Entrepreneurship:  Need for Affiliation: a desire for friendly and intimate interpersonal

An Overview
and social relationship.

McClelland discovered that some specific communities generate a large

proportion of high achievers. He made the point that the societies with people
having a strong drive for achievement and success will also have greater
levels of economic prosperity than those without one. According to
McClelland, the N-Ach trait has five main components: (1) accepting
responsibility for problem solving, (2) setting objectives, (3) achieving goals
by one's own effort, (4) recognising the value of and utilizing feedback, and
(5) a propensity for taking moderate amounts of risk.

Theory of Risk and Uncertainty by Knight:

Risk-taking is an essential prerequisite of entrepreneurship. Professor Knight
and John Staurt Mill believed that taking risks was an essential part of
becoming an entrepreneur. The risk-bearing theory states that the
entrepreneur makes profit by taking risks. Depending on their abilities and
preferences, entrepreneurs take on varied degrees of risk. The risk theory
states that if a business endeavour is riskier, the extent of profit is also likely
to be large. He defines uncertainty as a condition in which neither “a priori
reasoning” nor statistical inference can be used to establish the probabilities
of alternative events. Simply put, applying a priori reasoning to an economic
situation involving a unique event is irrelevant. This theory contends that the
reward for an entrepreneur's efforts in taking on non-insurable risks and
uncertainties is profit. The amount of profit earned is a function of the
level of uncertainty borne by the entrepreneur.

Hagen’s Theory of Entrepreneurship

Hagen (1962) argued that the primary driver of entrepreneurship is the
creativity of a marginalised minority group. He based his argument for this
concept on the Japanese samurai community. The samurai community had
traditionally enjoyed considerable respect and prestige, which was
subsequently taken away from it. The community became more active and
vigorous in an effort to restore this lost respect, and it gave rise to several
entrepreneurs. Hagen emphasised the critical role that creativity plays in
society's transition from a traditional one to a modern industrial economy. He
makes a detailed distinction between the “creative personality” and
“uncreative personality”. According to him, all cultures have historically
been conventional and continue to be so due to authoritarian child rearing
practises that produce uncreative personalities. Several societies have
transformed into modern economies, while many others have maintained
their conventional ways of living. Hagen believes that the loss of respect and
status acts as a catalyst for personality changes that eventually promote
entrepreneurial behaviour. When members of a social group believe that
other social communities do not respect their goals and beliefs, status
withdrawal develops. Hagen hypothesize that several factors may result in
status withdrawal including the displacement of a conventional elite group
from its privileged position, the denial of valued symbols through a change in
the approach of the superior group, the incompatibility of status symbols due
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to shift in distribution of economic power, and failure to accept expected Introduction to
Entrepreneurship
status upon immigrating to a new culture.

Hagen further speculates that four probable responses and four distinct
personality types may emerge from the lack of status respect:
i) Retreatist: Entrepreneur who engages in social activity while retreating
from his work or position.

ii) Ritualist: Someone who conforms to social rules at work but has no
possibility of improving his status or working conditions.
iii) Reformist: A reformist is a rebel who seeks to create a new society and
way of doing things.
iv) Innovator: Entrepreneur who uses creativity to work toward self-
imposed goals is an innovator.
The elites avoid participating in economic activities in traditional societies
because they view them as unimportant. The creative personalities focus their
resources mostly on things that the elites avoid in order to regain their status
position. Therefore, it is simpler for these creative individuals to participate
in economic activity which makes them economically powerful over time.
Eventually, they acquire other powers and alter the socio-economic system to
one that is based on the contemporary economy.

Theory of Cultural Values by Thomas Cochran

According to Thomas Cochran's thesis entrepreneurship represents a “model
personality” which emanates from role expectations, cultural norms or
values, and social sanctions. He claims that the entrepreneur embodies the
ideal personality of society. His/Her own attitudes and perspectives towards
work, the requirements of sanctioning organisations, and the operational
necessities of the job have profound impact on his performance. Modern
child upbringing practices instil values like high achievement, cooperation,
teamwork, rationalism, etc. In addition to the value structure, the defining
groups' expectations about roles and the new operational demands influence
an entrepreneur's personality. The role structure will be impacted by changes
in operational requirements brought on by long-term shifts in factors like
population, technology, and institutional drift. In the majority of nations,
entrepreneurs have come from a specific socioeconomic stratum. It is
believed that the Protestant ethic of the West helped to create a new
generation of industrialists. It should be noted that various castes and
communities have served as the foundation for entrepreneurship, including
the samurai in Japan, the French family structure, the Parsees, Marwaris, and
Gujaratis in India, the Yoruba in Nigeria, the Kikuya in Kenya, the Christians
in Lebanon, the Halai Memon industrialists in Pakistan.

Sociological Theory Entrepreneurship by P.D. Reynolds

Four social contexts have been identified by P.D. Reynolds (1991) which
contributes to entrepreneurial opportunity exploitation and development. The
first social context is social networks. Here, instead of opportunism, the
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Entrepreneurship: emphasis is on social ties and links that foster trust. To put it another way, an
An Overview
entrepreneur must not take advantage of others in order to prosper.
Rather, success in entrepreneurial venture comes from upholding goodwill
and kindness toward others. The second context propounded by Reynolds
is the life course stage, which involves investigating the traits and
circumstances of those individuals who have chosen to pursue
entrepreneurship. Experiences may have an effect on how people behave and
think which then inspires them to live fulfilling and meaningful lives. The
third social context is ethnic identification. Sociological background is one of
the key "drivers" that motivates someone to launch their own business. For
example, an individual's potential for advancement is influenced by their
social background. Marginalized people may surmount all obstacles and
strive to achieve success because they are driven by their trying
circumstances to improve their condition of life. The "population ecology" is
the fourth social context. The idea is that environmental factors have a big
impact on viability of business. Environmental factors including the political
system, law, government rules, consumers, workers and rivals may have an
impact on survival of new ventures and the performance of an entrepreneur.

Opportunity–Based Theory of Entrepreneurship

The opportunity-based paradigm is proposed by Howard Stevenson and Peter
Drucker. Contrary to what the Schumpeterian or Austrian school holds,
opportunity based theory assumes that an entrepreneur takes advantage of the
opportunities that originates from novel changes (e.g. changes in technology,
client preferences, etc.) rather than bringing about change. Drucker opines
that, “This defines an entrepreneur and entrepreneurship; the entrepreneur
always searches change, responds to it, and exploits it as an opportunity.”
According to Drucker's opportunity framework, entrepreneurs are typically
more concerned with opportunities offered by changes than the problems.
Stevenson (1990) broadened the opportunity-based paradigm of Drucker by
including the dimension of resourcefulness. His hypothesis was based on an
examination of the differences between entrepreneurial and administrative
management. According to Stevenson, the essence of entrepreneurial
management is the search and exploration of opportunities "without regard to
currently controlled resources."

Ardichvilli et al., (2003) argued that opportunity recognition and

development is not a chance discovery of any existing opportunity in the
market. Rather opportunity development is a continuous process that requires
proactive creation and development of an opportunity from perceiving an
idea to development of complete business plan. The authors also opined that
the process of opportunity development involves three distinct phases namely
perception, discovery and creation. The first stage is to perceive or sense an
unfulfilled market need and/or an underemployed resource. At the second
stage the entrepreneur recognizes or discovers a “fit” between the market
need and resource”. Finally, at the third stage, the entrepreneur discovers or
creates a “new fit between separate needs and resources in the form of a
business concept”. Researchers in the past have attempted to explain the
individual differences in opportunity recognition capability in terms of
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