UNIT-3

ENTREPRENEURIAL
BEHAVIOUR AND EDP
INNOVATION AND ENTREPRENEUR
• Creativity and innovation are seen as being the key to

survival in an ever-more competitive and global

economy. In fact change and innovation are becoming a

‘way of life’ for most entrepreneurs.

• An entrepreneur always takes a personal responsibility

for encouraging any type of innovative idea, product,

or process in the enterprise.

INNOVATION AND ENTREPRENEUR
• Peter Drucker has rightly observed that “Innovation is the
specific tool of entrepreneurs, the means by which they
exploit change as an opportunity for a different business or a
different service.”
• It is capable of being presented as a discipline, capable of
being learned and practiced. Entrepreneurs need to search
purposefully for the sources of innovation, the changes and
their symptoms that indicate opportunities for successful
innovation.
INNOVATION AND ENTREPRENEUR
• Drucker is of the opinion that an entrepreneur is one who
always searches for changes responds to it and exploits it as
an opportunity. Innovation is treated as an instrument of
entrepreneurship.
• In the dynamic, chaotic world of global
competition, entrepreneurs must create new products and
services and adopt new technology, if they are to compete
successfully. The organization that is not creative and
innovative may not survive.
INNOVATION AND ENTREPRENEUR
• Thus, entrepreneurs are looking for ways to
encourage and foster in creativity and innovation on
both the individual and the venture level.

• Thus it can be concluded that innovation and

entrepreneurs are indispensable to each other. Both
are useless and incomplete in absence of one
another.
 ENTREPRENEURIAL BEHAVIOUR
• Behaviour is a manifestation of what a person thinks, feels
and acts.
• An entrepreneur is a creative person. Need for
self actualization as manifested in the need for achievement
forces him to create something new, a new product, a new
way of doing things, a new source of raw material, a new
market etc.
• Behaviour is always caused and is never spontaneous.

• Behaviour is basically goal-oriented.

 ENTREPRENEURIAL BEHAVIOUR
• Entrepreneurial Behaviour includes the goal-oriented acts
or decisions of an entrepreneur.
• The entrepreneurial behavior means the manners or way in
which the entrepreneur deals with its total environment :
internal and external.
• The entrepreneurial behavior is a view of or orientation
towards risk-bearing, innovation, achievement, goal-setting,
ethics, social responsibility, motivation, challenges and values
of human society, and other psychological elements.
 CONCEPT OF VALUES

• Milton Rokeach has defined values as beliefs that guide

actions and judgment across a variety of situations.
• He further says that values represent basic convictions that
a specific mode of conduct is personally or socially
preferable to an opposite mode of conduct.
For example, a businessman is expected to supply true
information rather than making false claims.
 CONCEPT OF VALUES

• Values are at the core of personality of each individual

and are a powerful force affecting his behavior.

• Values are so embedded that they can be inferred from

people’s behavior and their expressed attitudes. They

are relatively stable and enduring.

CORE VALUES AMONG ENTREPRENEURS

Innovation and Independence or

Creativity Self-reliance

Quest for
Outstanding
Respect for Work Performance or
Achievement
Orientation
 CONCEPT OF ATTITUDES
• Schermerhorn, et. al have defined attitude as
predisposition to respond in a positive or
negative way to someone or something in
one’s environment.
• When a person says that he likes or dislikes
something, an attitude is being expressed.
• An attitude may be defined as the way a
person feels about something- a person, a
place, a commodity, a situation or an idea.
 Values Attitudes

Values help to guide our behavior. Attitudes are the response that is a result of our values.

Values decide what we think as for right, wrong, good, Attitudes are our likes and dislikes of things, people, and
or unjust. objects.

Values are more or less permanent in nature. Attitudes are changeable with favorable experiences.

They represent a single belief that, guides actions and They represent several beliefs focused on a specific
judgment across objects and situations. object or situation.

