Purpose – The purpose of this paper is 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 – The study finds that differences in life satisfaction between entrepreneurs and employees are larger in countries with high power distance, low uncertainty avoidance, extant entrepreneurship policies, low
commercial profit taxes and low 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.