A hypothesis proven true through research/testing becomes a theory

Similarly, different theories have been propounded to explain various factors behind the emergence of entrepreneurship and entrepreneurs

Max Webers theory of social change Hoselitz socio-cultural theory Trait theory of entrepreneurship Economic theory of entrepreneurship Schumpeters innovation theory McClellands psychological theory Theory of social behaviour X- Efficiency theory

Entrepreneurship and economic growth take place when the economic conditions are favourable Economic incentives are the main motivators for entrepreneurial activities Economic incentives include taxation policy, industrial policy, sources of finance and raw material, infrastructure availability, investment and marketing opportunities, access to information about market conditions, technology etc

Entrepreneurship is likely to get a boost in a particular socio-culture. Societys values, religious beliefs, customs, taboos influence the behaviour of individuals in a society. The entrepreneur is a role performer according to the role expectations by the society.

Entrepreneurship gets a boost when society has sufficient supply of individuals with necessary psychological characteristics. The psychological characteristics include need for high achievement, a vision or foresight, ability to face opposition. These characteristics are formed during the individuals upbringing which stress on standards of excellence, self reliance and low father dominance.

According to Weber rapid industrial growth depends upon rational use of technology, acquisition of money and its rational use for productivity and multiplication of money. Max Weber , analyzed religion and its impact on entrepreneurial culture.

He said that PROTESTANTS progressed fast in bringing capitalism because their ethical value system provided them with rational economic attitude.

Necessary condition for spirit of capitalism: Favourable mental attitude in society toward acquisition of wealth

Critiques of Webers theory: The rapid growth of entrepreneurship in India since independence proves that Indians are not averse to the spirit of capitalism. Hinduism has contributed a lot to the development of entrepreneurs in India.

Specific social culture leads to growth in entrepreneurship Social sanctions, cultural values and role expectations are responsible for the emergence of entrepreneurship Three important factors on which his performance depends: His own attitude towards his own occupation Role expectations held by the sanctioning groups Occupational requirements of the job

Societys values are most important determinant of the attitudes and role expectations

Grows in societies that permits variability in choice of paths of life and non standard socialisation of individuals

F. A. Walker believed in the individuals traits/capacities as the main determinant for entrepreneurial growth An entrepreneur is one who is endowed with more than average capacities in the task of organizing and coordinating the factors of production Eg. of traits Creativity Self confidence Risk taking Imagination Perseverance

This theory was developed by G. F. Papanek and J. R. Haris. According to them economic incentives are the main drive for the entrepreneurial activities. Economic factors include: Market incentives Availability of sufficient capital Institutional support According to this theory when favorable economic condition are prevailing, entrepreneurs develop at a faster rate.

Developed by Joseph Schumpeter. He proposed that an entrepreneur sees the potential profitable opportunities and exploits them. An entrepreneur is one who: Innovates Raises money Collects inputs Organizes talent Provides leadership Sets the organization

Existence of sufficient availability of capital Developed financial system

Existence of high level developed technology

Private initiative

 This theory is more applicable to developed economies. A person is an entrepreneur when he innovates but he ceases

to be so when he settles down and runs a established business.

This theory ignores risk-taking and organizing aspects of

entrepreneurship.
Schumpeters assumption that an entrepreneur is a large scale

business man is not true because an entrepreneur cannot have large scale business operations from the start.

Locates entrepreneurship in individuals possessing certain psychological traits

Dependent on certain learnt and socially acquired needs that motivates/drive individuals towards entrepreneurial activities Type of needs
Need for Achievement (n Ach) Need for Power (n Pow) Need for Affiliation (n Aff)

I. II. III.

 Conclusion
Mc Clelland found that the combination of a moderate to high need

for power and a lower need for affiliation enables people to be effective entrepreneurs. High need for Achievement gives rise to entrepreneurs They like to take calculated risk. They are highly motivated by challenging and competitive work situations.

Behavioral model of entrepreneurship by Kunkel Activities of individuals are related to the previous and present surroundings, social structures and physical conditions Attributes entrepreneurial activity to rewards which act as positive reinforcing stimulus According to Kunkel, individuals perform various activities of which some are accepted by the society while others are not. This pattern of social behavior is entrepreneurial behavior.

Four structures in society on which entrepreneurship depends: Limitation structure Demand structure Opportunity structure Labour structure Theorys limitation evident from its neglect towards situational factors and assumption of ideal structures which ignores discrepancy between objectives, structures etc

 According to Liebenstein, the most significant

feature of Entrepreneurship is Gap Filling.

An entrepreneur has to command all the

inputs to achieve efficiency and economy. Innovative entrepreneurs come forward to check inefficiencies in the utilization of various resources.