Introduction:
Entrepreneurship is a key driver of innovation and growth, yet the psychological demands it entails, particularly job demands such as work overload, are often underestimated. Entrepreneurs frequently operate under intense pressure, which can simultaneously undermine well-being (e.g., reduced work engagement) and increase ill-being (e.g., emotional exhaustion), with significant consequences for both individual and organizational functioning.
Purpose:
This study examines how psychological capital (self-efficacy, hope, optimism, and resilience) contributes to entrepreneurs' psychological health (work engagement and emotional exhaustion) and, in turn, to job (performance and leadership) and organizational (employee relation climate) functioning. We assess its dual role: 1) as an indirect contributor to functioning by promoting work engagement and mitigating emotional in response to job demands and 2) as a moderator that buffers the indirect effect of job demands on functioning through psychological health indicators.
Method:
The sample consisted of 617 entrepreneurs who were owner-managers of small or medium-sized enterprises (SMEs): 95.3% operated small businesses (1-99 employees) and 4.7% medium-sized businesses (100-499 employees). These enterprises were active in goods production (66.9%) and service provision (33.1%). Structural equation modeling was used to test the hypothesized relationships, including moderation effects through latent interactions.
Results:
Moderation effects were more pronounced in the engagement pathway, suggesting that psychological capital primarily enhances adaptive functioning by fostering well-being (work engagement), rather than by mitigating ill-being (emotional exhaustion).
Conclusions:
Psychological capital plays a strategic role in entrepreneurial adaptation. Its differentiated effects highlight the importance of viewing it as a multifaceted resource that supports both individual and organizational outcomes. These findings refine the JD-R model and suggest practical avenues for strengthening entrepreneurs' resilience and leadership capacity in demanding contexts.