E N T R E P R E N E U R I A

L D E V E L O P M E N T
P R E S E N T A T I O N

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E N T R E P R E N E U R I A
L B E H A V I O U R
A N D
P S Y C H O L O G I C A L
T H E O R I E S
ENTREPRENEUR
• An entrepreneur is an individual who creates a new business, bearing
most of the risks and enjoying most of the rewards. The entrepreneur
is commonly seen as an innovator, a source of new ideas, goods,
services, and business/or procedures.
• Entrepreneurs play a key role in any economy, using the skills and
initiative necessary to anticipate needs and bring good new ideas to
market. Entrepreneurs who prove to be successful in taking on the
risks of a startup are rewarded with profits, fame, and continued
growth opportunities. Those who fail, suffer losses and become less
prevalent in the markets.
E N T R E P R E N E U R I A
L B E H AV I O U R
 • A preference for changing the status quo
over maintaining it based on relatively
greater satisfaction generated by novel
information over redundant information.
Entrepreneurial behavior underlies the
inclination to undertake invention and
       innovation, including the creation of
something new as well as the distribution
 ENTREPRENEURIAL and adoption of the new throughout society.
BEHAVIOR It is the behavior most likely exhibited by
entrepreneurship. An alternative is
managerial behavior, which is a preference
for maintaining the status quo over changing
it.
• Entrepreneurial behavioral is one of
two behavioral alternatives underlying
the desire to undertake innovations and
to change the status quo. The other is
managerial behavior. Entrepreneurial
behavior embraces innovation, is
motivated to seek changes in the status
quo, draws satisfaction from
institutional changes. In contrast,
managerial behavior is a preference for
maintaining the status quo.
• The underlying source of
entrepreneurial behavior is a relative
preference for novel information over
redundant information. Both types of
information are important to the fight
or flight response to a threat. Novel
information reveals potential threats
that results in automatic physiological
responses, which is more satisfying to
some than it is to others.
• Entrepreneurial behavior is a
preference for innovation and a
change in existing institutions and
the status quo. It can be as simple as
the willingness to buy a new
electronic gadget or as involved as
rebelling against the existing
political regime and starting a new
nation. It often surfaces in the form
of an entrepreneur undertaking the
risk of organizing production and
launching a new business venture.
Characteristics of Entrepreneurial Behaviour

1. Facing Uncertainties
• An important characteristic of an entrepreneur is that he faces uncertainties, maybe in respect of new uses or
new commodity or in respect of profits or losses.
• For that, he believes that till these uncertainties and unfamiliar conditions are not faced with patience, there
will be no gain.
• So, for facing the uncertainties, he bears patience in many ways.

2. Positive Self Thinking

• The entrepreneur has positive thinking in No way, the losses the courage.
• So, he has the hopes of achieving success in all his works and hence it very conscious about himself.
• Besides, if he commits some mistakes or errors, then he accepts them, readily.
• He never likes that someone else may have given him directions and control his activities.
• All his activities and behavior are influenced by his internal instincts.
3. Bearer of Balanced Risks
• The entrepreneur bears various types of risks, like – time, money and efforts in starting the business,
depreciation in operation of the business, obsolesce and fluctuations, risks relating to non-
acceptance of new things by the consumers, changes, and fluctuations in prices, etc.
• But, he gives preference to the middle path of all risks, forbearing balanced risks, so that loss may
be minimum, which may be borne out, otherwise, it will not be easy to start the business.

4. Freedom
• The entrepreneur has the qualities of freedom of values, thoughts, and activities.
• So, he wants to become the master of his own, does not like the directions and suggestions of others.
• He likes to act on his own inspirations and does not like control by others.
• Hence, by behaviour, he dislikes working for others.
5. Use of Feedback
• The entrepreneur carries out functions right from the first step to the last step, for any particular assignment.
• In the end, he used the feedback, the reason being that in spite of the use of best possible Intelligence and
caution, some lapses are certainly left out.
• So, from time to time and step by step he makes introspection.

