 Entrepreneurial behaviour is influenced by many psycho-

concepts such as perception, motivation, optimism,

conditioning, cognition, self actualization or other
psychological thoughts,
 These psychological processes influence the thinking and
behaviour of entrepreneur. Main psycho-theories of
entrepreneurial behaviour may be discussed as follows :
1. Need for achievement (n-ach) and power by McClelland
2. Risk-Propensity Theory
3. Motivation Theory
4. Rotter’s locus of control theory
 He states that people who pursued
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.
 This theory has been criticized due to the following;
 The theory is contradictory and it has a limited
evidence
 It holds true to some cases while to other cases it is
not
 It is limited only to business people while other people
also show that behavior
 This theory focuses on “stable” characteristics of
entrepreneurs, whereas since the market conditions are
dynamic, the entrepreneurial behaviour also keeps changing.
 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 willing 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 important part of the
entrepreneurial behaviour.
 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
of motives, 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 behavioral dimensions motivate the people
to start a new venture.
 Various motivational theories are: Maslow theory,
ERG theory etc.
 This theory contends/states that there is a
degree to which one believes that he/she is in
control of one’s destiny.
 This can either be internal or external.
 Internals: The internals believe that what
happens to them is a result of their
internal efforts whether it is good or
bad. In this case, people believe that
they are in charge of their actions and
fortune. Events would be determined on
the basis of their qualities and conduct.
 Externals: These believe that whatever
happens to them is a result of external
factors whether good or bad. In this scenario,
individuals believe that outcomes are
out of their control and it completely
depends on external factors such as
fate, change etc.