampling... 17

4.3.2 Independent Variables ... 19

4.3.3 Dependent Variables ... 20

4.3.4 Control Variables ... 20

4.3.5 Summary Statistics ... 23

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5. ANALYSIS AND INTERPRETATION ... 27

5.1 MODEL AND FACTOR PREPARATION ... 27

5.2 BINARY LOGISTIC REGRESSION ANALYSIS ... 28

5.3 EVALUATION OF THE LOGISTIC REGRESSION MODEL ... 32

5.3.1 Overall Model Evaluation ... 32

5.3.2 Statistical Tests of Individual Predictors ... 33

5.3.3 Goodness-of-Fit Statistics ... 34

5.3.4 Validation of Predicted Probabilities ... 35

5.4 ROBUSTNESS CHECK ... 36

6. DISCUSSION AND CONCLUSION ... 39

6.1 HYPOTHESIS ANSWERING ... 39

6.2 DISCUSSION OF THE RESULTS ... 39

6.3 MANAGERIAL IMPLICATIONS ... 41

6.4 LIMITATIONS AND IMPLICATIONS FOR FUTURE RESEARCH ... 41

6.5 CONCLUSION ... 43

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Figures

FIGURE 1:DERIVED MODEL OF EUDAIMONIC INFLUENCES IN ENTREPRENEURSHIP ... 15

FIGURE 2:CONCEPTUAL MODEL FOR H1 ... 18

FIGURE 3:CONCEPTUAL MODEL FOR H2 ... 18

FIGURE 4:FLOW OF PARTICIPANTS INTO THE STUDY SAMPLE ... 19

FIGURE 5:TEST STRUCTURE FOR EVALUATION OF THE MODEL ... 32

Tables

TABLE 1:SUMMARY STATISTICS OF ALL USED VARIABLES ... 24

TABLE 2:REGRESSION TABLE FOR H1 ... 29

TABLE 3:REGRESSION TABLE FOR H2 ... 29

TABLE 4:CORRELATION MATRIX OF COVARIANCE’S FOR H1 ... 31

TABLE 5:CORRELATION MATRIX OF COVARIANCE’S FOR H2 ... 31

TABLE 6:MODEL FIT STATISTICS FOR H1 ... 33

TABLE 7:MODEL FIT STATISTICS FOR H2 ... 33

TABLE 8:OMNIBUS TEST OF INDIVIDUAL MODEL COEFFICIENTS FOR H1 ... 34

TABLE 9:OMNIBUS TEST OF INDIVIDUAL MODEL COEFFICIENTS FOR H2 ... 34

TABLE 10:CLASSIFICATION TABLE ... 36

TABLE 11:EUDAIMONIC WELL-BEING IN THE ROBUSTNESS TESTS FOR H1 ... 37

TABLE 12:EUDAIMONIC WELL-BEING IN THE ROBUSTNESS TESTS FOR H2 ... 37

Equations

EQUATION 1:SIMPLIFIED EQUATION FOR ODDS OF OCCURRENCE ... 28

EQUATION 2:MATHEMATICAL EQUATION FOR ODDS OF OCCURRENCE ... 28

EQUATION 3:GENERATED LOGISTIC MODEL FOR H1 ... 29

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Abbreviations

ADA Australian Data Archive

DSS Department of Social Services

Frequ. Frequency

H1 Hypothesis 1

H2 Hypothesis 2

HILDA Household Income and Labour Dynamics in Australia

LLC Limited Liability Company

n Number

Obs. Observations

SAS Statistical Analysis System

SF-36 Short Form 36 Health Survey Questionnaire

SPSS Statistical Package for the Social Sciences

Statistical Terms

X Observed covariate

Y Dependent variable

Regression coefficient

S.E. Standard error

df Degrees of freedom

C.I. Confidence interval

p-value; p Probability value; states statistical significance of Chi2 at the related df

z-score Standard score; derived through standardization of related variable

e Euler‘s number

2 Chi-square; 2 = ( S.E.)2

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1. Introduction

1.1 Introduction and Background

The future economy strongly depends not just on already existing companies, but also on new founded ones (Matricano, 2020). Entrepreneurial activity is not just a possibility to probably create new jobs, but also forces existing companies to innovate so they can stay competitive (Davidsson, 2016; Koster et al., 2012; van Stel & Suddle, 2008). No matter if the new businesses fail or succeed, they impact the industry by forcing existing businesses to become more efficient or effective (Davidsson, 2016). Especially, when the new businesses are successful though, their activities build pressure on existing companies which in general improves efficiency and effectivity to stay competitive (Holcombe, 2003). Even if the new market competitor fails as a first mover, the first one to offer new products or techniques, they allow the market and other companies to act on the novelty and therefore bring lasting change in the market although their own failure (Davidsson, 2016). As of the nature of self-employment, besides the business idea the potential success and survival of a new company is mostly dependent on the entrepreneur and therefore the person starting the business (Ayala & Manzano, 2014). Research has already shown that most entrepreneurs bring a specific personality (Pittino et al., 2017; Thomas, 2012; Zisser et al., 2019). Also well-being as a factor of personal health has been studied and connected to entrepreneurship research intensively. The influence of entrepreneurial activity on the person is already well known (Nikolaev, Shir, et al., 2020; Przepiorka, 2017; Ryff, 2019). We although still miss the understanding of how the person and its well-being influence the business and therefore its survival potential. This thesis therefore tries to anticipate entrepreneurial activity and persistence, the continuing of self-employment, based on eudaimonic well-being of the entrepreneur and founder of a business.

According to the self-determination theory, entrepreneurial, and thus self-employed activities, deliver the potential for self-realization (Pittino et al., 2017; Waterman, 1993). This is possible due to the nature of self-employment where individuals choose their own tasks rather than work for an employer. In particular, this has shown positive effects on individuals’ life satisfaction, which is a part of hedonic well-being and crucial for personal mental health (Brieger et al., 2019; Ryan & Huta, 2009; Waterman, 1993). Hedonic well-being is one of two parts of one’s general well-being and describes how happy and satisfied someone is with his or her life (Ryan & Deci, 2001). Resulting, the task of entrepreneurial and self-employed work can also lead to realization of someone’s personal potential and functioning, which are major results of positive eudaimonic being (Ryff & Singer, 2008). Eudaimonic being, the second part of well-being, describes not happiness but personal functioning (Ryan & Deci, 2001; Waterman, 1993). It usually comes with meaning and purpose in life and helps people to thrive and flourish (Ryan & Deci, 2001). However, in comparison to hedonic well-being which describes how someone feels through pain avoidance and attainment of pleasure (Ryan & Deci, 2001), eudaimonic well-being which describes how well someone functions is still understudied in the entrepreneurial context (Ryff, 2019; Stephan, 2018). More recent studies already found a clear correlation between positive eudaimonic well-being and the capability of entrepreneurs to handle the stress and uncertainties their activities bring (Bockorny & Youssef-Morgan, 2019; Nikolaev, Boudreaux, et al., 2020; Ryff, 2019). Still, we lack a framework of how personal

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functioning of individuals influences their likelihood of becoming and sustaining as successful entrepreneurs.

