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Decline in Job Satisfaction and How It Relates to Investment Decisions of the Self-Employed

Author

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  • Block, Jörn

    (University of Trier)

  • Gnad, Miriam

    (University of Trier)

  • Kritikos, Alexander S.

    (DIW Berlin)

  • Stiel, Caroline

    (DIW Berlin)

Abstract

Despite substantial research on job satisfaction in self-employment, we know little about the consequences for the venture when job satisfaction declines after an external shock. Taking the pandemic as an example of an external shock and drawing on 7,000 self-employed in Germany, we investigate how declines in job satisfaction are related to their investment decisions. Having separated job satisfaction into its financial and non-financial aspects, we build in our analysis on two perspectives to predict how reductions in financial and non-financial job satisfaction relate to investments in venture development. Our results show that decreasing financial job satisfaction is positively related to time investments, providing support for the performance feedback perspective. Negative performance, in terms of reduced financial job satisfaction, induces higher search efforts to improve the business situation. Moreover, we observe that reductions in non-financial job satisfaction are negatively associated with both time and monetary investments. This supports the broadening-and-build perspective in that negative experiences narrow the thought-action repertoire, thus hindering resource deployment.

Suggested Citation

  • Block, Jörn & Gnad, Miriam & Kritikos, Alexander S. & Stiel, Caroline, 2025. "Decline in Job Satisfaction and How It Relates to Investment Decisions of the Self-Employed," IZA Discussion Papers 18204, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp18204
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    References listed on IDEAS

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    1. Graeber, Daniel & Kritikos, Alexander S. & Seebauer, Johannes, 2021. "COVID-19: a crisis of the female self-employed," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 34(4), pages 1141-1187.
    2. Irene Bertschek & Joern Block & Alexander S. Kritikos & Caroline Stiel, 2024. "German financial state aid during Covid-19 pandemic: Higher impact among digitalized self-employed," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 36(1-2), pages 76-97, January.
    3. Henrich R. Greve, 2003. "Investment and the behavioral theory of the firm: evidence from shipbuilding," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 12(5), pages 1051-1076, October.
    4. Hansemark, Ove C., 2003. "Need for achievement, locus of control and the prediction of business start-ups: A longitudinal study," Journal of Economic Psychology, Elsevier, vol. 24(3), pages 301-319, June.
    5. Cédric Gutierrez & Randolph Sloof & Donal Crilly, 2024. "Time Is Not Money! Temporal Preferences for Time Investments and Entry into Entrepreneurship," Organization Science, INFORMS, vol. 35(2), pages 622-643, March.
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    Keywords

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    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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