THEORIES OF ENTREPRENEURSHIP 1

• THEORIES OF ENTREPRENEURSHIP 1
  FUNDAMENTAL OF ENTREPRENEURSHIP
• CONTENT : EXPLAINED THE FOLLOWING THEORY:-
1. ECONOMIC THEORY OF ENTREPRENEURSHIP
2. RISK BEARING THEORY OF KNIGHT
3. INNOVATION THEORY BY SCHUMPETER
4. NEED FOR ACHIEVEMENT THEORY
• ECONOMIC THEORY OF ENTREPRENEURSHIP

1. GIVEN BY MARK CASSON IN HIS BOOK THE ENTREPRENEUR-AN ECONOMIC THEORY
2. ENTREPRENEURSHIP IS A RESULT OF CONDUCIVE ECONOMIC CONDITIONS
3. THE DEMAND ARISE FROM THE DEMAND FOR CHANGE
4. ECONOMIC INCENTIVES ARE THE MAIN FORCES FOR ENTREPRENEURIAL OPERATIONS

• ECONOMIC THEORY:-

a)    INTERDEPENDENCE: ENTREPRENEURSHIP AND GROWTH ARE INTERDEPENDENT

b)    CONTRIBUTION TO NATIONAL INCOME

c)    PROFIT MAXIMISATION

d)    FAVORABLY ECONOMIC CONDITIONS

e)    ECONOMIC POLICIES

• ECONOMIC FACTORS:-

1. AVAILABILITY OF FINANCE
2. AVAILABILITY OF RAW MATERIAL
3. INCREASED DEMAND FOR CONSUMER
4. AVAILABILITY OF PRODUCTIVE RESOURCES
5. EFFICIENT ECONOMIC POLICIES

• RISK BEARING THEORY OF KNIGHT
• PROF KNIGHT ‘S THEORY IS BASED ON ECONOMIC PRINCIPLES.
• ACCORDING TO RISK BEARING THEORY:-
• ACCORDING TO KNIGHT AND JS MILL,THE IMPORTANT FUNCTION OF ENTREPRENEURS IS RISK BEARING

1. THEY EARN PROFIT BECAUSE THEY TAKE RISK
2. THE MAIN FUNCTION OF ENTREPRENEUR IS TO ACT IN ANTICIPATION OF FUTURE EVENTS
3. DIFFERENT DEGREE OF RISK IS UNDERTAKEN BY THE ENTREPRENEUR IN ACCORDANCE TO THEIR ABILITY AND INCLINATION. THE MORE RISK,THE MORE PROFIT
4. UNCERTAINTY-BEARING IS ESSENTIAL TO PRODUCTION
5. PROFIT IS THE PAYMENT FOR THE ASSUMPTION OF RISK HE UNDERTAKES

• INNOVATION THEORY OF SCHUMPETER
• IN 1949 HE ADVOCATED A DYNAMIC THEORY OF ENTREPRENEURSHIP AND CONSIDERED ENTREPRENEUR IS A CREATIVE ACTIVITY AND THE ENTREPRENEUR IS INNOVATOR.
• ENTREPRENEUR IS A MAN WHO SEES OPPORTUNITIES FOR :-

1. INTRODUCING NEW TECHNIQUES OR PRODUCT
2. IMPROVING ORGANIZATION
3. DEVELOPMENT RESOURCES
4. ENTREPRENEUR IS AN INNOVATOR
5. HE IS DYNAMIC

• TYPES OF INNOVATION

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• FEATURES OF SCHUMPETER THEORY

a)    HE REGARDED ENTREPRENEUR AS ENGINE OF GROWTH

b)    HIGH DEGREE OF RISK AND UNCERTAINTY

c)    HIGHLY MOTIVATED AND TALENTED INDIVIDUAL

d)    PROFIT IS MERELY PART OF OBJECTIVE OF ENTREPRENEUR

e)    PROGRESS UNDER CAPITALISM IS MUCH SLOWER THAN ACTUALLY IT IS

f)     IT IS LEADERSHIP RATHER THAN OWNERSHIP WHICH MATTERS

g)    IT LAYS THAT ENTREPRENEUR PLAYED CENTRAL PART IN RISE OF CAPITALISM

• MCCLELLAND’S ACHIEVMENT MOTIVATION THEORY( NEED FOR ACHIEVEMENT THEORY)
• DEVELOPED BY DAVID C MCCELLAND
• THIS IS PSYCHOLOGICAL THEORY
• IDENTIFICATION OF MOTIVATIONAL FACTORS THAT MOTIVATES A PERSON TO BECOME ENTREPRENEUR TO EXPLOIT THE OPPORTUNITIES AND TO TAKE ADVANTAGE OF FAVORABLE TRADE CONDITIONS.
• MCCLELLAND’S ACHIEVMENT MOTIVATION THEORY( NEED FOR ACHIEVEMENT THEORY
• HE PROPOSED THAT THERE ARE THREE MAJOR NEEDS OR MOTIVES FOR ACCOMPLISHMENTS. THESE ARE AS FOLLOWS:-

1. THE NEED FOR ACHIEVEMENT:-DRIVE TO EXCEL AND GROW. THESE KINDS OF ENTREPRENEUR LIKE TO FACE CHALLENGE,HIGH AIMS FOR ACHIEVEMENT AND TAKE CALCULATED RISK
2. NEED FOE POWER:-DRIVE TO DOMINATE OR INFLUENCE OTHERS. THEY ARE VERY MUCH BOTHERED ABOUT POWER
1. EXCELLED IN POSITION WITH STATUS AND PRESTIGE
2. PREFER TO BE PLACED INTO HIGHLY COMPETITIVE AND STATUS ORIENTED SITUATIONS
3. DEMAND OBEDIENCE

3. NEED FOR AFFILIATION: DRIVE FOR FRIENDLY AND CLOSE INTERPERSONAL RELATIONSHIP

• MCCLELLAND INDICATED FIVE COMPONENTS:

a)    RESPONSIBILITY FOR PROBLEM SOLVING

b)    ESTABLISHING GOALS

c)    REACHING GOAL WITH LESS EFFORT

d)    NEED FOR THE USE OF FEEDBACK

e)    A PREFERENCE FOR MODERATE LEVEL OF RISK TAKING

• MCCLELLAND’S ACHIEVEMENT MOTIVATION THEORY( NEED FOR ACHIEVEMENT THEORY
• IMPLICATIONS:-

a)    ECONOMIC DEVELOPMENT DEPENDS UPON ON VIGOROUS ACTIVITIES OF A NUMBER OF INDIVIDUAL WHO BEHAVE IN AN ENTREPRENEURIAL FASHION

b)    ENTREPRENEUR ARE MOTIVATED BY STRONG NEED FOR ACHIEVEMENT

c)    EVIDENCE THAT MOTIVATIONAL COMPLEX HAS BEEN IN SHORTER SUPPLY IN POOR COUNTRIES THAN RICH COUNTRIES

d)    TO IMPROVE THE CONDITION OF POOR COUNTRIES ENTREPRENEUR ARE TO BE INCREASED.