New and small firms in a modern working life: how do we make entrepreneurship healthy?

Abstract

The interplay between health, entrepreneurship and small and emerging businesses is a research field receiving growing interest. Studies point to both health-related risks and opportunities, which have implications for the social and economic lives of entrepreneurs and employees in small and new firms. Research has been carried out in different disciplines, which have contributed in different ways to the understanding of this inquiry. As the field is still premature and interdisciplinary in nature, there is a need to establish boundary-crossing avenues for developing new knowledge on the topic. This ambition has led to the development of this special issue. The issue includes results from original research on working life challenges encountered by small and new businesses, approached from a variety of disciplines. In this introduction, we begin by tracing an overarching framework, to which we add brief descriptions of the contributing papers. To conclude, we outline future research goals and discuss how issues around mental health, regulation and work environment inspections, race, disability and gender issues and the growing gig economy will affect the conditions for healthy entrepreneurial work.

Introduction

The theme for this special issue in Small Business Economics is “New and small firms in a modern working life: How do we make entrepreneurship healthy?”. This indicates that the papers in this issue will, in one way or the other, deal with matters related to work-related health, in the specific context of small and new firms. Given this, we can already note that the title encompasses a breadth of subtopics, not least since it allows for different interpretations.

First, there is the question of which types of firms and entrepreneurship are implied. The focus on new firms does not necessarily imply that they are small, and vice versa. New firms can start big, and small firms may have been around for decades. Second, entrepreneurship is not necessarily related to new or small firms—it is possible to launch into ventures without establishing a new firm—and the term intrapreneurship would cover such ventures within the frame of a large organization. We therefore include small private ventures but also small organizations of hybrid forms, as we can currently observe a large variation between different types of small enterprises with respect to ownership, distribution over sectors, relations to larger organizations and work characteristics (Davidsson and Klofsten 2003). This variation is important to take into consideration in this realm of health-related research (Josefy et al. 2015). Several health issues have been noted in relation to small and new businesses as well as to entrepreneurship (MacEachen et al. 2010), while the lion’s share of research on work-related health has been done on larger organizations (MacEachen et al. 2016).

Second, the field of work-related health is similarly broad. We can proceed from rather different definitions and foci, e.g. by having a pathogenic or a salutogenic approach. If we interpret the term as mainly connected to the prevention of illness, we can refer to the large research field on work and stress and the theoretical models of demand, control and support (Karasek and Theorell 1990) or effort and reward (Siegrist 1996). The field of occupational medicine focuses on other kinds of workplace hazards, such as chemical or ergonomic risks. Salutogenic approaches focus more on health promotion and what working conditions are beneficial for employee health, rather on causes of illness. Studies may focus on the individual, organizational, societal or policy levels in relation to how work-related health is managed or how these levels interact, e.g. in the prevention of work disability (Loisel 2009).

Therefore, the theme of this issue pertains to the overall question of how different issues of work-related health and illness interact with various forms of business structures in which entrepreneurial work takes place. This theme allows for the development of new knowledge about the role of new and small enterprises (including older small firms) as agents for the development of sustainable workplaces and knowledge of specific health risks related to such ventures. The theme also focuses on the interaction between small enterprises and public authorities (such as social insurance and the educational system).

Interest in the relationship between health and entrepreneurship is growing, and several health risks have been identified, such as high levels of stress, the risks of losing self-esteem and financial security and the feelings of fear and grief related to business failure (Jenkins et al. 2014; Monsen and Wayne Boss 2009). On the other hand, entrepreneurial work can also be health-promoting, where especially the sense of autonomy and self-determination seems to be related to life satisfaction and experiences of vitality (Shir et al. 2019). Studies of these relationships point out, however, that there is a large heterogeneity in business structures and sectors, which implies that results are likely to differ across contexts.

The conditions for managing small and entrepreneurial enterprises in today’s working life are influenced by several developments. Digitalization of the economy affects a majority of all small enterprises and allows enterprises to operate in an international arena while remaining small. An increasing number of small organizations are also virtual and global. This may improve their entrepreneurial and innovative capabilities (Audretsch 2002) but may also have consequences for management of the firm as well as for working conditions (MacEachen et al. 2010). Ample research describes how small enterprises have the potential to function as engines for economic growth and labour market expansion, e.g. for young people and immigrants (Eurofound 2015). New and small enterprises should not be seen as a scaled-down version of larger organizations, but rather as an entity, or even multiple and diversified entities of their own (Josefy et al. 2015).

