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QUESTION: THEORY OF ENTREPRENEURIAL PSYCHOLOGY
AN
ASSIGNMENT
ON
ENTREPRENEURIAL PSYCHOLOGY
SUBMITTED BY
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Introduction
Being an entrepreneur can be motivated for a variety of reasons, and human motivation is a crucial idea in
management research since it helps to comprehend organizational emergence (Schjoedt & Shaver, 2020).
Research on entrepreneurial motivation is focused on both the drive to start and the drive to grow and shut
down a business. The three distinct entrepreneurial stages of commencement, growth, and exit are
frequently used to categorize the literature in the research on entrepreneurial motivation. Initiation has by
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far received the most attention in the literature of these stages, which are frequently investigated
independently (Murnieks, Klotz, & Shepherd, 2020).
Push-pull theory, which is also known as need or opportunity entrepreneurship, is frequently used to
describe the motivation for starting an entrepreneurial venture (Hakim, 1989; Segal, Borgia & Schoenfeld,
2005; Schjoedt & Shaver, 2007; Kirkwood, 2009; Zaouali, Khefachaa & Belkacem, 2015). This implies
that either push or pull forces might serve as incentive for starting a business. Push factors, which are
reasons like job displacement, the recession, or trouble finding employment that create the urge to start a
business, or out of necessity, are frequently regarded as negative elements. On the other side, pull factors
are characterized as elements that entice people to launch a business, such as spotting an opportunity or
desiring autonomy or self-fulfillment (Segal et al., 2005; Kirkwood, 2009; Biehl, Gurley-Calvez).
Since entrepreneurial motivation is frequently a mix of push and pull rather than one or the other, this strict
dichotomy has recently come under scrutiny, and several authors have called for researchers to move
beyond it (Williams & Williams, 2014; Gundolf, Jaouen & Gast, 2018; Eijdenberg, Isaga, Paas and
Masurel, 2021). Additionally, according to Williams and Williams (2014), this separation makes us
overlook the fact that motivation can vary over time, or that entrepreneurial motivation is flexible
(Eijdenberg et al., 2021). Murnieks et al.'s (2020) argument that an entrepreneur's motivation can shift with
time, as it did for Paul Allen (Microsoft) and Yvon Chouinard (Patagonia) (Rich, 2003; Chouinard, 2005),
further emphasizes this point. Murnieks et al. (2020) urge greater research on how motivation can alter in
the entrepreneurial process in order to obtain a more comprehensive framework.
Although studies on entrepreneurs' motivation in later stages (growth and exit) have been conducted, it
appears that the push-pull hypothesis has been disregarded in these stages. However, by examining the
many motivating elements during the phases of start, growth, and exit, it may also be possible to acquire
an understanding of how push-pull theory can coexist and change over time. Push-pull theory, which is
already a widely used theory in the study of entrepreneurs' motivation, may help with later research and
knowledge of the elements that motivate entrepreneurs. Additionally, Williams and Williams (2014) claim
that research on the fluid entrepreneurial motivation and dualistic push-pull theory has frequently
concentrated on particular types of entrepreneurship, such as those in transitional or underground
economies, and that it is necessary to examine more common entrepreneurs. Similar to this, Eijdenberg et
al. (2021) ask that research on flexible entrepreneurial motivation be conducted in an environment with a
developed economy, as past research has a tendency to concentrate on underdeveloped economies.
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Entrepreneurial Motivation
A person must be motivated to take action. It is frequently seen to be the driving force behind actions like
striving for success and working hard (Sneakers & Speakers, 2015). It is a mental state that manifests
whenever internal or external factors initiate, guide, maintain, or terminate goal-driven behaviors. It is the
motivation that propels people to work toward their objectives in an effort to meet needs or expectations.
According to psychologists and researchers, motivation is the special ingredient for learning and doing
things (Biehler & Snowman, 1986); and among all personal and psychological factors that have drawn
researchers to the field of entrepreneurship development and what causes people to become entrepreneurs,
motivation seems to be gaining more popularity and is a leading factor in comparison to other factors (Tella,
2007). Entrepreneurial guru D.K. Sinha claims that motivation might come from within or without. When
a person acts, it is argued that external motivation is obvious since there will be a measurable, worthwhile
reward, such as better grades, a raise in pay, or recognition. The purpose of the action is to obtain an outside
benefit or reward. External motivation is the term used to describe incentives that are unrelated to the
activity taken (Covington, 2000). According to Cutron, Cole, Colangelo, Assouline, and Russell (1994),
one type of external motivation is the perception that social support is available and can affect a student's
academic achievement.
There are six conventional motivational variables in Sneakers & Speakers (2015), including rewards, fear
of failure, success, personal development, power, and social influences. However, there are nine motivating
ideas in entrepreneurship. As a result, there are six different categories of quantitative motivational ideas
related to entrepreneurship, including the need for achievement, risk-taking, tolerance for uncertainty, locus
of control, self-efficacy, and goal-setting (Shane, Locke & Collins, 2003). Money was listed as the sixth
quantitative motivator in Ademyi's 2010 survey. Only a few qualitative motivational characteristics, such
as independence, desire, and egoistic passion, have been linked to entrepreneurship thus far (Shane, Locke
& Collins, 2003).
Furthermore, a growing number of academics held the view that an entrepreneur's motivation and aim can
affect their desire to start a business. The drive of an entrepreneur affects how successful any business they
