Psychosocial and institutional factors as determinants of entrepreneurs’ subjective well-being: Empirical evidence from a multilevel analysis

Abstract

Background: Entrepreneurial activity is widely recognised as a key driver of economic growth, innovation and employment; however, comparatively less scholarly attention has been devoted to the subjective well-being (SWB) of entrepreneurs. Existing studies tend to focus either on individual-level determinants or on broader institutional conditions, rarely integrating both perspectives within a single analytical framework.
Aim: The aim of this study is to examine how psychosocial and institutional factors jointly shape entrepreneurs’ SWB, measured through life satisfaction.
Setting: The study adopts a cross-national perspective, analysing self-employed individuals operating in diverse institutional environments across multiple countries.
Methods: Drawing on well-being economics, self-determination theory and institutional theory, the study employs a multilevel empirical approach that accounts for the hierarchical structure of individuals nested within countries. Cross-national survey data on self-employed individuals are combined with country-level indicators of institutional quality and analysed using mixed-effects logistic regression models.
Results: The findings indicate that psychosocial factors, including job satisfaction, perceived financial situation, optimism, social trust and self-assessed health, are strong and consistent predictors of entrepreneurs’ life satisfaction. In addition, institutional conditions such as political stability, business freedom, regulatory efficiency and control of corruption exert a significant contextual influence on entrepreneurial well-being.
Conclusion: Entrepreneurs’ SWB is shaped by the interaction of individual psychosocial resources and the broader institutional environment. Supportive governance and regulatory frameworks enhance life satisfaction beyond individual-level characteristics alone.
Contribution: By integrating micro- and macro-level determinants within a unified multilevel framework, this study advances the entrepreneurship and well-being literature and offers policy-relevant insights for fostering sustainable and supportive entrepreneurial ecosystems.