Concept of Entrepreneurial Behaviour and Motivation
Entrepreneurial behaviour refers to the study of human behaviour displayed during the establishment of any new venture. It also studies the way in which an individual creates and explores prospective opportunities in case of growing organisation. Innovation within the existing organisational system and social change (at large scale) are promoted by entrepreneurial behaviour.
Having the entrepreneurial skills only does not guarantee the entrepreneurial behaviour. Motivation is very necessary for exploring the opportunities and converting them into success. Motivation is the compelling factor which initiates the entrepreneurial behaviour.
A number of factors are closely related with the entrepreneurial motivation; a few of them are 'push factors', such as unemployment and dissatisfaction with the job and others are 'pull factors', such as a new idea emerging in mind, desire to act independently, etc. For example, the major motivating factor behind entrepreneurial behaviour in a society is the economic condition.
The word "motivation" has originated from the term motive which relates to wants, needs, impulses and drives within a person. Motivation refers to the process of Inspiring people for doing tasks and achieving goals and desires. Motivation is a psychological occurrence that originates from the wants and needs of people. It initiates a goal-oriented behaviour.
Entrepreneurial motivation is a process of motivating an entrepreneur to apply higher level of efforts for the achievement of entrepreneurial goals. It is the drive within an entrepreneur that affects the direction, persistence and intensity of voluntary behaviour as an entrepreneur. In order to become motivated, an entrepreneur must identify and fulfil his needs, desires and ambitions. Once the entrepreneurs are satisfied, they can efficiently work towards fulfilment of organisational goals.
In the entire entrepreneurship development program package, training is regarded as the most crucial and integrated element. It is very important for the development of entrepreneurial motivation and competency. However, attaining entrepreneurial motivation through training is a complex process.
The findings of David McClelland reflect that:
- Motives can be acquired by individuals and can be developed through appropriate training and education.
- New stimulated motives are highly expected to influence future thoughts and actions.
Gartner, Bird and Starr have defined entrepreneurial motivation as the force within a person that stimulates an emerging entrepreneur to grow and expand his venture.
Factors Motivating Entrepreneurs
The emergence of entrepreneurs was marked in the human civilization era, when individuals used to have their own independent businesses and the same trend is still being followed. From the last few decades, entrepreneurs are considered as the value givers as they contribute towards the overall development of the society. There are three main factors which motivate the entrepreneurs to start their businesses. These factors are discussed below:
1) Compelling Factors:
Often, the individuals are forced to become entrepreneurs. Therefore, it is viewed as a compulsion rather than their own ambitions. Compelling factors leave no other choice for an individual which directs them towards entrepreneurship, Some the compelling factors are as follows:
i) Unemployment: Unemployment is the main reason for individuals to adopt entrepreneurship. This is one of those compelling factors where becoming an entrepreneur is the first and last option for a person.
ii) Make Use of Idle Funds: Being an entrepreneur, one can effectively utilize his idle funds. It can be used to set-up a new venture.
iii) Make Use of Technical/Professional Skills: Instead of working for others who do not recognize the technical or professional abilities of a person, individuals prefer to become entrepreneurs. This acts as one of the compelling factors as it helps them to exploit their technical and professional skills.
iv) Family Circumstances: Many times, the family circumstances force the individuals to choose entrepreneurship as their profession.
2) Facilitating Factors:
These factors facilitate the individuals to utilize their idle resources and easily start a particular business. Hence, they are known as facilitating factors. These factors are as follows:
i) Acquired Experience: The experience and skills of an individual facilitate him to become an entrepreneur. By doing so, an entrepreneur can earn profit by effectively utilizing his skills and experience for oneself.
ii) Moral Support: Sometimes, a person may face problems in commencing his own business, and having material support from friends and family is not just enough. At that time, moral support is the most significant need, which facilitates a person to become an entrepreneur.
iii) Influence of Success Stories: Many individuals get highly motivated by the success stories of various entrepreneurs. This is one of the important factors to start one's own business.
iv) Availability of Finance and Especially Risk Capital: The required finance and risk capital for start-up ventures is readily available to individuals in form of grants and subsidies: This acts as a motivator for individuals to become entrepreneurs.
