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OUR ECONOMY
pp. 56–62
REVIEW PAPER
Citation: Huđek, I., Tominc, P., &
Širec, K. (2020). Entrepreneurship vs.
Freelancing: What’s the Difference?
Naše gospodarstvo/Our Economy, 66(3),
56–62. DOI: 10.2478/ngoe-2020-0018
DOI: 10.2478/ngoe-2020-0018
UDK: 331.5:004:658.114.1
JEL: J24, L26, J21
RECEIVED: JUNE 2020
REVISED: AUGUST 2020
ACCEPTED: AUGUST 2020
Vol. 66 2020No. 3
Entrepreneurship vs. Freelancing:
What’s the Difference?
Ivona Huđek
Junior Researcher at the University of Maribor, Faculty of Economics and
Business, Slovenia
ivona.hudjek1@um.si
Polona Tominc
University of Maribor, Faculty of Economics and Business, Slovenia
polona.tominc@um.si
Karin Širec
University of Maribor, Faculty of Economics and Business, Slovenia
karin.sirec@um.si
Abstract
The development of Internet technology (IT) at the end of the 20th century
and its integration into the business sector has led to the emergence of
digital labour platforms that provoke a reorganization of work arrangements
by matching the demand and supply of goods and services, known as
the “gig economy”. The “gig economy” stands for economic activities or
work arrangements related to the performance of very short-term tasks
facilitated by digital platforms and can include freelance work, temporary
work, work on-demand and contract work. Our paper focuses on the new,
growing workforce of freelancers. Freelancers belong to the self-employed
category of entrepreneurial activity who do not employ workers, who pay
their own taxes, work on projects, work for several clients, and work remotely,
usually from home. According to various sources and findings, they are also
referred to as entrepreneurs, solopreneurs, digital micro-entrepreneurs,
hybrids of employees and entrepreneurs, enablers of entrepreneurship,
potential entrepreneurs, etc. The purpose of this paper is to examine the
relationship between freelancers and entrepreneurs. The paper will use a
literature-review approach to highlight the similarities and main differences
between freelancers and entrepreneurs and to find an answer to the question
whether freelancers can be considered entrepreneurs or not. In addition, the
paper provides insights into freelance work and highlights the benefits and
challenges that freelancers face in the labour market.
Keywords: digital labour platforms, entrepreneurship, freelance work, gig economy
Introduction
Thanks to the Internet, people are able to compete for jobs and offer their knowl-
edge and skills worldwide. In addition, business processes are becoming increas-
ingly fragmented, so that work can be broken down into smaller components, so-
called short-term projects (Friedman 2014; Stone & Deadrick 2015). The market
57
Ivona Huđek, Polona Tominc, Karin Širec: Entrepreneurship vs. Freelancing: What’s the Difference?
system, which stands for the involvement of organizations
and workers in short-term work arrangements, is called the
gig economy. These types of work arrangements are often
referred to as alternative or non-standard work arrangements
carried out by gig workers or so-called independent contrac-
tors (Friedman, 2014), more commonly known as freelanc-
ers (Gig Economy Data Hub, 2019).
According to American, British and European ndings, the
gig economy is a new and as yet unknown phenomenon,
which is reected in the growing number of online labour
platforms (Green, 2018) for job placement worldwide. As
far as the US is concerned, 36% of the workforce is part of
the gig economy, and forecasts show that if the gig economy
continues to grow at its current pace, more than 50% of the
US workforce will be participating in it by 2027 (Milen-
ković, 2019). In terms of global gig economy statistics,
20-30% of the US and EU-15 labour force is involved in the
gig economy (McKinsey, 2016). The UK gig economy also
appears to be following in the footsteps of the US in terms
of growth (Partington, 2019).
In addition, it is important to point out that some authors
claim that the gig economy considers not only work con-
trolled and delivered remotely and over digital platforms,
but also work delivered locally. Such local gig work typ-
ically includes food delivery, curation, transportation,
services, and manual work. Remote gig work, on the other
hand, consists of the remote delivery of a variety of digital
services ranging from data entry to software programming
via online labour platforms (Huws et al., 2016). Payoneer’s
Freelance Income Report shows, however, that more than
70% of all freelancers nd projects via gig websites. Some
of the largest websites offering gig work are Upwork (with
over 15 million users), Fiverr, and Freelancer (Milenković,
2019). This also supports an index that measures the use of
online labour platforms (i.e. OLI) and shows that their use is
increasing at an annual rate of 26% (Kässi & Lehdonvirta,
2016).