start will be. According to a study by Fischer, Reuber, Lorraine, and Dyke (1993), 18.5% of men are driven
by their financial situation and the need to survive, whereas 29.5% of men are motivated by the desire to
excel in business.
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As was already established, the three stages of commencement, growth, and exit are frequently used to
categorize the studies on entrepreneurial motivation (Murnieks et al., 2020). Whereas the motivation for
commencement relates to the drive to launch a venture, the drive for growth relates to the drive to expand
the endeavor, and the drive for exit relates to the drive to shut down the enterprise. The entrepreneurial
process's initiation, or motivation to start a business, has received the greatest research attention, whereas
the growth and exit phases have received less attention.
Initiation
According to Carsrud and Brännback (2011), "Motivations may be the spark that transforms a latent
intention into real action and therefore the missing link between intentions and action" (p. Meaning that
motivation may make the difference between wanting to start a business or thinking about doing so and
really doing it. As a result, motivation is a crucial component of the entrepreneurial initiation process. This
is also consistent with the definition of entrepreneurial motivation provided by Naffziger, Hornsby, and
Kuratko (1994), who state that it is "the process by which entrepreneurs decide whether or not to engage
in entrepreneurial behavior" (p. 30).
Depending on the nation, gender, and other factors, various incentives for starting a venture can be
discovered in the literature that is now available. According to several studies conducted in developing
nations, "job security" and "income" are the two main factors that encourage people to launch a business
(Bewayo, 1995; Chu, Benzing, & McGee, 2007). One study from a developed nation discovered that two
of the more important motives were to "make my own decisions" and "build a business to pass on"
(Robichaud, McGraw & Roger, 2001). In addition, Westhead, Ucbasaran, Wright, and Binks (2005)
discovered that Scottish entrepreneurs' motivation to launch a business varied depending on whether they
were rookie, serial, or portfolio entrepreneurs. There have also been some variances in motivation based
on gender, with women being more motivated by independence and self-sufficiency than by money (Clain,
2000; Kirkwood, 2009). According to Pattanayak & Kakati (2021), many researchers have discovered that
earning money and accumulating wealth are the main reasons people choose the entrepreneurial path. This
finding is consistent with earlier studies that found financial gain to be the main driver of entrepreneurial
activity (Schumpeter, 1934; Casson, 1982; Herbert & Link, 1988). Although empirical studies (Woo,
Cooper & Dunkelberg, 1991; Block, Sandner & Spiegel, 2015; Yitshaki & Kropp, 2016) do not support
economic motive as the main engine for entrepreneurial activity, Murnieks et al. (2020) call this out. citing
a 1995 study by Amit and Muller that found, among 11 distinct motivations, independence, making a
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difference, and innovation to be the three main drivers, placing the desire for wealth at the bottom of the
list. As is clear, there is still significant disagreement in the studies regarding what drives entrepreneurs to
start their businesses.
Growth
The majority of the prior literature on entrepreneurial motivation in growth focuses on various factors that
spur business expansion. In other words, rather than focusing particularly on the various motivational
variables present during the development phase, they examine the concept of growth, examining the
implications of how motivation in general might affect company growth. According to one study (Morris,
Miyasaki, Watters, & Coombes, 2006), female entrepreneurs in New York's initiation motives have an
impact on the growth of their companies. Additionally, it has been discovered that entrepreneurs' passion
for expansion had a favorable impact on business growth. In other words, businesspeople who aim for
expansion may also really trigger it (Delmar & Wiklund, 2008; Moen, Heggeseth & Lome, 2016). Only a
few research have examined the driving forces behind motivation during the entrepreneurial process'
growth stage. Specifically examining "fear of failure" as a motivator and an inhibitor in the growth stage,
Cacciotti, Hayton, and Giazitzoglu (2016) came to the conclusion that "fear of failure" could change over
time based on external and internal factors. Additionally, Cardon, Post, and Forster (2017) discovered that
positive team dynamics could result in more motivated work efforts and improved team and venture
performance.
Exit
The incentive to depart an enterprise is the main subject of research on the exit phase. According to
Shepherd, Williams, and Patzelt (2015), the exit is referred to as the moment the entrepreneur exits the
business by selling it or shutting it down. Entrepreneurs frequently depart due to situational or personal
circumstances, which in turn influence how the venture is exited, such as through liquidation versus sale,
according to studies on the subject. It can also be related to how long people hold off on leaving even when
the business is failing (Shepherd et al., 2015; Klotz, Swider, Shao & Prengler, 2020). There are a variety
of reasons why entrepreneurs quit their businesses. However, objective and task conflicts between the
entrepreneur and the angel investor have been found to influence this intention (Collewaert, 2012).
According to research by Ucbasaran, Lockett, Wright, and Westhead (2003) and Wennberg, Wiklund,
DeTienne, and Cardon (2010), company performance and heterogeneity in the entrepreneurial team were
also identified to be contributing factors to entrepreneurial exit. Another intriguing study found that
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depression may cause an exit from business and that maintaining good mental health is essential for survival
(Hessels, Rietveld, Thurik & Van der Zwan, 2018).
Factors Responsible For Emergence of an Entrepreneurship
Individual’s decision to pursue an entrepreneurial career is dependent on various factors. They have been
discussed below:
Background Factors:

