The impact of a necessity-based start-up on subsequent entrepreneurial satisfaction

  • Teemu KautonenEmail author
  • Jenni Palmroos


Necessity entrepreneurship has been much debated in research and policy. This paper examines the impact of necessity as a start-up motive on subsequent entrepreneurial satisfaction. Empirically, the paper is based on a sample of 777 recently established Finnish micro enterprises. The results show that necessity entrepreneurs are somewhat more likely to want to switch back to paid employment later in their entrepreneurial careers. However, if the individual earns a satisfactory livelihood through self-employment, the negative effect of a necessity-based start-up on subsequent entrepreneurial satisfaction diminishes. Training in business skills that helps necessity entrepreneurs to run an economically viable business might thus increase their satisfaction with being self-employed.


Necessity Entrepreneurship Satisfaction Income Work traits Self-employment Finland 



This paper is based on research commissioned and funded by the Finnish Ministry of Labour 2006–2007. The authors would like to thank the Ministry and the members of the steering board of the project for their support and insightful comments.


  1. Agho, A., Mueller, C., & Price, J. (1993). Determinants of employee job satisfaction: An empirical test of a causal model. Human Relations, 46, 1007–1027. doi: 10.1177/001872679304600806.CrossRefGoogle Scholar
  2. Aiken, L. S., & West, S. G. (1991). Multiple regression: Testing and interpreting interactions. Thousand Oaks: Sage.Google Scholar
  3. Allen, I. E., Langowitz, N., & Minniti, M. (2006). Global Entrepreneurship Monitor: 2006 report on women and entrepreneurship. Babson College and London Business School.
  4. Andersson, P., & Wadensjö, E. (2006). Do the unemployed become successful entrepreneurs? A comparison between the unemployed, inactive and wage-earners. IZA Discussion Paper No. 2402.Google Scholar
  5. Arenius, P., & Minniti, M. (2003). Women in entrepreneurship: The entrepreneurial advantage of nations. First Annual Global Entrepreneurship Symposium. United Nations Headquarters, 29 April 2003.Google Scholar
  6. Arenius. P., Autio, E., & Kovalainen, A. (2004). Global Entrepreneurship Monitor 2003 Finland executive summary. Helsinki University of Technology.
  7. Benz, M., & Frey, B. (2004). Being independent raises happiness at work. Swedish Economic Policy Review, 11, 95–134.Google Scholar
  8. Blanchflower, D. G., & Oswald, A. (1998). What makes an entrepreneur? Journal of Labor Economics, 16, 26–60. doi: 10.1086/209881.CrossRefGoogle Scholar
  9. Block, J. & Wagner, M. (2006). Necessity and opportunity entrepreneurs in Germany: Characteristics and earnings differentials. MPRA Paper no. 610.Google Scholar
  10. Böheim, R., & Muehlberger, U. (2006). Dependent forms of self-employment in the UK: Identifying workers on the border between employment and self-employment. IZA Discussion Paper no. 1963.Google Scholar
  11. Bosma, N., & Harding, R. (2006). Global Entrepreneurship Monitor: GEM 2006 summary results. Babson Park/London: Babson College/London Business School.Google Scholar
  12. Bradley, D. E., & Roberts, J. A. (2004). Self-employment and job satisfaction: Investigating the role of self-efficacy, depression and seniority. Journal of Small Business Management, 42, 37–58. doi: 10.1111/j.1540-627X.2004.00096.x.CrossRefGoogle Scholar
  13. Buttner, E. H. (1992). Entrepreneurial stress: Is it hazardous to your health? Journal of Managerial Issues, 4, 223–240.Google Scholar
  14. Cooper, A. C., & Artz, K. W. (1995). Determinants of satisfaction for entrepreneurs. Journal of Business Venturing, 10, 439–457. doi: 10.1016/0883-9026(95)00083-K.CrossRefGoogle Scholar
  15. DeWit, G. (1993). Determinants of self-employment. Heidelberg: Physica Verlag.Google Scholar
