John Wyse
Entrepreneural Psychology
European School of Economics
What motivates Entrepreneurs?
Introduction
I have chosen this topic because I was curious to know what actually is behind the mind of entrepreneurs. What is it that leads them to be leaders in the world? What made Mark Zuckerberg create a thing called Facebook which people are crazy of and have actually integrated it in their lifestyles? In order to answer all my queries, I carried out a short research on the motivational factors and the driving forces that actually lead entrepreneurs to a totally new world of innovation.
It is often said that a person cannot win a game unless he plays it. This statement applies well in the case of entrepreneurship. It is the willingness and motivation that makes the score go high. It would be interesting to know that the word motivation has been derived from Latin word ‘movere’ which means ‘to move’. It gives us a psychological implication which refers towards factors and forces that stimulates us to do certain actions or that are responsible for those actions. Moreover, motives and perceptions towards success can be different for each person. If three people participated in a marathon but did not win does not necessarily mean they are losers. Their motives can be different than to just win the marathon. The first one might have run the marathon to test his stamina. He may have come out to be better than his expectations. He did not lose as per his opinion. The second might have run in order to improve his previous performance. The third might have run the race just to complete the race, not to win the race. All three of them completed their motives. Every entrepreneur has different motives set in his mind. Others may think that he has not achieved success. But the entrepreneur might have achieved what he wanted to .
The study of entrepreneurial process is significant for several reasons. It brings out innovation and creativity in an economy and therefore economic growth is expanded because of entrepreneurship. Entrepreneurs are highly important and beneficial for any developing and developed country. Considering the fact that they play a significant role in growth and development of an economy, we need to understand the motivational factors that are behind the innovative minds of entrepreneurs. Entrepreneurs do not need to think about their future with a big bank balance, a world tour or other monetary benefits. There are certain other factors which a person needs to know about them .
Literature Review
Entrepreneurs have a great deal of commitment, vision and passion. They are innovative, competitive, extremely focused on their aims and objectives, creative in their ideas and think like no one has ever thought. The question comes up to our minds what actually motivates them to take such risky and entrepreneurial actions. The successful entrepreneurs are the most talented ones but those who have an obsession for entrepreneurship sees an opportunity and pursue it. They do not care whether they win it or lose it but all they care about is to go for it. This driving agent is called intrinsic motivation. It is the motivation to work on something because it is appealing, interesting, adventurous, exciting and challenging. The opposite of intrinsic motivation is known as extrinsic motivation which includes driving factors such as monetary rewards, competition with peers and expected evaluation. Entrepreneurs are less motivated by extrinsic factors .
A study released by a research and consulting firm called Humanintelligence shows that the sole factor dominating their motivation behind their business ideas is the freedom and to do things their own way. The research was done among young entrepreneurs aged between 18 and 22 years old. They were about 250 business owners. Independence and autonomy was their dominant motivator .
However, Wilson (2011) is of the opinion that following motivational factors drive and stimulate an entrepreneur:
Problem
The most common and usual motive behind an entrepreneurial act is a problem that drives an entrepreneur to come up with an appropriate solution. These problems actually serve as opportunities for real entrepreneurs .
Creativity
A creative mind inside an entrepreneur acts as a driving force for creating new solutions. Coming up with new solution requires an entrepreneur to think out of box. When everyone is seeing barriers and constraints, an entrepreneur is going to come up with a solution within those barriers .
Ego
Ego, the desire to be recognized in the world and the desire to do something to get oneself famous is often a driving force behind a great idea.
Community
There are many entrepreneurs who are interested in building strong bonds between people of a specific community or industry. They want to serve and contribute for a specific purpose in order to build social cohesion.
Challenge
Many entrepreneurs are risk takers and love to take challenges in their lives. Many of them leave well-paid secure jobs in search of a path towards starting their own companies. They often do not succeed but they never give up. It is like an addiction to them. They would try to find solutions to their problems until they find the best and unique one. They will grow and develop but will never give up .
Money
Money is often not the factor for entrepreneurs. Money is what they are least bothered about. Entrepreneurs are never after monetary gain. Money is a side factor for them, not the main one . However, different researches give different outcomes. A survey was done in North America whose aim was to find motivational factors of entrepreneurs. Findings from their survey showed that there are four categories into which we can categorize the motivational factors. They are extrinsic rewards, independence, intrinsic rewards and family security. These four groups of factors determine the level of motivation within an entrepreneur that makes a business a success .
Entrepreneurs do not go for financial rewards. The best thing they like about entrepreneurship is that they are their own bosses. It was Bill Gates who marked in entrepreneurship in 1990s. In 2000s it was late Steve Jobs and Google creators, Larry Page and Sergey Brin. Now in 2010s, it’s the Facebook that has created hype in the market and is still a market leader. The man behind Facebook, Mark Zuckerberg, created revolutionary technology. All these entrepreneurial gurus changed the way people interacted and worked. They actually changed the culture .
A study was done at Princeton University which looked over two groups of people. One group being a bunch of entrepreneurs and the other being general public. Both the groups were given three options for venture investments. One option being a profit of US$5 million with a 20 percent chance of success, the other option being a profit of US$2 million with a 50 percent of success and the last option being a profit of US$1.25 million with an 80 percent of chance of success. A general perception was that the entrepreneurs would be opting for option 1. But the study showed opposite results. Entrepreneurs opted for option 3. They were in favor of taking less monetary gain but with a higher chance of profit. The general public opted for option 1 instead of the entrepreneurs opting for it .
It is evident that the entrepreneurs are least bothered about monetary benefit. There are other motivational factors. Most important of them being observed commonly is autonomy. Entrepreneurs want to be their own boss. Independence is something people yearn for it. They have massive ideas and vision for a unique product or service but their employers would not let them execute their ideas .
Wasserman and Timothy Butler, senior fellow and director of career development programs at Harvard Business School, surveyed around 2000 entrepreneurs in order to find the reason for their motivation. Survey was done among men and women in their 20s, 30s, 40s and beyond and the results were compared with non-entrepreneurs who went through with the same survey. The respondents were asked to rank the top 13 factors for their motivation. Entrepreneurs gave preference to autonomy and independence. However, non-entrepreneurs gave preference to well-secured work environment .
Recent research from Cox Business has discovered that more than half of small business entrepreneurs start their own business in order to be their own boss. Nearly two-third of the respondents agreed to the factor behind their entrepreneurial success and the factor was to be their own boss. Money was not their main factor that affected their motivation for starting a business. Only 8 percent of the respondents said that money was their motivation behind their entrepreneurial actions .
Example of Ingvar Kamprad (IKEA)
Ingvar Kamprad, a dyslexic entrepreneur, is now a billionaire in the world. He started his entrepreneurial career at the age of five by selling matchboxes and pens to the local villagers. When he turned 11, he expanded his business by doing it on a bicycle. In 1943, when he was 17 years old, he founded IKEA. IKEA stands for his own initials, E for Elmtaryd (his family farm) and A for Agunnaryd (village where he was raised). The business was conducted in a two meter square shed selling matches, lighters, wallets, watches and nylon stockings. In 1948, they expanded and included furniture to which the market responded well. The product line was further expanded in 1951 through their catalogue strategy. The first outlet of IKEA opened in Älmhult, Sweden in 1953 . Ingvar Kamprad is a perfect example of charisma and motivation at a very young age. IKEA is a family business and is bounded by strong family ties. IKEA’s values are based on family business concept .
Conclusion and Suggestions
Bibliography
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