3) Ambitions Factors:
Often it is the internal drive and ambitions that motivate the individuals to start their own businesses. Following are some of the ambitions factors:
i) To Make Money: The ambition to earn money and make profits is one of the major factors that stimulate individuals towards entrepreneurship. It may also include the desire to innovate something new or to transform a concept into reality.
ii) To Secure Self-Employment/Independent Living: In order to secure self-employment and independency, many individuals start their own business.
iii) To Gain Social Prestige: There are some people who establish a business enterprise to gain social prestige and recognition.
iv) Desire to be Creative: A desire to be different from others and to create something new is the characteristic of a successful entrepreneur. He is never satisfied with his performance and is always ready to learn new things.
Elements of Entrepreneurial Behaviour
As different behaviour is shown by different entrepreneurs under different situations, it is very difficult to draw-out a general entrepreneurial behaviour. With every entrepreneur counted, a new entrepreneurial behaviour is highlighted. According to a well-known social psychologist, David McClelland, the creators of well-established organisations possibly have common personality traits.
1) Self-Analysis:
Self-assessment or self-analysis refers to a process of self-introspection to explore the factors which are crucial for the personality of an individual. Self- analysis is one of the driving forces behind self- evaluation, self-verification as well as self- enhancement. It is vital to assess one's personality as it helps in revealing the clear picture about one's abilities, willingness and economic soundness at a crucial point of time. A comprehensive assessment helps in depicting the business idea of the entrepreneur, his/her strategies and how he/she would associate with the society at large. It is one of the crucial factors that help in finding out how an entrepreneur can be assisted for succeeding in his business endeavor.
Types of Assessments
There are a number of assessment tools, which can help in evaluating different aspects of the behaviour of the entrepreneur, such as his area of interest, abilities and skills, values and personality type. The self-assessment tools can be mainly of two types, namely, Self-directed or Requiring Interpretive Assistance. These tools have been explained below:
i) Self-Directed:
It refers to the assessment tool which has been designed in such a way that it can be used by an individual without the need of any professional or licensed trainer for the purpose of interpretation. Although, there is no need for involving any professional for analyzing the results, yet some questions may remain unanswered to the entrepreneurs. In such conditions, the service offering tool may be helpful for the entrepreneurs.
ii) Tools Requiring Interpretive Assistance:
It refers to the assessment tools which require the assistance from the professional for analyzing the data. The expenses of this interpretive support would be included in the cost of the tool in some or the other way.
2) Personal Efficacy:
The faith in one's own abilities concerning the information organisation and execution of a given course of action is called personal or self-efficacy. The chance of attaining success for a particular task is increased with high level of self-efficacy. According to social psychologist Albert Bandura, "self-efficacy is a key component of the self-system, which consists of an individual's attitudes, abilities, and cognitive resources". It is suggested through the psychological researches that entrepreneur must use the idea of self-efficacy as a medium to assess the past experiences and make judgements about succeeding in future plans.
An entrepreneur develops personal efficacy through his experiences with the outside world and framing judgments about one's abilities on the basis of these experiences. Hence, we can say personal efficacy is not an inborn characteristic of an individual. This implies that an entrepreneur does not require to be born with self-confidence or faith in his own capabilities as these traits can be attained through his experience at later stages of life.
Ways for Raising Personal Efficacy
The four key ways for raising self-efficacy proposed by Albert Bandura are as follows:
i) Mastery of Experiences:
When entrepreneur accomplishes a task, his faith in his abilities to succeed rises. Hence, one should never be afraid and should not show reluctance in trying something which can add to an individual's experiences.
ii) Social Modelling:
Another way to raise self- efficacy is through social modelling in which an entrepreneur needs to find a role model, who has fruitfully accomplished his tasks. This helps the entrepreneur in developing trust in his capabilities regarding successfully accomplishing the task.
iii) Social Persuasion:
The self-efficacy of the entrepreneur can also be influenced by others. The self-efficacy of the entrepreneur considerably rises when the colleagues tell him/her that he/she could successfully accomplish the given task.
iv) Psychological Responses:
Personal-efficacy of an entrepreneur is also governed by the feelings carried by the entrepreneur at a particular point of time. The negative emotions such as distress, anger or nervousness might refrain the entrepreneur from believing in his/her abilities for successfully accomplishing the task; however, the positive emotions such as cheerfulness and serenity helps him to embrace all the challenges with high levels of personal efficacy.
3) Culture and Values:
Culture of the entrepreneur is expressed through the amalgamation of tradition and social behaviour in the process of development of the new venture. It acts as a primary factor responsible for exploring the entrepreneurial behaviour of the individual. It describes the manner in which the entrepreneur takes decisions, evaluates resources, determines market potential, compares the risks against opportunities, designs competitive strategy, etc.
