Does autonomy exert magic power on the low-paid self-employed’s
workplace wellbeing: The moderating effect of poverty
57
2.1 Introduction
According to the Global Entrepreneurship Monitor Report 2013, ‘Entrepreneurs are among the
happiest individuals across the globe when it comes to individual wellbeing and satisfaction with
their work conditions’ (Amorós and Bosma, 2013:10).This report serves as a trigger of interest in
the further investigation into the topic of workplace wellbeing in entrepreneurship. This is an
important inquiry in current entrepreneurship field. Firstly, workplace wellbeing has been found
as a strong predictor of such behaviours as workers’ commitment, motivation, absenteeism,
quitting intentions, and other affective responses to aspects of the job and is closely related to the
organisation’s performance or business success (Gazioglu and Tansel, 2006; Lange 2012).
Secondly, when someone plans to become a self-employed person, he/she will consider the
rewards of entrepreneurship. For a long time, in entrepreneurship research entrepreneurial reward
has almost exclusively been defined regarding financial outcomes. While such measures are
indeed important indicators of success, however, there is currently growing recognition in the
field of entrepreneurship of a somewhat broader definition of ‘entrepreneurial reward’—one that
regards wellbeing as important as financial outcomes. Indeed, research findings indicate that
many individuals who are driven to become self-employed display more non-monetary intentions
and are more caring about the influence of entrepreneurship on their wellbeings (Baron, 2012;
Cassar, 2007).
In explanation of the job wellbeing of the self-employed, numerous studies have tried to link,
compare and disentangle the determinants of workplace wellbeing. A good number of
research has found that the self-employed have a higher level of job satisfaction due to their
job characters (Le Blanc et al., 2001). Some of these studies have applied the SDT (self-
determination theory) in their investigation. SDT suggests that autonomy is one of the three
basic psychological needs and has a close relationship with one’s wellbeing. Entrepreneurship
research appears to suggest that job autonomy is the main source of high
58
workplace wellbeing among entrepreneurs. This study will also apply SDT theory to test the
significance of job autonomy’s effect on workplace wellbeing.
Methodologically, there are two ways to test the significance of a variable’s effect on the other
one. One popular way to verify the importance of job autonomy to individual’s workplace
wellbeing is to test it across different contexts (occupations, gender and country) (Lange, 2012).
The other way to test the importance of the job autonomy is to examine whether its contribution to
wellbeing is constrained by another factor, for example, the poverty. In other words, when the
need for a monetary reward of entrepreneurship is threatened, do the self-employed still
experience higher workplace wellbeing than employees? If the answer is yes, is job autonomy still
the major contribution of this difference. Empirically, those who plan to take entrepreneurial
activities will not only care about their prospect of success but will also wish to assess the
difficulties facing them arising from financial difficulties. Indeed, it is a lot easier to stay happy in
a positive financial situation than a negative one. For many self-employed who are creating and
running new ventures, a financial problem like poverty can be a more sensitive issue to them than
to ‘stable-working’ employees, due to high-risk, uncertainty and complexity of self-employment
(Carland et al.,2002). As a matter of fact, the financial situation of the self-employed is less
positive than people expected previously. As Meager (2008,200) concludes, ‘the presence of self-
employed spells in the previous work history does increase chances of poverty, low savings levels
and poor pension entitlement in later life’. Also, there is evidence in practice, according to the
SMF (Social market foundation) (Broughton and Richards, 2016) that low-paid self-employment
(Income below the National Living Wage) is rising yearly. Around half (49%) of the UK’s self-
employed are in the poverty situation, compared with around a fifth of employees (22%). Also,
they found, the low-paid self-employed have few other sources of income to rely on aside from
their earnings. Moreover, the low-paid self-employed are more likely to live in low-income
households than their
59
employee counterparts. PenaCasas and Latta (2004) found that the poverty rate (<60% of median
income) was higher among self-employed than regularly employed in all EU-15 countries. On
average, 6% of the employed were poor; while as many as 14% of the self-employed were poor.
