McClelland’s Need Theory explains the concept of entrepreneurial motivation. He identified three motivating needs. (i) need for power (ii) need for affiliation and (iii) need for achievement. McClelland is of the view that the need for achievement is a distinct human motive that can be distinguished from other needs.
McClelland subjected a group of fifty two entrepreneurs in India to the concentrated achievement motivation course. Two thirds of them were found usually active in the post training period. Some of them actively started new business and others integrated new product lines. His study showed that achievement motivation is a major contributory factor for entrepreneurship. Need for achievement is simply the desire to do well not so much for the sake of personal recognition or prestige, but for the sake of an inner feeling of personal accomplishment. It is this need for achievement which guides an entrepreneur’s actions.
McClelland’ identified two characteristics of entrepreneurs:
- to do something in a new and better way
- to take decisions under uncertainty.
Entrepreneurial role involves doing things in a new and better way. A business man who simply behaves in traditional ways is not an entrepreneur. on the other hand, if there is no significant uncertainty and the action involves applying known and predictable results entrepreneurship is not at all involved.
Following psychological factors contribute to entrepreneurial motivation.
- Need for achievement through self study, goal setting and inter personal support.
- Keen interest in situations involving moderate risk.
- Desire for taking personal responsibility.
- Concrete measures of task performance.
- Anticipation of future possibilities.
- Organisational skills.
- Energetic or novel instrumental activity.
The needs are the basic simulating factors and the need for achievement stimulates the behavior of a person to be an entrepreneur.