OFAD 115. ENTREPRENEURIAL BEHAVIOR 1.

Need Hierarchy Theory propounded by

AND COMPETENCIES Maslow,

(LECTURE) 2. Factor Theory given by Herzberg and

3.Factor/ERG Theory formulated by Alderfer. ∗

ENTREPRENEURIAL MOTIVATION We would, however, be referring to here much

celebrated framework of ‘manifest’ needs given
motivation’ its origin in the Latin word ‘movere,’ by McClelland who may be regarded as the
meaning "to move." father of the study of entrepreneurial motivation.
it means an inner or environmental stimulus to The prefix ‘manifest’ suggests that you can easily
action, forces or the factors that are responsible perceive or observe these needs from the
for initiation, sustaining (and behaviour of the individual. As such ‘manifest’
restraining/abstaining from) behaviour. You will needs framework relates directly to what the
be amazed to learn that different people engage entrepreneurs do and how they do it. Take for
in the same behaviour for different reasons (see example the risk-taking and innovative behaviour
the Box entitled, ‘Different Reasons’), that there of entrepreneurs that imply an individual’s desire
may, in fact, be more than a reason, a to undertake challenging tasks, pursuit of
constellation of various influences, and, that the excellence and competitiveness. All these
reasons for continuing the same behaviour may observable behaviours are summarised in ‘Need
be different from the ones that triggered it off at for Achievement’ or N-Ach. In the manifest needs
the first place. In other words, motivations may be framework
diverse, multiple and dynamic. MANIFEST NEEDS THEORY
NEEDS FRAMEWORK OF McClelland identified three types of manifest
ENTREPRENEURIAL MOTIVATION needs, namely,
In common perception, entrepreneurs are after 1. Need for Achievement (N-Ach.),
money and they engage in profit making. True,
profit- as understood in terms of the residual 2. Need for Power (N-Pow) and
income of the owner after meeting all the
expenses incurred on the engagement and 3. Need for Affiliation (NAff.).
utilisation of other factors of production-is the
Need for Achievement: Entrepreneurial
reward of entrepreneurship just as salary is to
behaviour is so much singularly attributed to this
men and women in employment and professional
need that one may just stop short of taking
fees is to those in profession. So everybody
entrepreneurial motivation and achievement
works for money. But people certainly don’t work
motivation as synonymous. N-ach. Concerns
for money alone. After all, money is required not
issues of excellence, competition, challenging
for its own sake, but for the sake of the needs of
goals and overcoming difficulties. A complete
the person that it can fulfill. Money, thus, is not
achievement sequence would comprise, “…
the need as such. It is teleological (to put it more
defining the problem, wanting to solve it, thinking
simply, distantly) related to the internally felt
of means to solving it, thinking of difficulties that
needs (such as need for food) and socially
get in the way of solving it (either in one’s self or
acquired needs (such as status symbols).This
in the environment), thinking of people who might
leads us to the needs framework of studying
help in solving it, and anticipating what would
entrepreneurial motivation.
happen if one succeeded or failed.”
This framework serves the important purpose of
Need for Power (N-Pow.): If a man “speculates
enabling us to understand what motivates an
about who is boss”, he has a concern for power,
entrepreneur.
notes McClleland. Need for power, in effect, is the
There are various variants of the needs “concern for influencing people” or the behaviour
framework, such as: of others for moving in the chosen direction and
attaining the envisioned objectives. In common
perception, politicians, social-religious leaders Most of these are physical growth and financial
Chief Executive Officers . Such a perception growth parameters and have been the traditional
seems more based on the belief that the source measures of entrepreneurial performance.
of power lies in the “position” a person occupies
in organizational/societal context. In the same Other measures of performance such as
vein, business ownership too may imply a need 1. customers’ satisfaction,
for power.
2. employee satisfaction,

3. image,
Need for Affiliation: If a man “readily thinks
about interpersonal relationships”, he has a 4. credit rating, etc.
concern for affiliation, wrote McClleland. It
implies, among other things, “a tendency of the are also becoming increasingly relevant.
people to conform to the wishes and norms of
ENTREPRENEURIAL REWARDS
those whom they value.” Apparently, social
activists, environmentalists, teachers, and doctors The personal rewards of entrepreneurship extend
and nurses may seem as predominantly driven by beyond business performance. Do the rewards
these needs. Entrepreneurs are believed to be inhere in the outcomes of the activity or the
low on affiliation, as they are and expected to be, activity itself? Often one draws a distinction
innovative, trendsetters and tradition breakers between extrinsic rewards and intrinsic rewards.