Entrepreneurship is not something inborn or instinctive; rather it comes out as a result of interaction with the outside environment. Both economic as well as social behaviours combine to form the entrepreneurial behaviour. A dynamic entrepreneur who shows responsibility to the entire society or environment surely gets success. It is difficult for entrepreneurship to sustain in all type of environment, and instead it needs an ideal environment for prospering. As entrepreneurship is a component of the complete system or society, its growth is influenced by the values, culture, rules, political setup, technology, financial status, traditions and laws, etc.
Actually, it is difficult to separate the entrepreneurship from the changes in the social values and beliefs, novel and rising hopes, pressures within the environment, religious beliefs, desires of the customer and the needs of the society, etc. Business refers to a system which is made-up of some factors of the environment which calls for the need for adopting a dynamic attitude, and novel and distinctive strategy by the entrepreneur.
The set of values, norms, and traits which are favorable for the growth of entrepreneurship is referred to as entrepreneurial culture. Entrepreneurship as well as economic development is greatly affected by cultural values. It helps in determining if the prospective opportunities can be implemented into reality and also stimulates entrepreneurial development. There is a close association between the values of the organisation and its culture. The starting point of any behaviour is value, while the end point is the culture. For example, a person or organisation might consider honesty as the basic value, but if most of the people fail to behave honestly, ultimately the culture of the organisation would turn to be a dishonest one.
The basic values of an organisation should be enacted through its culture. Though values are something coming from the higher authorities, yet the culture of the organisation develops through the behaviour of all the individuals associated with the organisation. Directing the action of all the individuals is possible by clearly communicating the values to them and emphasizing the importance of imbibing them. Though it is simple to dictate the values, yet if most of the employees, especially the higher authorities fail to adhere to them, the culture of the organisation would be ruined. The actions performed in an organisation and behaviour associated with its individuals drive the cultural environment of an organisation.
Thus, it is vital to clearly define and communicate the values of an organisation to its individuals and to keep a strict check on its reinforcement. In absence of doing so, it would be difficult to implement the desired values in accordance with the culture of the organisation.
Developing Culture and Values
In order to control and develop values and culture, an organisation can follow the below mentioned process:
i) Identification:
The first step in the process is associated with identifying and listing the values of the organisation and highlighting the desirable values as per the authorities and other important personnel.
ii) Communication:
Here, the process of communication indicates conveying the values to the employees from time to time. However, over-communicating the values in the organisation is not permissible.
iii) Recruitments:
In the recruitment process, the organisation should try to recruit such individuals whose values match with that of the organisation, so that they can prove to be suitable for the organisation.
iv) Training:
In the process of training, the values of the organisation and its importance should be explained while providing training to the fresher and the existing personnel.
v) Presenting Role Models:
It is vital to behave in a way that helps in endorsing and depicting the defined values. It is also important to support the communication with actual behaviour as 'actions speak more than words'.
vi) Reinforcement:
In the process of reinforcement, positive reinforcement should be provided to personnel so that they adhere to the values of the organisation.
4) Risk-Taking Behaviour:
Entrepreneurial life is not complete without risks and entrepreneurs are always ready to take such risks. It is the key feature of entrepreneurs to plan their behaviour in a sensible manner to face the different risks involved in entrepreneurial life. But, it does not mean that they just take the risks; a proper evaluation is involved behind taking the risks. Every pros and cons are evaluated. They simply avoid the goals which are too simple or too difficult to achieve. The completion of the challenging tasks provides them a sense of achievement.
Calculate Risk-Taking Behaviour
Following are the factors which are included in calculated or moderate risk-taking:
- Knowing the existing situation.
- Collecting the sufficient information from the concerned environment.
- Evaluating one's own competencies.
- Choosing the risks as per the collected information and available resources.
- Judging one's own capabilities.
- Changing the set goals as per the past experience.
Risk-taking path is not a tried and tested path. It is like practicing innovativeness, Most of the big risk- takers become the successful owners of different big ventures. Entrepreneurs, who are highly successful in their lives with lofty bank accounts and a chain of companies, are those who dare to take the risks. It is difficult to taste the sweet fruit of success without taking any risk.