To fill this gap, I focus on eudaimonic well-being, which seems to be an important mediator for entrepreneurial capabilities (Hahn et al., 2012; Nikolaev, Boudreaux, et al., 2020).

The present work contributes to entrepreneurial research by shining light on this connection and therefore builds on the self-determination theory, which explains the intrinsic drivers of autonomy, relatedness, and competence (Ryan & Deci, 2001), which are crucial for entrepreneurial tasks. This thesis expands the existing knowledge of entrepreneurial entry and persistence by building on the self-determination theory and integrate eudaimonic well-being as a key variable. This in return would allow to use eudaimonia as predictive factor for entrepreneurial tendencies and potential entrepreneurial persistence. Therefore, a connection between eudaimonic well-being and business survival will be made.

In return this allows to extent the literature and add eudaimonic well-being as descriptor for the entrepreneurial personality. By focusing on opportunity-entrepreneurs, people that seek entrepreneurship as occupation due to intrinsic motivation from personal and proactive choice, misleading results of necessity entrepreneurs, people that start self-employment due to limited other options, are avoided (Nikolaev, Boudreaux, et al., 2020; Ryff, 2019; Wiklund et al., 2019). This is done by only including individuals into the sample which were already employed the year before entering self-employment. The analysis is carried out on an original dataset of the HILDA (Household Income and Labor Dynamics in Australia) survey. To describe the correlation between eudaimonic well-being and entrepreneurship, binary logistic regression is used as methodical approach. The richness of the longitudinal dataset allows to draw a picture of eudaimonic parameters and its correlation to entrepreneurial entry and persistence.

1.2 Problem Discussion

Existing research clearly shows the importance of well-being for entrepreneurs and therefore directly influences their capabilities and potential success (Bockorny & Youssef-Morgan, 2019; Hahn et al., 2012; Ryff, 2019). Most of the current research although still focuses on life satisfaction in combination with entrepreneurial activities and mainly analyses the hedonic well-being effects as outcome variable when following an entrepreneurial path. Far less research goes the other way and tries to describe the entrepreneurial output based on different states of eudaimonic well-being (Nikolaev, Boudreaux, et al., 2020; Stephan, 2018; Wiklund et al., 2019). More intense research in this field could shine light on how psychological personality traits lead to success or failure (Erdogan et al., 2012). Also the use of longitudinal data would give more valuable insights on the mediating role of well-being in entrepreneurial activities (Nikolaev, Boudreaux, et al., 2020; Thomas, 2012).

This would contribute to existing research by building a bridge between positive psychology and entrepreneurship. Results could help in future entrepreneurial education and coaching by not just focusing on business factors but also on the personality and psychological health which includes well-being. Further, besides the business idea, the entrepreneurial personality could also deliver crucial information on potential business success in measuring entrepreneurs’ capabilities of running a business over years. It could also deliver politicians important insights for beneficial changes in laws and regulations that would improve

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important areas of well-being and thus increase the success rate of entrepreneurial businesses. In return, this would have positive impact on the economy by creating jobs and economic value. Job trainings and unemployment activities which lead to self-employment, often majorly delivering necessity entrepreneurs, seem to fail in creating long-term self-employment and therefore its effectiveness can be questioned (Caliendo et al., 2020). Trainings which take the academic findings into account can try to form the personality of new entrepreneurs and achieve long-term self-employment to enhance the success rate of job programs.

1.3 Purpose and Research Question

This thesis will connect the entrepreneurial psychology through eudaimonic well-being with entrepreneurial activities. The purpose of this study therefore is to investigate the effect of eudaimonic well-being on business success through survival of newly found businesses.
The focus will lay on eudaimonic well-being as prior research shows a bigger connection between eudaimonic rather than hedonic well-being and entrepreneurial tasks (Nikolaev, Boudreaux, et al., 2020; Pittino et al., 2017; Ryff, 2019; Shir et al., 2019). To further narrow down the field, necessity entrepreneurs are excluded and the focus will be laid on opportunity entrepreneurs, those seeking self-employment proactively for the intrinsic rewards it delivers and for the potential they might see. This is done by only including individuals into the research group which were employed before they started self-employment. Additionally, a comparison to regular employees will be made to better understand the entrepreneurial well-being in relation to the well-being of employed individuals. For entrepreneurial persistence, eudaimonic well-being will be measured from one-year prior the entry into self-employment and the sustaining in self-employment one one-year after the entry year into the entrepreneurial activity. Therefore, the HILDA longitudinal dataset with the possibility to follow individuals by unique person identifier codes will be used with the goal to build a binary logistic regression between eudaimonic well-being and entry into self-employment as well as entrepreneurial persistence. In best case, entrepreneurial entry and persistence can be anticipated based on the eudaimonic well-being of the founder.

In my theory, different aspects of eudaimonic well-being can be used to anticipate the probability of entrepreneurial persistence early on. This will add new insights to existing research and show the high importance of eudaimonia of entrepreneurs and helps to see differences in eudaimonic well-being between persistent entrepreneurs and those who quit their self-employment. Therefore, the research question is:

How does eudaimonic well-being effect entrepreneurial entry and persistence?

By answering this question, new insights into the entrepreneurial psychology can be added to the existing knowledge. Eudaimonic well-being could play a future potential for entrepreneurial research and training. This could lead to higher survival rates of newly found businesses and helps to build a new theory of business failure and exit based on psychological factors.

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2. Frame of Reference

2.1 The Reasons to follow Entrepreneurial Paths

2.1.1 Entrepreneurs’ Contribution to the Economy

A countries economy is driven by large and small companies and its working population (Grant, 2014; Matricano, 2020). Old existing companies are contributing but also especially new start-ups founded by entrepreneurs offer a huge potential for a flourishing economy (Matricano, 2020; van Stel & Suddle, 2008). Several studies have shown that especially entrepreneurial activity and new founded businesses lead to new competition in the existing economy (Davidsson, 2016; Koster et al., 2012). Special programs which support the step from unemployment towards employment mostly do not lead to long-term self-employed activity and often end in entrepreneurial failure (Caliendo et al., 2020; Davidsson, 2016). Although the new start-ups have direct impact on the competitors, longer survival of the new business would lead to competitive pressure which forces existing businesses to innovate, become more efficient and effective, but also provides new opportunities for potential new entrepreneurs (Davidsson, 2016; Holcombe, 2003; Plummer et al., 2007).

The following parts therefore will cover the individuals and its intrinsic reasons to enter self-employment and shine light on the importance of well-being for their success.

