Essec Business School

With ESSEC Knowledge Editor-in-chief

Entrepreneurs are innovative, creative, go-getters, proactive… but do they make good bosses? As with many research questions, the answer is: it depends. 

In an article published in The Journal of Business Research, Karoline Strauss, professor of management at ESSEC, alongside co-authors Ute Stephan (King’s College London), Marjan J. Gorgievski (Erasmus University Rotterdam), and Dominika Wach (Macromedia University of Applied Sciences) studied the link between entrepreneurs and the job satisfaction of their employees - and the role their personality plays in this relationship. 

Does a proactive personality = a positive place to work? 

Dr. Strauss is an expert in proactivity, defined as one’s tendency to take initiative and enact change. Her past work has studied the impact of proactivity on outcomes for the proactive individual; in this study, she turns her attention to the impact on those around them. 

Having a proactive personality and being an entrepreneur go hand in hand, with past research demonstrating that this type of personality is beneficial for entrepreneurs. But just how does it impact their employees? To better understand the influence of an entrepreneur’s proactive personality on their employees, the researchers studied 43 small and medium sized enterprises (SMEs) in Germany, the entrepreneurs leading these firms, and the experiences of the 511 employees working at these firms. 

They looked at the role of the job’s characteristics, namely: 

• Job demands: factors such as workload and deadlines

• Job control: the level of autonomy granted to employees 

• Social support: the extent to which employees experience positive social interactions 

The researchers found that entrepreneurs’ proactive personality is a double-edged sword when it comes to these characteristics - and that the impact on job satisfaction hinges on the firm’s stability. As a proxy for firm stability, the researchers looked at the change in the number of employees in a three-year period. A higher number can indicate growth -  but can also mean that the entrepreneur might have to loosen the reins on daily operations, and might be accompanied by a new set of tasks like sourcing capital and customers. A lower number can indicate a storm brewing in the firm. Either way, a flux in staff suggests that the entrepreneur might feel a lack of control, leading them to exert control in other ways: such as adding the aforementioned new tasks to their employees’ workload, increasing job demands, or through micromanagement, restricting employee autonomy. These leaders might also find this situation anxiety-inducing, limiting their bandwidth for building and nurturing their work relationships. With leadership often establishing norms for workplace culture, this reduced social support could trickle down through the hierarchy and lead to a less supportive workplace overall. 

Employees working for a proactive entrepreneur did indeed report that their jobs were more demanding, regardless of the firm’s stability. The stability came into play when looking at job control and social support, with entrepreneurs’ proactive personality positively impacting both in stable firms. Put otherwise, employees in stable firms led by proactive entrepreneurs felt that they had more job control and social support, whereas these characteristics weren’t significantly impacted by the boss in unstable firms. 

When it comes to job satisfaction, the relationship was very clear: an entrepreneur’s proactive personality was a good thing for employees’ job satisfaction when the firm was stable, but detrimental for those working in firms in flux. Taken together, this suggests that the entrepreneur’s proactive personality drove increased job demands when the firm was unstable, decreasing job satisfaction. On the flipside, the entrepreneur’s proactive personality was a boon for job control and social support in more stable times, thus boosting job satisfaction. 

Why does this matter? Employee wellbeing is tied to performance and productivity, meaning that firms should make it a key priority. Wellbeing in and of itself is essential: the United Nations identified decent work as a Sustainable Development Goal, alongside the promotion of healthy lives and wellbeing. 

Recent figures from the French government suggest that in France, approximately 200 000 people were employed by startups in 2021 - a 20% increase from 2016. With this growth showing no signs of slowing, more and more people will be employed by entrepreneurs, meaning we need to take a closer look at their working conditions. Clearly, the quantity of jobs created by entrepreneurs is not in question - but we need a better understanding of the job quality. 

Key takeaways for entrepreneurs (and their colleagues) 

• First of all, entrepreneurs must take note that their personality itself can significantly influence their employees’ working conditions. Changing one’s personality is a tall order - but changing working conditions is doable. 

• Leaders can pave the way for employee well-being by allowing employees to have autonomy in their work. 

• Social support is also a key factor. Leaders should model this behavior by nurturing positive working relationships and encouraging colleagues to support each other, even under uncertain circumstances. 

• While firm stability can be hard to manage, entrepreneurs can ensure that they continue to grant job control and social support in periods of change. 

• With firm (in)stability identified as a pain point for employee wellbeing, leadership should take note and be more vigilant as to their employees’ job demands in order to protect them from undue work stress. Dr. Strauss suggests, “We believe that businesses and policymakers should collaborate to raise awareness among entrepreneurs about how their personality could influence their employees, and offer them guidance on how to manage this impact, as well as the important role of proper job design for their companies.” 

Taken together, this study underscores the role of entrepreneurial proactivity as a catalyst for a workplace where employees can thrive - or just survive. With an improved understanding of their impact, entrepreneurs can ensure that they set the stage for success.

Reference

Stephan, U., Strauss, K., Gorgievski, M. J., & Wach, D. (2024). How entrepreneurs influence their employees’ job satisfaction: The double-edged sword of proactive personality. Journal of Business Research, 174, 114492.