Friday, August 20, 2010

Motivational factors for entrepreneurship

General perception towards entrepreneurship

Entrepreneurship is generally considered an uncertain and difficult carrier path. One has to face problems and frustration associated with new business development. There is also a misconception that a large number of entrepreneurial ventures fail within few years. A study carried out by Kirchhoff in 1994 shows that only 18% of the small firms surveyed reported loss to creditors.

Research: Motivational Theories and factors for entrepreneurship

Herron and Sapienza (1992, p. 49) stated, “Because motivation plays an important part in the creation of new organizations, theories of organizational creation that fail to address this notion are incomplete”.

A lot of research has been done in this field to identify the basic motivational factors for entrepreneurs and identify the common traits in them McClelland in 1961 argued that a high need for achievement was a personality trait common to entrepreneurs. In spite of the plethora of research it is still difficult to say what actually motivates entrepreneurs as they are highly idiosyncratic and innovative.

The motivational theories for entrepreneurship can be divided into two categories 1. Content theories: search for the specific things within individuals that initiate, direct, sustain, and stop behavior. 2. Process theories explain how behavior is initiated, directed, sustained, and stopped. Gilad and Levine in 1986 proposed two different theories- Push theory and Pull theory. The “push” theory says persons are forced to opt the way of entrepreneur as there is no other way left for them. External factors such as job dissatisfaction/loss, incapable of switching the job, low salary, or inflexible and boring work. On the other hand The “pull” theory suggests that individuals are attracted towards entrepreneurial activities because of the high independence, prosperity and self-sufficiency attached to it. A research done by Keeble et al., 1992; Orhan and Scott, 2001 indicates that pull factors are more prevalent than push factors.

Often decision between a career of self employment or working for others is taken considering the three factors shown below in the diagram

Research of Gerry Segal, Dan Borgia and Jerry Schoenfeld

In a research done by Gerry Segal, Dan Borgia and Jerry Schoenfeld, they found that risk taking capabilities has direct correlation with individuals engagement in entrepreneurial activities. Even though the individual have interest in self employment and might posses the self confidence to carry that but if the risk appetite is absent then there is high probability that he or she will keep on postponing the start. They concluded that there are five outcomes emphasized as criteria in the decision between self-employment or being employed by others: income potential; financial security; independence; need for achievement; and escape from corporate bureaucracy.

Measures to promote entrepreneurship

Educators and policy makers should highlight the advantages of taking moderate, calculated risks to get ahead. Examples of the rewards that can result from risking an entrepreneurial endeavor abound. Many of our most successful executives, including Bill Gates, Michael Dell, and many others achieved their success by taking the risk of launching their own ventures.

Disclaimer : Article is Based on the research paper “The motivation to become an entrepreneur” by Gerry Segal, Dan Borgia and Jerry Schoenfeld


  1. Hey!!!
    Nice food for thought. Since I am interested in entrepreneurship, this was quite helpful and I was able to narrow down to the factors that are the main obstacles in my way to entrepreneurship :)

  2. A nice piece of work dude...certainly true


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