2.1.2 Reasons to Enter Entrepreneurship

Research suggests that there seems to be a specific personality type which seeks self-employment (Zisser et al., 2019). Individuals entrepreneurial orientation is driven through combinations of intrinsic motivation, extrinsic motivation, and personality traits (Pittino et al., 2017). Although self-employed people are not just from this group, understanding the specific characteristics of their personality helps to understand the psychology and motivations behind it better. Generally, all entrepreneurs can be divided into the two groups of opportunity and necessity entrepreneurs (Ryff, 2019; Stephan, 2018).

Necessity entrepreneurs enter self-employment due to the lack of other or better options and is mostly an act to lift themselves into the working community and create an income source (Caliendo et al., 2020). Specific programs by many countries try to bring unemployed individuals back into the workforce and self-employment is a valid option if it is hard for them to find an employed position. These workforce programs therefore usually reach the group of necessity entrepreneurs rather than opportunity entrepreneurs (Davidsson, 2016). The biggest downside to this way of bringing them back to work is the high likelihood of failure which leads them ending up in unemployment again (Davidsson, 2016). Research has shown a high drop-out rate for the group of necessity entrepreneurs (Caliendo et al., 2020).

Opportunity entrepreneurs on the other side seek self-employment not for the sake of employment itself, but rather for different rewards it offers them (Wiklund et al., 2019). They often directly come from a paid employment or education and change to seek an opportunity they find worth taking some risk for (Guerra & Patuelli, 2016). Research also shows that prior employment to the entrepreneurial activity highly decreases the likelihood of failure for the newly found business (Caliendo et al., 2020). Opportunity entrepreneurs, seeking self-employed profession for its benefits rather than for the reason of no better available employment option (Wiklund et al., 2019) seem to have higher mental well-being (Stephan,

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2018). The entrepreneurial work offers them the potential for self-determination and fulfillment of their personal psychological needs (Shir et al., 2019; Wiklund et al., 2019). This mainly happens through the activities of self-development and purposeful life engagement (Waterman, 1993). Also, external motivators seem to loose importance in the founding process and internal motivators such as self-determination are becoming more important (Pittino et al., 2017). Although negative aspects of entrepreneurial work in comparison to employed work exist, entrepreneurs choose their profession for these intrinsic rewards (Nikolaev, Boudreaux, et al., 2020; Zisser et al., 2019).

The remarkable differences in persisting or failing in self-employment between the groups of opportunity and necessity entrepreneurs even questions the purpose of specific employment programs (Caliendo et al., 2020). Changing training and the mindset of prior unemployed necessity entrepreneurs seems to make huge sense and could offer the potential for a far higher success rate and long-term self-employment. Therefore, it is important to specifically understand the psychology of the opportunity entrepreneur as it seems to be the road to success. The following part and also the research part itself therefore primarily focuses on this group of self-chosen opportunity entrepreneurs. Findings will also help to understand important factors for success which in return could also bring value to necessity entrepreneurs by an increased awareness of psychological contributors to success.

2.1.3 Facets of Entrepreneurial Success

Firm performance and success can be seen very differently. While business growth and handling potential financial problems are important for companies’ survival, also innovation, customer satisfaction, or many other factors play a crucial role for the perceived success (Stephan, 2018). Thus said, naming entrepreneurial success as a single item does not necessarily make sense with just a single measure (Pittino et al., 2017). Davidsson (2016) suggests to define entrepreneurship by its impact on the economy. Even failed business can disrupt an industry while persistent new ventures build continuous pressure on competitors to become more efficient and effective and gives chance for new entrepreneurial activity (Davidsson, 2016; Holcombe, 2003; Plummer et al., 2007).

For some individuals, also a planned exit can be in their favour to gain financial reward, more free-time, or the ability to tackle new projects in their life (McGrath, 1999; Wennberg & DeTienne, 2014). For some others, an unplanned exit because of lacking success of the business might be the reason to stop self-employment (Wennberg & DeTienne, 2014).

The opposite can be defined as entrepreneurial persistence. No matter if the business is creating value or not, as long as the entrepreneurial activity is actively acted out, there is at least the chance of economic value through its own output and also through the higher competition for other companies (Davidsson, 2016). Due to the nature of self-employment, the willingness and capability to persist an entrepreneurial activity is highly individual. This thesis will therefore explore the matter to create a better understanding of how well-being can change the likelihood of entering self-employment and helps entrepreneurs to persist in their self-employed activities.

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2.1.4 Entrepreneurial Exit and Failure

The discontinuation of self-employment is often seen as failure. Failure although is far more complex (Bolinger & Brown, 2015) and can also be intentionally. The exit decision is mostly a choice based on the subjective valuation of several dimensions (McGrath, 1999; Wennberg & DeTienne, 2014). It can be based on strategic decisions of the company, firm performance, resources, capabilities, but also the personality and characteristic of the entrepreneur play an important role (Wennberg & DeTienne, 2014). Entrepreneurs have to encounter economic forces as well as psychological sources into their decision to persist or exit self-employment (McGrath, 1999). The decision for an exit of the business often also includes the minimization of further potential losses if the business is not profitable (Bolinger & Brown, 2015; Wennberg & DeTienne, 2014). Further, health problems often lead to regret of the decision to enter self-employment and further increase the likelihood of exit (Hessels et al., 2018; Hsu et al., 2019). The exit can also be satisfying for some individuals, especially when those value the learning experience (Wennberg & DeTienne, 2014). Therefore, exit does necessarily have to be seen as failure as it could be in favour for specific individuals.

An unprofitable business can also be satisfying to individuals, if acting in self-employment gives them intrinsic rewards (Hsu et al., 2019). This can reflect the positive effects of self-realization on hedonic enjoyment. Also, when the potential costs of failure are small, individuals show a higher willingness to overcome those failures (McGrath, 1999). If uncertainties about business actions can be resolved, entrepreneurs usually have more options to persist in self-employment (McGrath, 1999). Optimism and resilience also positively influences the likelihood of achieving entrepreneurial success (Ayala & Manzano, 2014). Especially in small companies, resilience has a clear connection to possible business growth (Ayala & Manzano, 2014).

Still, entrepreneurial exit or persistence cannot fully show the whole picture of business success. Some might keep unprofitable business alive as an act of lifestyle while for well performing firms, selling the firm to another company can be the ultimate goal to create financial rewards (Wennberg & DeTienne, 2014). This shows the complexity and the range in exit decisions. An exit should therefore not necessarily be seen as failure without having further insights into the reason of the entrepreneurial exit.

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2.2 Deep-Dive into the Entrepreneurial Psychology

2.2.1 Importance of Health

Personal health, mental and physical, is crucial for all of us. The lack of it can play a hindering role for following a regular lifestyle and sometimes to proper participate in the labor force (Schofield et al., 2011; Schuring et al., 2013). Whereas in big corporation the effects of individual employees seem minor to the performance of the whole company, in self-employment, health conditions can directly influence the business and lastly result in entrepreneurial exit (Hessels et al., 2018). It seems therefore even more important for entrepreneurs to stay healthy as severe health issues would have a direct effect on the possibility of persisting in self-employment (Hessels et al., 2018). This thesis focuses on mental health and more specifically on well-being of entrepreneurs. Later on, a connection from their well-being to the likelihood of persisting in self-employment will be made and tested empirically. This helps to present the importance of mental health for the newly found business.

