Entrepreneur is human being who has his dignity, self-respect, values, sentiments, aspirations, dreams apart from economic status. Indeed, economic betterment and social upliftment motivates a person to distinguish from others. Entrepreneurship is to a great extent the product of motivation. Motivation refers to the inner drive that ignities and sustains behaviour to satisfy needs. Behaviour is always caused and it is not spontaneous. In other words, human behaviour is goal directed or directed towards satisfaction of needs. A person’s behaviour is shaped by several sociopsychological factors such as his goals, education level, cultural background, work experience, etc. When a person, feels some need tension arises in his mind until the need is satisfied. The tension motivates him to take action. If the action is successful need is satisfied otherwise the person changes the action until the need satisfaction occurs.

By now, you have learnt what an entrepreneur is and does. You have also learnt that the entrepreneurs play a risk-bearing role which is a difficult one. The entrepreneur embarks on a difficult journey. Then, a few important and obvious questions arise: What prompts people to embark on such a difficult journey? What motivates people to go into business? This lesson intends to answer these questions/issues by discussing entrepreneurial motivation in its various aspects viz. meaning and theories of motivation, motivating factors and development of achievement motivation.


The term ‘motivation’ has its origin in the Latin word “movere” which means to “move”. Thus, motivation stands for movement. One can get a donkey to move by using a “Carrot or a stick”, with people one can use incentives, or threats or reprimands. However, these only have a limited effect. These work for a while and then need to be repeated, increased or reinforced to secure further movement. The term motivation may be defined as “the managerial function of ascertaining the motives of subordinates and helping them to realise those motives.”

Whatever may be the behaviour of a man, there is always some stimulus that elicits the behaviour. The stimulus is often dependent upon the motive of the person concerned. Motive can be known by studying his needs and desires. There is no universal theory that can explain the factors influencing motives which control man’s behaviour at any particular point of time. Generally, different motives operate at different times among different people and influence their behaviour. The management should try to understand the motives of individuals which cause different types of behaviour.

According to Dubin, motivation could be defined as “the complex of forces starting and keeping a person at work in an organisation. Motivation is something that .moves the person to action, and continues him in the course of action already initiated”. Motivation refers to the way a person is enthused at work to intensify his/her desire and willingness to use and channelise his/ her energy for the achievement of organizational objectives. It is something that moves a person into action and continues him in the course of action enthusiastically. The role of motivation is to develop and intensify the desire in every member of the organisation to work effectively and efficiently in his position.

In the words of Dalton E. McFarland, “Motivation is the way in, which urges desires, aspirations, striving or needs direct, control or explain the, behaviour of human being”. Motivation has very close relationship with the behaviour. It explains how and why the human behaviour is caused. According to McFarland motivation is a form of tension occurring within individuals, with resulting behaviour aimed at reducing, eliminating or diverting the tension. Understanding the needs and drives and their resulting tensions helps to explain and predict human behaviour ultimately providing a sound basis for managerial decision and action. Thus, motivation is the term which applies to the entire class of urges, drives, desires, needs and similar forces.

March and Simon have developed a model, according to which motivation is the process or the reaction which takes place in the memory of the individual. It may be viewed as the combination of forces or motives maintaining human activity. Motivation to produce is a function of the character of the evoked set of alternatives, the perceived consequences of evoked alternatives and individual goals in terms of which alternatives are evaluated. March and Simon have established positive correlation between productivity and motivation by means of a theoretical model shown in Figure 1.

The main implications of this model are as under :

(i) If lower the individual satisfaction, greater the search for better ways of doing the job.

(ii) With more search for alternative, greater is the expectation of rewards.

(iii) When greater the expected rewards, the higher the satisfaction and level of aspiration.

(iv) When higher the level of aspiration, lower the satisfaction. The unsatisfied needs of a person is the beginning of the motivation process.

The unsatisfied need results in tension within the individual and motivates him to search for the ways to relieve this tension, and compels or develops certain goals for himself. If he is successful in achieving his goals, certain other needs will emerge which will lead to setting a new goal. But ifthe goal is not achieved, the individual will engage himself in either constructive or destructive behaviour. This process never stops. . It keeps on working within an individual.

Needs, Incentives and Motives

A distinction may be made among three things: need, incentive and motive. This is to emphasise that any need present in the individual does not necessarily lead to action. The need has to be activated which is the function of incentive. Incentive is something which incites or tends to incite towards some determination. Thus, incentive is an external stimulus that activates need and motive refers to an activated need, and active desire or wish. But a better definition is to regard incentive as the outward stimulus for the motive to work. When a motive is present in a person, it becomes active when there is some incentive. Thus, any incentive has reference to (i) the individual and his needs which he is trying to satisfy or fulfill; and (ii) the organisation which is providing the individual with opportunity to satisfy his needs in return for his services. Thus, conceptual difference between motivation and incentive is that incentive is the means to motivation.