6. Initiative
• The entrepreneur has the quality to initiate, the reason being that he alone has to lead in all spheres and
activities.
• He finds out responsibilities for himself to work in various spheres and also ascertains, whether he will be
able to bear the increasing responsibility with possibilities of expansion in work or not.
• This way, the entrepreneur finds out responsibilities for initiations, which is known as entrepreneurial
behaviour.
7. Self Confidence
• The self-confidence of an entrepreneur is the essence of his success.
• This is mighty power and inspiration, by which one can cross all hurdles, He has a confidence about his
capabilities.
• If he does not think so and behaves strongly, to do anything, howsoever big or small, he will not be successful.

8. Firmness
• The entrepreneur believes in firmness.
• He feels that any person who makes the firm determination and sincerely carries any task even the most
difficult task becomes easy and he may achieve his goals.
• For that, he always perceives and consistently watches the environment and the circumstances and then goes
on functioning, accordingly.
• Hence, it may be stated that the entrepreneur vigorously acts with full firmness in his behaviour.
PSYCHOLOGIC
AL THEORIES
 • Entrepreneurship is a
psychological process and concept.
According to this concept,
psychological factors are the
primary source of entrepreneurship
PSYCHOLOGIC development. When there are
sufficient number of persons
AL THEORIES having the same psychological
characteristics in the society, then
there are bright chances of
development of entrepreneurship.
 Joseph A. Schumpeter Theory

David C. McClelland Theory

Self-monitoring Theory

Risk- propensity Theory

PSYCHOLOGIC
AL THEORIES Motivation Theory

Role Model and Support System Theory

Joseph Alois Schumpeter Theory
• According to Joseph A. Schumpeter, the effective function of an entre­
preneur is to start innovation in venture. This theory is also called
innovation theory or dynamic theory. According to this theory, the
entrepreneurs emerges because of individuals having certain
psychological elements i.e., will power, self-intuitions, tolerance
capacity. The entrepreneur is a person who has creative nature.
• He regarded the entrepreneurship as a catalyst who checks the static
conditions of the economy, there by initiates and thrusts a process of
economic development i.e., innovation. He carries economy to new
height of develop­ment.
David C. McClelland’s Theory
• David C. McClelland has given a particular concept of
entrepreneurship. According to him, needs for high achievement is an
essential feature of entrepre­neurial behavior. According to
McClelland, “Burning desire of need for achievement attracts an
entrepreneur for activities.”
• The primary basis of the development of an entrepreneurship is
achieve­ment orientation. The capacity of becoming an entrepreneur
develops due to desire of reaching heights of excellence and specific
performance
SELF MONITORING THEORY
Self-monitoring is a personality trait that measures an individual’s
ability to adjust his behavior to external situational factors. This theory
states that high monitor entrepreneurs can be more successful in
entrepreneurial jobs and managerial positions where they are required to
play multiple roles. They tend to display their true dispositions and
attitudes in every situation. The high self-monitor entrepreneur is
capable of putting on different faces for different audiences.
RISK-PROPENSITY THEORY

Risk- propensity is the theory to which an individual is willing to take

chances and make risky decisions. An entrepreneur with a high risk
propensity might be willing to experiment with new ideas and gamble
on new products . He might also lead the venture in new and different
directions .Thus , risk taking-wether financial , social or psychological
is an important part of entrepreneurial behavior.
MOTIVATION THEORY
People differ not only in their ability to do, but also in their will to do or
motivate. Motives are the mainsprings of action. Entrepreneurial
motivation maybe defined as a set of motives, needs, urges or desires
such as need for power, to earn money or to be one’s own boss , to
dominate and influence others by earning industrial power etc. These
behavioral dimensions motivate the people to start a new venture.
ROLE MODEL And SUPPORT SYSTEM
THEORY
Every entrepreneur has a choice of a role model. He follows and learns
for the behavior of his role model. Many new entrepreneurs need
guidance and moral support. In addition to moral encouragement, the
entrepreneur needs advice and counsel throughout his entrepreneurial
behavior . Each entrepreneur needs to establish both a moral and a
professional support network. These contacts provide confidence,
support, advice, and information. As one entrepreneur stated, “In your
own business, you are all alone. There is a definite need to establish
support groups to share problems with gain overall support for the new
venture.