  16. Dietrich, H. (1999). ‘Scheinselbständige’ oder ‘Quasi-Firmen’?—Zwei Seiten einer Medaille. In D. Bögenhold, & D. Schmidt (Eds.), Eine neue Gründerzeit? Die Wiederentdeckung kleiner Unternehmen in Theorie und Praxis. Grünungsforschung, Bd. 1 (pp. 71–98). Amsterdam: Fakultas.Google Scholar
  17. Eden, D. (1975). Organisational membership versus self-employment: Another blow to the American dream. Organizational Behavior and Human Performance, 13, 79–94. doi: 10.1016/0030-5073(75)90006-9.CrossRefGoogle Scholar
  18. Filion, L. (2004). Two types of self-employed in Canada. In L. Dana (Ed.), Handbook of research on international entrepreneurship (pp. 308–329). Cheltenham: Edward Elgar.Google Scholar
  19. Finnie, R., Laporte, C., & Rivard, M. C. (2002). Setting up a shop: self-employment amongst Canadian college and university graduates. Working Paper 183, Statistics Canada Research Paper Series.Google Scholar
  20. Frey, B., & Benz, M. (2003). Being independent is a great thing: Subjective evaluations of self-employment and hierarchy. CESIFO Working Paper no. 959. Category 4. Labour Markets, June 2003.Google Scholar
  21. Galbraith, C. S., & Latham, D. R. (1996). Reluctant entrepreneurs: Factors of participation, satisfaction, and success. In Frontiers of Entrepreneurship Research 1996. Babson Park: Babson College.Google Scholar
  22. Granger, B., Stanworth, J., & Stanworth, C. (1995). Self-employment career dynamics: The case of unemployment push in UK book publishing. Work, Employment and Society, 9, 499–516.Google Scholar
  23. Hakala, A. (2006). Yrittäjyys ei ole aina vapaaehtoinen valinta. Uutispäivä Demari, 18 May 2006.Google Scholar
  24. Harvey, M. (2001). Undermining construction. The corrosive effects of false self-employment. London: Institute of Employment Rights.Google Scholar
  25. Heinonen, J., Kovalainen, A., Paasio, K., Pukkinen, T., & Österberg, J. (2006). Palkkatyöstä yrittäjäksi. Työpoliittinen tutkimus 297. Helsinki: Työministeriö.Google Scholar
  26. Helisten, M., Rissanen, S., & Hujala, A. (2007). Care entrepreneurs’ start-up motives and work motivation. Paper presented at the ICSB 2007, June, Turku.Google Scholar
  27. Hinz, T., & Jungbauer-Gans, M. (1999). Starting a business after unemployment: characteristics and chances of success (empirical evidence from a regional German labour market). Entrepreneurship & Regional Development, 11, 317–333. doi: 10.1080/089856299283137.CrossRefGoogle Scholar
  28. Holmes, T. J., & Schmitz, J. A. (1996). Managerial tenure, business age and small business turnover. Journal of Labor Economics, 14, 79–99. doi: 10.1086/209804.CrossRefGoogle Scholar
  29. Hornaday, J. A. (1982). Research about living entrepreneurs. In C. A. Kent, D. L. Sexton, & K. H. Vesper (Eds.), Encyclopedia of entrepreneurship. Englewood Cliffs: Prentice-Hall.Google Scholar
  30. Hughes, K. D. (2003). Pushed or pulled? Women’s entry into self-employment and small business ownership. Gender, Work and Organization, 10, 433–454. doi: 10.1111/1468-0432.00205.CrossRefGoogle Scholar
  31. Hulin, C., Roznowski, M., & Hachiya, D. (1985). Alternative opportunities and withdrawal decisions: Empirical and theoretical discrepancies and integration. Psychological Bulletin, 97, 233–250. doi: 10.1037/0033-2909.97.2.233.CrossRefGoogle Scholar
  32. Hundley, G. (2001). Why and when are the self-employed more satisfied with their work? Industrial Relations, 40, 293–317. doi: 10.1111/0019-8676.00209.Google Scholar
  33. Kaihovaara, R. (2007). MOT—Isäntien varjossa. TV1, 2 April 2007, manuscript (in Finnish). Retrieved February 2008 from
  34. Kautonen, T., Down, S., Welter, F., Althoff, K., Kantola, J., Kolb, S., & Vainio, P. (2007). Involuntary entrepreneurship as a public policy issue in selected European countries. Paper presented at the ICSB 2007, June, Turku.Google Scholar
  35. Kautonen, T., Palmroos, J., & Vainio, P. (2009). ‘Involuntary self‐employment’ in Finland – A bleak future? International Journal of Public Policy, in press.Google Scholar
