Self-Employment and Job Satisfaction: Investigating the Role of Self-Efficacy, Depression, and Seniority

Are self-employed workers more satisfied with their jobs compared to wage and salary workers? Using The National Survey of Families and Households: Wave I, 1987-1988, and Wave II 1992-1994 several expectations are evaluated in this article. First, self-employed persons should enjoy higher job satisfaction than others. Second, a portion of the association between job satisfaction and self-employment should be explained by higher levels of self-efficacy and by lower levels of depression among the self-employed compared to others. Third, self-employment veterans are a select group and should be different systematically from self-employment newcomers with respect to reported job satisfaction. Findings offer support for the first and second arguments above but not the third. Post-hoc analysis suggests that among the newly self-employed, the association between job satisfaction and self-employment depends on both the quantity and quality of time invested in the business. Implications of these findings and directions for further research are discussed. Introduction Entrepreneurs play an important role in the free-enterprise economic system. Much of the impetus for change, innovation, and progress in the U.S. economy will come from entrepreneurs (for example, Reynolds 1997; Light and Rosenstein 1995; Drucker 1985; Schumpeter 1934). Moreover, small firms create important new employment opportunities (Reynolds and White 1997; Light and Rosenstein 1995). Conventional wisdom suggests that the United States is increasingly a nation of entrepreneurs and self-starters. Indeed, the portion of the labor force accounted for by nonfarm self-employment, having declined steadily between 1870 and 1973, generally has been expanding since 1976 (Bregger 1996; Steinmetz and Wright 1989; Mills 1951), and this expansion is projected to continue into the near future (Silvestri 1999). Moreover, according to Gartner and Shane (1995), entrepreneurship, measured as the number of commercial firms per capita, nearly has tripled between the late 1970s and the mid 1990s and is significantly higher than at any time in the past hundred years. According to some observers, the contemporary period is the "era of the entrepreneur," in which the entrepreneur is viewed increasingly as a folk hero (Goffee and Scase 1987). Certainly not all self-employed individuals properly may be considered entrepreneurs, but self-employment and entrepreneurship are linked in the popular imagination. Evidence of public fascination with self-employment readily is available. In the United States, "being one's own boss ... is a deeply held ideal," with historical roots dating to the nation's founding (Steinmetz and Wright 1989, p. 974). Further, evidence from a cross-national survey research suggests that over 60 percent of Americans report a preference for self-employment as opposed to employment (Blanchflower, Oswald, and Stutzer 2001; Blanchflower and Oswald 1998). (1) In addition, some four percent of working-age adults may be engaged actively in starting a business at any particular time (Reynolds 1994). Moreover, results from the Entrepreneurial Research Consortium Study reported in the trade press suggest that approximately 33 percent of U.S. households "have had an intimate involvement in a new or small business" (as cited by Richman 1997). Why are individuals so positively disposed toward the prospect of starting a business? For many, more than expected financial rewards, the desire to be self-employed may be rooted in the perception that small business ownership promises greater autonomy and challenge than employment by a large bureaucratic organization (Vivarelli 1991). Indeed the notion that self-employed individuals gain greater satisfaction from their jobs than do other individuals is commonplace in both the popular press (for example, Leonard 2001; Willax 1998; Chun 1997) and in entrepreneurship textbooks (for example, Scarborough and Zimmerer 2000; Kuratko and Hodgetts 1998; Hatten 1997; Zimmerer and Scarborough 1996). …