Entrepreneurial Behavior Innovation and Psycho Theories Notes of Entrepreneurship

Entrepreneurial Behavior Innovation and Psycho Theories Notes of Entrepreneurship :-  Hello friends in this post we are provided the materials of the b.com second part its name is fundamental of Business Entrepreneurship notes and its the first chapter of this subject and in this article you learn many more knowledge of Entrepreneurship like as  Meaning of Entrepreneurial Behavior, Characteristics of entrepreneurial behavior, Meaning and Definition of Innovation, Characteristics of Innovation, Contents of Innovation, Relationship Between Innovation and entrepreneur, Psycho – Theories and Entrepreneurial Behavior.

 

 Entrepreneurial Behavior: Innovation & Psycho Theories

MEANING OF ENTREPRENEURIAL BEHAVIOUR

Behaviour is a manifestation of what a person thinks, feels and acts. An entrepreneur is a creative person. Need for self actualisation as manifested in the need for achievement forces him to create something new, a new product, a new way of doing things, a new source of raw material, a new market etc. Behaviour is always caused and is never spontaneous. Behaviour is basically goal-oriented. Entrepreneurial Behaviour includes the goal-oriented acts or decisions of an entrepreneur. The entrepreneurial behaviour means the manners or way in which the entrepreneur deals with its total environment : internal and external. It is the way or approach to look at the physical and human resources and the society. The entrepreneurial bvehaviour is a view of or orientation towards risk-bearing, innovation, achievement, goal-setting, ethics, social responsibility, motivation, challenges and values cf human society, and other psychological elements.

CHARACTERISTICS OF ENTREPRENEURIAL BEHAVIOUR

The entrepreneurial behaviour is different from the capitalist’s behaviour. The capitalists assume a traditional or conservative approach. He believes in “safe-playing” while investing his money in the enterprises. He is concerned mainly with his share of interest on his investment. On the other hand, entrepreneur loves to take risk and tends to establish a new enterprise and adopts a new technology, or a new product, or tries to find cut a new raw material. He is always looking out for a new thing or a new method. He is a high achiever. He is guided mainly by achievement motivation.  Main characteristics of entrepreneurial behaviour may be summarised as follows :

(1) Intitiative Behaviour : It is the entrepreneur who takes or imitate the first move towards setting up of an enterprise. Entrepreneur basically is an innovator who carries out new combinations to initiate and accelerate the process of economic development.

(2) Challenge accepting behaviour : Entrepreneurs take problem as a challenge and put in their best for finding out the most appropriate solution for the same. They will first of all understand the problem and then evolve appropriate strategy for overcoming the problem.

(3) Assertive Behaviour : An assertive  person knows what to say, when to say, how to say and whom to say. He believes in his abilities and ensures that others fall in line with his thinking, aimed at promoting the interests ofthe organisation.

(4) Persuasive Behaviour : A successful entrepreneur through his sound arguments and logical reasoning is in a position to convince others to do the works the way he wants them to do. It is not physical but intellectual force he will use for convincing others.

(5) Effective Monitoring : Entrepreneurs ensure that everything is carried out in their organisations as per their wishes. They ensure regular monitoring of the working so that the goals of the organisation are achieved in best possible manner.

(6) Looking for Opportunity : An entrepreneur is always on the look out or searching for opportunity and is ready to exploit it in the best interests of the organisation.

(7) Persistence : An entrepreneur is never disheartened by failures. He believes in the Japanese proverb ‘Falls even times, stand up eight’. He follows Try-Try Again for overcoming the obstacles that come in the way of achieving goals.

(8) Information Seeker : A successful entrepreneur always keep his eyes and ear open and is receiptive to new ideas which can help him in realising his goals.

(9) Quality Consciousness : Successful entrepreneurs do not believe in moderate or average performance. They set high quality standards for themselves and then put in their best for achieving these standards. They believe in excellence, which is reflected in everything they do.

(10) Recognizing the importance of Business Relationships : Entrepreneur acts to build repport or friendly relationships with customers. He sees interpersonal relationships as a fundamental business resource. He places long-term goodwill over short-term gain.

(11) Commitment to Work : Successful entrepreneures arc prepared to make all sacrifices for honouring the commitments they have made. Whatever they commit, they take it as a moral binding for honouring their commitments, irrespective of the costs innolved.

