Entrepreneurship

Unit-2
Motivating Factors

Achievement, Challenge, & Learning

This reason is quite familiar to those of us in Silicon Valley. The challenge of solving a
problem using technology has motivated thousands of entrepreneurs here and abroad, and
created some of the largest and most successful companies in history. To me, this motivation
applies to anyone with a strong need for self-expression and a desire to create. I know chefs,
graphic artists, musicians, clothing designers, vintners, and builders who have become
entrepreneurs so they have a way to express their creativity, apply their skills, and solve
challenging problems.

Independence & Autonomy

Independence and autonomy are profound and compelling human desires. Entrepreneurs set
their own goals, pick their own partners, and face the consequences of their decisions. When I
asked Phil Holland, the founder of the My Own Business Institute, about the benefits of his
entrepreneurial journey, he responded: "The number one benefit (no close second): Living in
a democratic, free-enterprise society, which gave me the freedom to follow my dream in my
own business."

Income Security and Financial Success

I think this is really two motivations. Some entrepreneurs are motivated by the desire to
create the next "unicorn" - a privately-held company with a valuation of over $1 billion (see
examples). Far more common is the entrepreneur who is seeking financial security. They
might be excluded from traditional employment because of limited education, poor language
skills, illegal discrimination, or previous incarceration. For them, one of the best options for
achieving financial security is starting a business and creating their own opportunity.

Recognition and Status

Depending on the community and culture, entrepreneurs can be either celebrated or vilified.
Entrepreneurs who create enormous wealth for themselves and their communities are not
automatically recognized as citizens we would like our children to emulate. Much depends on
how they made their money and what they do with it.

Family
In many parts of the world, the family business is the only way to maintain financial and
social stability. The well-being of the family is a powerful motivator for young entrepreneurs
looking for a vocation.

Dissatisfaction with Current Work Arrangements

Remember the song “Take this Job and Shove It” by (ironically) Johnny Paycheck? A bad
boss, poor pay, job discrimination, forced retirement, and no opportunity for advancement are
strong motivators for potential entrepreneurs. So is being fired. Research has shown that
layoffs associated with the Great Recession resulted in a rapid and significant increase in
business start-ups and entrepreneurial activity.

Community and Social Motivation

Many entrepreneurs are motivated by a desire to give back to the community or solve an
ongoing social problem. Social entrepreneurs and their efforts to solve the problems of
disadvantaged communities are the focus of SCU’s Miller Center. The mission of
organizations like Inner City Advisors is to create jobs in communities that need them the
most.
Motivation Theories

Definition

“Motivation means a process of

stimulating people to action to
accomplished desired objectives”

Importance of Motivation
► Helps in satisfying needs of the Employees

► Change the negative attitude to Positive attitude

► Helps in introducing changes

► Improves level of efficiency of employees

► Creating friendly and supportive relationship

Types of motivation

Positive motivation
► Positive motivation induces people to do work in the
best possible maimer and to improve their performance.

► An example of Positive motivation :

when a Boss tells his subordinate , "if you achieve the

J

target on the time I will give you promotion “

Negative motivation
► Negative motivation is generally resorted to when positive
incentive does not works and a psychological set back has to
be given to employees.

► An example of Positive motivation :

When a Boss tells his subordinate , "if you do not achieve the
target on the time I will give you demotion”

Monetary incentives-
Those incentives which satisfy the subordinates by providing them
rewards in terms of rupees.

Money has been recognized as a chief source of satisfying the needs

of people.

Money is also helpfill to satisfy the social needs by possessing

various material items.

Non-monetary incentives-
Besides the monetary incentives, there are certain non-financial
incentives which can satisfy the ego and self- actualization needs of
employees.

The incentives which cannot be measured in terms of money are under

the category of “Non- monetary incentives”.

Non- financial incentives can be of the following types:-

► Security of service-
► Praise or recoguitiou-
► Promotion opportunities
Fear and Punishment Theory
* Managers developed a strategy of
forcing people to work by
threatening to punish or dismiss
them or cut their rewards if they
did not work well.

* This philosophy is characterized

by thinking of aggressiveness and
authorities managers

* Their was a tight control and rigid

supervision over workers.
 Reward Theory
► This theory tried to establish a
direct relationship between
efforts and rewards.

► Bases of Piece rate system of

wages

► Based on the standard manager

should decide on dearee of
rewards and penalties

Carrot and Stick Theory

This theory suggest a combination of both
rewards and penalties for motivation

This is based on the strategy of putting

carrot in the front of the donkey and hitting
it with the stick so it has to run

Carrot refers to the incentives

k Stick refer to the penalties

 Maslow’s Theory of Motivation
► Abraham Maslow is well renowned for
proposing the Hierarchy of Needs Theory
in 1943.
► Maslow was of the view that needs have
priority, i.e., needs are satisfied in an
order.
►As soon as the lower level needs are
satisfied. Those on the next higher level
emerge.
► Thus, he considered an individual's
motivation behavior as a predetermined
Abraham Maslow
order of nee ds.