Education, Training, and Experience: An individual's decision to start a business is influenced by
the kind of education, training, and experience he or she has obtained. Technically skilled
individuals typically launch their businesses in the industry in which they specialize since doing so
instills confidence and lessens the uncertainty around a new enterprise.

Family, successful role models, and affiliation with people of a like mind: People who have
supportive families, have successful role models in their lives, or who associate with people of a
like mind are more motivated to start new businesses.

Financial Situations: Both unfavorable and favorable financial situations can spur someone to
launch a new business. An individual may begin looking for a new company endeavor where he
can invest his time and money to achieve success and thereby satisfy his wants when he is
unemployed, unable to maintain his family's needs, or if he has surplus funds.
Motivational Factors

Need for achievement: According to numerous academics, this is the primary driver of
entrepreneurial motivation. The need for achievement is the motivation to accomplish a task.
Entrepreneurs have a strong desire to be successful. Instead of seeking out rewards per se, they are
working toward personal success. They want to accomplish their goals faster or more effectively
than they have in the past.

Personal Motives and Expectations: This has been identified as one of the key elements driving
individual entrepreneurship. These people have an internalized sense of control, meaning they hold
themselves accountable for their personal progress.

Business Environment: A favorable business environment, including low levels of competition,
high profit margins, a strong local economy, and high demand, all contribute to persuading a person
to launch a new business.
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Economic Factors

Encouragement from the government: On occasion, the government develops policies and
initiatives to support entrepreneurs in a variety of contexts, such as tax breaks. These policies and
processes significantly contribute to the motivation of entrepreneurs.

