Career Patterns of the Self-Employed: Career Motivations and Career Outcomes

Abstract

Despite the rapid increase in the growth of self-employment in the U.S., surprisingly little attention has been given to what motivates individuals to start small business enterprises and the extent to which self-employment fulfills important needs. The present study utilizes the career typology of Schein (1978, 1990) to determine which constellations of goals, interests, and values attract individuals into, and keep them attached to, self-employment. Then, using data from a national survey of the self-employed, the effects of anchors on outcomes (in terms of job satisfaction, psychological well-being, skill utilization, and future plans) are examined. Quantitative data on individuals' job histories and qualitative data from respondents on the advantages and disadvantages of self-employment are used to identify differential patterns of outcomes among the self-employed. The results suggest that individuals do vary greatly in their motivations to pursue sel f-employment, that anchors do influence the goals individuals hope to achieve from self-employment, and that anchors do influence individuals' satisfaction with their jobs, careers, and lives in general. For many individuals, a in self-employment, small business proprietorships, and entrepreneurship represents both an escape from life in traditional organizational bureaucracies and an opportunity to generate greater personal wealth. At the simplest level, self-employment entails working as an independent consultant, contractor, or service provider. Small business proprietors manage local or regional businesses with a limited staff and with limited expansion goals. At the entrepreneur level, individuals invest their own capital and seek investments from venture capitalists to build enterprises into major corporate powers (Case 1992). As Dennis (1996) points out, the actual level of self-employment in the U.S. is not precisely known because there are no systematic, widely-accepted annual measures of it. Nevertheless, there are some reasonable proxies for levels of self-employment, and these indicators highlight the growth of this employment pattern in recent years. For example, Dun and Bradstreet reports that annual new business incorporations in the U.S. have risen from 685,572 in 1987 to 789,126 in 1997. Over the past five years, the amount of venture capital invested in entrepreneurial start-up firms has increased from $4 billion to $10 billion (Alsop 1997). Across the board, then, entry into the path of self-employment has accelerated dramatically over the past decade (Wiatrowski 1994). In examining the reasons for this growth in self-employment, previous research focused on two issues in particular. One research approach examined the macroeconomic and structural factors which affect the pursuit of these kinds of jobs. For example, Dyer (1994) suggests that periods of economic growth give rise to greater new business creation, while Leana and Feldman (1992) suggest that increases in downsizing have led more laid-off workers to consider self-employment as a option. Indeed, Dennis (1996) reports that unemployed workers are about twice as likely to start new businesses as employed workers. The second stream of studies has examined the role of personality traits and demographic differences in the decision to pursue self-employment (Brenner, Pringle, and Greenhaus 1991; Cooper and Dunkelberg 1981; Kolvereid 1996a; Shane, Kolvereid, and Westhead 1991). For example, research suggests that the personality traits most commonly associated with self-employment are the need for achievement, the need for control, and tolerance for ambiguity (Dyer 1994; Kolvereid, 1996b). In terms of demographic differences, gender and education have received the most attention. Males currently constitute the majority of owners of small businesses, but the percentage of women entering these independent employment paths is rising steadily. …

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