Hierarchy of Needs Theory

The original hierarchy of needs five-stage model includes:

Maslow (1943, 1954) stated that people are motivated to achieve certain needs and that some
needs take precedence over others.

Our most basic need is for physical survival, and this will be the first thing that motivates our
behavior. Once that level is fulfilled the next level up is what motivates us, and so on.

1. Physiological needs - these are biological requirements for human survival, e.g. air, food,
drink, shelter, clothing, warmth, sex, sleep.
If these needs are not satisfied the human body cannot function optimally. Maslow
considered physiological needs the most important as all the other needs become secondary
until these needs are met.

2. Safety needs - once an individual’s physiological needs are satisfied, the needs for security
and safety become salient. People want to experience order, predictability and control in their
lives. These needs can be fulfilled by the family and society (e.g. police, schools, business
and medical care).

For example, emotional security, financial security (e.g. employment, social welfare), law
and order, freedom from fear, social stability, property, health and wellbeing (e.g. safety
against accidents and injury).

3. Love and belongingness needs - after physiological and safety needs have been fulfilled,
the third level of human needs is social and involves feelings of belongingness.
Belongingness, refers to a human emotional need for interpersonal relationships, affiliating,
connectedness, and being part of a group.

Examples of belongingness needs include friendship, intimacy, trust, and acceptance,

receiving and giving affection, and love.

4. Esteem needs are the fourth level in Maslow’s hierarchy and include self-worth,
accomplishement and respect. Maslow classified esteem needs into two categories: (i) esteem
for oneself (dignity, achievement, mastery, independence) and (ii) the desire for reputation or
respect from others (e.g., status, prestige).

Maslow indicated that the need for respect or reputation is most important for children and
adolescents and precedes real self-esteem or dignity.

5. Self-actualization needs are the highest level in Maslow’s hierarchy, and refer to the
realization of a person’s potential, self-fulfillment, seeking personal growth and peak
experiences. Maslow (1943) describes this level as the desire to accomplish everything that
one can, to become the most that one can be.

Individuals may perceive or focus on this need very specifically. For example, one individual
may have a strong desire to become an ideal parent. In another, the desire may be expressed
economically, academically or athletically. For others, it may be expressed creatively, in
paintings, pictures, or inventions.
McClelland’s Three Needs Theory: Power, Achievement, And
Affiliation

The Three Needs Theory, also known as need theory, is the best-known theory of David
McClelland, a Harvard professor who spent thirty years conducting research on motivation.
He sought to understand human nature and develop tools to measure how people make
choices.

McClelland’s Theory of Three Needs outlines the three desires that an individual could
possibly have. Each person is motivated by power, affiliation, or achievement. One trait is
usually more dominant, but the others are present in an individual as well.

There are many theories that examine motivation, some of which have similar elements to
McClelland’s theory. For example, in his Achievement model, McClelland studies those
who try and be better and achieve more. This is similar to both Herzberg’s ideas on high and
low achievers as well as Maslow’s theory of Self-Actualization.

While his ideas are used primarily to assess work performance, McClelland conducted other
studies that centered on motivation. He researched how motivation affected one’s health; an
individual’s drive to succeed can cause stress, high blood pressure, or abnormal hormone
levels. This demonstrated that internal factors, i.e. a motive, can cause a physical response.
Some were not convinced, but these ideas provided a foundation for future studies.

Motivation - Three Needs Theory:

• Need for Achievement (nACH): Personal responsibility, Feedback, Moderate risk

• Typical behaviors:
• High: Must win at any cost, must be on top, and receive credit.
• Low: Fears failure, avoids responsibility.
• Need for Power (nPOW): Influence, Competitive
• Typical behaviors:
• High: Demands blind loyalty and harmony, does not tolerate disagreement.
• Low: Remains aloof, maintains social distance.
• Need for Affiliation (nAFF): Acceptance and friendship, Cooperative
• Typical behaviors:
• High: Desires control of everyone and everything, exaggerates own position and
resources.
• Low: Dependent/subordinate, minimizes own position and resources.

The Power Motive

If an individual’s predominant motive is power, they are motivated to influence others and
take control. While the extreme example of Hitler in Nazi Germany may come to mind, this
motive actually takes on a more mild form of coach or leader. They do not seek to implement
a dictatorship but hope to motivate others, delegate responsibility and influence those around
them.