The aim of this paper is therefore to study the entrepre-
neurial form of self-employment - the freelancers. In the
rst part of the paper we will give insights into freelance
activity and highlight its advantages and challenges. In the
second part, we will use the existing literature to examine
the similarities and differences between freelancers and
entrepreneurs, regardless of whether freelancers are also
considered entrepreneurs or not. We will try to answer the
following questions:
Can freelancers be identied as entrepreneurs? What are the
differences between freelancers and entrepreneurs?
The second part is followed by conclusions.
Theoretical Background
As already mentioned in the Introduction, freelance activity
as a non-standard and exible work arrangement is part of
the gig economy. Shevchuk and Strebkov (2012) characterize
freelance workers who work remotely as individuals with a
higher entrepreneurial spirit and human capital, who provide
creative and knowledge-intensive services and take advan-
tage of the global Internet era while maintaining their work.
In the early literature on freelance careers, freelancers were ini-
tially described as borderless workers. The term was created in
the mid-1970s through the initiative of career studies led by sci-
entists in the Massachusetts Institute of Technology. The origin
of this name lies in the fact that freelancers know no boundaries
when it comes to fullling their tasks. Such an approach implies
a shift from individuals relying primarily on career development
organizations to individuals taking responsibility for their own
career management and employability (Hall 2004; Rousseau
1989; Sullivan & Baruch, 2009). Due to the growth of techno-
logical development and globalization, traditional linear career
development can no longer be used to adequately explain
the reality of modern careers and thus the needs of the labor
market. Individual knowledge, skills, expertise and adaptability
are becoming more important than organizational commitment
(Sullivan & Baruch, 2009). Accordingly, traditional working
hours have been replaced by more exible work arrangements
and autonomy. Boundarylessness does not necessarily mean
the complete absence of boundaries between different areas
of life, but it illustrates weak to virtually non-existent area
boundaries (Ezzedeen & Zikic, 2017). According to Donovan
et al. (2019) and Utz (2016), in the business model, companies
(clients) are looking for freelancers (providers) of services for a
specic task through online labour platforms or other applica-
tions (intermediaries). Freelancers enter into formal agreements
with companies to provide services upon request and receive
nancial compensation for the work performed.
Since it applies to the category of self-employed with zero
employees (Sapsed et al., 2015), many self-employed people
in modern economies contribute signicantly to economic
prosperity by enabling client rms to operate more exibly
and cost-effectively, and by introducing innovations in
their client rms (Burke & Cowling 2015). On this basis,
therefore, we will examine the advantages and challenges of
freelance activity in the following section.
Advantages and Challenges of the Freelance
Activity
Since the business environment is very dynamic and market
demand is changing rapidly, freelancers represent the
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NAŠE GOSPODARSTVO / OUR ECONOMY Vol. 66 No. 3 / September 2020
external resources for new solutions. In order for companies
to respond quickly to market changes, they rely on hiring
freelancers who can do a job that no one else in the company
can do. Moreover, freelancers are usually specialists in their
respective elds and are occasionally suitable for niche tasks
(Brinkely, 2016).
The most common reason for hiring a freelancer is cost
efciency. Freelancers work remotely, usually from home,
and companies are not obliged to provide them with space
and equipment for their work. Additionally, freelancers are
usually paid by the hour for their work, and the company
that employs them does not pay health insurance, pension
benets or other contributions (O’Donnell, 2020). This is
followed by risk mitigation, as the cooperation can be ter-
minated relatively easily if the freelancers do not perform
according to the expectations of the companies.
Freelancers generally require a low level of supervision,
mentoring and guidance through work. This saves time
for many companies as they can concentrate on other
tasks. In order to provide added value, the freelancer must
be willing to take the initiative and do the best possible
work (Kirk, 2020). Many freelancers claim that freelance
work is hard work, although it allows freelancers to work
from the comfort of their own homes. Success in freelance
work requires great communication skills, lots of learning,
determination, perseverance and self-discipline (Dam,
2019). Freelancers must market themselves because they
are the only ones responsible for nding their next client
(Artisan, 2017). In this way they are able to deliver work
of high quality. Hiring a freelancer also gives the company
a global reach in talent selection for the work to be done.
Finding talent through online labour platforms has never
been easier.
