Various theories which motivates an Entrepreneur

1. ECONOMIC AND PSYCHOLOGICAL THEORIES
OF ENTREPRENEURIAL MOTIVATION
PRESENTATION BY:-
Bhashkar Upadhyay
Mohit Garg
Ritu Jha

3. Entrepreneurial Motivation
Entrepreneurial Motivation is the drive of an
entrepreneur to maintain an entrepreneurial spirit in all
their actions.
TWO TERMS:-
ENTREPRENEURIAL.
MOTIVATION.

4. Defining Motivation
Internal and external factors that stimulate desire and
energy in people to be continually interested and
committed to a job, role or subject, or to make an effort to
attain a goal.
Motivation refers to the states within a person or animal
that drives behaviour toward some goals.
- MORGAN AND KING

5. Theories of Entrepreneurial Motivation
• Sociological Theories
• Economic Theories
• Psychological Theories
• Cultural Theories
• Motivational Theories

6. Economic Theory
• Entrepreneurship and economic growth take place
when the economic conditions are favourable
• Economic incentives are the main motivators for
entrepreneurial activities
• Economic incentives include taxation policy,
industrial policy, sources of finance and raw
material, infrastructure availability, investment and
marketing opportunities, access to information
about market conditions, technology etc.

7. Innovation Theory by Schumpeter
Joseph Schumpeter (1934)
According to him, process of innovation in entrepreneurship
may be in the form of-
Introduction of new product
Use of new method of production
Opening of new market
Conquest of new source of supplying raw material
New form of organization

8. Continued..
• Innovation in the form of
– new ideas,
– new products,
– new methods/ functions,
– opening new market,
– capture of new source of raw materials,
– carrying out new organization
• Schumpeter’s concept of innovation includes element
of risk taking, coordination.

9. Continued..
However, if innovation is absent, presence of rest of the
elements cannot make Entrepreneur
Entrepreneurship is an initiative taken to go beyond the existing
way of life
But, there is a difference between Inventor and Innovator
Criticism:
• This theory assumes existence of capitalist society, with private
property, private initiative, money and banking system, etc.
• Applicability and success of this theory becomes doubtful in under
developed country

10. Psychological Theory
• Entrepreneurship gets a boost when society has
sufficient supply of individuals with necessary
psychological characteristics
• The psychological characteristics include need for high
achievement, a vision or foresight, ability to face
opposition
• These characteristics are formed during the individual’s
upbringing which stress on standards of excellence, self
reliance and low father dominance

12. Psychological Theory
• He emphasis on two factors- Innovation and
Resources.
• Innovation is an instrument of entrepreneurship.
• Drucker is of the opinion that entrepreneurs need
not be owners of their businesses. A professional
manager who mobilizes resources and allocates
them to make a commercial gain from an
opportunity is also an entrepreneur.

13. • Material is converted into resources and are
combined in a new or more productive
configuration
• Entrepreneurship is the practice which has
knowledge base.
• Entrepreneurship is equally important to
small business and non- economic
institutions.

14. Psychological Factors
• Need for Achievement
• Need for Influencing Others
• Sense of Efficiency
• Risk Taking Behaviour
• Self-introspection
• Hope of Success

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