They are derived from social and cultural practices. These are personal experiences.
 ESSENTIAL ATTITUDES OF SUCCESSFUL
ENTREPRENEURS
1. Attitude towards of Expression and Action

Imagination 7. Attitude towards

2. Attitude towards Risk Performance

3. Attitude towards Initiative 8. Attitude towards Personal

4. Attitude for Looking New Capacity

Opportunities 9. Attitude towards Building

5. Attitude towards Change Relations and Networking

6. Attitude towards Freedom 10. Attitude towards Customers

 Entrepreneurial Motivation

• The word motivation has come from the Latin term motivus (“a
moving cause”), which suggests the activating properties of the
processes involved in psychological motivation. It means the
inner state of our mind that direct or stimulate us to achieve
our goals.
• Motives are not necessarily in born but are the result of our
interactions with the society. So, they give directions to our
behavior to achieve the desired goals.
 Entrepreneurial Motivation

• Therefore, Entrepreneurial motivation can be defined

as the process that directs or stimulates our behavior
to achieve the entrepreneurial goals.
• In other words, entrepreneurial motivation activates
the inner state of an entrepreneur to put higher level of
efforts for the achievement of the desired
entrepreneurial objectives.
Motivating Factors for Entrepreneurs
Entrepreneurial motivation is important because as long as the entrepreneur
is not motivated he/she cannot achieve their goals. There are certain factors
which motivate the entrepreneurs while some do not. It is a matter of concern
to find out which factors motivate the employees. Different researchers have
conducted several studies to identify such factors. Following are the summed
up factors of motivation for the entrepreneurs:
• Education background: The knowledge acquired through the various courses
provided by the institutions has motivated entrepreneurs to step into the
business. Entrepreneurs feel confident while entering into the business of
their education fields.
Motivating Factors for Entrepreneurs

• Family Background: The family businesses motivate the

entrepreneurs to join businesses. In India, different
entrepreneurs have continued their fore father’s business.
For e.g.: Mukesh Ambani, Ratan Tata, Aditya Birla etc.
• Desire to do something new: People have urge to do
something new and creative. The strong desire to be
innovative and creative promotes entrepreneurship among
the population.
Motivating Factors for Entrepreneurs

• Business experience: Large experience in a particular field makes the

people aware of that field. Therefore, Entrepreneur feel motivated to enter
into the fields in which they have the rich experience.
• Government assistance and support: Government provide support to the
entrepreneurs in different ways such as providing loans at low interest rates,
tax concessions, leasing scheme, Export assistance etc. Assistance from the
end of the Government motivates people to become entrepreneurs.
• Encouragement from big business houses: The success stories of the large
businesses motivate the people to become entrepreneur. Moreover, the
large businessman encourages the people to become entrepreneurs.
Motivating Factors for Entrepreneurs

• Easy availability of raw material and labour: Easy availability of the

raw material and labour at cheap rates motivates the people to

become entrepreneurs as it makes the business little easy.

• Profit margins: Many people become entrepreneurs for earning more

money. So, earning money is one of the most motivating factors.

• Promising demand of the product or service: There is an increasing

demand for some goods and services. Therefore, entrepreneurs find

their paths in establishing business for such products and services.

Motivating Factors for Entrepreneurs

• Job Security: Over-population and Unemployment is the one of most

challenging problem in India. As the population is growing there is more

and more risk of unemployment. Moreover, people don’t feel secure

with their jobs because of the availability of large number of skilled

population. Therefore, People prefer to become entrepreneurs.

• Social prestige: In India, entrepreneurs are seen with respect. So,

people get motivated to become entrepreneurs to gain social respect.

 Motivation Theories for
Entrepreneurship
Entrepreneurship has large risk associated with it but still prefer to
become entrepreneur because of the several motivating factors.
There are thinkers who have explained what motivates an individual
to go for entrepreneurship through different theories.
Maslow’s Need Hierarchy and McClelland Achievement Motivation
Theory are most relevant to understand the entrepreneurial behavior
of an individual.
Maslow’s Need Hierarchy Theory
 Maslow’s Need Hierarchy Theory
Maslow has given the need hierarchy theory of motivation. According to him,
humans have five types of needs from lower to higher order. Following are the
needs:

1. Physiological needs:
These are the most basic needs and the lowest in the hierarchy. These needs are
of basic shelter, food and cloths. Human beings work hard to fulfill their basic
needs. Entrepreneurs also have this basic need which motivates them to set up
their own enterprise.

2. Safety and Security needs: The second in the hierarchy is the safety and security
needs and will emerge once the physiological needs are met and once these
needs are met they become inactive. These needs include the free from the
threats, secure atmosphere, financial security etc. to fulfill these needs, one need
to have enough money. Entrepreneur works hard to meet his/her security needs.
3. Social needs: After security needs are met, social needs are arises. Human
being likes to be recognized and accepted by others. People like to interact
with others so to get affiliated to others. Therefore, entrepreneurs interact
with the other entrepreneurs, employees and others.