  36. Lin, Z., Picot, G., & Compton, J. (2000). The entry and exit dynamics of self-employment in Canada. Small Business Economics, 15, 105–125. doi: 10.1023/A:1008150516764.CrossRefGoogle Scholar
  37. Mallon, M. (1998). The portfolio career: Pushed or pulled to it? Personnel Review, 27, 361–377. doi: 10.1108/00483489810230316.CrossRefGoogle Scholar
  38. McClelland, D. C. (1961). The achieving society. Princeton: Van Nostrand.Google Scholar
  39. Moore, C. S., & Mueller, R. E. (2002). The transition from paid to self-employment in Canada: The importance of push factors. Applied Economics, 34, 791–801. doi: 10.1080/00036840110058473.CrossRefGoogle Scholar
  40. Nunnally, J. (1978). Psychometric theory. New York: McGraw-Hill.Google Scholar
  41. Paasch, U. (1990). Selbständig oder abhängig? Deregulierung von Arbeitsbedingungen per Statusdefinion. In J. Berger (Ed.), Kleinbetriebe im wirtschaftlichen Wandel (pp. 129–158). Frankfurt: Campus.Google Scholar
  42. Parker, S. C. (2004). The economics of self-employment and entrepreneurship. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  43. Perulli, A. (2003). Economically dependent/ quasi sub-ordinate (parasubordinate) employment: legal, social and economic aspects. Retrieved December 2007 from
  44. Reynolds, P., Bygrave, W. D., Autio, E., Cox, L. W., & Hay, M. (2002). Global Entrepreneurship Monitor: 2002 executive report. London.Google Scholar
  45. Rosa, P., Kodithuwakku, S., & Balunywa, W. (2006). Reassessing necessity entrepreneurship in developing countries. Paper presented at the ISBE 2006, November, Cardiff.Google Scholar
  46. Rose, M. (2003). Good deal, bad deal? Job satisfaction in occupations. Work, Employment and Society, 17, 503–530. doi: 10.1177/09500170030173006.CrossRefGoogle Scholar
  47. Schneider, B., Gunnarson, S., & Wheeler, J. (1992). The role of opportunity in the conceptualization and measurement of job satisfaction. In C. J. Cranny, P. C. Smith, & E. F. Stone (Eds.), Job satisfaction: How people feel about their jobs and how it affects their performance (pp. 53–68). Lexington: Lexington Books.Google Scholar
  48. Schultze Buschoff, K. (2005). Von der Scheinselbständigekeit zur Ich-AG: Neue sozialpolitische Weichenstellungen? Zeitschrift fur Sozialreform, 51, 64–93.Google Scholar
  49. Singh, G., & DeNoble, A. (2003). Early retirees as the next generation of entrepreneurs. Entrepreneurship Theory and Practice, 23, 207–226. doi: 10.1111/1540-8520.t01-1-00001.CrossRefGoogle Scholar
  50. Sippola, A.-R. (2007). Vastentahtoista yrittäjyyttä eniten kampaamoissa, Helsingin Sanomat, 16 May 2007.Google Scholar
  51. Smallbone, D., & Welter, F. (2003). Entrepreneurship in transition economies: Necessity or opportunity driven? Paper presented at the BCERC 2003, Babson College, June.Google Scholar
  52. Spector, P. (1997). Job satisfaction: Application, assessment, causes, and consequences. Thousands Oaks: Sage.Google Scholar
  53. Statistics Finland.(2008). Business Register—Service Guide 2008. Retrieved March 2008 from
  54. Tabachnick, B. G., & Fidell, L. S. (2007). Using multivariate statistics (5th ed.). Boston: Pearson.Google Scholar
  55. Taber, T., & Alliger, G. (1995). A task-level assessment of job satisfaction. Journal of Organizational Behavior, 16, 101–121. doi: 10.1002/job.4030160202.CrossRefGoogle Scholar
  56. Taylor, M. P. (1996). Earnings, independence or unemployment: Why become self-employed? Oxford Bulletin of Economics and Statistics, 58, 253–266.CrossRefGoogle Scholar
  57. Taylor, M. P. (1999). Survival of the fittest? An analysis of the self-employment duration in Britain. The Economic Journal, 109, C140–C155. doi: 10.1111/1468-0297.00422.CrossRefGoogle Scholar

Copyright information

© Springer Science + Business Media, LLC 2008

Authors and Affiliations

  1. 1.Department of ManagementUniversity of VaasaVaasaFinland

Personalised recommendations