Furthermore, many authors nd that people are motivated
by push and pull factors to become a freelancer. The former
represents unemployment and underemployment (Bertram,
2016, p. 24; Block & Hennessy, 2017; Coyle, 2017; Tran &
Sokas, 2017), while the latter represents extra income and
exibility as well as interaction with clients and interest in
entrepreneurship (Anderson, 2016; Carboni, 2016; Webster,
2016). Furthermore, Sapsed et al. (2015), divide freelancers’
motivation into three factors: aspirations, pay, and necessity.
Aspirations are the realization of one’s own ideas and the
exibility of work, pay is, of course, earning money, and ne-
cessity is the reasons for engaging in freelance work, such as
dismissal and the inability to nd a steadier job. According
to Van den Born and Van Witteloostuijn studies in 2012, the
main motive for workers to participate in the gig economy
is exibility, followed by autonomy and money. Also, ac-
cording to the results of the First European Freelance Study
(2019) 76.6% of participants were involved in the freelance
work by choice. The main reason is exibility, followed by
the other reasons shown in Figure 1.
The main obstacles identied by respondents were nding
customers (57%) and monthly or weekly income uctua-
tions (46%) (Malt & EFIP, 2019).
With regard to the other challenges, competition is high.
In order to be successful, the freelancer must constantly
work on his skills, knowledge, communication abilities and
Figure 1. First European Freelance Study – reasons to become a freelancer
Source: Malt and the European Forum of Independent Professionals (EFIP), 2019.
46,80%
37,40% 36,90%
35,60%
28,40%
0%
10%
20
%
30%
40%
50
%
Have exibility in my
schedule
Choose my own
project
Work from the
locaon of my choice
To be my own boss To have a beer
work/life balance
59
the portfolio they offer. Working as a freelancer therefore
requires a high degree of self-study (Eden, 1973; Akhmetshin
et al., 2018). As the result, their income depends only on
the capabilities of the freelancer himself. As freelancers fall
into the category of the self-employed, they do not receive
benets such as pensions, sick leave, paid leave, or health
insurance (Akhmetshin et al., 2018).
Consequently, 63% of respondents still believe that they
should be better recognized and supported by policymakers
to maximize their potential (Malt & EIPF, 2019). There is
still a lack of institutional recognition, although existing
European and other international research suggests that it
is one of the fastest-growing forms of contemporary em-
ployment arrangements. There are still no agreements on
the denition and classication of gig workers. Mould et
al. (2013), nd that the lack of information and empirical
data on freelancers explains the lack of government support.
A global ofcial register for such a new workforce does
not exist, and for this reason the classication of freelanc-
ers varies from country to country or does not exist at all.
Freelancers are often identied as entrepreneurs rather than
being perceived as the unique economic entity, which will
be discussed in the next section.
Disscusion on Entrepreneurship vs.
Freelancing
As mentioned in the previous section, there are still different
classications of gig workers. Many authors have examined
the differences between a freelancer and an entrepreneur and
have developed different approaches.
Although freelancers are often referred to as entrepreneurs,
solopreneurs (Fitz, 2019), digital micro-entrepreneurs
(Malaga, 2016), etc. some authors clearly distinguish between
freelancers and entrepreneurs. Other authors offer a more
balanced view of a freelancer compared to an entrepreneur.
They nd that freelancers can be seen as a hybrid of employ-
ees and entrepreneurs. They nd that freelancers are similar
to employees in that they are typically hired by large compa-
nies to use their professional knowledge for a certain period of
time, as opposed to entrepreneurs who sell tangible products
to customers. However, they also argue that freelancers are
entrepreneurs because they work at their own risk, work for
themselves without organizational support, and use their ca-
pabilities to create value (Van den Born & Van Witteloostuijn,
2013). This is why they are so often considered to be entrepre-
neurs themselves when they take risks.
On the other hand, the authors, who make a clear distinc-
tion between freelancers and entrepreneurs, claim that
freelancers are unique economic entities that promote and
enable entrepreneurship. With regard to the category of em-
ployment, they state that freelancers belong to the category
of self-employed with zero employees, who use their poten-
tial to apply for temporary jobs or projects. In addition, they
pay their own income taxes, have full control over where
they work (usually remotely), do not receive benets from
companies, usually work with several clients and projects at
the same time, and set their own rates, whether they charge
by the hour or by project (Darlington, 2014). In contrast,
they state that an entrepreneur is someone who owns a small
business, aims to run and develop a business, has employ-
ees, i.e. hires people, and buys resources (products) from
others to sell them protably (Nation 1099, 2020). This
means, for example, if a furniture designer sells his skills
to a furniture company, the designer is clearly a freelancer
as long as he designs the furniture himself. Only when the
designer stops outsourcing construction activities and hires
people to make the furniture is the designer no longer a free-
lancer and becomes an employer (Van den Born, 2009; Kazi
et. al 2014).