4. Self esteem needs: These needs include self-confidence, accomplishment,

skills, knowledge, and freedom. In case of entrepreneurs, the ownership and
self- control over business satisfies their esteem needs by giving them respect,
reputation, freedom and status.

5. Self-actualization This is the highest level of the Maslow hierarchy. Self

actualization needs are self aware, self conscious and more concerned with the
personal growth. This need is concerned with identifying what actually the
potential is and actualizing the realization of the potential.

According to Maslow, if the lowest need in the hierarchy is satisfied then only
next need will arise. Humans never get satisfied so as long as one need is
satisfies, immediately second need arises. Social needs, Self esteem and self-
McClelland Achievement Motivation
Theory
 McClelland Achievement Motivation Theory

• The most important motivation theory for

entrepreneurs is McClelland need for achievement
theory.
• McClelland focused on three needs: Need for
power (n pow), need for affiliation (n aff), need for
achievement (n ach).
• Need for Power (n Pow)
The need for power is related to influence others, have control over others, and push to
change people. The people with high need for power want to direct others. They want
people to be dependent on them which results in supreme satisfaction to the individuals.
• Need for Affiliation (n Aff)
The need for affiliation is concerned with desire to build healthy and friendly relations
with the other people. They have the strong desire to get accepted and affiliated by
others. When people recognize the individuals they get motivated.
• Need for Achievement (n Ach)
The need for achievement is the desire to excel, to achieve the set goals with excellence.
These needs direct the behavior of the individuals to perform better. People with high
achievement needs show better performance than the individuals with the low
achievement needs. They personally take the responsibility of achieving the set goals.
They accept challenges and generally set difficult goals than low achievers.

According to the McClelland, all the three needs can exist simultaneously but people with
the high achievement needs are more likely to be entrepreneurs.

Entrepreneurs are important for the economic development of the country. There are certain
characteristics which are common to the entrepreneurs. Moreover, entrepreneurs cannot always remain
motivated. There are several factors which motivates the entrepreneurs. Different Psychologists have
worked to find the factors which can motivate the entrepreneurs. On the basis of that, they have
propounded different theories of motivation for the entrepreneurs.
 ENTREPRENEURIAL DEVELOPMENT
PROGRAMME (EDP)
• EDP means a programme designed to help young
entrepreneurs in strengthening their entrepreneurial
motive and in acquiring skills and capabilities necessary for
playing their entrepreneurial role effectively.
• EDP means inculcating entrepreneurial traits into a person,
imparting the required knowledge, developing the
technical, financial, marketing and managerial skills and
building the entrepreneurial attitude.
 Role of EDPs
Elimination of Unemployment and Poverty

Balanced Regional Development

Utilisation of Local Resources

Prevention of Slums in Urban Areas

Defusion of Tension among Youth

 Phases/Steps in EDP
1. Pre-Training Phase
• Selection of Faculty
• Designing Course Curriculum
• Advertisement/ Publicity of EDP
• Selection of Participants
• Arrangement of Infrastructure
2. Training Phase
3. Post-Training Phase or Follow up Stage
4. Evaluation of EDP
 HOLISTIC TRAINING MODEL
1. Stimulating Phase:
• Entrepreneurial awareness,
• entrepreneurial motivation,
• planned publicity for entrepreneurial opportunities,
• identification of potential entrepreneurs,
• information on project planning and implementation,
• assistance in product/service identification and market
survey,
• assistance in preparation of business plan,
• help in development of new product/ service
• and, counselling
 HOLISTIC TRAINING MODEL
2. Supporting Phase:
• Assistance in registration of the enterprise,
• assistance in obtaining finance,
• help in getting land,
• help in obtaining various permissions and licences,
• guidance in selection and procurement of plant and
equipment,
• Supply of scarce raw materials, grant of incentives and
subsidies,
• Assistance in marketing
• And provision of management consultancy.
 HOLISTIC TRAINING MODEL
3. Sustaining Phase
• Modernisation of units,
• Diversification, expansion or product substitution,
• Assistance in improving business and profitability
• Creation of need based common facility centre
• Delayed repayment/interest
• Product standardisation and testing services, and
• Additional finances for rehabilitation of units