Financial aid is available from a variety of funding sources: An entrepreneur requires money to start
a business, but many do not have the resources to support the requirements of the business setup.
In these cases, he or she might seek help from financial institutions. Therefore, financial institutions
can make it easier for new businesses to start by making it easier for them to receive funding.

Ancillary Support: Ancillary support from suppliers, distributors, retailers etc., even bigger units
can act as great encouragement to the budding entrepreneurs.
Accessibility of technical variables, such as space, electricity, and labor: An entrepreneur's capacity to
decide whether to launch a business endeavor and even the profitability of a business will depend on how
easily they can access the production factors.

Rewards and Recognition: Starting new initiatives offers an entrepreneur a unique identity, the fate
of which is heavily dependent on him, since the success of a business is typically inversely
correlated to the efforts made by the entrepreneurs. Since an entrepreneur's achievements and efforts
are correlated with the success of their business, they receive sufficient acknowledgment to
maintain their sense of self-worth.

Social standing: Starting a business and growing it successfully boosts a person's social standing
because it allows them to earn significant profit margins that a salaried worker could never imagine.
Additionally, having control over one's destiny, employing others, and making significant decisions
all contribute to raising someone's social status.
Motivation theories for Entrepreneurship
Despite the high risk involved in being an entrepreneur, many people choose to do so for a variety of
reasons. Different hypotheses have been developed by intellectuals to explain what drives someone to
pursue entrepreneurship. The most pertinent theories to comprehend an individual's entrepreneurial conduct
are Maslow's hierarchy of needs and McClelland's achievement motivation theory. The push-pull theories
of entrepreneur motivation are another.
Maslow Need Hierarchy theory:
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The need hierarchy hypothesis of motivation was developed by Maslow. He claimed that from lower to
higher order, there are five different types of requirements for humans. The needs are as follows:

Physiological needs: These are the most fundamental requirements and are at the bottom of the
list. Basic requirements include those for clothing, food, and shelter. To meet their basic necessities,
humans put in a lot of effort. This fundamental urge is shared by entrepreneurs and is what drives
them to start their own businesses.

Safety and security needs: These requirements come second in the hierarchy after physiological
requirements, and if these requirements are satisfied, they cease to exist. To satisfy these needs, one
must have adequate money. These needs include being free from threats, living in a secure
environment, and having financial stability, among others. To meet their security needs,
entrepreneurs put forth a lot of effort. Social needs: After security needs are met, social needs are
arises. Human being likes to be recognized and accepted by others. People like to interact with
others so to get affiliated to others. Therefore, entrepreneurs interact with the other entrepreneurs,
employees and others.

Needs for self-esteem: These needs include self-assurance, success, competence, wisdom, and
freedom. Entrepreneurs' requirements for esteem are met by their ownership of and control over
their businesses, which grants them respect, a good name, freedom, and status.

Self-actualization: Self-awareness, self-awareness, and a greater interest for personal development
are requirements for self-actualization. This need is concerned with figuring out what the potential
is in reality and bringing that potential to life.
According to Maslow, if the lowest need in the hierarchy is satisfied then only next need will arise.
Humans never get satisfied so as long as one need is satisfies, immediately second need arises.
Social needs, Self esteem and self-actualization needs motivate the entrepreneur more to work hard.
McClelland Need for Achievement theory: The McClelland need for achievement hypothesis is the most
significant motivational theory for businesspeople. McClelland concentrated on three needs: the desire for
achievement (nach), the need for affiliation (npow), and the need for power (npow).

Need for Power (n Pow): The desire for power is related to the desire to control, influence, and
attempt to change others. Those with a strong desire for power seek to control others. They want
others to depend on them, which gives the people the greatest level of satisfaction.
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
Need for Affiliation (n Aff): The drive to establish positive and cordial relationships with other
people is what the need for affiliation is all about. They have a great desire to be liked and included
by other people. People become motivated when they are recognized as unique individuals.

