EENTREPRNTREPREENEURSHINEURSHIP P THEORIESTHEORIES

Theories of Theories of EntrepreneurshipEntrepreneurship

Many economists give their views about entrepreneurship but Richard Cantillon was the first person who recognise the role of entrepreneurship. He said that farmer is an entrepreneur who promise to pay landlord for his land without any assurance of profits he can drive from his enterprise i.e. land. He said that there is always a risk factor of fluctuation of prices in market for an entrepreneur.Schumpeter added the concept of innovation. He said that an entrepreneur can be helpful in economic development by introducing new innovative ideas. Lack of innovation can reduce the enthusiasm, physical and mental energy of entrepreneur.

ECONOMIC THEORYECONOMIC THEORY

Sociologists suggest that entrepreneurship can be social movement. Propounders of this theory believe that cultural values deeply affect the entrepreneurship and economic development. If strong family support is with entrepreneur then this will be fruitful but if family does not care about businessman it can cause adverse affect. According to Hoselitz the persons who introduce innovative ideas reject the traditional ways of doing the things.Economists believes that special attention given to society can improve the relations between the entreprise and its surroundings.

SOCIOLOGICAL THEORYSOCIOLOGICAL THEORY

Propounders of this theory said that entrepreneurship is most likely to emerge when a society has sufficient psychological characteristics.

Joseph Schumpeter states that entrepreneur is motivated & driven by 3 things:(a) ‘The dream and the will to found a private kingdom’ that means the desire for power & independence.(b) ‘The will to conquer’ that means the will to succeed.(c) ‘The joy of creating’ that means satisfaction of getting things done.He asserts that matter is beheviour not the actor.

PSYCHOLOGICAL THEORYPSYCHOLOGICAL THEORY

FREDRIK BARTEH developed this theory. According to him, entrepreneurship has two connecting spheres in the society between which there exits a difference in values. These spheres are:

Something which is cheap and Something which is expensive.

Barth states that entrepreneurial beheviour means to connect 2 different spheres in the society, between there is a huge discrepancy in the value.

ANTHROPOLOGICAL ANTHROPOLOGICAL THEORYTHEORY

Schumpeter-1934-Theory of Innovation

The ability to identify new opportunities in the market is a central Entrepreneurial activity which creates disequilibrium in the Economy.

Entrepreneur is the Bearer of the Mechanism for change- which can occur from inside or outside economy

He listed five different kinds of innovations or ways to Act as an entrepreneur:

•The introduction of a new good or quality of good•The introduction of a new method of production•The opening of new market•The utilization of some new sources of supply for raw material or Intermediate goods•The carrying out of some new organized form of industry

JOSEPH SCHUMPETER gave a well-rounded picture of an entrepreneur. He disclosed the various aspects of entrepreneurship and produced the competent history of entrepreneurship in economic theory.In his book The Theory of Economic Development he said that art, political, innovative activities are on one side & repetitive and mechanical activities are on other side. He developed theories of interest, profit, credit & business cycle. He said that entrepreneur doesn’t have to be a single person but can be an organization. He stressed more on technological innovations rather than on organizational innovations.

JOSEPH SCHUMPETER’S CONTRIBUTTION TO JOSEPH SCHUMPETER’S CONTRIBUTTION TO ENTREPRENEURSHIPENTREPRENEURSHIP

Conclusion.Conclusion.

From all this it is concluded that it is as old as civilisation. Entrepreneurship is a role played by or task performed by the entrepreneur. Entrepreneurship become important and caught strong waves during last 3 decades of the previous century. James Schumpeter's contribution in this concept is very much wide. His versatile and multi-disciplinary approach could influence the history of economic thoughts. Schumpeter distinguished between an inventor and innovator by saying that inventor is discovers new methods and materials whereas innovator utilizing inventions and make a new combinations and produces newer and better product. From all this he generates his profits.

McClelland Achievement McClelland Achievement Motivation TheoryMotivation Theory

What is Motivation?What is Motivation?

• The word 'motivation' comes from the Latin word meaning 'to move‘

• External motivation: bonus, work conditions (getting the office with the window)

• An inner (self-motivation) or outer drive to meet a need or goal

Why is Motivation Why is Motivation Important?Important?

