CHAPTER 5

ENTREPRENEURIAL MOTIVATION
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OBJECTIVES
Understanding the Theories of Motivation
Understanding the 7 rules of motivation

Defining the entrepreneurial motivation

Understanding A Model of Entrepreneurial Motivation

DEFINING MOTIVATION
The processes that account for an individuals intensity, direction, and persistence of effort toward attaining a goal

Key Elements 1. Intensity: how hard a person tries

2. Direction: toward beneficial goal

3. Persistence: how long a person tries

WHY IS MOTIVATION IMPORTANT?

THEORIES ON MOTIVATION
Maslows Hierarchy of Needs Theory Herzbergs Two-Factor Theory McGregors Theory X and Y Alderfers ERG Theory McClellands Needs of Achievement Theory Cognitive Evaluation Theory Lockes Goal-Setting Theory Reinforcement Theory Equity Theory Expectancy Theory
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MASLOWS HIERARCHY OF NEEDS THEORY

There is a hierarchy of five needs physiological, safety, social, esteem, and self-actualization As each need is satisfied, the next need becomes dominant.

Self-Actualization The drive to become what one is capable of becoming.

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MASLOWS HIERARCHY OF NEEDS

Lower-Order Needs
Needs that are satisfied externally; physiological and safety needs.

Higher-Order Needs
Needs that are satisfied internally; social, esteem, and self-actualization needs.

Source: Motivation and Personality , 2nd ed,, by A.H. Maslow, 1970. Reprinted by permission of Prentice Hall, Inc., Upper Saddle River, NJ.

What is their level of needs?

What is their level of needs?

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TWO-FACTOR THEORY (FREDERICK HERZBERG)

Two-Factor (Motivation-Hygiene) Theory

Intrinsic factors are related to job satisfaction, while extrinsic factors are associated with job dissatisfaction.
Hygiene Factors Factorssuch as company policy and administration, supervision, and salarythat, when adequate in a job, will make the workers feel satisfied. When factors are adequate, people will not complain and continue to be in the organization.
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THEORY X AND THEORY Y (DOUGLAS MCGREGOR)

Theory X
Manager assumes that employees dislike work, lack ambition, avoid responsibility, and must be directed and coerced to perform.

Theory Y
Manager assumes that employees like work, seek responsibility, are capable of making decisions, and exercise self-direction and self-control when committed to a goal. No need to coerced them to perform

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ERG THEORY (CLAYTON ALDERFER)

There are three groups of core needs: existence, relatedness, and growth.
Core Needs Existence: provision of basic material requirements.

Concepts: More than one need can be operative at the same time. If a higher-level need cannot be fulfilled, the desire to satisfy a lowerlevel need increases.
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Relatedness: desire for relationships.

Growth: desire for personal development.

 To ensure that the workers stay motivated, the managers must ensure that the elements in ERG are taken care of

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DAVID MCCLELLANDS THEORY OF NEEDS

Need for Achievement
The drive to excel, to achieve in relation to a set of standard, to strive for success.

Need for Affiliation

The desire for friendly and close personal relationships.

Need for Power

The need to make others behave in a way that they would not have behaved otherwise.

nPow

nAch

nAff
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MATCHING HIGH ACHIEVERS AND JOBS

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REINFORCEMENT THEORY
The assumption that behavior is a function of its consequences.

Concepts:

Behavior is environmentally induced

Behavior can be modified (reinforced) by providing (controlling) consequences.

Reinforced behavior tends to be repeated.