2.2.2 Overview of Well-Being

Well-Being as important factor for mental health is an important factor for humans’ satisfaction with their life (Diener, 2000; Erdogan et al., 2012; Ryan & Deci, 2001). The lack of positive well-being can lead to depression (Edmondson & MacLeod, 2015) which usually leads individuals to difficulties handling their work and personal life (Hessels et al., 2018). Most research in connection to entrepreneurship so far focused on life satisfaction as part of hedonic well-being and other hedonic factors (Ryff, 2019). Well-being although can be divided in two major categories – as mentioned the hedonic well-being but also eudaimonic well-being (Ryan & Deci, 2001).

Hedonic well-being, also labelled as hedonism, subjective well-being, or measured as happiness or life satisfaction which are parts of hedonic well-being describes a positive mental state (Diener, 2000; Ryan & Deci, 2001). Through the three main parts of life satisfaction, presence of positive mood, and absence of negative mood, it leads to pain avoidance and pleasure attainment (Ryan & Deci, 2001), so basically how people rate their own life (Diener, 2000). Hedonic well-being is positively influenced through easiness and stability (Vittersø & Søholt, 2011) but also action orientation and hope (Przepiorka, 2017). It covers emotions such as happiness, peacefulness, depression and sadness (Nikolaev, Boudreaux, et al., 2020). Positive hedonic well-being in employment usually comes from satisfaction with its learning, training and development in the job (Erdogan et al., 2012). Entrepreneurs which seek self-employment benefit in their hedonic well-being through self-direction (Ryff, 2019). Still, very happy feelings rarely last long and most people fall back to their average happiness level which on average is mild to moderate positive (Diener, 2000). According to the regulation to a normal happiness level, a long-term difference just from starting self-employment cannot be expected. But engaging in certain activities can be hedonically pleasant (Vittersø & Søholt, 2011), thus individuals which seek self-employed work intrinsically will benefit in their hedonic well-being through continuous challenges.

Eudaimonic well-being, also labelled as eudaimonia, psychological well-being, or its outcomes flourishing, vitality, vigor, or psychological functioning, focus on meaning and self-realization (Hahn et al., 2012; Ryan & Deci, 2001; Ryff, 2013, 2019). This distinguishes it clearly from hedonic well-being, as both types of

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well-being are not necessarily affected by the same situations (Ryan & Deci, 2001). It basically covers the six factors self-acceptance, autonomy, environmental mastery, positive relationship, purpose in life, and personal growth (Ryff, 1989) and often is administered with answering question to oneself in 42 statements on a 6 point Likert-scale, seven for each factor. (Ryff, 1989b). Ryan and Deci (2001) brought it later down to the three factors autonomy, relatedness and competence. High eudaimonia leads to a fully functioning person (Hahn et al., 2012; Ryan & Deci, 2001), fully usage and development of one’s potential (Huta & Ryan, 2010; Ryff, 2019; Ryff & Singer, 2008), meaning and purposeful life engagement (Huta & Ryan, 2010; Ryff, 2019) as well as increased capability to manage complex environments (Ryff, 2019). An important outcome of the eudaimonic process is meaningfulness (Stephan et al., 2020). Higher meaning and purpose in life increases subjective vitality and therefore eudaimonic well-being and personal functioning (Ryff, 2014; Stephan et al., 2020). Various researchers created similar scales to measure eudaimonia by using other variables that relate to the general understanding of eudaimonic well-being (Mujcic & Oswald, 2018; Nikolaev, 2018; Vladisavljević & Mentus, 2019).

Hedonic well-being alone would not be enough to cover personal growth (Vittersø & Søholt, 2011). While Huppert and So (2013) see a low correlation between hedonic and eudaimonic aspects, Waterman (1993) found a strong correlation. This could be explained by the mediating effect of eudaimonic well-being on hedonic well-being (Nikolaev, Boudreaux, et al., 2020) but not reverse. Eudaimonic activities are not specifically pleasant while doing, they show to bring more positive effects in the long-run compared to the relative direct positive feelings of hedonic well-being (Huta & Ryan, 2010).

2.2.3 Well-Being of Entrepreneurs

This thesis builds on the self-determination theory which suggests that people are oriented towards their own well-being (Shir et al., 2019) which is mainly achieved through self-endorsed goals (Ryan & Deci, 2001). Hedonic well-being therefore fails to fully cover the self-determination theory (Ryan & Huta, 2009; Waterman, 1993), whereas eudaimonic parameters and handling of adequate challenges can lead to self-realization (Waterman, 1993). This is particularly present at individuals with a high need for achievement (Pittino et al., 2017). The self-realization in return leads to optimal psychological functioning (Waterman, 1993) which is especially beneficial for the entrepreneurial journey (Nikolaev, Boudreaux, et al., 2020; Shir et al., 2019) and derives from eudaimonic well-being. Additionally, high eudaimonic well-being also shows positive influence on hedonic well-being (Nikolaev, Boudreaux, et al., 2020; Shir et al., 2019).

Eudaimonia can be seen as a predictor of interest and not of pleasure (Vittersø & Søholt, 2011) which derives from hedonism. Finding the right challenges would then lead to hedonic enjoyment (Waterman, 1993) through the person-job fit for opportunity entrepreneurs (Nikolaev, Boudreaux, et al., 2020). Thus it can be said for opportunity entrepreneurs, those who choose an entrepreneurial occupation voluntarily and for the intrinsic rewards it brings them, that the entrepreneurial work allows them to thrive by using their eudaimonic potential because it fits their intrinsic needs (Brieger et al., 2019; Shir et al., 2019). In return, interaction in eudaimonic expression also positively influences hedonic well-being (Waterman, 1993). It therefore depends on the person that seeks entrepreneurship actively to benefit in their well-being from the job characteristics and self-realization (Brieger et al., 2019; Nikolaev, Boudreaux, et al., 2020) to find personal fulfillment (Shir et al., 2019). This can also explain the higher hedonic well-being for

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entrepreneurs who persist (Bockorny & Youssef-Morgan, 2019) and also would explain the higher persistence for opportunity entrepreneurs in comparison to necessity entrepreneurs (Davidsson, 2016) which would get less hedonic enjoyment from their self-employment (Waterman, 1993). For independence-oriented entrepreneurs, self-employment seems to have a bigger impact on their hedonic well-being, while growth-oriented entrepreneurs increase their eudaimonic well-being through the personal growth capabilities and environmental mastery the entrepreneurial path offers (Ryff, 2019). The autonomy through self-employment also positively influences their hedonic well-being through the fulfillment of basic psychological needs (Ryff, 2019; Shir et al., 2019). This is important as other factors such as work-related social support may lack for solo entrepreneurs (Stephan, 2018).