A coach is a good example because it perfectly illustrates the idea of letting the players (or in
this case, employees), do their job while they assess the situation and make decisions. The
players and employees are aware of their responsibilities and are highly skilled to perform
them.
McClelland found that power-motivated individuals were best suited for leadership positions
within a company. If they were able to effectively delegate tasks in the workforce, they were
often able to be successful leaders. This does not mean that all power-motivated individuals
will make good leaders. Each personality is unique and those who are aggressive and
authoritative may actually decrease the work performance of their employees.

The Power Motive is not without its own disadvantages. Individuals who are motivated by
power are often flighty and frustrate easily. They have no problem moving locations or
changing situations if the opportunity presents itself. They have a reputation for being “ladder
climbers,” or working their way up the organization as soon as a better position presents
itself. Some believe that they are not invested in their role, but just simply biding their time
until the next one is available. As they will simply abandon their position in their search for
fame, recognition and wealth, it is difficult to dispel those ideas.

The Achievement Motive

If an individual’s predominant motive is achievement, they are motivated to do better for the
sake of doing so. They hope to exceed expectations and are pleased when they surpass their
peers. These individuals like challenges and want to be in charge of their success.

Achievement-oriented individuals will change the situation or the location if they feel like it
is not meeting their needs. They do not like working in groups because they do not like
having limited control over the outcome. Instead, they prefer to do work where the results are
clear and visible.

Many entrepreneurs are motivated by achievement. They have the drive to be successful and
this is, in turn, vital to the economy. However, this may not mean that they are the best bosses
to their employees. Achievement-motivated individuals often prefer to do things themselves,
leading them to micromanage things in a business. They prefer not to work in a team and
often fail to share the workload and responsibility. It is a double-edged sword: they
experience success and rise to management positions, but this same personality is what keeps
them from being successful in those roles.

The Affiliation Motive

If an individual’s predominant motive is affiliation, they are essentially motivated by social
connections. They are primarily motivated to fit in and please others, and value their
relationships with their peers. These individuals appreciate familiar situations and are
unlikely to leave their work location. They also do not like working alone and try to avoid
disappointing their coworkers and managers at all costs.

Even though affiliation-motivated individuals work well in a team, they are often not the best
employees. They are not motivated to do better as they are content to stay in their position.
There is no drive to improve their employee status or their personal position, which makes
them, in effect, the least effective workers.
Government Policies for Entrepreneurship Development
[Schemes for Entrepreneurs]

1. Government Policies For Small Scale Industries

India has recently been described as the world's only genuinely emerging market at
the moment. The growing SME sector of India propels a portion of this development.
The Small and medium-sized sector accounts for over 40% of the total GDP and
continues to be a vital source of jobs for the increasing population of India.
Recognising the significance of Local SMEs in the government has launched several
schemes to boost the SME sector.

As a result, India is experiencing a boom in startups in all industries, including IT,

service delivery, wellness, technology, and others. The government has launched
several schemes to make the process quick in order to enable young entrepreneurs
to kickstart startup companies that will ultimately generate job opportunities. The
majority of these schemes offer financial aid in the form of subsidies and loans to
prospective individuals and organisations.

2. Beneficial Government Policies for Budding Entrepreneurs

1. Atal Incubation Centre (AIC)

Atal Incubation Centre is a funding scheme that Started in the year 2016. Envisioned
by the NITI Aayog, this aims at supporting entrepreneurs by covering their operating
costs of capital. The approved business ventures can avail up to Rs. 10 crore over a
five-year term. Atal Incubation Centre allows researchers, students, and startup
owners to apply for the scheme across different verticals and sectors. The
entrepreneurs can set their company as a Public-private partnership, Public
organisations, or as a completely private organisation. The entrepreneur needs to set
up space of around 10,000 sq. ft. and should set up the physical infrastructure within
six months of disbursement of financial assistance.

2. MSME Business Loans in 59 Minutes

Right now, the MSME Business Loans in 59 Minutes is undoubtedly the most
discussed business loan scheme. This program was introduced in the year 2018 by
the Government of India. This scheme is introduced to provide financial assistance to
micro, small, and medium enterprises. The entrepreneurs can avail of loans of up to
one crore under this scheme. This scheme is very quick and, within 59 minutes, you
will know about your eligibility. Disbursement of the financial assistance happens
within 1 -2 weeks. A majority of the public sector banks are a part of this scheme.
3. National Small Industries Corporation Subsidy

NSIC subsidy offers two forms of financial benefits for small businesses: Raw Material
Assistance and Marketing Assistance. Raw Material Assistance helps to purchase raw
materials from abroad and from India. Marketing Assistance, on the other hand,
helps to improve the sales of products and services with an efficient marketing
process. The program is introduced to provide loans to SMEs who are looking for
growth or rapid expansion.

