From business owner to retiree: understanding life satisfaction's impact on entrepreneurial exit

Purpose Entrepreneurial exit research has overlooked the unique context of exits at retirement age when an exit marks the end of an entrepreneurial career (i.e. retirement). To better understand retirement exit decisions and transitions, this study introduces the concept of work ability (i.e. an individual’s ability to meet work demands) into the entrepreneurial exit literature and, based on role theory, hypothesises its effect and interaction with general life satisfaction in explaining the entrepreneurial exits to retirement. The study clarifies the dynamics between the voluntary and non-voluntary aspects behind exit to retirement. Design/methodology/approach The authors use mixed-effects ordinal logistic regression with four-wave panel data on 198 Finnish small business entrepreneurs who intend to retire to test hypotheses on the relationship between work ability, general life satisfaction and entrepreneurial exit to retirement. Findings The study provides partial support for the hypothesis that work ability negatively impacts entrepreneurial exit to retirement and strong support for the idea that this effect is affected by general life satisfaction. Entrepreneurs who experience higher life satisfaction are likely to retire on their own terms, whereas those less satisfied continue working until declining work ability forces them to retire. Originality/value The study contributes to the entrepreneurial exit literature by showing how the exit dynamics unfold in the unique context of entrepreneurial exit to retirement. The theoretical discussion opens up the potential psychological mechanisms behind such dynamics.