The feature of risk-taking is closely associated with entrepreneurship. According to McClelland, the entrepreneurs are moderate risk-takers who take calculated movements by skillful management and control. Entrepreneurs do not refer to risk management skills both in case of risk free situation and in situation which is completely risky in nature. This perspective has been supported by various studies. Such studies also claim that risk- taking behaviour is also exhibited by managers and general public (i.e., risk-taking is not a unique feature possessed merely by entrepreneurs). Moreover, according to Begley and Boyd, those who founded the firms (entrepreneurs) got higher scores in their risk-taking inclination, in comparison to the non-founders.
5) Technology Backup:
Technological backup is very crucial for any organisation in today's fast growing technological era. Technology is a vital part of all types of firms, even for those which are "non-technological" firms. Technology is everywhere, be it software for enhancing the yields, or security system, cooling system, marketing, networking, advertising. telecommunication, etc. In order to attain a significant position in the global market and to have competitive advantage, different technological systems are required, be it simple cash register program (to track daily purchases/inventory) or a delicate network system (to connect people and places). The entrepreneurs can remain ahead of all their competitors by keeping themselves well-informed about the latest technologies, and looking for the information which facilitates in effective decision- making in regards to purchasing decisions.
Role of Technology Backup
Here are some ways in which technology backup plays a role in the entrepreneurial behavior:
i) Idea Generation and Opportunity Recognition:
Technology Tools and Platforms: Entrepreneurs often use technology tools and platforms to gather information, analyze market trends, and identify potential opportunities. This may include the use of data analytics, market research software, and social media monitoring tools to track consumer behavior and identify emerging trends.
ii) Risk-Taking and Innovation:
Research and Development Technologies: Entrepreneurs leverage technology to innovate and create new products or services. This involves investing in research and development tools and technologies that enable the exploration of new ideas, prototyping, and testing.
iii) Pro-activeness:
Communication Technologies: Entrepreneurs need to be proactive in reaching out to customers, partners, and stakeholders. Communication technologies such as email, video conferencing, and collaboration tools play a crucial role in facilitating effective and timely communication, enabling entrepreneurs to stay connected and responsive.
iv) Resource Management:
Project Management Tools: Entrepreneurs use technology to manage resources efficiently. Project management tools help in planning, organizing, and tracking tasks and activities, ensuring that resources are allocated effectively to achieve business goals.
v) Networking and Relationship Building:
Social Media and Networking Platforms: Technology facilitates networking and relationship-building through online platforms. Entrepreneurs can use social media, professional networking sites, and other digital channels to connect with peers, mentors, investors, and potential customers.
vi) Adaptability and Flexibility:
Cloud Computing and Mobile Technologies: Entrepreneurial ventures often require adaptability and flexibility. Cloud computing enables entrepreneurs to access and manage data and applications remotely, while mobile technologies provide flexibility in managing business operations on the go.
vii) Resilience:
Data Backup and Security Systems: Entrepreneurs recognize the importance of resilience in the face of challenges. Technology backup includes robust data backup and security systems to safeguard critical business information, protecting against data loss, cyber threats, and other disruptions.
viii) Customer Focus:
Customer Relationship Management (CRM) Systems: Entrepreneurs prioritize customer focus by utilizing CRM systems. These technologies help in managing customer interactions, analyzing customer data, and tailoring products or services to meet customer needs.
Achievement Motivation Theory
Achievement Motivation Theory is a psychological framework that seeks to explain why individuals are motivated to achieve certain goals and how their need for achievement influences their behavior. One of the most well-known proponents of this theory is David McClelland, who developed the concept in the 1950s. The theory suggests that people are driven to excel in their endeavors and that the need for achievement varies among individuals.
According to McClelland, the major determinant of entrepreneurship development is a set of personality characteristics which are indicative of high need achievement. Here, "need achievement" is a social motive of an entrepreneur to become successful when supported by the cultural factors. As a result, high level of entrepreneurship development is expected within a society, if the average level of need achievement in a society in reasonably high.
In earlier times, it was believed that parents play a significant role in upbringing their children to be independent and powerful, especially the mother. But, McClelland stated that need achievement is accustomed more by the social and cultural factors compared to parental support.
For an entrepreneur to be successful, organisational climate must encourage high accomplishments. The manager must permit liberation to subordinate, increase the level of achievement need of subordinates to develop a suitable business environment, increase the responsibility and make the task more competitive.
Components of Achievement Motivation Theory
Key components of Achievement Motivation Theory include:
1) Need for Achievement (nAch):
McClelland proposed that individuals have a varying degree of need for achievement. Some people possess a high need for achievement, meaning they are strongly motivated to excel, set challenging goals, and take calculated risks to attain success. Others may have a low need for achievement and may prefer tasks that are too easy or too difficult to avoid potential failure.