However, there are important challenges. Employment relations have changed over time, and new types of precarious employment arrangements, e.g. temporary work agencies and subcontracting (including self-employment), increase the risk for job insecurity for workers in enterprises of all sizes (Kalleberg 2009; Heyes et al. 2018). This will challenge the inclusion of people with disabilities or limited resources in the labour market and may also have health implications (Tompa et al. 2007; Bajwa et al. 2018). Other important aspects, such as gender and ethnicity, need to be addressed both with regard to how combinations of disadvantages may multiply discriminatory effects (Brown and Moloney 2018) and for analysing the specific conditions for growth and development among specific groups (Reichborn-Kjennerud and Svare 2014). As well, studies of small enterprises often overlook the issue of “standpoint”, that is, that workers and employers have different stakes in this business and this will shape interactions, for instance, around work disability (Eakin 2010).

A systematic review of the understandings of workplace health and the effectiveness of interventions in small businesses concluded that the often informal social relations in small firms risk downplaying workplace risks and individualize the management of occupational health hazards (MacEachen et al. 2010). Further, there is an interplay between individual, organizational and policy levels where workplace health regulations are generally designed for larger workplaces, meaning that they either do not fit with the realities of small businesses or exempt small businesses altogether, which may imply that the work environment of small businesses is never inspected (MacEachen et al. 2010). The research on health interventions in small businesses is not very well-developed, but combinations of training, safety audits and motivational components have shown some positive effects (Breslin et al. 2010).

In new firms, organizational structures and processes are often not yet sufficiently developed to identify and manage occupational risks and hazards (Qin et al. 2017; Wiklund et al. 2010). Such issues may not be a primary concern in start-ups and the developing process of a firm, but as an organization starts to grow, they will need to adhere to regulations and establish such structures (McKelvie et al. 2017). Firms at this point have generally not adapted to the legal arrangements a larger organization needs to face, e.g. consortia agreements, employment agreements, work environment and social insurance legislation or procedures for collective bargaining. Another key issue is the high failure or “churn” rate of new small enterprises, where this precariousness of enterprise will affect their behaviour, especially around occupational health and safety. New and small firms are also vulnerable to personnel changes or illness among the staff, where a small work group will need to compensate for absence in various ways (Hansen and Andersen 2008).

Given the complexities of the field, it may be approached from very different angles. One such angle could be how new and small enterprises relate to changing conditions, such as digitalization, globalization, new employment arrangements and user-driven innovations. Firms’ relationship to the external environment is another topic, including issues of which types of networks and competencies are needed as small and new businesses manage issues related to the working environment and how they interact with welfare systems, e.g. in cases of sickness absence and rehabilitation. This also relates to how small and new firms develop adherence to regulations related to employment agreements, work environment and social insurance legislation and legislated processes for participation of employees in work environment issues. Other topics include internal processes, such as how recruitment and selection processes of employees effect the working environment and how gender, ethnicity, age and other sociocultural aspects interact in how work conditions play out in small and new enterprises. It can also encompass how leadership should develop to promote an attractive workplace with a diverse set of people who are included in the development of the organization. This relates to broader topics of how small and new enterprises promote health and manage work disability and the organizational learning capacity related to identifying and management of occupational risks and hazards.

Summary of the papers in the special issue

This special issue on “Smaller firms in a modern working life: How do we make entrepreneurship healthy?” presents six publications that stand out in their coverage of this central topic (Table 1). Below is a summary of each paper, and their contributions to entrepreneurship, small businesses and modern working life are highlighted.