It is, clear that incentive has direct bearing on the degree of motivation. Increase in incentive leads to better performance and decrease in incentive has adverse effect on performance. It should be noted that motivation does not change the individual’s capacity to work. It simply determines the level of the effort of individual, raises it or lowers it, as the case may be. Keith Davis feels that motives are expression of a person’s need; hence, they are personal and internal. Incentives, on the other hand, are external to the person. They are something he perceives in his environment as helpful towards accomplishing his goal. For instance, management offers salesmen a bonus as an incentive to channel in productive way their drives for recognition and status.

Needs create tension which are modified by one’s culture to cause certain wants. These wants are interpreted in terms of positive and negative incentives to produce a certain response or action. To illustrate, need for food produces a tension of hunger. Since culture affects hunger, a man will require wheat or rice accordingly. For a man, perhaps incentive is provided by his wife’s promise to prepare food in his favourite way.


The importance of motivation to human life and work can be judged by the number of theories that have been propounded to explain human’s behaviour. They explain human motivation through human needs and human nature. Prominent among these theories which are particularly relevant to entrepreneurship are Maslow’s Need Hierarchy Theory and McClelland’s Acquired Needs Theory.

1. Maslow’s Need Hierarchy Theory: Prof A. H. Maslow developed a theoretical framework for understanding human motivation which has been widely acclaimed. According to him, a person’s effectiveness is a function of matching his opportunity with the appropriate position of hierarchy of needs. Process of motivation begins with an assumption that behaviour, at least in part, is directed towards the satisfaction of needs. Maslow proposed that human needs can be arranged in a particular order from the lower to the higher as shown in Figure II.

The need hierarchy is as follows :

(i) Basic Physiological Needs: The physiological needs relate to the survival and maintenance of human life. These needs include such things as food, clothing, air, water and other necessaries of life which are biological in nature. These needs are primary needs.

(ii) Safety and Security Needs: After satisfying the ‘physiological needs, people want the assurance of maintaining a given, economic level. They want job security, personal bodily security, security of source of income, provision for old age, insurance – against risks, etc.

(iii) Social Needs: Man is a social being. He is, therefore, interested in conversation, sociability, exchange of feelings and grievances; companionship, recognition, belongingness, etc.

(iv) Esteem and Status Needs: These needs embrace such things as self-confidence, independence, achievement, competence, knowledge and success. These needs boost the ego of the individual. They are also known as egoistic needs. They are concerned with prestige and status of the individual.

(v) Self-Fulfilment Needs: The final step under the need priority model is the need for self-fulfilment or the need to fulfill what a person considers to be his mission in life. It involves realizing one’s potentialities for continued self-development and for being creative in the broadest sense of the word. After his other needs are fulfilled, a man has the desire for personal achievement. He wants to do something which is challenging and since this challenge gives him enough dash and initiative to work, it is beneficial to him in particular and to the society in general. The sense of achievement gives him psychological satisfaction.

Maslow felt that the needs have a definite sequence of domination. Second need does not dominate until first need is reasonably satisfied and third need does not dominate until first two needs have been reasonably satisfied and so on. The other side of the needs hierarchy is that man is a wanting animal, he continues to want something or the other. He is never fully satisfied. If one need is satisfied, the other need arises.

As said above (according to Maslow), needs arise in a certain order of preference and not randomly. Thus, if one’s lower level needs (physiological and security needs) are unsatisfied, he can be motivated only by satisfying his lower level needs and not satisfying his higher level needs. Another point to note is that once a need or a certain order of needs is .satisfied, it ceases to be a motivating factor. Man lives for bread alone as long as it is not available. In the absence of air one can’t live, it is plenty of air which ceases to be motivating.

The physiological and security needs are finite and tangible, but the needs of higher order are sufficiently infinite and are likely to be dominant ones in persons at higher levels in the organisation. This has been proved by various studies. A study by Boris Blai supported this by showing that managers and professionals in U.S.A. highly value self-realization, while service and manual workers value job security most highly. Further, a survey of 200 factory workers in India reported that they give top priority to job security, earnings and personal benefits – all lower order needs. Studies have also revealed that those needs, which are thought to be most important like social needs, egoistic needs and self-realization, are also thought to be the best satisfiers. One study on two thousand and eight hundred managers in eleven countries reported that security, belongingness esteem and self-realization needs are progressively less satisfied according to the pattern of the needs priority model.

