Abstract of the most powerful drivers of growth

Abstract

Entrepreneurship, The emergence and development of
entrepreneurship is an important phenomenon in contemporary economies.
Entrepreneurship is strongly linked to small and medium sized enterprises
(SMEs), which are the main developing force of the developed market economies.
The
main discussion of this paper is understanding what are the motivational
factors of entrepreneurs. Considering that entrepreneurs are very significant
for the growth and development of economies in countries in which they operate
their businesses, understanding their motivational and success factors is a very
important topic. The Main motivation factors that drive intrapreneurs can be
identified
into internal and external motivating factors.

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 Keywords:
Entrepreneurship, Internal Motivational Factors, External Motivational Factors.

1.   Introduction

Entrepreneurship
is one of the most powerful drivers of growth and prosperity in the modern
global economy. Few factors have as great an impact in creating jobs, producing
innovation, or generally contributing to a dynamic and competitive economy.
Being an entrepreneur, one who is
self-employed and who starts, organizes, manages, and assumes responsibility
for a business, offers a personal challenge that many individuals prefer over
being an employee working for someone else. Entrepreneurs accept the personal
financial risks that go with owning a business but also benefit directly from
the potential success of the business. Being an entrepreneur is often viewed as
an aversive career choice where one is faced with everyday life and work
situations that are fraught with increased uncertainty, impediments, failures,
and frustrations associated with the process of new firm creation. Not surprisingly,
many researchers have investigated the motivation to become self-employed. What
is it about certain people that drives them to take on the risk, the
uncertainty and the independent structure of business ownership? Entrepreneurs who
started their business during the recession had stronger ‘challenge’,
‘financial’ and ‘family and legacy’ motivations and higher growth expectations.
The recession may have acted as a trigger for individuals who were in
employment and had long-standing entrepreneurial intentions to act on these
intentions. At the same time, a recession also presents genuine opportunities
for starting entrepreneurs as closing firms leave behind unsatisfied market
demand. Similarly, demand for more efficient and cheaper products and services
increase during recessions spurring innovations in these areas.

 

 

 

2.   Literature
Review

The definition of Entrepreneur is reviewed
by (Muhammad Raheel Shafique, 2008) as the word
entrepreneur derived from the French verb entreprendre, which means to
undertake, and the German word unternehmer, which means owner-manager (Drucker,
1985). According to the Kilby (1971), The French economist Cantillion (1755)
explained that an entrepreneur is a person who provides the management to firm
and take risk. Similarly, another French Economist Say said that entrepreneur
is a person who will convert lower productive resources into higher productive
resources (Drucker, 1985 p.19). Entrepreneur is the person who creates
something new and innovation within the existing economy (Schumpeter, 1934).
The person who is a risk-taker and has consistency with his goals and objectives
in different situation is an entrepreneur (Unwalla, 1964). The person, who runs
the business and bears the risk for the profit and loss.

In the research of (Rahnuma Ahmed, 2012),’Entrepreneur’ is a
basic term that integrates many issues and is defined in many ways. According
to Holt (1992) “The term entrepreneur may be properly applied to those who
incubate new ideas, start enterprises based on those ideas, and provide added
value to society on their independent initiatives.” They should possess a
special set of traits. They need to be a risk taker; they should be innovative,
risk taker, self- confident, goal setter, hard worker and accountable
(Siropolis, 1997).

(Lönnström, 2015)’s Thesis said Motivation can be
understood differently depending on the contexts it is examined. Whereas, for
psychophysiologists motivation is a biochemical state or a neurological
activation for psychologists it is a dynamic aspect of behavior which leads
individuals into contact with the world. According to psychologist. This
research applies Joseph Nuttin’s (1984) view that motivation is an active
process which leads individuals to direct behavior towards certain situation
and object. Research on motivation has traditionally looked for answers to
questions of what gets a person activated, why an individual prefers certain
things over others and why people respond differently to the same stimuli.

 

There is
conclusion in (Ivan Stefanovic, 2010)Paper, Four motivational
factors resulted from this research: greater business achievement, independence,
intrinsic factor and job security. Based on these results and their comparison
with the empirical findings in other countries, it may be concluded that motivational
factors of entrepreneurs are generic in developing countries.