Table 1 Overview of articles and their contributions in this special issue

The first paper by Gillanders and colleagues describes a particularly relevant study in light of the current attention being paid to male-female relationships, on or off the job. The authors chose to study workplace relationships in start-up enterprises, with a focus on social sexual behaviour and co-worker trust, asking: What role do social sexual behaviours play in elevating or undermining co-worker trust? The study draws its data from the 2018 Global University Entrepreneurial Spirit Students’ Survey (GUESSS), which has been undertaken every second year by participating universities since 2003. Gillanders et al. found that the data identified particular social sexual behaviours that eroded the trust of persons to whom the behaviour was directed, lowering their desire to delegate and calling into question the honesty of their co-workers. Behaviours with an adverse impact on trust included sexual gossip, flirtation and inappropriate looks. The authors found evidence for significant reductions in workplace efficiency when sexual behaviour was overlooked in start-up enterprises. In many environments, social sexual behaviours in the workplace negatively affect perceptions of whether the behaviour of a person is context-appropriate. In some situations, this behaviour may adversely affect perceptions of the benevolence or professional ability of the person. Employees may be tempted to dismiss the behaviour with the excuse “my co-workers don’t know any better”, attributing it to an issue of competence, or “my colleagues don’t care to treat me any better”, attributing the behaviour to a benevolence issue. Future research should explore varying situations to determine the underlying mechanisms at play in each.

Our second paper, a study of clinical depression among entrepreneurs by Cubbon et al., found that when financial security depends on a venture being successful and on being able to work with good mental and physical health, the entrepreneur can experience the responsibilities as overly burdensome. The idea of a high risk of depression and suicide among entrepreneurs has been promoted in the popular press, but the scientific literature in this area has been less concrete. This is one reason why the scoping review of Cubbon et al. explores what is known about this phenomenon. The thematic synthesis of their findings found four overarching themes among the 34 eligible articles: mental health, work characteristics, personal factors and social relations. For each main theme, the synthesis also identified subthemes describing the psychological impact of entrepreneurial work that included personal factors (e.g. routine, personality traits, gender) as well as others (e.g. risk of social isolation and relationship strain, high demands on time). The factors emerging from the analysis indicated a potential for feelings of shame and failure and the risk of reluctance to seek help due to stigma and a need to project a positive brand identity. A diathesis-stress model of depression explains the results of this review. The authors found risks of depression and suicide among entrepreneurs, an issue that had garnered little attention in peer-reviewed literature in the entrepreneurial field.

Sustainable development, in any sized enterprise, is based on sustainability in relation to ecologic, economic and social issues. Included in the under-researched area of social sustainability is the concept of sustainable work. Harlin and Berglund’s article addresses sustainable work design, particularly among high-growth entrepreneurial start-ups, in a longitudinal, single-case study. They chose to explore how a high-growth industrial firm in a new-developing industrial domain approached social sustainability during its beginning phases of development. Analyses sourced data from workplace observations, participative meetings and semi-structured interviews. Working conditions during the start-up were challenging, but the need to recruit and retain talent for the planned business acted as a driver for development. Executive management became responsible for this area, and they placed social sustainability firmly on the agenda. This step alone served to move social sustainability toward the forefront of organizational design and prevented it from being overlooked while other start-up issues vied for attention. Another step was to involve stakeholders in working conditions and work organization designs during the early project phases; this collaboration became a useful arena for identifying challenges and potential solutions.

In Sweden, occupational safety and health (OSH) conditions are poor for many workers in micro-enterprises (less than 10 employees). Compliance with working environment regulations is a challenging task for many micro-enterprises. Hagqvist and colleagues interviewed 11 Swedish OSH inspectors about their experiences of supervising micro-enterprises. In particular, the authors sought to draw a picture of how the interviewees perceived themselves as inspectors and how they viewed their role of being a bureaucratic regulator in their work with micro-enterprises. One overarching theme with three subcategories emerged from the qualitative content analysis of the interviews. The main theme was that their work was a balancing act, where subcategories described how the same inspector played the different roles of enforcing regulations and supporting the micro-entrepreneurs. This double task of carrying out the bureaucratic requirements of their profession while managing the OHS information needs of micro-enterprises was a major challenge for the OSH inspectors. The authors recommend providing support to OSH inspectors that is designed specifically for work with micro-enterprises. This support, for example, could be to foster development of suitable inspection models and enforcement methods that are tailored to different business sizes. Such measures could alleviate the burden of OSH work and improve inspection outcomes. Other support needs included greater inspector competence in issues regarding the working environment and health and training in handling these issues.

