The Rewards of Entrepreneurship: Exploring the Incomes, Wealth, and Economic Well–Being of Entrepreneurial Households

Abstract

The financial rewards and consequences of entrepreneurship for the individual are unknown. Prior studies have focused on self–employment income estimates and have highlighted the low median earnings that may be anticipated. The apparent financial irrationality of entrepreneurship is typically explained in terms of nonpecuniary compensating factors, such as autonomy and satisfaction. However, the financial rewards of entrepreneurship are multifaceted and include different types and amounts of rewards at different stages of the business life cycle. More accurate reflections of entrepreneurial rewards require researchers to move away from the use of narrow and static measures and instead focus on a broad set of indicators that collectively contribute to overall economic well–being. Entrepreneurial rewards are not only determined by business rationality, but are influenced by household needs that evolve over time. Hence, the analysis of entrepreneurial rewards requires an approach that captures the processes of reward decision making over the business life cycle while contextualizing reward decisions within the entrepreneurial household.