(12) Independent Behaviour : Entrepreneurial behaviour posseyses strong need for independence and due to this desire they are motivated to start a business. They always concentrate to achieve their goals.

Describe Entrepreneurial Behaviour. Explain the

psychological factors to effect the entrepreneurial behaviour.

The behaviour of an entrepreneur is dependent largely on his psychology and motives which are the main  determinants of be. haviour. These motives are based on needs for survival and growth. The movements of an entrepreneur are affected by the psychological background. Many theorists Akouri, McClelland, Javillionar & Winter have given views related to psychological factors as follows :

(1) Achievement Motive : Achievement motive is most important for an entrepreneur. It is this motive which  motivates people to do something different and extraordinary so that one may feel that he has achieved or created something which others are not able to do..lt motivates an entrepreneur to take an initiative for innovation. It also makes one personally responsible for his actions and performances. It helps to develop self-reliance and develops the spirit of risk-taking which is very -essential part of entrepreneurial behaviour, one will not establish a unit unless he is prepared to take risk.

(2) Desire to Influence Others : Strong desire of the need for power, helps a person to become a successful institution builder, Thus, it is necessary that an entrepreneur must have the ability of self-management with a strong will power. Thus, they possess a strong desire towards the need of influencing others.

(3) Desire for Independence : Entrepreneur possesses strong desire for independence and it is only due to this desire that they are motivated to start a new business. According to psychologists, the feeling of independence is acquired by them through the family atmosphere. Due to this they do not want to work under anyone rather they like to work independently.

(4) Innovation :   This is an important psychological factor Of entrepreneurs. Generally, an entrepreneur does those acts which are not taken up by other persons. They transform the creative ideas into useful applications. Accordmg to Schumpeter, a person is an entrepreneur only when he is an innovator, engaging himself in an innovative behaviour. Thus, innovative behaviour is an entrepreneurial behaviour,

(5) Hope for Success : Entrepreneurs are always hopeful for future success. They work for being successful which enlightens them with the confidence, positive attitude and high energy level. Hope for success makes their behaviour strong and stable.

(6) Calculated Risk Taking : Entrepreneur is a person who is always in a position to accept challenging job, He works on those projects only, which are risky but have a probability of success through their efforts. He does not rely on those ventures, which totally depends on chance. In other words, the entrepreneur belives in calculated risk-taking.

(7) Immediate feed back : Entrepreneur wants immediate feedback of the progress of his entrepreneurial targets so that he can improve the way of achieving the targets and his behaviour changes according to the situations.

(8) Self-Efficacy : An entrepreneur has a drive for self-efficacy. They want to become the problem solver, instead of problem avoiders. They do not want to copy others but they want others to copy them. Further they feel proud of their achievements and live in the present.

(9) Self-Expression : The desire for self-expression appears to be a common thread and may help explain why so many men and women prefer to work for themselves than for someone else.

(10) Self Confidence : Entrepreneurs believe in themselves. They have confidence that they can outdo anyone in their field. They tend not to accept the status quo, believing instead that they can change the facts. Often, they insist the odds are better than the facts would justify. They have winning habits. On the basis of self-confidence, they become overachievers.

(11) Different Way : Although all people are different, entrepreneur is different from all others. They judge the world in terms of their own beliefs, values and expectations. A good entrepreneur behaves like human being rather than rational machine. They sce their work world differently. They differ in their psycho-personalities, needs, time periods, social surroundings and perception.

 

MEANING AND DEFINITION OF INNOVATION

Innovation is the process of taking a creative idea and turning it into a useful product, service or work method. It implies doing new things, It includes introduction of new products, creation of new markets, application of new method of production, discovery of new and better sources of raw materials and developing a new and better form of industrial organisation. Innovation may be used on the application of knowledge produced by research. Innovation is different from invention. Invention implies discovery of new ideas, new products and new methods whereas innovation refers to the application of inventions to make new combinations and thereby produce satisfaction and profit. According to Paul E. Plsek, “Innovation is the first, practical, concrete implementation of an idea done in a way that brings broad-based, extrinsic recognition to an individual or organisation.” In the words of Peter F. Drucker, “Innovation is the means by which the entrepreneur either creates new wealth-producing resources or endows existing resources with enhanced potential for creating wealth. ‘

CHARACTERISTICS OF INNOVATION

On the basis of above discussion, it can be concluded that :

(i) Innovation implies action, notjust conceiving new ideas.