“Entrepreneurial experiences of Syrian refugee women in Canada: A feminist grounded qualitative study” is an intriguing study conceived by Senthanar and colleagues. The paper explores the “whys” and the “whats” of female Syrian refugee entrepreneurial drive in Canada: Why have they decided to start their own businesses? What factors and contexts foster and which obstruct the activities of these women? To gather information, the authors conducted in-depth interviews with Syrian refugee women who had resided in Canada for at least one year. Key informants, such as program managers and employment counsellors who had worked with the women during their resettlement, were also interviewed. Systemic challenges to entrepreneurship were identified through the feminist grounded analysis. The Syrian women were generally interested in feminized occupations, like tailoring or food service, and wished to start small businesses in these areas. Regulatory, economic and gendered contexts, however, challenged these aspirations to such a degree that the women felt compelled to set up their businesses in an unregulated environment, receiving insufficient financial rewards for their efforts. Meanwhile, the key informants appeared inclined to promote the entrepreneurial efforts of the women as “social enterprises”, taking little account of their experience and background. Senthanar et al.’s study makes a valuable contribution to the field of gender and refugee contexts in Canadian entrepreneurism by examining the migrant situation and their path of economic integration.

The final paper in this issue is an interesting, quantitative cross-sectional study by Ahmadi et al. that sought to identify associations between work and behaviour patterns and good health outcomes in small- and medium-sized enterprises. The authors were specifically interested in management-level patterns in firms that were growth-oriented and profitable. The study cohort of top managers responded to a standardized questionnaire. Data included number of on-the-job hours worked and proportion of time dedicated to work activities, as well as leadership behaviour orientation. The authors used compositional data analyses, linear regressions and descriptive statistics to analyse the extracted data. Although the managers worked long hours, which entails a health risk, their work practices and leadership behaviours appeared to balance that risk with an end result that benefited the health of the organization and the employees. A high proportion of time was spent on the road, which most likely benefited organizational health, and active leadership behaviours appeared to promote the health and effectiveness of the employees and the company. Referring to other studies, Ahmadi et al. observed that time-use patterns at the managerial level in small companies differed from in large companies and that firm size was thus a predictor of managerial work patterns in successful, growth-oriented enterprises.

Future research orientations on entrepreneurship and smaller firms in a modern working life

The diverse set of articles in this special issue sparks ideas for future research on the field of entrepreneurship, small businesses and health. A key difference between small and new enterprises and those that are large and well established is the nature and quality of workplace social relations. That is, small and new businesses generally lack the bureaucracy and organizational structure of larger firms, rendering rules and policies difficult to apply to small firms. The health and safety regulatory system, including visits by occupational health and safety inspectors and return-to-work rules for injured or ill workers, is often challenging to manage for small businesses, which can struggle to keep up with rules and red tape (Lamm and Walters 2004). In small firms, flat organizational hierarchies and flexible, interchangeable roles shape workplace relations, including how worker injury or illness is understood and managed (Eakin et al. 2010). For instance, Eakin et al. (2003) described small business owners as facing a conflict between their administrative role in managing return-to-work as expected by the state and the demands of a small business, leading them to “play it smart” by focusing primarily on cost-efficiency rather than the rehabilitation of the worker. Similarly calling attention to a lack of fit between the health and safety regulatory system and small firms, Haqqvist and colleagues in this issue consider the challenges faced by occupational health and safety inspectors in relation to micro businesses as they attempt to balance enforcement activities, such as fining a business for having a flawed safety environment, with support to enterprises, such as overlooking unsafe conditions while providing advice about how to improve safety. Future research should continue this focus on how to adapt the health and safety regulatory system to the unique needs of small and emerging firms.