Vittersø and Søholt (2011) suggest that engagement coming from eudaimonic well-being is from importance while starting an activity, like starting a business, while hedonic well-being is important later on to stick to the activity. This makes it especially interesting and valuable and thus to the main aspect of this study of how eudaimonia at the begin of self-employment effects the persistence in the own business. Although the benefits of eudaimonic well-being in the entrepreneurial journey may change over time (Nikolaev, Boudreaux, et al., 2020), it becomes especially important in the process of founding the company, ruling out other external motivators (Pittino et al., 2017). Recent research even suggest a clear connection from eudaimonic outcome benefits to initiative behavior of entrepreneurs and business success (Bockorny & Youssef-Morgan, 2019; Hahn et al., 2012).

This clearly shows that the personality and psychology of individuals has lots of influencing factors which should be considered when researching entrepreneurship and the entrepreneurial personality. With neglecting the individuals’ psychology in entrepreneurship research, a big part of understanding entrepreneurial entry and persistence would be missing.

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3. Hypothesis Building

3.1 Eudaimonic Well-Being as Predictor for Entrepreneurial Entry

Personal health can play a crucial decision factor in entering or specifically avoiding self-employment. Positive mental health through well-being greatly increases individuals’ satisfaction with their life (Diener, 2000; Erdogan et al., 2012; Ryan & Deci, 2001). Negative well-being up to depression leads to difficulties with work-related activities (Hessels et al., 2018). Research has already shown a self-selection of proactive entrepreneurs, where negative mental and physical health lead to an avoidance of self-employed activities and therefore entrepreneurs usually have a positive state of personal health (Rietveld et al., 2015). This already can be seen as a first selection and exclusion of individuals with low health and low eudaimonic well-being in the group of entrepreneurs.

Also, satisfaction in the current employment and no further intrinsic motivation might be a reason for individuals to remain in their existing job. Hedonic pleasure derives through easiness and stability (Vittersø & Søholt, 2011). In employment it also usually comes from satisfaction with learning, training and personal development (Erdogan et al., 2012). Further, hedonic well-being is driven through life satisfaction, the presence of positive mood and absence of negative mood, which results in pain avoidance and pleasure attainment (Ryan & Deci, 2001). As the entrance towards self-employment usually is paired with high risks and challenges (Huta & Ryan, 2010; Ryff, 2019; Ryff & Singer, 2008), individuals which are satisfied with their current employment might be less likely to change towards self-employment based on their hedonic enjoyment. Also, through the regulation towards a normal hedonic happiness level, long-term positive hedonic effects directly deriving from pleasure attainment cannot be expected (Diener, 2000). Individuals without intrinsic motivation and personal goals connected with self-employment therefore might be unlikely to start an entrepreneurial founding process. This would suggest differences in the eudaimonic profile as people not willing to take the risks towards self-employment seem to value different aspects compared to entrepreneurially oriented individuals.

Contrary, proactive self-chosen entrepreneurs show a higher willingness to take on the entrepreneurial risks (Caliendo et al., 2020). Engaging in certain activities which are from personal importance can create hedonic pleasantness (Vittersø & Søholt, 2011). Entrepreneurs high need for achievement (Pittino et al., 2017) and interest deriving from eudaimonia (Vittersø & Søholt, 2011) can be seen as factors why the entrepreneurial work also fulfills them hedonically. Therefore, individuals which lack or just show minor intrinsic motivation will less likely finish the founding process and therefore more often finally not enter self-employment. On the other side, proactive entrepreneurs which decide to change from their paid employment towards self-employment are seeking intrinsic rewards it offers them (Nikolaev, Boudreaux, et al., 2020; Wiklund et al., 2019; Zisser et al., 2019) and therefore find worth taking on the risks this path brings with it (Guerra & Patuelli, 2016). These individuals seem to have higher mental well-being (Stephan, 2018) and through the self-direction, they also benefit in their hedonic well-being from the step towards self-employment (Ryff, 2019). During the founding process, external motivators lose importance compared to intrinsic motivators such as self-determination (Pittino et al., 2017). Whereas independence-oriented entrepreneurs finally benefit hedonically through self-employment, growth-oriented entrepreneurs can

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benefit in their eudaimonic well-being through the possibilities of personal growth and environmental mastery (Ryff, 2019). Autonomy, a part of eudaimonic well-being, can nevertheless positively benefit the eudaimonic well-being through the fulfillment of basic psychological needs in entering self-employment (Ryff, 2019; Shir et al., 2019). The entrepreneurial work itself offers the proactive opportunity entrepreneur the potential for self-determination and fulfillment of individual psychological needs (Shir et al., 2019; Wiklund et al., 2019) through activities of self-development and purposeful life engagement (Waterman, 1993). This shows a high level of self-determination for the own choice towards self-employment and a connection between business starters and high intrinsic motivation towards self-directed behavior. Eudaimonic parameters and acting in adequate challenges can be seen as the entrepreneurs way of acting in self-realization (Waterman, 1993). Opportunity entrepreneurs therefore can benefit from an improved person-job fit in self-employment (Nikolaev, Boudreaux, et al., 2020). Seeking this higher person-job fit proactively can be seen as intrinsic motivation. Individuals thriving towards entrepreneurial actions also often come with higher ambitions (Zisser et al., 2019). This leads to an increased proactive behavior and also helps to overcome upcoming challenges in the founding process (Hahn et al., 2012). The entrepreneurial work offers them the possibility to thrive by using their eudaimonic potential (Brieger et al., 2019; Shir et al., 2019). High eudaimonic well-being and its outcomes therefore seem to positively influence the chance of seeing self-employment as a valid option for individuals to reach personal fulfillment.

High eudaimonic well-being leads to a fully personal functioning (Hahn et al., 2012; Ryan & Deci, 2001) and increases the own personal potential and capability to manage complex environments (Huta & Ryan, 2010; Ryff, 2019; Ryff & Singer, 2008) as the complex founding path can be. The positive influence of eudaimonia also comes from an increased sense of meaning and purpose in life which further results in vitality, also important for personal functioning (Huta & Ryan, 2010; Ryff, 2014, 2019; Stephan et al., 2020). Although the positive benefits of eudaimonic well-being may change over time in the entrepreneurial process (Nikolaev, Boudreaux, et al., 2020), it is especially important for the starting of an activity (Vittersø & Søholt, 2011), like starting an own business. Research suggests a connection between eudaimonic outcomes, like flourishing and personal functioning, and a positive influence to the initiative behavior of entrepreneurs (Bockorny & Youssef-Morgan, 2019; Hahn et al., 2012). This would suggest that individuals with high eudaimonic well-being are more likely to finish the founding process and finally enter a self-employed occupation.