In terms of the promoters of entrepreneurship, Burke (2012),
in his report The role of freelancers in the 21st century British
economy summarises four effects that occur when compa-
nies turn to freelancers: capability, productivity, reduced risk
and competitiveness. These effects are explained in more
detail in Table 1 below.
Table 1. Hiring freelancers - economic added value
CAPABILITY Access to a wide variety of talent/Reduced
nance constraints
PRODUCTIVITY Specialisation of labour/Reduced worker
downtime/Ability to transform an
organisation
REDUCED RISK Lower sunk costs/Variable cost model
COMPETITVENSS Lower barriers to entry/Reduced minimum
efcient scale
Source: Burke, 2012.
Burke (2012), points out that companies can improve their
own efciency and thus their performance through these
effects. The availability of freelancers lowers entry barriers
and thus increases competition and economic efciency.
In this way, freelancers can play a signicant role in the
development of a start-up or a company, and a team could
consist of a mixture of employees and freelancers. Other
authors also point out that freelancers are the focus of at-
tention, with the aim of enriching our understanding of the
contextualization of entrepreneurship (Ucbasaran et al.,
2001). Consequently, they are also perceived as enablers
of entrepreneurship. They enable entrepreneurs to give up
impure risks and thus generate more entrepreneurial activity
Ivona Huđek, Polona Tominc, Karin Širec: Entrepreneurship vs. Freelancing: What’s the Difference?
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NAŠE GOSPODARSTVO / OUR ECONOMY Vol. 66 No. 3 / September 2020
(encouraging innovation). One of the characteristics of
successful entrepreneurs is their ability to avoid risk by
spreading the risk across a portfolio of projects and ventures
(Burke et al., 2010). Freelancers create more opportunities
for entrepreneurs and companies to adopt these strategies.
Instead of having to tie themselves to long-term contracts
to secure workers from a new company, companies can
employ freelancers on short-term contracts. The risk is
transferred from the entrepreneurial venture to the freelanc-
er, since freelancers are usually paid for the output of their
work and not for the input, so they take on general business
risk. They also free companies from the constraints of their
internal resource base and enable them to take advantage of
exceptional talent that would otherwise not be economically
viable with employment contracts (Burke, 2012).
In most cases, freelance work serves as the basis for entre-
preneurship, and entrepreneurship drives economic inno-
vation and job creation (Kazi et al., 2014). Moreover, the
Global Entrepreneurship Monitor, best known international
research on entrepreneurship states that gig workers are also
an interesting pool of potential entrepreneurs (GEM, 2019).
Burke and Van Steel (2011) provide the approach that
denes freelancers as unique economic entities. Table
2 below shows the labour force in a 2x2 matrix based on
the double distinction of whether a person is employed or
self-employed and whether he or she is a manager or worker.
The table shows that while freelancers are self-employed,
their unique function is not that of a business owner. They
are primarily workers on their own account.
Table 2. Labour Force Functional Categories
Manager Worker
Employed Executive Employee
Self-employed Entrepreneur Freelancer
Source: Burke and Van Steel, 2011.
Taking into account freelancers as a unique economic entity,
Van den Born and Van Witteloostuijn (2013) have developed
a model of freelance career success, which provides a basis
and insight for further research directions. Their model is
developed on the basis of an intelligent career framework
(Parker, Khapova & Arthur, 2009), and a protean career
model (Hall, 1970; Hall, 2004). The protean career model
represents a career orientation in which the main success
criteria are subjective. The intelligent career model was
developed for intelligent rms, and it is suitable for the
career of freelancers, because they sell their knowledge and
skills. Due to the fact that a freelancer is self-employed, the
self-employed drivers are seen as the result of entrepreneur-
ial performance and entrepreneurial success. According to
the literature on entrepreneurship, a considerable amount of
research has been devoted to identifying personal traits and
other characteristics associated with entrepreneurial perfor-
mance and success. The results show that personality traits,
motivation, human capital, and social capital characteristics
are generally associated with above-average performance
and what it takes to be successful in the entrepreneurial
profession (Sorensen & Chang, 2006). These constructs
should therefore be considered for a future research model.