Need for Autonomy: is a desire for

independence which, in effect, becomes a desire
to do work of one’s choice and at one’s pace, 1. Intrinsic Rewards:
defining one’s own rules of the game, taking
As the names would suggest, intrinsic rewards
initiative, making independent and innovative
vest in the activity itself- ask a musician the joy of
choices and being responsible and accountable
making music, the craftsman or the artist the joy
to oneself rather than some external authority for
of creative work or a cricketer the joy of playing
performance.
the game! Likewise, the entrepreneur enjoys the
creativity and innovativeness that he brings to his
venture. This aspect of entrepreneurship may be
ENTREPRENEURIAL PERFORMANCE AND so dear to the entrepreneur, that he may happily
REWARDS forgo other commonly perceived physical and
financial parameters of performance. Many
ENTREPRENEURIAL PERFORMANCE
entrepreneurs, even as they welcome the
The various measures of business performance prosperity and flourish of Entrepreneurial
include, Performance Physical Financial Stakeholders’
Based MarketBased 11 business miss “those
1. longevity of survival or more popularly ‘age of momentous” days of bringing their dream project
the enterprise,’ alive. Such rewards inhere also in the pleasure
that one is creating an organization/institution that
2. sales growth, would outlive one’s lifespan. Every business is a
3. growth in market share, source of livelihood to many employees and their
families. Thus, the entrepreneurs derive immense
4. growth in market scope (local, national or satisfaction in their ability to ‘touch’ other’s lives.
international),
2. Extrinsic Rewards:
5. growth in investment (in the same unit),
additional units created via acquisition & One reason an individual may desire to be on
diversification one’s own could be that one is looking for the
profit pie rather than mere a share in it! The logic
6. growth in number of employees, profits and so is simple-the payoff to the employer is greater
on. than the salary to the highest paid employee!
Apart from income and wealth that business motivators for taking the plunge into
ownership may bring forth, it may also be source entrepreneurship have been identified by
of career continuity for family members. McClleland among others. Of these the Need for
Achievement plays a very crucial role in
SUMMARY entrepreneurial motivation. It encompasses
defining a problem, organizing the means of
To take up a career in entrepreneurship you have
solving it, setting goals, seeking challenges and
to feel the desire as well as perceive the
taking moderate risks. Desire for autonomy also
feasibility of entrepreneurship as a career option.
spurs people to start their own ventures, as they
Fortunately it is no longer believed that
do not want to work as subordinates who have to
entrepreneurs are born with certain traits. The
follow instructions all the time. Entrepreneurial
emphasis is now on the competencies, which
performance can be measured in physical,
provide the know-how of how to engage in
financial, market or stakeholder basis. While the
entrepreneurial behaviour. Knowledge, skills and
age of enterprise, sales, profits, increase in
abilities for undertaking a particular task can be
market share/scope etc. are important the
learnt. A list of general competencies, which play
rewards of entrepreneurship can be intrinsicthe
an important role in entrepreneurial success
joy of creating ones own organization, or
include work commitment self confidence,
extrinsic-profits or being part of the ET Top 50 or
systematic planning, concern for quality etc. A
part of the Forbes List of Billioniares.Whatever be
change in perspective- an ability to perceive
the personal agenda for taking the plunge into
opportunities and to think of innovative ways of
entrepreneurship the intricacies of identifying the
exploiting opportunities is a right step in thinking
product or service, its feasibility analysis,
like an entrepreneur. Experience in that particular
decisions regarding plant location, financing,
field will go a long way in providing you the know-
marketing etc. have to be taken. You will learn
how and confidence that you can launch and 12
about these in the subsequent lessons.
successfully run an enterprise. Many