Comprehensive Report on Entrepreneurial Motivation and Theories

This report provides a comprehensive analysis of entrepreneurial motivation, beginning with an introduction that emphasizes the crucial role of motivation in achieving entrepreneurial success and overcoming uncertainties. It explores the current perspective of entrepreneurial motivation, highlighting the influence of economic and cultural environments. The report then delves into various theories of entrepreneurial motivation, including internal and external factors such as independence, optimism, government support, and access to resources. It discusses the importance of a positive mindset, self-motivation, and factors like goal setting, risk-taking ability, and self-efficiency. The report further examines different motivational theories, such as sociological, economic, psychological, and cultural theories, as well as content theories (Maslow’s hierarchy, ERG theory, Herzberg’s two-factor theory, and McClelland’s theory) and process theories (Vroom’s expectancy theory). Each theory is explained in detail, providing insights into how they contribute to entrepreneurial behavior and success. The report concludes by emphasizing the significance of motivation for entrepreneurs in achieving their goals, increasing productivity, and reducing absenteeism and turnover.

Running Head Entrepreneurial Motivation 0
Entrepreneurial motivation

Entrepreneurial motivation 1
Contents
Introduction...........................................................................................................................................2
Entrepreneurial motivation and its current perspective..........................................................................2
Conclusion.............................................................................................................................................8
Reference...............................................................................................................................................9

Entrepreneurial motivation 2
Introduction
Entrepreneurial motivation plays a vital role in the process of entrepreneurship. Motivation is
necessary for an entrepreneur for achieving success and growth. Entrepreneurial motivation is
a process which helps an individual to become a powerful businessman. In order to overcome
the pressure and different level of uncertainties in entrepreneurship, motivation plays a
crucial role in developing entrepreneurial behaviour. In this report, the current perspective of
entrepreneurial motivation will be discussed and entrepreneurial motivation is influenced by
the economic and cultural environment. Various theories of entrepreneurial motivation will
be discussed which are crucial for an entrepreneur. In entrepreneurial process, it is studied
that it is an independent variable which helps in analysing entrepreneurial motivation and
behaviour (Stevenson and Jarillo, 2007).
Entrepreneurial motivation and its current perspective
Entrepreneurial motivation is a way to motivate an entrepreneur to give high level of efforts
in achieving the goals. In entrepreneurial motivation, forces and drives in an entrepreneur
help in guiding, intensity and persistence of entrepreneurs. In order to exert the level of effort
which is intensity in some time is persistence for achieving the particular goal of an
entrepreneur. For the motivation of entrepreneur it is necessary to arouse action and sustain
the activities and regulate the activities and their patterns. The current perception of
entrepreneurial motivation is to improve the entrepreneurial process. In an entrepreneurial
process, motivation is a key driver for a change (Hechavarria and Reynolds, 2009).
Entrepreneurial motivation factors
There are various internal factors and external factor are involved which motivates an
entrepreneur to achieve the desired goals. An internal factor is to become independent, desire
to do something new, experience and educational background. External factors are those
which include the government assistance and support, availability of labor and raw material.
Internal factors include the optimism for entrepreneurial motivation. It is essential to have a
positive mindset for finding new business opportunities in critical situations. In tough
situation, positive mindset and attitude help to tackle the situation. An entrepreneur must be
motivated with a positive attitude and mindset (Barba-Sánchez and Atienza-Sahuquillo,
2017). A positive attitude is a crucial factor that helps an entrepreneur to motivate and

Entrepreneurial motivation 3
become successful entrepreneur. It helps an individual to build constructive thinking in
business (Lee, et al., 2011). Self-motivation for an entrepreneur is necessary to start and run
entrepreneurship. In order to make effective decisions in entrepreneurship, an entrepreneur
must feel confident for the development of the business. Enthusiasm and commitment are
better solutions for becoming an innovative entrepreneur and achieve success. The
motivational factors in entrepreneurship are goal setting, risk-taking ability, tolerance for
ambiguity, locus for control and self-efficiency. Tolerance for ambiguity is a motivation
factor for an entrepreneur which helps in adding a tolerance level to adopt for an
unpredictable nature in entrepreneurship (Van, et al., 2016). A locus for control is the belief
in an individual as their personal characteristics and actions. It can be internal or external.
The external societies believe that the result will be out of their control and internal societies
believe that personal action impacts the result. Risk-taking ability in entrepreneur must be
strong as it is crucial in entrepreneurial process. In order to face the uncertainties an
entrepreneur must be prepared in advance and activities which include the intermediate-risk
helps in achieving the challenging goals. Goal setting is essential for an entrepreneur for
improving the performance, innovation, and growth in business. Self-efficiency must be high
in entrepreneurs as it will help them to give more effort for a longer time and can make better
strategies and plan for accomplishing the tasks (Hopp and Stephan, 2012).
Importance of motivation for an entrepreneur
Motivation is an essential factor for an entrepreneur as it helps in achieving their desired
goals and helps in achieving the objectives of entrepreneurship. It is important for high
satisfaction and morale. To increase productivity it is necessary for an entrepreneur to be
motivated for contributing to organizational goals. Motivation helps in reducing absenteeism
and turnover (Foyolle, et al., 2014).
Entrepreneur motivation is classified into 3 categories which are entrepreneurial ambition is
to make money. An entrepreneur must be motivated to creating opportunities and maximizing
wealth and economic development. Entrepreneurship is to identify the strengths and
opportunities in order to achieve for developing, designing and running a business
effectively. The various motivational theories help an entrepreneur to fulfil higher desires
such as recognition, self-actualization and esteem.

