Hello, Many entrepreneurial theorists have propounded theories of entrepreneurship that concentrate especially upon psychological factors. These are as follows:
#1. Achievement Required
The most important psychological theories of entrepreneurship were put forward by David McClelland in the early 960s. According to McClelland, ‘achievement is required’ which is a social objective for excellence. Goes to mark successful entrepreneurs, especially when reinforced by cultural factors.
He found that some types of people, especially those who became entrepreneurs, had this characteristic. In addition, some societies reproduce a larger percentage of people with higher achievement needs’ than other societies. McClelland attributed sociological factors to this.
The difference between society and individuals needs to be greater for the ‘need for achievement’, in some societies and less in some others. Analyzing this phenomenon, Paul Wilken states that “entrepreneurship becomes the link between need and economic growth”, the latter being a particularly social factor.
#2. Withdrawal of Status Respect
There are many other researchers who have tried to understand the psychological roots of entrepreneurship. One such person is Everett Hagen who emphasizes the psychological consequences of social change. At some point, says Hagen, many social groups experience a radical loss of status.
Hagen attributed the withdrawal of a group status to the origins of entrepreneurship. Giving a brief account of Japan’s history, he concluded that it developed sooner than any non-Western society other than Russia, owing to two historical differences.
First, Japan was free from colonial disintegration, and second, the repeated prolonged withdrawal of expected status from important groups (samurai) in its society prompted them to retreat, leading to increased creativity from traditional values Broke apart. This fact led him to technological advancement through entrepreneurial roles.
Hage believes that the initial condition leading to eventual entrepreneurial behaviour is the loss of status by a group. He postulates that four types of events can produce status withdrawal:
- The group may be displaced by force;
- It may have its valued symbols denigrated;
- It may drift into a situation of status inconsistency; and
- It may not be accepted the expected status of migration in a new society.
He further postulates that withdrawal of status respect would give rise to four possible reactions and create four different personality types.
- Retreats: He who continues to work in society but remains different from his work and position;
- Ritualist: He who adopts a kind of defensive behavior and acts in the way accepted and approved in his society but no hopes of improving his position.
- Reformist: He is a person who foments a rebellion and attempts to establish a new society.
- Innovator: He is a creative individual and is likely to be an entrepreneur.
Hagen maintains that once the status withdrawal has occurred, the sequences of change in personality formation is set in motion. He refers that status withdrawal takes a long period of time – as much as five or more generations – to result in the emergence of entrepreneurship.
Other psychological theories of entrepreneurship stress the motives or goals of the entrepreneur. Cole is of the opinion that besides wealth, entrepreneurs seek power, prestige, security, and service to society.
Stepanek points particularly to non-monetary aspects such as independence, persons’ self-esteem, power and regard of the society. On the same subject, Evans distinguishes motive by three kinds of entrepreneurs :
- Managing entrepreneurs whose chief motive is security.
- Innovating entrepreneurs, who are interested only in excitement.
- Controlling entrepreneurs, who above all otter motives, want power and authority.
Finally, Rostow has examined intergradational changes in the families of entrepreneurs. He believes that the first generation seeks wealth, the second prestige, and the third art and beauty.
Thomas Begley and David P. Boyd studied in detail the psychological roots of entrepreneurship in the mid-1980s. They cameo the conclusion that entrepreneurial attitudes based on psychological considerations have five dimensions:
The ‘need-achievement’ was first described by McClelland. In all studies of successful entrepreneurs, a high achievement orientation is always present.
The second dimension that Begley and Boyd called ‘the locus of control’ means that the entrepreneur follows the idea that he can Control your own life and not be influenced by factors like luck,
Destiny, and so on. Need-achievement logically implies that people can control their own lives and are not influenced by external Forces.
The third dimension is the willingness to take risks. Both these researchers have come to the conclusion that entrepreneurs who earn a higher return on their assets than those who take moderate risks or who take unnecessary risks.
Tolerance is the next dimension of this study. Very few decisions have been made with complete information. So all business executives should have a certain amount of tolerance for ambiguity.
Finally, here psychologists refer to ‘Type A’ behavior. This is nothing but “an old, persistent struggle to achieve more and more and more in less time” is characterized by the presence of Type A behavior in all their efforts.