This approach overlaps with the intelligent career model, in
which personal traits reect knowing why variable, human
capital reects knowing how variable and social capital
reects knowing whom variable. The model combines the
individual characteristics of the entrepreneur. The intelligent
career model considers the intrinsic factors of the entrepre-
neur but ignores the effect of the external environment in
which an individual freelancer works. We believe that these
factors must also be identied and included in the analysis.
Conclusion
Given the assumptions of the paper, our aim was to provide
insights into the growing number of new workers: freelanc-
ers. Freelancers are part of the gig economy, which has come
to the fore in recent years due to the growing number of
online labour platforms offering remote work worldwide
through non-standard work agreements.
Freelancers are an external source of knowledge and skills
for companies and therefore offer many advantages. Free-
lancers are self-employed with zero employees. Their
unique function is not that of business owners. They work
primarily for their own account. Since they are self-em-
ployed and to a certain extent responsible for nding their
own work, they take risks and participate in risky projects,
and for this reason are often identied with entrepreneurs.
In the entrepreneurship literature, however, they are recog-
nized as promoters and enablers of entrepreneurship. Hiring
freelancers can improve the performance and productivity of
companies, reduce risk and increase their competitiveness,
and inuence innovation and efciency.
One disadvantage in their profession is that they are still not
sufciently recognized and protected by society and gov-
ernment to receive support for developing their potential.
Consequently, as limitations of the paper, there is not much
literature and empirical research that would reveal statistical
differences between entrepreneurs and freelancers, e.g. in
personality traits or even in entrepreneurial orientation or
risk-taking, as is usually practiced between entrepreneurs
and managers. But for some further research such an aspect
of research can be considered. For future research directions,
61
statistical analysis could be carried out on the sample of
labour force categories with regard to some research aspects
(characteristics) in order to determine the clear distinctions
between them. Developing a framework for the freelance
career success model based on the career and entrepre-
neurship literature would provide a better insight into the
specics and challenges by evaluating the empirical results
for specic factors. Some evidence suggests that the work
characteristics of freelancers are related to entrepreneurial
skills. By identifying and analysing certain constructs that
would be used as preconditions, it is also possible to develop
the entrepreneurial predictors that inuence the motivation
of freelancers for a future entrepreneurial career. Accord-
ingly, future research should consider a study with a larger
sample of freelancers to imply a model of career success and
a sample of entrepreneurs to assess the differences between
them. To assess whether the freelancers are potential entre-
preneurs, long-term research is also considered.
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Podjetništvo in freelancing: Kakšna je razlika?
Izvleček
Razvoj internetne tehnologije ob koncu 20. stoletja in njeno vključevanje v poslovni sektor sta privedla do pojava digitalnih
delovnih platform, ki povzročajo reorganizacijo delovnih dogovorov z usklajevanjem povpraševanja in ponudbe blaga
in storitev, znane kot »gig ekonomija«. »Gig ekonomija« zajema gospodarske dejavnosti ali ureditve dela, povezane z
izvajanjem zelo kratkoročnih nalog, ki jih olajšujejo digitalne platforme. Te oblike vključujejo freelance delo, začasno delo,
delo na zahtevo in pogodbeno delo. Naš prispevek se osredotoča na novo, rastočo delovno silo – freelancerje. Freelancerji
pripadajo samozaposleni kategoriji podjetniške dejavnosti, ki ne zaposluje delavcev, plačuje lastne davke, delajo pa na
projektih za več strank in na daljavo, običajno od doma. Glede na različne vire in ugotovitve jih lahko opredelimo tudi
kot podjetnike, samostojne podjetnike, digitalne mikropodjetnike, hibridne podjetnike/zaposlene, kakor tudi kot morebitne
potencialne podjetnike ipd. Namen prispevka je preučiti odnos oz. razmejitev med freelancerji in podjetniki. Cilj prispevka je
na podlagi pristopa pregleda obstoječe literature preučiti in poudariti ključne podobnosti in glavne razlike med freelancerji
in podjetniki ter tako najti odgovor na ključno raziskovalno vprašanje, ali se lahko freelancerji štejejo med podjetnike ali ne?
Poleg tega prispevek ponuja vpogled v samostojno delo ter poudarja prednosti in glavne izzive, s katerimi se freelancerji
srečujejo na trgu dela.
Ključne besede: digitalne delovne platforme, podjetništvo, freelancersko delo, gig ekonomija