2) Achievement-oriented behavior:
Individuals with a high need for achievement tend to display certain behaviors such as setting challenging but realistic goals, taking personal responsibility for their performance, seeking feedback, and actively searching for tasks that offer a sense of accomplishment.
3) Fear of Failure:
The fear of failure is another aspect of the theory. People with a high need for achievement may experience fear of failure, but they often view failure as an opportunity to learn and improve. On the other hand, individuals with a low need for achievement may avoid challenging tasks to prevent the possibility of failure.
4) Goal-setting:
Achievement Motivation Theory emphasizes the importance of goal-setting in driving behavior. Individuals with a high need for achievement are more likely to set specific and challenging goals, which can enhance their motivation and performance.
5) Feedback:
Regular and constructive feedback is essential for individuals with a high need for achievement. They seek feedback to monitor their progress, make necessary adjustments, and improve their performance.
6) Cultural and social influences:
Achievement Motivation Theory recognizes that cultural and social factors can influence an individual's need for achievement. Cultural norms and values, as well as socialization experiences, can shape an individual's motivation to achieve.
Importance of Achievement Motivation Theory
McClelland's theory of motivation has a broad perspective. He established achievement as a motive for motivation. He also stated that it is very important to develop achievement motive among the employees. For this purpose, one has to go through a properly devised and deliberate learning process. Some of the points that reflect the importance of this theory are:
- McClelland's theory of motivation can be taught and achieved by learning. Thus, his theory is important.
- Manager can raise the achievement need level of subordinates by making the tasks more challenging and interesting, building a healthy work environment, providing of adequate freedom to subordinates, and delegating more responsibilities.
- High performance of subordinates lead to reward and appreciation which also help to raise the achievement need level of subordinates.
- Developing a desire of high achievements in the mind of employees can also be used for achievement motivation.
- For the survival and success of an entrepreneur and his business, achievement motivation is very essential.
- It acts as a motivating factor for the economic development of the country.
Criticism of Achievement Motivation Theory
This theory has the following criticisms:
- High achievement seekers cannot be effective managers and expect similar results from others.
- The practice of protective techniques is objectionable.
- The training for achievement motivation is a time consuming process.
- Not all needs motivate the workers.
Ways to Achieve Entrepreneurial Motivation
For several persons, exploring the motivation for attaining the objective is not an easy job. A number of people have the ability to outshine without requiring external source of motivation, while several others need extra motivation from others. Inborn motivation to succeed varies from person to person, as anything which might motivate an individual fails to do so in case of another person. In case a person is satisfied with what he has, it would be very difficult to motivate him to excel. Following are the means through which motivation for excelling can be attained:
1) Maintaining an Optimistic Approach:
The most optimistic person might also lose his/her objectives at times. But those who are really motivated entrepreneurs are determined in true sense as they always remember, "Never quit, irrespective of all the adversities". Sometimes motivation is synonym to determination. A strong determination that nothing can interfere with the objective makes the entrepreneur truly motivated. At several occasions, it is not the consequences of a situation which frighten a person, but his/her own attitude, Failure to accomplish a task in spite of continuous actions can be turned into success by adopting an optimistic outlook.
2) Making an Appropriate Plan:
Motivation till the end of the lengthy project is difficult to maintain in absence of an organised plan. Setting up of the objectives should be accompanied with various key points for regaining the focus: For example, motivation to buy a house in the next year should be accompanied with timely payment of all the dues and a regular saving structure for the down payment. Fixing of the small objectives instead of a bigger one helps the entrepreneur to regularly check his success and would help him to attain the desired goal eventually.
3) Being Accountable:
The method of motivation varies from person to person. Some need motivation from others, while some are determined to attain what they desire and act accordingly. As motivation to excel would be eventually advantageous to the entrepreneurs, therefore they have to take the responsibility for their actions. The entrepreneurs also require proving themselves that they really want to achieve what they have aimed for and will give their best efforts in improving their actions and attaining success. This would eventually help the entrepreneurs to explore their own definition of excellence; however they should never forget that, 'sweating and toiling would ultimately help in tasting the sweet fruit of successes.
4) Working for Others, Not for Self:
Sometimes motivation comes from the feeling of doing something for others. Some entrepreneurs get tired of entrepreneurial life but they remain in this journey just to secure the future of their loved ones. In absence of personal motivation, this factor compels the entrepreneurs to being engaged in entrepreneurial journey.