In (Wadhwa, 2009)’s Paper,
Entrepreneurs are far more likely to have worked for an employer for more than
six years than to have quickly launched their own businesses. Their primary
motivations for launching a business are to build wealth, to own their own
company, and to capitalize on a business idea they had. Entrepreneurs typically
are well-educated and experienced. In other words, they largely come from the
existing workforce and not from college. They have ideas they want to
commercialize, are motivated to build wealth, and like the idea of being their
own bosses in a startup.

The conclusion
of  (?ížek, 2012)’s
Thesis said  The Maslow’s theory of
motivation has strict order of hierarchy of needs. However the entrepreneurs
are different from the regular employees. Entrepreneurs have to work with no
one to motivate them. Therefore they have to be strongly self-motivated and
determined to pursuit their goals. The research shows that entrepreneurs in
Pardubice region are more motivated by a vision of self-actualization even when
they don’t have satisfied their esteem needs. This is in contradiction with the
Maslow’s hierarchy of needs. It could be caused by diverse character traits
than in case of ordinary employees. The other interesting result is that
entrepreneurs are mostly highly motivated by financial factors however majority
of the respondents refused to sacrifice the time with the family to obtain
higher financial income.

By learning (Ute Stephan, 2015)Motivations for
entrepreneurship relate most clearly to entrepreneurs demographics (age,
gender, education, household income), with fewer systematic relations to the
entrepreneurs” personal situation at start-up (employment status, cross-over
with previous job, family commitments, role models) and characteristics of the
start-up business itself (starting alone versus with others, industry sector of
start-up).

More highly
educated entrepreneurship and those from households with high income are more
likely to pursue opportunity entrepreneurship, whilst those with less education
and from poorer households are more likely to be necessity motivated. Both
younger and older entrepreneurs are more likely to be opportunity motivated,
while the reverse pattern holds for necessity motivation. Opportunity and
necessity entrepreneurs do not differ with regard to gender. Opportunity as
opposed to necessity entrepreneurs are more likely to be in employment, in
education or retired as opposed to unemployed when starting their business.
They are also more likely to know other entrepreneurs, while necessity
entrepreneurs are less likely to know other entrepreneurs. .

Growth
expectations are reported by those with higher education, higher household
income, men, and those who know multiple other entrepreneurs. The pattern of
associations is more complex for the taxonomy of motivations. Autonomy
motivations are reported by younger and less well educated entrepreneurs who
know other entrepreneurs. Similarly, financial as well as family and legacy
motivations are less common amongst those with higher education. Challenge
motivations were reported by more highly educated entrepreneurs and those who
knew multiple other entrepreneurs.

(Biruta Sloka, 2014)’s Research conclusion said, Main
findings of the research results included in the paper are that in general the
motivation factors in different countries are alike, but for Latvia
entrepreneurs willing to start their business most important factors
influencing business success are: good client service; honesty reputation;
charisma and friendliness with clients; good management abilities and among the
less important factors are: political support and interest.

The entrepreneurs
in Latvia were more center on intrinsic motives to start a business– the desire
to be independent. Most important motivations factors for beginners in entrepreneurship
are: to start business for entrepreneurs in Latvia were: make own decisions;
increase income and maintain personal freedom which is similar to the Canada, USA
and Mexico entrepreneurs view.

In Latvia the most
important factors influencing expectations for business success for starting
entrepreneurs were: good client service; honesty reputation; charisma and friendliness
with clients; good management abilities. There are statistically significant
differences with high probability of starting entrepreneurs on attitudes
towards appropriate training: the evaluations of respondents by age groups:
older entrepreneurs evaluate appropriate training higher than younger
entrepreneurs.

(Arora, 2012)discussed
Achievement motivation has been judged on the basis of three categories; low,
moderate, and high. Women entrepreneurs possessing low attributes were those who
were not so much involved, attentive but just survivor to their enterprise.
Moderate women entrepreneurs were those doing substantial enterprise and
introduce new ideas in their enterprise on calculated basis of success and
failure. Women entrepreneurs possessing high attributes were those who were
up-to date to introduce new ideas in their enterprise and place

emphasis on innovation
rather than totally on profit and loss which is also an important criterion for
running an enterprise.

