The Bigger the Better? Business Size and Small-Business Owners\u2019 Subjective Well-Being

Filip Fors Connolly,Ingemar Johansson Sevä,Tommy Gärling

doi:10.1007/s10902-020-00264-2

Filip Fors Connolly, Ingemar Johansson Sevä + Show 1 more

Open Access

https://doi.org/10.1007/s10902-020-00264-2

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Abstract

Business growth is often portrayed as an important outcome for small-business owners. Few empirical studies have however examined whether there is a positive relationship between business size and different dimensions of small-business owners’ subjective well-being. In a large cross-sectional sample (n = 1089) of small-business owners from Sweden, we investigate the relationship between business size and the two main components of subjective well-being, life satisfaction and emotional well-being. By means of structural equation modelling, we determine the importance of business size for subjective well-being by focusing on potential advantages (financial satisfaction) and disadvantages (time pressure) related to business size. The results show that there is no overall relationship between business size and life satisfaction, but a weak negative relationship between business size and emotional well-being. However, in a subsequent mediation analyses we find that these findings largely can be explained by the fact that financial satisfaction and time pressure relate to subjective well-being in opposite directions and thus cancel each other out. The results of the mediation analysis also reveal differences across the two components of subjective well-being. We here find that financial satisfaction is more important for small-business owners’ life satisfaction while time pressure is more important for their emotional well-being.

Highlights

In the last decades politicians and policy makers have emphasized the importance of small business growth for the economy and job creation (Morrison et al 2003; Davidsson 2004; Henrekson and Stenkula 2009)
In a large sample of small-business owners, we investigated the relationship between business size and subjective well-being by focusing on the relative importance of advantages and disadvantages related to business size
Our results show that the overall association between business size and life satisfaction is close to zero and not statistically significant, while there is a weak negative association between business size and emotional well-being

Summary

Introduction

In the last decades politicians and policy makers have emphasized the importance of small business growth for the economy and job creation (Morrison et al 2003; Davidsson 2004; Henrekson and Stenkula 2009). Small-business owners often express preferences for financial success that in general requires business growth. Previous research shows that high job demands are prevalent among small-business owners’ and that high demands may be especially pronounced among individuals who owns larger businesses (Nordenmark et al 2012; Warr 2018). These psychological aspects of having a small business are especially relevant today since policy makers and scholars have increasingly come to focus on subjective well-being as a measure of quality of life (OECD 2011; Helliwell et al 2016). In line with this, Wiklund et al (2019) recently proposed that increased attention should be given to the multi-faceted nature of subjective well-being as well as relating it to smallbusiness development, which includes starting, growing, and running a business

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