THE PSYCHOLOGICAL SCHOOL – THEORY OF ENTREPRENEURSHIP

Some scholars believe that people become entrepreneurs because of intermediating psychological motives. Examples of such scholars are Joseph Schumpeter (1934), David McClelland (1961), and Hagen Everett (1963).

(a) Joseph Schumpeter (1934) criticized earlier theories like that of Max Weber, which sees entrepreneurship as a function of social, cultural or religious factors. He posits that an entrepreneur is some one with a very strong will to achieve power. Such entrepreneur could

see things in different ways from how other persons see them, hence ethical and moral to entrepreneurs, ones the laws governing such society are not broken. This strong will to achieve power could easily be realized or satisfied by high acquisition of money. Schumpeter sees an entrepreneur as a special person or extra-ordinary person in a society.

(b) McClelland is famous for his n’ach theory, made popular in his book “The achieving society”. He argues that the major reason compelling people to move into entrepreneurship is the need for achievement. A society with many people who have high need for achievement, therefore, will likely have many entrepreneurs, while a contented or lazy society will not produce let alone cherish entrepreneurship. The need for achievement could be propelled through child rearing practices. children who are encouraged either by their parents or the society to fend for themselves and take up the challenges of building the society end up as entrepreneurs, while their mates who are given the impression, consciously or unconsciously, that they should be taken care of by the government or unconsciously, that they should be taken care of by the government or economic development of a society, therefore, depends, on the availability of a good number of people with this psychological variable-the need for achievement.

(c) Hagen Everett (1963), in his book “the theory of social change” sees creativity and innovation as the main bases for entering entrepreneurship. Like McClelland, he believes that creativity and innovation is driven by the need for achievement, but he adds law, order, autonomy and excellence. He believes that those who do not have high need for achievement are neither creative nor innovative. A society with many creative and innovative personalities is bound to develop economically. His theory does not recognize a common trader who buys and sells without crating or modifying existing predict, service or method as an entrepreneur.

(d) There are other psychological views including the locus of control view. The locus of control view believes that an entrepreneur will probably have strong internal locus of control. This means that an entrepreneur believes in his or her capabilities to commence and complete things, and events through his own actions. This view is credited to Low & Macmillan (1988). By and large, this approach has not quite succeeded in providing us with clear-cut criteria for distinguishing entrepreneurs from non-entrepreneurs. Should all entrepreneurs have identical traits and if they do, is it an advantage? What the trait approach has done is to work for similarities among entrepreneurs.