Thus, does the poverty of the self-employed affect workplace wellbeing, especially moderate the
relationship between the job autonomy and workplace wellbeing? According to Maslow’s
Hierarchy of Needs (Maslow, 1943, 1971), autonomy is defined as one kind of self-esteem needs
on the second high level. A more fundamental need described in the Maslow’s hierarchy is
security and material need. As Maslow explained, human needs follow a hierarchical structure.
Maslow’s theory implies that when one’s financial need cannot be satisfied due to low income,
the charming of autonomy associated with self-employment may be less appealing. In other
words, ‘autonomy’ may lose its magic power for the low pay self-employed.
In conclusion, current research suggests that the self-employed are happier than employees (Benz
and Frey 2004), largely due to job autonomy that the self-employed enjoy (Epstein et al., 1990).
However, this line of research has focused more on the positive financial situation but rarely pays
attention to the negative one. Therefore, this study wishes to fill this significant gap in the research
for a better understanding of the workplace wellbeing of the self-employed who live in poverty. This
thesis will do so by undertaking a comparison analysis between the self-employed and employees to
uncover the reasons behind the differences of workplace wellbeing between the two groups. Thus, by
drawing on the theories of SDT and Maslow’s hierarchy of needs, this thesis aims to answer two
questions in this study. Firstly, are the self-employed always happier (experiencing higher workplace
wellbeing) than employees when their income are below the poverty line? Secondly, does the poverty
exert a moderating effect on the relationship between job autonomy and workplace wellbeing?
Reference
Baron, R. A. (2012). Entrepreneurship: An evidence-based guide. Cheltenham,UK:
Edward Elgar Publishing.
Caliendo, M., and Kopeinig, S. (2008). Some practical guidance for the implementation of
propensity score matching. Journal of Economic Surveys, 22(1), 31-72.
Felstead, A., Gallie, D., and Green, F. (Eds.). (2015). Unequal Britain at Work.
Oxford,UK: Oxford University Press.
Guo, S., and Fraser, M. W. (2010). Propensity score analysis: Statistical methods and
analysis. London,UK: SAGE Publications
Hamilton, B. H. (2000). Does entrepreneurship pay? An empirical analysis of the returns
to self-employment. Journal of Political Economy, 108(3), 604-631.
Joffe, M. M., and Rosenbaum, P. R. (1999). Invited commentary: propensity scores.
American Journal of Epidemiology, 150(4), 327-333.
Lehrer Paul, M., Woolfolk Robert, L., and Sime Wesley, E. (2007). Principles and
Practice of Stress Management. New York, USA: The Guilford Press
Luthans, F., Avolio, B. J., Avey, J. B., and Norman, S. M. (2007). Positive psychological
capital: Measurement and relationship with performance and satisfaction. Personnel
Psychology, 60(3), 541-572.
Rindova, V., Barry, D., and Ketchen, D. J. (2009). Entrepreneuring as emancipation.
Academy of Management Review, 34(3), 477-491.
Rosenbaum, P. R., and Rubin, D. B. (1985). Constructing a control group using
multivariate matched sampling methods that incorporate the propensity score. The
American Statistician, 39(1), 33-38.
Taris, T. W. (2006). Bricks without clay: On urban myths in occupational health
psychology. Work and Stress, 20, 99-104
Uy, M. A., Foo, M. D., and Song, Z. (2013). Joint effects of prior start-up experience and
coping strategies on entrepreneurs’ psychological wellbeing. Journal of Business
Venturing, 28(5), 583-597.
Wiklund, J., Graham, C., Foo, M. D., Bradley, S. W., Shir, N., and Nikolaev, B. (2017).
Entrepreneurship and Wellbeing. Journal of Business Venturing. Call for papers:
https://www.journals.elsevier.com/journal-of-business-venturing/call-for-papers/entre
preneurship-wellbeing . Accessed: 20 SEP 2017