The influence of eudaimonic well-being, its positive outcomes, and intrinsic motivation of self-determination seem to have a positive impact on the likelihood to start an entrepreneurial activity and therefore enter self-employment. Satisfied individuals without ambitions towards self-employment would, according to my theory, not proactively look for self-employment activities. The intrinsic motivation and eudaimonic well-being brings people with entrepreneurial ambitions towards self-employment as they also would benefit eudaimonically as well as hedonically from this occupation (Ryff, 2019; Shir et al., 2019). The personal functioning and increased capability deriving from high eudaimonic well-being helps then to

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overcome the first struggles of the founding path (Pittino et al., 2017), taking out individuals with low personal functioning and ability to tackle challenges and difficulties. This leads me to my first hypothesis: H1: Higher eudaimonic well-being leads to higher likelihood in changing from paid employment to self-employment.

3.2 The Importance of Eudaimonia for Entrepreneurial Persistence

Sustaining personal health is from high importance for entrepreneurs’ persistence (Hessels et al., 2018) as illness would lead to a direct negative effect of the main person running a new business. Further, depression through a lack of positive well-being (Edmondson & MacLeod, 2015) would lead individuals to have higher struggles with their work (Hessels et al., 2018). Entrepreneurs usually show better health compared to the general population, coming from self-selection where unhealthy individuals rarely risk the step towards self-employment (Rietveld et al., 2015). This suggests that proactive entrepreneurs are less likely to suffer from diverse health issues which could negatively influence their persistence in self-employment.

Research is also still barely done in the field of entrepreneurial eudaimonic well-being, although it seems that it has higher influence on firm performance than hedonic well-being (Stephan, 2018). High psychological functioning from high eudaimonic well-being helps to cope with the negative aspects such as stress, uncertainties, and long working-hours (Guerra & Patuelli, 2016; Nikolaev, Boudreaux, et al., 2020; Ryff, 2019). Eudaimonic well-being acts as buffer to overcome these challenges, sustaining hedonic well-being and maintaining the profession for longer times which is important for entrepreneurial success (Bockorny & Youssef-Morgan, 2019; Ryff, 2019). Eudaimonic well-being helps to build coping strategies and some individuals bring the capacity to sustain their high eudaimonia despite the upcoming challenges (Ryff, 2014).

Eudaimonic well-being gives individuals higher personal abilities and willingness for self-development (Huta & Ryan, 2010) which will be especially important to learn how to successfully run a business. Additionally, intrinsic outcomes are important parts of eudaimonic well-being and lead to the personal capacity of effectively managing complex environments (Ryff, 2019). Proactively facing the entrepreneurial challenges can be seen as an act of self-realization for entrepreneurs (Brieger et al., 2019; Nikolaev, Boudreaux, et al., 2020). This could lead to higher persistence capabilities in the entrepreneurial field of individuals with high eudaimonic well-being. It would also suggest that among long-term successful entrepreneurial businesses, the founders have generally higher eudaimonic well-being over time as they find personal fulfillment through their self-realization in the entrepreneurial tasks (Shir et al., 2019). Also a planned exit would for some be a valid option (McGrath, 1999; Wennberg & DeTienne, 2014), which would lead to stopping the business activity. As their intrinsic motivations tend towards self-realization (Shir et al., 2019), it can nevertheless be expected that they rather found a new business and stay entrepreneurial active than going back to self-employment.

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Success leads to self-fulfillment, an important intrinsic goal (Pittino et al., 2017) especially if these goals are self-endorsed (Ryan & Deci, 2001; Waterman, 1993). The act of entrepreneurial activity therefore leads to self-realization (Waterman, 1993), which in return leads to optimal psychological functioning (Waterman, 1993), an outcome of eudaimonic well-being (Hahn et al., 2012; Ryan & Deci, 2001). It makes individuals able to fully use and further develop their own potential to handle challenging tasks (Huta & Ryan, 2010; Ryff, 2019; Ryff & Singer, 2008) and brings therefore huge benefits for the entrepreneurial journey (Nikolaev, Boudreaux, et al., 2020; Shir et al., 2019). This would suggest that individuals with higher eudaimonic well-being bring a higher capability and intrinsic motivation to tackle entrepreneurial struggles and sustain longer in self-employment. Through individuals’ intrinsic needs derives a higher goal commitment for this group of people (Przepiorka, 2017). Because these goals are self-selected by the nature of self-employment, it can be expected that success is one of the founders’ main interest. This interest plays a vital role in preservation and engagement in the upcoming challenges, especially if the challenges fit the personal capabilities (Vittersø & Søholt, 2011; Waterman, 1993).

Additionally, the high eudaimonic well-being gives resilience and helps to persist even in these challenging situations (Hahn et al., 2012; Ryff, 2014). The persistence of entrepreneurs therefore plays a crucial role for creating a successful business (Caliendo et al., 2020). Social interaction through work-related support may be missing for solo entrepreneurs (Stephan, 2018), which would suggest a decrease in the social part of eudaimonic well-being. Still, the self-realization leads to a high need for achievement (Pittino et al., 2017), which might help solo entrepreneurs in overcoming the social difficulties. Growth-oriented entrepreneurs, those who want to grow their business further than to just be able to sustain in self-employment, gain a positive impact in the fields of personal growth and environmental mastery (Ryff, 2019; Ryff & Singer, 2008), two main parts of eudaimonic well-being. Personal growth covers activities such as self-development and realization of one’s personal potential (Ryff & Singer, 2008) which especially entrepreneurial work offers (Erdogan et al., 2012).

Entrepreneurs can take the positive psychological outcomes deriving from eudaimonic well-being to better perform in their business (Hahn et al., 2012), which shows the importance and benefits of the drive deriving from positive eudaimonic well-being. The results of eudaimonic well-being as increased willingness of goal achievement can therefore lead to increased individuals’ performance (Huta & Ryan, 2010). Combined with bigger goal commitment, this positively influences the likelihood of success in the entrepreneurial activity (Przepiorka, 2017). It therefore can be suggested that high eudaimonic well-being positively influences the likelihood of the ability to tackle upcoming challenges in self-employment and therefore it decreases the chances of an entrepreneurial exit due to lack of skills.

The autonomy coming with the self-employed nature of entrepreneurship also shows a positive impact on the individuals hedonic well-being (Ryff, 2019; Shir et al., 2019). It gives the entrepreneurs an increased sense of meaningfulness (Erdogan et al., 2012; Stephan et al., 2020), personal mastery, competence, and self-efficacy (Shir et al., 2019). Meaning deriving from high eudaimonia comes along with purposeful life engagement (Huta & Ryan, 2010; Ryff, 2019) and increases individuals subjective vitality and personal functioning (Ryff, 2014; Stephan et al., 2020), important factors for handing challenging tasks. Finding

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challenges, as the entrepreneurial work offers it, results in hedonic enjoyment (Waterman, 1993), especially for opportunity entrepreneurs due to their person-job fit (Nikolaev, Boudreaux, et al., 2020).