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Entrepreneurial motivation theories are sociological theories, economic theories, and
psychological theories, cultural and motivational theories. For the entrepreneurial activities,
the economic activities are the main motivator the entrepreneur. Incentives that are economic
are industrial policy, taxation policy, and source of finance, marketing opportunities,
technology and access to market conditions.
The sociological theory includes the behavior of an individual. Society is influenced by
religious belief, society values, taboos, customs. It is necessary for an entrepreneur to
perform a role to meet the expectations of society. Entrepreneurship innovation theory
includes innovation. An entrepreneur must be innovator and it will help in motivating them
but the two abilities are ignored: Organizing and risk-taking abilities. It is essential for an
entrepreneur to think innovatively and convert innovative ideas into successful
entrepreneurship (Barba-Sánchez and Atienza-Sahuquillo, 2012). Entrepreneurship and
innovation include the introduction of new product and introduction of new production
method and it can be also opening of new market. The psychological theory includes the
characteristics of the need for achievement and ability to facing opposition (Khanka, 2006. It
is necessary to form a characteristics by high standards of excellence and low father
dominance.
In entrepreneurship, the economic theory includes the economic growth which takes place
when the economic conditions are favorable. The main motivators are the economic
incentives include industrial policies, taxation policy, and infrastructure availability. The
economic environment helps in analyzing the investment and marketing opportunities and
helps in accessing the information about the technology and market conditions. It is necessary
for an entrepreneur to be a risk-taker.
The goals for the entrepreneurial development are needed for the need for achievement, the
need for power and need for affiliation. The need for achievement requires the desire for
achieving the standard of excellence. Need for power is needed to motivate moe power and
authority for managing and supervising (Khanka, 2006. The need for affiliation is a desire to
create and maintain a good relationship with others and avoiding conflicts with others. For an
entrepreneurial motivation, it is necessary for entrepreneur to be a problem solver, creative an
must have tolerance to ambiguity.

Entrepreneurial motivation 5
For the motivation of an entrepreneur, the content theories are also the necessities theories
and process theories which include how the motivation occurs and process is required for the
motivation. Content theories include Maslow’s need hierarchy, ERG theory, McClelland’s
theory and Herzberg’s two-factor theory where process theories include the Vroom’s
expectancy theory, Skinner’s reinforcement theory, and Adam’s equity theory. Each theory is
essential for an entrepreneur for success in entrepreneurship.
Maslow’s need hierarchy theory
It is one of the effective theory of motivation in which Abraham Maslow has discussed the
needs in five categories. It includes the hierarchy of basic psychological needs, safety and
security needs, Belongingness, Self-esteem and self-actualization needs. Physiological needs
are the basic needs for the survival of human being which includes the water, air, and food.
Safety and security include the person’s desire for protection and safety. It is necessary at the
workplace to feel safe and have security about the job (Wasdani and Mathew, 2014). Safety
includes the financial security, health, and personal safety. Belongingness and love is the
integration of social group. When the physiological needs and safety needs are fulfilled, the
love and belongingness are the desires that are necessary to be satisfied. It includes the
receiving and giving of affections. Esteem needs includes the valued, respected and
appreciated by others. Esteem needs includes the lower version and higher version. Self-
actualization includes the desire to grow and develop.
Alderfer’s ERG theory
In ERG theory, Alderfer has distinguished the needs into three classes: existence, relatedness,
and growth. In existence need, physiological and safety needs of Maslow’s are included and
in relatedness is the belongingness and esteem needs where growth needs are the self-
actualization need of Maslow’s. Alderfer’s also stated that these needs are essential for an
entrepreneur for motivation. Existence needs include the necessities which are basic needs for
human beings (Shane, et al., 2003). Relatedness includes relationships with love and
belongingness as it helps an entrepreneur to reach recognition and public fame. For the
growth and development of an entrepreneur it is necessary to fulfill the self-actualization
need for self-development, advancement and personal growth in entrepreneurship. In ERG
theory, the needs are not set in hierarchy but they are considered as the range and they are

