Entrepreneurial Behaviour and Psychological theories:

UNIT -II Following theories are very much relevant to the entrepreneurial behaviour: Maslows need hierarchy theory. McClellands need achievement theory. Maslows theory try to explain how human behaviour is influenced in many aspects as per the satisfaction of human needs. The inner urge to fulfill the needs is the fundamental factor in entrepreneurial motivation. Inspite of the criticisms, this theory has a common sense appeal for all managers and entrepreneurs. And it has a relation to human behaviour 1

McClellands need achievement theory. As per this theory an individuals need for achievement (n Ach) is the triggering factor which drives the individual to excel and take risks on a different way. This type of behaviour for accomplishment of goals is the entrepreneurial way that is stimulated by the need for achievement. A number of psychological factors influence the entrepreneurial motivation such as i. Need for achievement through goal setting. ii. High desire to take personal responsibility ii. High level of aspirations etc. Thus, this theory considers the need for achievement to be the most 2 critical factor for entrepreneurial motivation.

UNIT-II-B Entrepreneur Behaviour: Innovation & Entrepreneur: -two sides of the same coin -interrelated and correlated -innovation-crux of entrepreneurship

-innovation helps in developing entrepreneurial base of the country through application of newly-created things into practical use.

According to Schumpeterentrepreneurshipa creative activity entrepreneursan innovator.

Innovation-manifests itself in problem-solving activities. & entrepreneur-acts as a problem solver. -converts problems into opportunities. -do things in a novel and better way. -goes beyond traditional ways of thinking. -starts the activity in an innovative way.
Facts- businessman who behaves in traditional way hardly becomes an entrepreneur.
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Schumpeters opinion on the motives and desire for innovation- (why innovation)?

i)-the dream and the will to establish a private kingdom, ii)-the will to conquer, iii)-the joy of creating, getting things done or simply exercising ones energy and ingenuity are the motives that inspire the innovative entrepreneur to undertake innovation.
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Schumpeters Theory of Innovation: concept of combination leading to innovation covers following 5 cases:1. Introduction of new goods: (which the consumers are not yet familiar of a new quality) 2. Introduction of new method of production: (ie yet to be tested by experience in the branch of manufa)

3. Opening of a new market: (ie a market into which particular branch of manufacture of the country in question has not previously entered)

4. introduction of a new source of supply o a raw materials: or semi-manufactured goods.

5. Carrying out of the new organisation(ie position/status): like the creation of monopoly position or breaking up of a monopoly position