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EQUITY THEORY
Individuals compare their job inputs and outcomes with those of others and then respond to eliminate any inequities striking a balance

Referent Comparisons: Self-inside Self-outside Other-inside Other-outside

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EQUITY THEORY (CONTD)

Choices for dealing with inequity: 1. Change inputs (slack off) 2. Change outcomes (increase output) 3. Distort/change perceptions of self 4. Distort/change perceptions of others 5. Choose a different referent person 6. Leave the field (quit the job)

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EQUITY THEORY (CONTD)

Propositions relating to inequitable pay:

1. Overrewarded hourly employees produce more than equitably rewarded employees.

2. Overrewarded piece-work employees produce less, but do higher quality piece work. 3. Underrewarded hourly employees produce lower quality work. 4. Underrewarded employees produce larger quantities of lower-quality piece work than equitably rewarded employees
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EQUITY THEORY (CONTD)

Distributive Justice Perceived fairness of the amount and allocation of rewards among individuals.

Procedural Justice The perceived fairness of the process to determine the distribution of rewards.

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EXPECTANCY THEORY
Expectancy Theory (Victor Vroom)

The strength of a tendency to act in a certain way depends on the strength of an expectation that the act will be followed by a given outcome and on the attractiveness of that outcome to the individual.

E X H I B I T 68

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EXPECTANCY THEORY RELATIONSHIPS

EffortPerformance Relationship

The probability that exerting a given amount of effort will lead to performance.
PerformanceReward Relationship The belief that performing at a particular level will lead to the attainment of a desired outcome. RewardsPersonal Goals Relationship The degree to which organizational rewards satisfy an individuals goals or needs and the attractiveness of potential rewards for the individual.

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PERFORMANCE DIMENSIONS

Source: Adapted from M. Blumberg and C.D. Pringle, The Missing Opportunity in Organizational Research: Some Implications for a Theory of Work Performance, Academy of Management Review, October 1982, p. 565.

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7 RULES OF MOTIVATION
#1 Set a major goal, but follow a path.

The path has mini goals that go in many directions. When you learn to succeed at mini goals, you will be motivated to challenge grand goals.
#2 Finish what you start. A half finished project is of no use to anyone. Quitting is a habit. Develop the habit of finishing self-motivated projects.

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 #3 Socialize with others of similar interest . Mutual support is motivating. We will develop the attitudes of our five best friends. If they are losers, we will be a loser. If they are winners, we will be a winner.
#4 Learn how to learn . Dependency on others for knowledge supports the habit of procrastination. Man has the ability to learn without instructors. In fact, when we learn the art of self-education we will find, if not create, opportunity to find success beyond our wildest dreams.

#5 Harmonize natural talent with interest that motivates. Natural talent creates motivation, motivation creates persistence and persistence gets the job done.

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 #6 Increase knowledge of subjects that inspires

The more we know about a subject, the more we want to learn about it. #7 Take risk Failure and bouncing back are elements of motivation. Failure is a learning tool. No one has ever succeeded at anything worthwhile without a string of failures.

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ENTREPRENEURIAL MOTIVATION
- Examining why people start business and how they differ from those who do not. - Because motivation plays an important part in the creation of new organizations, theories of organization creation that fail to address this notion are incomplete Herron, L., & Sapienza, H.J., (1992).

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Johnson, B.R. mentioned that: It remains worthwhile to carefully study the role of the individual, including his or her psychological profile. Individuals are, after all the energizers of the entrepreneurial process

Entrepreneurial motivation the willingness to sustain the venture.

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A MODEL OF ENTREPRENEURIAL MOTIVATION

Expectation/ Outcome Comparison Intrinsic/ Extrinsic Rewards

PC

PE

PG

Decision to Behave Entrepreneurially

Entrepreneurial Strategy

Entrepreneurial Management

Firm Outcomes

BE

Idea

Implementation/ PC = Personal Outcome Characteristics Perception PE = Personal Environment PG = Personal Goals BE = Business Environment

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A MODEL OF ENTREPRENEURIAL MOTIVATION

PC, PE, PG, BE and IDEA directly affect the decision to behave entrepreneurially. Entrepreneurial Strategy The strategy that entrepreneur in the initial stage and start-up stage of the business. Entrepreneurial Management Management style and Firm outcomes Rewards intrinsic and extrinsic reward

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SUMMARY

Motivation is essential to drive a person to do what they are doing

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