Entrepreneurial motivation 6
very flexible also. In order to motivate effectively and efficiently, it is necessary to prioritize
and sequence the needs (Marvel, et al., 2007).
Herzberg’s two-factor theory
Herzberg's theory is the motivation-hygiene theory. There are various motivating factors that
influence job satisfaction and hygiene factors influence dissatisfaction. An entrepreneur must
be satisfied or not satisfied. Motivating factors include the need for personal growth and
satisfaction in job where hygiene factors includes the dissatisfaction because of working
environment, safety, salary at the workplace. Hygiene factors include that an employee must
not be dissatisfied and motivation factors includes the motivation for effective performance
and satisfaction (Carsrud and Brännback, 2011). There are five job satisfaction factors for
motivation are responsibility, advancement, achievement, work, and recognition and the job
dissatisfaction for hygiene factors are supervision, salary, policy, and administration of
company, working conditions and interpersonal relationships.
McClelland theory
In McClelland's theory, the needs are required to fulfil our need for achievement, affiliation,
and power. He stated that in every entrepreneur there are three motivating drivers and it is
necessary to focus on present needs satisfaction relatively than developing and generating
new needs. The three motivators in human beings are achievement which includes
accomplishment and demonstration competence. Affiliation is the need for relatedness, love,
and belongingness. Power is to control own work or others' work (Thomas and Mueller,
2000).
Achievement motivation is a need for accomplishment. It includes the need for high
standards, success, mastering of skills, and controlling. It also includes the range of actions
and an individual has to achieve success and attain the challenges and realistic goals. In this
theory, an entrepreneur can be influenced by external and internal drivers. Internal drivers are
also known as intrinsic motivation and the pressure which is used to prospects others are the
extrinsic motivation. When the need for achievement is low it means an entrepreneur wants
to minimize the risk of failure and in high need for achievement an entrepreneur chooses to
do difficult tasks as it helps in reaching goals and developing the needs (Toma, et al., 2014).

Entrepreneurial motivation 7
Affiliation motivation is the need for belonging and relatedness. For effective leadership an
entrepreneur must have high need for affiliation for interpersonal relationships. Power
motivation includes the authority for motivation. It is necessary for entrepreneurship to lead
and succeed in growth and development. A high need for power helps in increasing more
dynamic in entrepreneurship.
Vroom’s expectancy theory
In this theory, the content and process of motivation are emphasized. It is stated that
individuals choose from the different available activities. In this theory, motivation is
explained as the procedure which helps in governing the choices form the alternatives forms
of behavior. In this theory, motivation is driven by determining three factors expectancy,
instrumentality, and valence (Segal, et al., 2005). Expectancy includes the belief of person
that extra effort always helps in getting success. Better performance and success can be
achieved with the work hard. Instrumentality is when an entrepreneur believes that the
activity and goals are connected with each other. Valence is the value of reward, when an
entrepreneur value the reward than only the result can be achieved. In order to determine the
motivation, expectancy, instrumentality and valence are connected with each other (Baum
and Locke, 2004).
Entrepreneurial motivation is influenced by the economic and cultural environment.
The economic environment includes the economic factors which are external in the market.
External factors influence the business and its operation. Economic factors can be
microeconomic and macroeconomic factors. Microeconomic factors are suppliers, demand,
competitors, distribution chain and market size. It influences entrepreneurship motivation in
different ways and affects entrepreneurship. Macroeconomic factors are the interest rate,
exchange rate, Consumers, inflation and saving rates. The economic factors that afters the
growth in entrepreneurship influence entrepreneurial motivation. Capital is a significant
aspect for an entrepreneur. It is necessary for entrepreneurship to have the raw material and

Entrepreneurial motivation 8
goods available for production. Infrastructure is necessary for entrepreneurship for growth
and development (Lichtenstein and Lyons, 2001). The cultural environment includes the
beliefs, practices, behavior which helps in entering into target market. The economic
environment includes the policies, labor policies, incentives, and subsidies, resources. The
cultural environment includes consumer opinion, cultural structure, and caste system. The
skills which are required in entrepreneur are risk-taker, innovator, organization builder, and a
resource assembler. It is necessary for an entrepreneur to be a leader. Managerial and
leadership skills are required in entrepreneur for taking the effective decision (Lichtenstein
and Lyons, 2001).
The cultural environment influences entrepreneurial motivation as it is necessary to follow
the culture in the market. It is essential for an entrepreneur to implement the required culture
as it helps in building confidence and growth in entrepreneurship. The cultural environment
includes the development which influences personality and ideologies. Different aspects are
included in cultural environment which influences the choices and behavior of people
(Renko, et al., 2012).
Conclusion
In order to conclude the report, it is analyzed that entrepreneurial motivation is necessary for
entrepreneurship for growth and development. An entrepreneur plays a crucial part in
promoting and executing the business. The different theories of entrepreneurial motivation
are relevant for the development of an organization and help in improving and understanding
the role of entrepreneur. It is concluded that entrepreneur must be motivated for the success
of entrepreneurship. It is necessary for an entrepreneur to be self-confident, risk-taker and
leader to motivate others also. Entrepreneurship is to identify the strengths and opportunities
in order to achieve for developing, designing and running a business effectively.

Entrepreneurial motivation 9
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