Achievement
motivation among women entrepreneurs : When the desire for achievement

becomes a dominant
concern for a person it is expressed in restlessness, driving energy to aim at
attaining excellence, getting ahead, beating competitors, doing things better, faster,
more efficiently and finding unique solutions to different problems. This need
of achievement motivation leads people to become entrepreneurs. Such people
with strong achievement

motivation set
challenges, goals, demanding more efforts and goals, which are possible to
attain. Entrepreneurs are not satisfied with automatic success that comes from
easy goals nor do they try to do the impossible, they make long range plans and
like to get concrete feed-back on how well they are doing, so that their plans can
be modified accordingly.

Internal and
External Motivation Factors was discussed in (Thom, 2015)
Thesis, The research on motivation has separated the factors that make up the
phenomena into internal factors and external factors. As the entrepreneur goes
through life there is some relationship between internal motivations and
effects from the external environment. The motivation literature has had
difficulties defining motivation, however most definitions include aspects of
activation, direction, and maintenance of behavior. Whether looking at the
stage of life or their personality, it is clear to us now that individuals are
affected by both internal and external sources of motivation with both forms of
motivation having an influence on the decision to start a business. The most
successful individuals in any endeavor are able to balance both extrinsic and
intrinsic motivation factors in the right way, in different contexts, and at
different times. Entrepreneurial motivation is affected by the individual’s
internal world and their external environment.

Extrinsic factors
of motivation have been extensively researched in the field of psychology.
External influences develop during the entrepreneurs’ life course that can
result in the need to engage in self-employment. Grundsten (2004) looked at how
the environment affected entrepreneurial behavior, finding that affective and
rational environmental factors affect entrepreneurial intentions. Studies have
looked at these external factors of motivation, with important findings
including that the external monetary rewards of entrepreneurship are not nearly
as powerful as the internal non-monetary rewards. The decision to become an
entrepreneur across career course is influenced by the authenticity, balance
and challenge provided by their current profession. From this research it is
clear that external factors of motivation have an effect on the entrepreneurial
mind.

Shapero &
Sokol (1982) described these external factors as social and situational
mechanisms coming together to explain the decision to become an entrepreneur.
These social and situational mechanisms include professional and personal
background, experience, and perceived feasibility of self-employment. These
factors are also related to other personal and professional external factors
such as personal goals, business environment and the business idea (Naffziger,
Hornsby, & Kuratko, 1994). External factors are important in that they
often drive the decision to become an entrepreneur; however, it seems to be the
internal factors that drive the individual throughout the entrepreneurial
journey.

The literature largely
focuses on internal factors driving entrepreneurs in to self-employment. These
factors include enjoying the freedom, job satisfaction and money that come with
entrepreneurship. However, there are also negative factors such as stress,
risk, and responsibility which affect the decision. An individual’s perceived
motivation and intentions to become an entrepreneur are mediated by that
individual’s perceived behavioral control and attitudes. Internal factors such
as personality characteristics, psychological factors  and even biology affect these motivations.
The research undertaken here largely focuses on the intrinsic factors within an
individual that provide the link between intention and action.

The literature on
intrinsic factors of motivation has been largely influenced by
‘Self-Determination theory’, which was developed by Edward Deci and Richard
Ryan (1975). This theory suggests that people tend to be driven by a need to
grow in order to gain fulfilment; this need manifests itself in the form of people’s
inherent growth tendencies. Internal motivations help us to explain why
individuals strive towards growth. Self-determination theory assumes that
people are activity directed towards growth. This growth is achieved through
gaining mastery over challenges and taking in new experiences. Deci and Ryan
identify competence, relatedness and autonomy as generating intrinsic
motivation through developing a cohesive sense of self. This internal drive to
grow and master challenges may be an important aspect of entrepreneurial
motivation.