Easiness and stability acts positively on the hedonic well-being (Vittersø & Søholt, 2011). Increased personal ability deriving from eudaimonic well-being (Huta & Ryan, 2010; Ryff, 2019; Ryff & Singer, 2008) can therefore be seen as anticipator for easier handling of the tasks and therefore predict higher hedonic enjoyment in the entrepreneurial activity of individuals with high eudaimonic well-being. Also hope and action orientation seem to have a positive effect on hedonic well-being (Przepiorka, 2017). This would suggest that a high sense of meaning, which derives from high eudaimonia (Huta & Ryan, 2010; Ryff, 2019), would also positively influence hedonic well-being through the path of hope and meaning for the future. Also the chance to continuously learn and develop oneself in the job leads to hedonic enjoyment (Erdogan et al., 2012), especially when it comes through self-direction (Ryff, 2019).

Eudaimonia does not result in immediate pleasure for the individual while acting in eudaimonic directed activities, but show a long-term positive effect, compared to the short-term effect of hedonic enjoyment on the general well-being (Huta & Ryan, 2010). While eudaimonic well-being might be important when starting the entrepreneurial activity, hedonic well-being is important to persist in the activity (Vittersø & Søholt, 2011). Nevertheless, feelings of intense happiness usually do not last long and people usually fall back towards an average happiness level sometime after hedonic enjoyable events (Diener, 2000). Still, eudaimonic well-being has a long-term mediating effect on hedonic well-being (Nikolaev, Boudreaux, et al., 2020). This would suggest a high importance of eudaimonic well-being, as it could deliver the potential for long-term hedonic well-being within the entrepreneurial activity. Seeking direct hedonic enjoyment otherwise would be not sustainable for longer times due to the nature of only short-term effects on overall well-being (Diener, 2000). High eudaimonic well-being could therefore be from importance for long-term enjoyment of the entrepreneurial activity while a low eudaimonic well-being would suggest a lack of pleasure and therefore an increased risk of an entrepreneurial exit.

The self-selecting nature of people who enter self-employment proactively, their increased capability to tackle difficulties in the entrepreneurial work, and the long-term hedonic enjoyment coming from eudaimonic well-being leads to the expectation of high eudaimonic well-being in persistent entrepreneurs. High eudaimonic well-being gives individuals the confidence to successfully engage and survive in self-employed activities already upfront. In the entrepreneurial activity itself, these individuals can make use of, and further increase their eudaimonic well-being. Lastly, in the long run, individuals can gain constant higher hedonic well-being through their eudaimonic engagement with their work, which shows the importance of eudaimonic well-being at any stage of the entrepreneurial journey. Therefore, a clear correlation between eudaimonic well-being and long-term persistence in self-employed activities can be suggested. This leads me to the second hypothesis:

H2: Higher eudaimonic well-being positively influences the likelihood of entrepreneurial persistence beyond the first year in self-employment.

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3.3 Conceptual Framework of Eudaimonic Influence on Entrepreneurs

The hypotheses can be written down in a simple model (see Figure 1). In general, high eudaimonic well-being, according to the first hypothesis, increases the likelihood of individuals to act in entrepreneurial ways and thus enter self-employment. Eudaimonic well-being therefore influences entrepreneurial entry for individuals coming from paid employment. Based on the second hypothesis, high eudaimonic well-being provides the capability to persist in self-employment. Eudaimonic well-well-being has therefore influence on the entrepreneurial persistence in self-employed activities.

Figure 1: Derived model of eudaimonic influences in entrepreneurship

Eudaimonic Well-Being

Entrepreneurial Persistence Entrepreneurial Entry H1

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4. Research Design

4.1 Research Philosophy

This thesis focuses on intrinsic factors of entrepreneurs and their effects on entrepreneurial activities, as the personal intrinsic factors that are represented in well-being can be directly assessed by related questions. It is expected that a positive eudaimonic well-being profile leads to higher entrepreneurial intentions and survival than a negative one. To analyze this, hypotheses are built based on existing literature and should be able to answer directly with a comparison of eudaimonic values and the relationship to entrepreneurial entry and persistence. This leads to an ontology of realism in my research philosophy, which suggests that there is one single truth existing (Easterby-Smith, 2018). Because this truth can be revealed from objective measures without direct interaction to the participants, the epistemology of this thesis is positivism (Easterby-Smith, 2018). The study is made without close collaboration with practitioners and experts to determine the aims of the research and potential practical implications. It therefore can be seen as a detached, in comparison to the engaged research style and specifies the epistemology towards detached positivism.

The general knowledge of mental well-being as well as hedonism and eudaimonia are well-known in the academic world. Existing literature about these psychological factors as well as combinations towards entrepreneurship research are therefore taken to build a theoretical construct and form hypotheses to test the created model. In detail, this thesis states two hypotheses which are either confirmed or rejected through statistical analysis. The research approach therefore is deductive and the results help to clarify if the built theory is true. It is expected that positive eudaimonic well-being and mental health as the cause result in higher likelihood of entrepreneurial entry and persistence, meaning that the self-employed person’s business is more likely to still exist in several years. This undermined cause-effect relationship between eudaimonic well-being and entrepreneurial survival clearly points to a causal research philosophy (Easterby-Smith, 2018) where results help to clarify the understanding of the topic of well-being and entrepreneurship.

4.2 Research Methodology

The purpose of this study is to examine relationship between well-being and entrepreneurial entry as well as entrepreneurial persistence. Fitting to the detached positivism approach I follow the often used scientific method. This suggests for the detached positivism research field that a large sample size will allow statistical analysis to create generalizable results (Easterby-Smith, 2018). The analysis of the pre-defined hypotheses is therefore done in a quantitative manner, more detailed with longitudinal data which allows to measure the effects over time and should therefore allow us to gain the most accurate results for this thesis.

As the research question and the pre-defined hypotheses make it necessary to measure different variables at different time-points, this research follows the quasi-experimental design and the research group will therefore be divided based on key values of well-being before entering self-employment. This allows us to clearly accept or reject the stated hypotheses, which in turn helps to answer the research question.

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As there is no technical measure method to assess eudaimonic well-being directly, it will be assessed according to existing literature with relevant questions that are suitable to reflect eudaimonic parameters. Through the combination of several questions, a score for eudaimonic well-being can be generated and compared between individuals and groups. To reach the number necessary for quantitative research, a questionnaire-based survey fits best to reach enough participants and assess the eudaimonic parameters. Due to the limited time frame of this thesis, a self-assessment of longitudinal data would not be reasonable but still be best to follow the research philosophy. Existing available datasets were therefore screened and compared for potential usage for this research. The usage of a secondary dataset in the form of a database gives the benefit of having longitudinal data as well as a big group of participants.

The HILDA (Household, Income and Labour Dynamics in Australia) survey (Melbourne Institute of Applied Economic and Social Research, 2021) from their Department of Social Services (D. o. S. S.) was chosen as the most suitable available database for the stated hypotheses. It covers the important aspects of longitudinal data since 2001 with person identifier code, a large enough sample group of over 17,000 original participants and with a top-up in 2011 to over 23,000 participants. The survey includes various health related as well as job related questions as well as a broad set of psychological indicators. There sampling method is a nationally representative household panel and therefore best represents the whole Australian population. The annually repeated questionnaire is directly answered by the participants and health-related questions are given to answer in private and send back to the interviewer. With financial rewards for each participant, the study usually achieves response rates above 90%. After registering and signing a confidentiality agreement, the data can be accessed over the ADA (Australian Data Archive) Dataverse platform. The HILDA survey has been used for numerous studies in the fields of the labour market, wealth and economic well-being, health and subjective well-being, family life, religion, and further. The findings often are from relevance for Australian politicians as the insights are valuable for future governmental and economic actions.