Among entrepreneurs and small firms, health is affected by long work hours which often lead to a blurred line between home and work (Adisa et al. 2019; Di Domenico et al. 2014; MacEachen et al. 2008). In this issue, Ahmadi et al. describe how organizational leaders worked long hours to create a social presence, but this presence kept them close to frontline employees and had positive benefits for organizational and employee health. This raises new questions about the health of the leaders themselves, including job turnover. For instance, under what conditions do leaders thrive when working long work hours? Is it sustainable over long periods of time? Related to small business workplace social relations, Gillanders et al. in this issue focused on how casual sexual behaviour can impede trust among employees in start-up enterprises. Among small firms or businesses with a lack of formal structure, these informal, unstructured and personal aspects of work can undermine business success. An example for how to address social relations is provided by Harlin and Berglund in this issue who describe how a new business paid close attention to socially sustainable work design (including manageable workload and individual growth and development) as the business grew and developed. This ability to manage entrepreneurial activity and growth of a new business, while also attending to the health of leaders and workers, is an important research area. In small enterprises, where unionization rates are low, this topic becomes especially relevant as good working conditions are dependent on processes established by managers rather than by agreements with workers.

Mental health is a key topic in work and health that requires attention in relation to entrepreneurial activity and small businesses. In advanced economies over past years, mental health claims for income support have become the main health reason for inability to work (EU Joint Action On Mental Health And Wellbeing 2016; Dewa et al. 2014). The high failure rate of small and new enterprises sets these businesses apart from large enterprises, suggesting that this is a key stressor for owners. In the USA and Europe, only 50% of businesses survive five years (US Small Business Administration 2018; Commission of European Communities 2007). Past researchers have examined what distinguishes resilient entrepreneurs, who fail and try again until they succeed, from those that do not succeed by focusing on issues such as biographical qualities and business preparedness (Duchek 2018; Vuong et al. 2016). However, the mental health impact of this highly competitive environment has been less discussed. Cubbon et al.’s article in this issue on the psychological impact of entrepreneurships draws our attention to the mental health pressure and riskiness of setting up a new enterprise. Future studies might continue this focus on mental health among entrepreneurs and small business owners, for instance by studying movement between waged labour and entrepreneurship in relation to mental health trajectories.

When considering health in small and new businesses, it is also important to consider race, disability and gender. For instance, in North America, new immigrants are disproportionately small business owners (Green et al. 2016; Lofstrom and Wang 2019), and people with disabilities are often entrepreneurs (Pagan 2009). It is important to understand the drivers of entrepreneurialism and how these relate to health. For instance, the motivation of immigrants or people with disabilities to start a new business may stem from a lack of access to waged labour due to social stigma or other reasons. The article in this issue by Senthanar et al. describes how refugee women in Canada had few options to work as employees and therefore sought entrepreneurship as an alternate and flexible way to make an income. This raises questions including: What is the difference in the health and opportunities of small business owners when they are from marginalized communities rather than the mainstream population in a country? When an individual is motivated to start a business by push factors, such as limited paid employment opportunities within a new country, how does this circumstance shapes risk-taking and health?

Finally, a key emerging area for research in the field of entrepreneurship, small business and health is the growth of micro-enterprises and, in particular, the gig economy. With the growth of digital platforms, such as Uber and Airbnb, we see new forms of small businesses, via apps, where self-employed individuals lack the autonomy and entrepreneurship that normally exist among small business owners. This is because these digital platforms usually impose rules about work, such as work pace, and involve other mechanisms, such as customer peer-reviews, that create unique constraints and stressors for gig workers (MacEachen et al. 2019; Christie and Ward 2019). More research is needed on how self-employed gig workers manage health risks created by the impersonal algorithmic environment of the digital platform and how they survive economically when they become injured or ill and unable to work.

Small businesses function as crucial engines of larger economies (Audretsch 2002; OECD 2019). These businesses can have intense work environments, with little leeway for ill-health. In this issue, we have drawn attention to health challenges in these businesses, as well as models for managing small business psychosocial environments.

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Funding

Open access funding provided by Linköping University. This study has been funded by the Helix Competence Centre at Linköping University, Sweden.

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All authors contributed equally to this paper. The names are in alphabetic order.

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Correspondence to Magnus Klofsten.

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Klofsten, M., MacEachen, E. & Ståhl, C. New and small firms in a modern working life: how do we make entrepreneurship healthy?. Small Bus Econ 57, 755–763 (2021). https://doi.org/10.1007/s11187-020-00380-6

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Keywords

  • Work environment
  • Health
  • Entrepreneurship
  • Small businesses
  • New businesses

JEL classifications

  • L26
  • L20
  • I15