Need for Achievement (n Ach): The desire to strive and reach the established goals with excellence
is the demand for achievement. These needs influence how people behave in order to perform better.
Individuals with high accomplishment needs perform better than those with low achievement needs.
They accept personal accountability for reaching the objectives. In contrast to low achievers, they
often welcome challenges and establish challenging goals.

Push - Pull Theory
The push-pull hypothesis is a cornerstone of the academic literature on entrepreneurial motivation,
especially in the start stage. Growth and exit settings have received far less attention. According to Gilad
and Levine (1986), there are two general categories that may be used to classify venture initiation
motivations: push and pull. Meaning that some people are forced into starting their own business because
of unfavorable external circumstances like unemployment, financial difficulties, or professional
disappointments. The unfavorable situations awaken dormant entrepreneurial aptitude and encourage
entrepreneurial action. Others are drawn into alluring business chances, indicating that these opportunities
already exist and will "alert" and draw entrepreneurs into company ventures. The push-pull notion, to put
it simply, is a concise manner of talking about the various kinds of motivation that have been
recognized.The push-pull notion, to put it simply, is a concise manner of talking about the various kinds of
motivation that have been recognized.
Since the 1980s, numerous researchers have investigated the push-pull theory of entrepreneurial
motivation, and the pull theory has gained more understanding. For example, the pull may come from the
desire for independence, financial motivations, self-fulfillment, need for achievement, ability to innovate,
and lifestyle changes, among other factors (Segal et al., 2005; Kirkwood, 2009; Zaouali et al., 2015).
Additionally, those who are pulled into entrepreneurship are referred to as opportunity entrepreneurs,
whereas those who are driven into it because of push reasons are referred to as necessity entrepreneurs
(Duan, Kotey & Sandhu, 2021). After being established in The Global Entrepreneurship Monitor's 2001
edition (Reynolds, Camp, Bygrave, Autio & Hay, 2001), the distinction between necessity and opportunity
entrepreneurs gained significant traction in the research literature. This distinction, according to
researchers, is crucial since it might reveal the main reasons why someone would want to be involved in a
start-up (Zaouali et al., 2015; Maritz, 2004). varied factors, such as country and gender, can have varied
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primary motivators to entrepreneurial activity, as explained in section "2.1 Entrepreneurial Motivation".
Entrepreneurs from underdeveloped nations that are motivated by needs for money and employment
stability would be considered necessity entrepreneurs in this situation. Women who were motivated by
factors like independence, on the other hand, would be categorized as opportunity entrepreneurs.
Additionally, it is believed that pull motivators outlast push ones and that opportunity entrepreneurs
frequently already enjoy financial security (Gódány & Zsigmond, 2021). Additionally, according to Duan
et al. (2021), the majority of immigrant entrepreneurs are forced into business because they must in order
to survive, making them necessity entrepreneurs, while the majority of non-immigrant entrepreneurs start
businesses in order to take advantage of opportunities, making them opportunity entrepreneurs (Maritz,
2004).
Some academics investigate how happiness, business growth, and other factors may be impacted by the
incentive to commence that comes from push or pull. According to Amit and Muller (1995), enterprises
founded by opportunity entrepreneurs that were motivated by pull factors had a higher chance of being
profitable than those started by necessity entrepreneurs. According to Gódány and Zsigmond (2021),
opportunity entrepreneurs who were motivated by pull forces experienced a greater sense of success than
necessity entrepreneurs. According to Morris et al. (2006), female entrepreneurs with pull variables had a
much higher growth orientation, or aspiration for expansion. In turn, this caused them to see fewer
problems, problems with the outside world as challenges rather than problems, and a strong belief in their
own skills.
Summary
Entrepreneurs are crucial to the nation's economic growth. The majority of entrepreneurs share a few traits
in common. Entrepreneurs also struggle with motivational issues. The entrepreneurs are motivated by a
variety of things. Numerous psychologists have conducted research to identify the elements that can inspire
businesspeople. They have developed various theories on entrepreneur motivation in light of this.