• It is one of the three key elements in performance

• Performance = f {Ability x Motivation x Opportunity}

• Ability refers to a natural talent to do something mental or physical

• Motivation is not a stable individual characteristic. Motivation is not a trait.

• Opportunity refers to the different situations that workers may find themselves in.

McClelland's Achievement McClelland's Achievement MotivationMotivation

• McClelland's Achievement Motivation Theory is based upon the idea that people have an achievement need. An achievement need is the need to be successful and to receive recognition for your success.

3 characteristics of people3 characteristics of people

1. Need for Achievement - doing innovative, new, interesting and challenging things.

2. Need for Affiliation - the need for feedback / contact with others.

3. Need for Power - the need for responsibility, or to be responsible for others.

McClelland's experimentMcClelland's experiment-- The Thematic Apperception Test (TAT) -- It consisted of showing individuals a series of pictures and asking them to give brief descriptions of what was happening in the pictures. The responses were analysed in terms of the presence or absence of certain themes. The themes McClelland and his associates were looking for revolved around the following motivators: achievement, affiliation and power.

THEMATICTHEMATIC APPERCEPTION APPERCEPTION TESTTEST

• The Thematic Apperception Test or TAT is amongst the most widely used, researched, and taught psychological tests

• TAT was developed by the American psychologist Henry A. Murray and Christina D. Morgan at during the 1930s to explore the underlying dynamics of personality, such as internal conflicts, dominant drives and interests and motives.

• It uses a standard series of 31 provocative yet ambiguous pictures about which the subject must tell a story.

• A subject is asked questions such as: What dialogue might be carried on between characters? How might the "story" continue after the picture shown?

• For this reason, the TAT is also known as the 'picture interpretation technique'.

• Today, the TAT is widely used as a tool for research around areas of psychology such as dreams, fantasies and what motivates people to choose their occupation.

• Sometimes it is used in a psychiatric context to assess disordered thinking, in forensic examinations to evaluate crime suspects or to screen candidates for high-stress occupations.

• THE NEXT FEW SLIDES WILL CONTAIN SOME PICTURES.

• THEIR MEANING WILL DIFFER FROM PERSON TO PERSON AS THEY WILL BE INTEPRETED ACOORDING TO INDIVIDUAL PERCEPTION

AchievementAchievement

• The need for achievement is characterised by the wish to take responsibility for finding solutions to problems, master complex tasks, set goals, get feedback on level of success.

THE NEED FOR ACHIEVEMENT THE NEED FOR ACHIEVEMENT (N-ACH)(N-ACH)

The n-ach person is 'achievement motivated' and therefore:

• seeks achievement, • attainment of realistic but challenging goals, • advancement in the job.• There is a strong need for feedback as to

achievement and progress, accompained with a need for a sense of accomplishment.

Affiliation Affiliation

• The need for affiliation is characterised by a desire to belong, an enjoyment of teamwork, a concern about interpersonal relationships, and a need to reduce uncertainty.

THE NEED FOR AFFILIATION THE NEED FOR AFFILIATION (N-AFFIL)(N-AFFIL)

• The n-affil person is 'affiliation motivated',• He has a need for friendly relationships and is

motivated towards interaction with other people.

• The affiliation driver produces motivation and need to be liked and held in popular regard.

• These people are team players.

Power (Influence)Power (Influence)

• The need for power is characterised by a drive to control and influence others, a need to win arguments, a need to persuade and prevail.

THE NEED FOR AUTHORITY AND THE NEED FOR AUTHORITY AND POWER (N-POW)POWER (N-POW)

The n-pow person is 'authority motivated'. This driver produces a need to be

• influential, • effective • to make an impact.• There is a strong need to lead and for their ideas

to prevail. • There is also motivation and need towards

increasing personal status and prestige.

TYPES OF POWERTYPES OF POWER

A persons need for power is of two types• PERSONAL POWER

Those who need Personal Power want to direct others, which is often perceived as undesirable.

INSTITUTIONAL POWERINSTITUTIONAL POWER

• Persons who need Institutional power or Social Power want to organise the efforts of others to further the goals of the organisation.

• Managers with high need for institutional power tend to be more effective managers as compared to those with high Personal Power.

Need for Achievement and Need for Achievement and EntrepreneurshipEntrepreneurship

• McClelland further described the profile of an entrepreneur as someone high in achievement motivation and low in power motivation, while good managers have high power motivation and low achievement motivation.