From Entrepreneur to Employee: A Multilevel Study on Negative Affect and Work Engagement

This study examined how entrepreneurs’ work-related negative affect—specifically anxiety and depression—relates to employees’ work engagement in small firms. Based on emotional contagion and social cognitive theories, the study investigated whether entrepreneurs’ negative affect impacts employees, thereby reducing their work engagement. The sample included 97 entrepreneurs and 852 employees from businesses in the Netherlands, Poland, and Spain. Data were gathered through surveys in participants’ native languages. Multilevel modelling revealed that entrepreneurs’ anxiety and depression were negatively related to their own work engagement. Employees experiencing higher levels of anxiety and depression also showed lower work engagement. Emotional contagion was observed, as entrepreneurs’ negative affect was positively linked to employees’ corresponding emotional states. However, no direct relationship was found between entrepreneurs’ negative affect and employee work engagement. Indirect effects were identified through employees’ negative affect and entrepreneurs’ work engagement. These findings suggest that entrepreneurs may influence employee work engagement via affective contagion and role modelling. The study extends previous single-level research by demonstrating the cross-level effect of entrepreneurs’ emotional well-being on employee engagement, highlighting the psychological interdependence within small business settings.