Entreprenuership theories

1. EENTREPRNTREPREENEURSHINEURSHIPP
THEORIESTHEORIES

2. Theories ofTheories of
enTrepreneurshipenTrepreneurship

3. 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.
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4. 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.
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5. 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.
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6. 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.
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7. Schumpeter-1934-Theory of Innovation
Theability to identify new opportunitiesin themarket isacentral Entrepreneurial
activity which createsdisequilibrium in the Economy.
Entrepreneur is the Bearer of the Mechanism for change- which can occur from
insideor outsideeconomy
Helisted fivedifferent kindsof innovationsor waysto Act asan entrepreneur:
•The introduction of a new good orquality 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

8. 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 TOJOSEPH SCHUMPETER’S CONTRIBUTTION TO
ENTREPRENEURSHIPENTREPRENEURSHIP

9. Conclusion.Conclusion.

10. 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.

11. McClelland AchievementMcClelland Achievement
Motivation TheoryMotivation Theory

12. 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

13. Why is MotivationWhy 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.

14. McClelland's AchievementMcClelland'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.

15. 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.

16. 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.

17. THEMATICTHEMATIC APPERCEPTIONAPPERCEPTION
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.

18. • 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'.

19. • 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.

20. • 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

25. 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.

26. THE NEED FOR ACHIEVEMENTTHE 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.

27. AffiliationAffiliation
• 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.

28. THE NEED FOR AFFILIATIONTHE 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.

29. 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.

30. THE NEED FOR AUTHORITY ANDTHE 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.

31. 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.

32. 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.

33. Need for Achievement andNeed 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.