(ii) It is a process of changing, experimenting, transforming and revolutionising.

(iii) It is a key aspect of entrepreneurial activity,

(iv) It is a “creative destruction”.

(v) It leads to technological changes and employment growth*

(vi) It is a pervasive attitude, feeling, an emotional state, an ongoing commitment to newness,

RELATIONSHIP BETWEEN INNOVATION AND ENTREPRENEUR

Inereasingly, creativity and innovation are seen as being the key to survival in an ever-more competitive and global economy. In fact change and innovation are becoming a ‘way of life’ for most entrepreneurs. An entrepreneur always takes a personal responsibility for encouraging any type of innovative idea, product, or process in the enterprise. Peter Drucker has rightly observed that “Innovation is the specific tool of entrepreneurs, the means by which they exploit changes as an opportunity for a different business or a different service. It is capable of being presented as a discipline, capable of being learned and practised. Entrepreneurs need to search purposefully for the sources of innovation, the changes and their symptoms that indicate opportunities for successful innovation. kid they need to know and apply the Principles of successful innovation.” Drucker is of the opinion that an entrepreneur is one who always searches for changes responds to it andexploits it as an oppor tunity. Innovation is treated as an instrument of entrepreneurship. R.M. Kanter says, “Winning in business today demands innovation” and such is the stark reality facing today s entrepreneurs. In the dynamic, chaotic world of global competition, entrepreneurs must create new products and services and adopt new technology, ifthey are to compete successfully, The organisation that is not creative and innovative may not survive. Thus, entrepreneurs are looking for ways to encourage and foster in creativity and innovation on both the individual and the venture level. Thus it can be concluded that innovation and entrepreneurs are indispensable to each other. Both are useless and incomplete in absence of one another.

PSYCHO-THEORIES AND ENTREPRENEURIAL BEHAVIOUR

Entrepreneurial behaviour is influenced by many psycho-concepts such as perception, motivaticn, optimism, conditioning, cognition, self actualisation or other psychological thoughts, These psychological processes influence the thinking and behaviour of entrepreneur. Main psycho-theories of entrepreneurial behaviour may be d •scussed as follows :

(1) Achievement Theory of McClelland : This theory was propounded by David Mc-Clelland in his book, ‘The Achieving Society’. He states that people who persued entrepreneur like careers were high in need achievement. The n-achievement is called a desire to do well, not so much for  the sake of social recognition or prestige but for the sake of an inner feeling of personal accomplishment. It is this motive of n-achievement that guide the action of entrepreneur. People with high nachievement behave in an entrepreneurial way. They do things in a new and better way. They make decisions under uncertainty. Entrepreneurs with a high-need to achieve feel that their success or failure is due to their own actions. McClelland indicates that there are five major component to the need achievement trait.  (i) responsibility for problem solving, (ii) setting goals, (iii) reaching goals through one’s own effort, (iv) the need for and use of feedback, and (v) a preference for moderate levels ofrisk-taking. Thus people with high need for achievement are motivated to be an entrepreneur.

(2) Self-Monitoring Theory : Self-monitoring is a personality trait that measures an individual’s ability to adjust his behaviour 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.

(3) Risk-Propensity Theory : Risk-propensity is the to which an individual is willing to take chances and make risky decisions. An entrepreneur with a high risk propensity might be villing to experiment with new ideas and gamble on new products He might also lead the venture in new and different directions Thus, risk taking-whether financial, social or psychological is an impatantpart ofthe entrepreneurial behaviour.  (4) Motivation Theory : People differ not only in their ability to do, but also in their will to do or motivation. Motives are the mainsprings of action. Entrepreneurial motivation may be defined as a set ofmotives, 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 behavioural dimensions motivate the people to start a new venture.

(5) Role Models and Support Systems Theory : Every entrepreneur has a choice of a role model. He follows and learns for the behaviour 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 behaviour. 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 and gain overall support for the new venture. ”

What is the difference between Innovation and Invention ?

Innovation is not similar to invention. Main points of difference between invention and innovation may be summarised as follows :

(1) Nature of Activity : Invention is the creation of something new, whereas innovation is the economic exloitation of the new idea or resource; in other, words, innovation is the transformation of an idea or resource into useful commercial applications.

(2) Results : Invention results in new knowledge Whereas, innovation results in the products, services, or processes.

(3) Position : All inventors are not innovators, while all innovators are inventors.

 

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