Well-being is an essential outcome of engagement in entrepreneurship, but the pathway from self-employment to well-being is poorly understood. To address this, we develop a model in which psychological functioning—purposeful engagement with life, realization of personal talents and capabilities, and fulfillment of intrinsic needs such as autonomy and competence—mediates the relationship between entrepreneurship and subjective well-being. We test our model with data from the European Social Survey using structural equation modeling and a series of robustness tests (e.g., propensity score matching estimators and accounting for model uncertainty). Results suggest that entrepreneurship is associated with substantial benefits in terms of psychological functioning—both personal and social—which almost entirely mediate the relationship between entrepreneurship and subjective well-being. These findings highlight psychological functioning as a critical pathway between entrepreneurship and subjective well-being.

Using institutional economic theory as our guiding framework, we develop a model to describe how populist discourse by a nation’s political leader influences entrepreneurship. We hypothesize that populist discourse reduces entrepreneurship by creating regime uncertainty concerning the future stability of the institutional environment, resulting in entrepreneurs anticipating higher future transaction costs. Our model highlights two important factors that moderate the relationship. First is the strength of political checks and balances, which we hypothesize weakens the negative relationship between populist discourse and entrepreneurship by providing entrepreneurs with greater confidence that the actions of a populist will be constrained. Second, the political ideology of the leader moderates the relationship between populist discourse and entrepreneurship. The anti-capitalistic rhetoric of left-wing populism will create greater regime uncertainty than right-wing populism, which is often accompanied by rhetoric critical of free trade and foreigners, but also supportive of business interests. The effect of centrist populism, which is often accompanied by a mix of contradictory and often moderate ideas that make it difficult to discern future transaction costs, will have a weaker negative effect on entrepreneurship than either left-wing or right-wing populism. We empirically test our model using a multi-level design and a dataset comprised of more than 780,000 individuals in 33 countries over the period 2002–2016. Our analysis largely supports our theory regarding the moderating role of ideology. However, surprisingly, our findings suggest that the negative effect of populism on entrepreneurship is greater in nations with stronger checks and balances.