4.3 Research Method

4.3.1 Data and Sampling

The used data for this thesis came from the latest release of the HILDA survey release 19 (Melbourne Institute of Applied Economic and Social Research, 2021), which includes all the previous years as well and covers the waves 1 to 19 and therefore the survey years 2001 to 2019. The year 2014 is taken as the starting year. By starting with 2014, it includes the participants from the increased sample size, measures for persistence are possible, and it is far enough away from the 2008 financial crisis which could possibly influence the outcome so that the resulting model is not generable.

To answer the first hypothesis, eudaimonic well-being is measured from the year prior (2013) to gain insights about differences for employees and self-employed individuals. The measurement of eudaimonic well-being is taken the year prior to the measurement of entrepreneurial entry, as measurements in the same year could already show influence of self-employment in the eudaimonic scores. The used conceptual model can be seen in Figure 2.

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Figure 2: Conceptual Model for H1

In line with the theoretical model and to answer the second hypothesis, the effect of eudaimonic well-being on the entrepreneurial persistence will be analysed. Self-employed individuals enter the sample if they entered self-employment in the measurement year 1 (2014) and had to be in paid employment the year prior. This excludes the high influence of prior non-employment, which would have a strong negative effect on entrepreneurial persistence (Caliendo et al., 2020). Eudaimonic well-being, the independent variable, is then similarly to the first hypothesis assessed from the year before entering self-employment and it is observed whether they remain or exit their self-employed activity the following years. The used time-frame can be seen in Figure 3.

Figure 3: Conceptual Model for H2

To test the proposed hypotheses, I focused on opportunity entrepreneurs, which can be considered as the individuals who were employed the year prior to the starting year of measurement. After excluding respondents with missing information on necessary variables for the empirical part, the final sample consists of 5,424 individuals for testing the first hypothesis and 195 individuals suitable for the measurement group of the second hypothesis. The flow chart of the participants can be seen in Figure 4. The data is analyzed in the statistical software SPSS 27.

Eudaimonic Well-Being Year 0 (2013) (Independent Variable) Entrepreneurial Entry Year 1 (2014) (Dependent Variable) Eudaimonic Well-Being Year 0 (2013) (Independent Variable) Entrepreneurial Persistence Year 2 (2015) (Dependent Variable)

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Figure 4: Flow of participants into the study sample Source: HILDA survey, Release 19

(Melbourne Institute of Applied Economic and Social Research, 2021)

4.3.2 Independent Variables Eudaimonic Well-Being

The HILDA survey (Melbourne Institute of Applied Economic and Social Research, 2021) does not directly cover the original questions of Ryff (1989b) to assess eudaimonic well-being but still offers a broad range of suitable similar questions. While Vladisavljević and Mentus (2019) used just a single parameter to assess eudaimonia, Mujcic and Oswald (2018) assessed it by using the mental health score assessed through five questions from the SF-36, a commonly used questionnaire to assess the general health status of individuals. For this research and according to the available data assessed in the HILDA survey, I use the measurements similar to Nikolaev (2018).

The average of the responses to four different questions were used to assess eudaimonic well-being. The specific questions were: “In the last 4 weeks, about how often did you feel … (1) worthless, (2) hopeless,

(3) tired for no good reason, and (4) that everything in life was an effort.” The first two questions relate to

the concept of self-worth and meaning, while the last two questions relate to questions relate to the concept of positive engagement and flow (Nikolaev, 2018). These concepts and therefore the questions are part of eudaimonic well-being (Huta & Ryan, 2010; Ryff, 2019; Waterman, 1993). Respondents could answer

Entire HILDA Cohort 2014 (n = 32,131 persons)

Responding Individuals in Paid Employment 2013 (n = 10,942 persons)

Not Self-Employed in 2013 and respond in non-contradicting ways from 2013-2015 (n = 5,424 persons)

Responding to Relevant Questions for this Study (n = 9,534 persons)

Sample for H1 (n = 5,424 persons)

Entered Self-Employment in 2015

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time’. A higher score represents higher eudaimonic well-being. The mean score is taken without further

transformation for the analysis to avoid loss or minimization of information. 4.3.3 Dependent Variables

Entrepreneurial Entry

Individuals which are employed were more specifically questioned about their occupation. The measurement of self-employment is held similar to Nikolaev, Boudreaux, and Wood (2020) which use the HILDA survey for similar research purposes. If their employment status was employee of own business

(incorporated business) or employer/self-employed (non-incorporated business) they were considered as to

have entered self-employment, as prior self-employed individuals were taken out of the research group. If both questions were answered negatively or not asked due to not being applicable for the individual, but the respondent answered to be employed rather than unemployed or not in labour force, the individual person was considered to be in paid employment. People which stated to be not in the labour force anymore in year one (2014) are taken out of the research group as it could lead to falsely represent them in the group of people who did not enter self-employment. The variable is binary coded as 1 for entering and 0 for not entering self-employment.

Entrepreneurial Persistence

Entrepreneurial persistence was measured similar to entrepreneurial entrance. Answering at least one of the two statements employee of own business (incorporated business) or employer/self-employed

(non-incorporated business) positive, the person was considered to still be self-employed. The measurement

therefore is taken from the year two (2015), after they stated in year one (2014) already to be self-employed. Not self-employed individuals from year one were not part of the research group for the second hypothesis. Being still self-employed in year two is considered as persistence in self-employment whereas changing back to paid employment or unemployment is considered as entrepreneurial exit. Individuals which stated to be not in the labour force anymore in year two are taken out of the research group to not measure retirement as entrepreneurial exit. The variable is binary coded as 1 for sustaining in self-employment and 0 for entrepreneurial exit. Thus, entrepreneurial persistence, if not stated differently, always represents persistence of one year after entrepreneurial entrance.

4.3.4 Control Variables

In addition, to avoid variable bias, control variables which might influence the analysis and are usually used in the field of well-being and entrepreneurship research are taken into account. Additionally, previous unemployment would show a huge influence on entrepreneurial success (Caliendo et al., 2020). The influence of this factor is avoided by taking out prior unemployed individuals from the year before the measurement year. Also individuals which leave the labour force in the year after the start of measurement are excluded to not falsely measure retirement as entrepreneurial exit.

Figure

Figure 1: Derived model of eudaimonic influences in entrepreneurship Eudaimonic Well-Being
Figure 4: Flow of participants into the study sample  Source: HILDA survey, Release 19
Table 1: Summary Statistics of all used variables
Table 1  continued
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