How intrinsically
motivated an individual is will determine the level of energy and commitment
they apply to attaining goals. It is the need to achieve these things that
drives individuals towards self-development. This intrinsic motivation leads to
intrinsic regulation which in turn allows individuals to take action. Intrinsic
motivation is the best indicator of whether an individual will take action
towards growth versus being inclined to remain passive and stagnate. In the entrepreneurial
motivation literature scholars have identified numerous personality
characteristics and internal factors that drive the entrepreneur in to action .

 

3.   Discussion

Motivations
for entrepreneurship relate most clearly to entrepreneur’s demographics (age,
gender, education, household income), with fewer systematic relations to the
entrepreneurs” personal situation at start-up (employment status, cross-over
with previous job, family commitments, role models) and characteristics of the start-up
business itself (starting alone versus with others, industry sector of
start-up).

More highly
educated entrepreneurship and those from households with high income are more
likely to pursue opportunity entrepreneurship, whilst those with less education
and from poorer households are more likely to be necessity motivated. Both
younger and older entrepreneurs are more likely to be opportunity motivated,
while the reverse pattern holds for necessity motivation. Opportunity and
necessity entrepreneurs do not differ with regard to gender. Opportunity as
opposed to necessity entrepreneurs are more likely to be in employment, in
education or retired as opposed to unemployed when starting their business.
They are also more likely to know other entrepreneurs, while necessity
entrepreneurs are less likely to know other entrepreneurs. .

Growth expectations are reported by those with higher
education, higher household income, men, and those who know multiple other
entrepreneurs. The pattern of associations is more complex for the taxonomy of
motivations. Autonomy motivations are reported by younger and less well-educated
entrepreneurs who know other entrepreneurs. Similarly, financial as well as
family and legacy motivations are less common amongst those with higher
education. Challenge motivations were reported by more highly educated
entrepreneurs and those who knew multiple other entrepreneurs. Entrepreneurs
who started their business during the recession had stronger ‘challenge’,
‘financial’ and ‘family and legacy’ motivations and higher growth expectations.
The recession may have acted as a trigger for individuals who were in
employment and had long-standing entrepreneurial intentions to act on these
intentions. At the same time, a recession also presents genuine opportunities
for starting entrepreneurs as the closure of many firms leaving unsatisfied
demand in many markets as well as increasing demand for products and services
that are more efficient and are able to deliver larger cost savings to
consumers and businesses. The relationships of growth ambitions
with ‘challenge’, ‘financial’ and ‘family and legacy’ motives suggest that
entrepreneurs may see growth as something that helps them to grow and challenge
themselves, as something that helps them to earn more income (either to
accumulate wealth or because they seek financial security), and, finally, as
something that helps them to establish a (family) legacy. Showcasing that
growth can be a means to a range of different goals may help to develop growth
ambitions across different types of entrepreneurs. The
inclusivity of policy aimed at increasing entrepreneurship could be maximized
by recognizing and emphasizing the varying motivations and circumstances
leading different individuals into entrepreneurship. For instance, knowing
other entrepreneurs has implications for motivation, which suggests that
increasing contact and networking opportunities with entrepreneurs could be a
useful way of enhancing a range of entrepreneurial motivation.

 

 

4.   Conclusion

Motivation is something that moves a person to action
and continues him in the course of action already initiated. If
the entrepreneur feels motivated, his behavior will bring about the desired
action. Motivational factors constitute the inner drive present in an individual
which continuously demands from him to do something new and unique as also to
perform better than others. These motivational factors stimulate the persons to
undertake entrepreneurial activities relating to creation of new business. Base
on reference paper and journal we can conclude the motivating
factors of entrepreneurs into internal and external motivating factors.

 Internal
factors can summarize as Educational background, Desire to work
freely and independently, Desire to do something pioneering and
innovative, to build wealth, to own their own company, and to
capitalize on a business idea they had etc.

External Factors are great financial background, professional
and personal background, experience, and perceived feasibility of self-employment
etc.

The internal motivating factors make the personality
of the entrepreneur. These factors generate an inclination to adopt
entrepreneurial activity. The internal factors may be supplemented by the
external factors. The external motivating factors serve as a spark in the
lightening of the entrepreneurial idea. Finally, the conclusion is internal and
external motivation factors are the main drivers of entrepreneurs.

 

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