4. MSME Market Development Program

This development program is designed to provide market expansion assistance to

micro, small, and medium enterprises using international events, trade fairs, and
roadshows. This system helps in the growth of the business by providing them
assistance in terms of expansion into international markets.

Any startup organisation registered under District Industries Centre can apply for this
program under which the to and fro travelling expenses will be borne by the
government for participating in international exhibitions. Not only that, it bears half
of the accommodation charges and % amount of the participation charges.

5. MUDRA Loans

The Government of India initiates MUDRA loans for providing business finance for
micro-business units. This program was launched with the single motive of 'paying
the unfunded'. Since most of the time, the small-medium enterprises suffer from lack
of funds, the government launches this program to encourage participation and
growth of the startups across different sectors like trading, manufacturing, services,
etc.

6. Swarojgar Credit Card

Swarojgar Credit Card was initiated to provide loans to small-time businessmen like
fishers, homemakers, travel operators, shopkeepers, etc. Under this scheme, the
small-time business owners can take a loan of Rs. 25000 in terms of credit card
facilities. A passbook is also provided to keep track of the financial transactions. The
card will be valid for five years and can be renewed upon satisfactory results from the
initial investments.

7. Coir Udyami Yojana

The primary objective of this scheme is to build coir units throughout India. This Coir
Board oversees this system which provides financial assistance up to Rs. 10 lakh to
eligible units. However, the credit term should not exceed one-quarter of the project
value. Individual entrepreneurs, joint ventures, private institutions, the public-private
enterprises can avail of benefits under this scheme.
8. Refinancing by NABARD

This program launched by NABARD focuses on providing refinancing to lending

institutions in agricultural areas. This aims to provide growth to rural enterprises
based in diverse areas. Various handicraft manufacturing industries, rural institutions,
agricultural setups have taken part in this scheme and made rapid growth.

9. The Women Entrepreneurship Platform

The Government of India introduced the Woman Entrepreneurship Platform to

promote women's entrepreneurship. The NITI Aayog is the primary driver behind this
program and aims to boost the morale of young and dynamic woman entrepreneurs.
This scheme has got three divisions: Gyaan, Iccha, and Karma Shakti. Iccha Shakti
aims to empower women to start a company. Gyaan Shakti offers a favourable
environment for setting up a business.

Whereas, Karma Shakti provides practical help to bussing women entrepreneurs to

start their own business or scale them up. Any form of the organisation - be it NGO,
Corporations, and associations - led by women entrepreneurs can apply under this
program. This scheme provides several other benefits such as mentoring, credit score
improvement, and tie-up with corporate, etc.

10. Stree Shakti Package

The Stree Shakti Package is provided in India by most branches of the State Bank of
India (SBI) and focuses on providing women in business with a business loan. The
biggest benefit of this startup business loan for women is that loans up to Rs. 5 lakh
need no protection. In addition, some concessions are made by the bank, such as
having a reduced interest rate in the event of the loan exceeds Rs. 2 lakh. But the
main downside of this loan is that it is only open to women who hold a 51% or
greater share in the business.

11. Venture Capital Scheme

This Venture Capital Scheme is a program run by Small Farmers Agribusiness

Consortium. This program aims to improve agricultural production. Under this
program, the Small Farmers Agribusiness Consortium helps in the development of
the agricultural market and improvement in the marketing of agricultural products.
The minimum value of the business should be 50 lakhs to become eligible for this
program.

12. End to End Energy Efficiency Scheme

The End to End Energy Efficiency scheme was launched in the year 2016. The SIDBI
initiates this program in collaboration with the Government of India. Any micro,
small, or medium enterprise that is in the business for three years and earning
revenue for two years can avail of benefits under this scheme. However, this scheme
is designed to support only energy-efficient units that need to do an energy audit
through an auditor affiliated with the Bureau of Energy Efficiency. The startups can
also purchase equipment using this line of business finance.

13. Credit Link Capital Subsidy Scheme

This scheme helps small-medium enterprises to improve their productivity through

technological upgrades. Technological upgrades can be attributed to different
processes and systems related to the business, such as sales, marketing, delivery
module, etc. The Government of India launched the Credit Link Capital Subsidy
Scheme to reduce the cost of production for SMEs, thus enabling them to remain
competitive in comparison with other players in local and foreign markets.

14. Standup India

The government of India started the Standup India program in the year 2016. It is
launched with the sole aim of promoting entrepreneurship and startup cultures in
India and is driven by the Small Industries Development Bank of India. The SMEs can
avail of loans of up to one crore under this program. This scheme enables you to
take a loan of up to 75% of the total project cost.