Greater fit and a greater gap: how environmental support for entrepreneurship increases the life satisfaction gap between entrepreneurs and employees

Purpose – This study seeks to understand how national institutional environments contribute to differences in life satisfaction between entrepreneurs and employees. Design/methodology/approach – Leveraging person–environment fit and institutional theories, and using a sample of more than 70,000 entrepreneurs and employees from 43 countries, the study investigates how the impact of entrepreneurial activity on life satisfaction differs in various environmental contexts. An entrepreneur’s life satisfaction arguably should increase when a high degree of compatibility or fit exists between his or her choice to be an entrepreneur and the informal and formal institutional environment. Findings – Differences in life satisfaction between entrepreneurs and employees are greater in countries marked by low individualism, high power distance, low uncertainty avoidance, supportive entrepreneurship policies, low commercial profit taxes, and weak worker rights. Originality/value – This study sheds new light on how entrepreneurial activity affects life satisfaction, contingent on the informal and formal institutions in a country that support entrepreneurship by its residents.