Appraisal of Need Hierarchy Model: The need priority model may not be apply at all times in all places. Surveys in continental European countries and Japan have shown that the model does not apply very well to their managers. Their degrees of satisfaction of needed does not vary according to the need priority model. For example, workers in Spain and Belgium felt that their esteem needs are better satisfied than their security and social needs, Apparently, cultural differences are an important cause of these differences. Thus, need hierarchy may not follow the sequence postulated by Maslow. Even if safety need is not satisfied, the egoistic or social need may emerge.

Proposition that one need is satisfied at one time is also of doubtful validity. The phenomenon of multiple motivation is of great practical importance in understanding the behaviour-of man. Man’s behaviour at any time is mostly, guided by multiplicity of motives. However one or two motives in any situation may be proponent, while, others may be of secondary importance. Moreover, at different levels of needs, the motivation will be different. Money can act as a motivator only for physiological and social needs, not for satisfying higher level needs. Employees are enthusiastically motivated by what they are seeking, more than by what they already have. They may react cautiously in order to keep what they already have, but they move forward with enthusiasm when they are seeking something else. In other words, man works for bread alone as long as it is not available.

There are always some people in whom, for instance, need for self-esteem seems to be more prominent than that of love. There are also creative people in whom the drive for creativeness seems to be more important. In certain people, the level of operation may be permanently lower. For instance, a person who has experienced chronic unemployment may continue to be satisfied for the rest of his life if only he can get enough food. Another cause of reversal of need hierarchy is that when a need has been satisfied for a long time, it may be under-valued.

2. McClelland’s Acquired Needs Theory

Each person tends to develop certain motivational drives as a result of his cognitive pattern and the environment in which he lives. David McClelland gave a model of motivation which is based on three types of needs, namely, achievement, power and affiliation.

They are as follows:

(i) Need for achievement (n-Ach): a drive to excel, advance and grow;

(ii) Need for power (n-Pow): A drive to influencing others and situations; and

(iii) Need for affiliation (n-Aft): A drive for friendly and close interpersonal relationships.


(i) Achievement Motivation:

Some people have a compelling drive to succeed and they strive for personal achievement rather than the rewards of success that accompany it. They have a desire to do something better or more efficiently than it has been done before This drive is the achievement need (nAch). From researches into the area of achievement need, McClelland found that high achievers differentiate themselves from others by their desire to do things better. They seek situations where they can attain personal responsibility for finding solutions to, problems, where they can receive rapid feedback on their performance so they can set moderately challenging goals. High achievers are not gamblers; they dislike succeeding by chance. They prefer the challenge of working at a problem and accepting the personal responsibility for success or failure, rather than leaving the outcome to chance or the actions of others.

(ii) Power Motivation:

The need for power (n-Pow) is a drive to have impact, to be influential, and to control others. Individuals high in n-Pow enjoy being “in charge”, strive for influence over others, prefer to be placed into competitive and status-oriented situations, and tend to be more concerned with gaining influence over others and prestige than with effective performance. Power-motivated people wish to create an impact on their organisations and are wiling to take risks to do so.

(iii) Affiliation Motivation:

This need has received the least attention of researchers. Affiliation need (n-Aft) can be viewed as the desire to be liked and accepted by others. 1t is the drive to relate to people on a social basis. Individuals with a high affiliation motive strive for friendship, prefer cooperative situations rather than competitive ones, and desire relationships involving a high degree of mutual understanding.

People possess the above needs in varying degrees. However, one of the needs will tend to be more characteristic of the individual rather than the other two. Individual with a high-need for achievement thrives on jobs and projects that tax their skills and abilities. Such individuals are goal-oriented in their activities, seek a challenge and want task-relevant feedback. Individuals with high affiliation needs value interpersonal relationships and exhibit sensitivity towards other people’s feeling. But individuals with the high power needs seek to dominate, influence or have control over others.

McClelland also suggests that these three needs may simultaneously be acting on an individual. But, in case of an entrepreneur, the high need for achievement is found dominating one. In his view, the people with high need for achievement are characterised by the following :

(i) They set moderate, realistic and attainable goals for them.

(ii) Prefer to situations in which they can find solutions for solving personal responsibility.

(iii) They need concrete feedback on how well they are doing.

(iv) They have need for achievement for attaining personal accomplishment.

(v) They look for challenging tasks.

Entrepreneurial motivation may be defined as a set of motives such as high need to achieve, moderate need for power and low affiliation motive which induce people to set up and run their own enterprises. Apart from these, entrepreneurs have other behavioural dimensions such as, tolerance for ambiguity, problem-solving, creativity, etc.