What is Entrepreneurial Behaviour? Definition, Features, Models

What is Entrepreneurial Behaviour?

Entrepreneurial behaviour is directly concerned with the understanding prediction and control of human behaviour in enterprise. It is an area of the study that investigates the impact that individuals, groups and structure have on behaviour within the enterprise.

Definition of Entrepreneurial Behaviour

According to Callahan, “Entrepreneurial behaviour is a subset of entrepreneurial activities concerned with understanding, predicting and influencing individual behaviour the in entrepreneurial settings”

J. Alday has opined that entrepreneurial behaviour, “Is a branch of the social sciences that seeks to build theories that can be applied to predicting, understanding and controlling behaviour in work enterprise”

Keith Devis defined “Entrepreneurial behaviour is an academic discipline concerned with understanding and describing human behaviour in an entrepreneurial environment. It seeks to shed light on the whole complex human factor in enterprises by identifying causes and effects of that behaviour”.

Stephen P. Robbins, “ Entrepreneurial behaviour is a field of study that investigates the impact that individuals , groups and structure have on behaviour within enterprises for the purpose of applying such knowledge towards improving an enterprises effectiveness”

In the words of Fred Luthans, “Entrepreneurial behaviour is directly concerned with the understanding prediction and control of human behaviour in enterprise”.

Features of Entrepreneurial Behaviour

The features of entrepreneurial behaviour are as follows:

• Behavioural approach to management: Entrepreneurial behaviour represents the behavioural approach of management. It emerged as a distinct field of study because of the importance of human behaviour in enterprise.
  
  
• Cause and effect relationship: Human behaviour is generally taken in terms of cause and effect relationship. It provides generalizations that entrepreneurs can use to anticipate the effect of certain activities on human behaviour.
  
  
• Branch of social sciences: Entrepreneurial behaviour is greatly influenced by other social sciences viz. psychology, sociology and anthropology. It draws a rich array of research from these disciplines.
  
  
• Three levels of analysis: Entrepreneurial behaviour is the study of three levels of analysis i.e., individual behaviour, inter – individual behaviour and the behaviour of organizations.
  
  
• A science as well as an art: Entrepreneurial behaviour is a science as well as an art. The systematic knowledge about human behaviour is a science and the application of behavioural knowledge and skills is an art. Entrepreneurial behaviour is not an exact science because it cannot exactly predict the behaviour of people in it.
  
  
• A body of theory, research and application: Entrepreneurial behaviour consists of a body of theory, research and application which helps in understanding the human behaviour in organization. All these techniques help the entrepreneur to solve human problems in organization.
  
  
• Beneficial to both enterprises and individuals: Entrepreneurial behaviour is useful and beneficial to both enterprise and individuals. A reasonable climate is created so that employees may get much needed satisfaction and the entrepreneur may attain its objectives.
  
  
• Rational thinking: Entrepreneurial behaviour provides a rational thinking about people and their behaviour. The major aim of Entrepreneurial behaviour is to explain and predict human behaviour in enterprise.
  
  
• Human part of enterprise: Entrepreneurial behaviour is directly related with the human side of enterprise. It focuses on people, their desires and needs. It is the systematic study of the action and attitudes of people working in enterprise.
  
  
• Change oriented: Entrepreneurial behaviour is a change oriented process. It points to the need for change in human behavior with change in technology and other fields of environment.

Models of Entrepreneurial Behaviour

• Autocratic Model
• Custodial Model
• Supportive Model
• Collegial Model
• Other Models

Autocratic Model

The basis of this model is the power of the boss. Maxweber defined power as, “The probability that one actor, with in a social relationship, will be in a position to carry out his own will despite resistance”. Walternord defined power as, “the ability to influence flow of available energy and resources towards certain goals as opposed to other goals. Power is assumed to be exercised only when these goals are at least partially in conflict with each other”.

The essentials features of this model are as follows:

• Enterprise with an autocratic environment is authority oriented. The entrepreneur believes that he is the best judge to determine what is better for the health of the both the enterprise and its participants. It assumes that the employees have to be directed, persuaded and pushed into performance. Entrepreneur does the thinking and employees obey the orders.
  
  
• Under autocratic model, the employees orientation is obedience to the boss, they need not be respectful to him. The bosses have all power to hire fire and inspire employees. The employees depend upon the boss and are paid minimum wages for minimum performance.
  
  
• The autocratic model has been successful in some situations where the workers are actually lazy and have a tendency to shirk work. It is also required in the situations where the work to be done is time bound.
  
  
• The leadership in an autocratic model is negative.

Custodial Model

This model overcomes the shortcomings of the autocratic model. The insecurity and frustration felt by the workers under the autocratic model sometimes led to aggression and frustration. There was a need to develop a model which will improve the employer – employee relating. The custodial model was used by the progressive entrepreneurs.

Some of the important features of this model are as explained below.\:

• The success of this model depends upon the economic resources because this model emphasizes the economic rewards and benefits.
  
  
• The employees depend upon unit rather than their boss. If the organization has got good welfare and development programme for the employees, they cannot afford to leave the organization
  
  
• Under this model, the employees are satisfied and happy and they are not strongly motivated. So they give only passive cooperation.
  
  
• The main benefit of this model is to bring security and satisfaction to the employees.

Supportive Model

The supportive model has originated from the principles of supportive relationships. According to Rensis Likert, “The leadership a must be such as to ensure a maximum probability that in all interactions and all relationships with the organization, each member will, in the light of his background, values and expectations, view the experience as supportive, and one which builds and maintains his sense of personal worth and importance”.

The main features of this model are as follows:

• The supportive model depends on leadership instead of power or money. Entrepreneur as a good leader, try to create a favourable climate in unit in which the employees are helped to grow to grow to the greatest capacities in compliance with the goals of the enterprise.
  
  
• The leader assumes that the worker will take responsibility, make their contributions and improve themselves, if given a chance. It is assumed that the workers are not lazy and work shirkers by nature. If properly motivated, they can be self directed and creative to the organization.
  
  
• It should be duty of the entrepreneur to support the employee’s job performance.
  
  
• This model takes care of the psychological needs of the employees in addition to their subsistence and security needs.

Collegial Model

The collegial model is an extension of the supportive model. The dictionary meaning of the collegial is a body of persons having a common purpose. This model is based upon the partnership between employees and the entrepreneur.

The main features of this model are as follows:

• This model creates a favorable climate in the unit as the workers feel that they are the partners in the enterprise. They don’t treat the entrepreneurs as their bosses but joint contributors. Both the entrepreneurs and workers accept and respect each other.
  
  
• This model inculcates the team spirit in an unit. The workers accept responsibilities. This helps in developing a system of self discipline in the organization.
  
  
• In this model, the workers have job satisfaction, job involvement, job commitment.

Other Models

Some models of organizational behavior can be classified by a number of approaches. A few of these models are as explained below:

• Normative model: The normative models seek to find out that what should be done to produce optimum results. These models are connected with the determinations of optimum actions. ii)
  
  
• Empirical model: The empirical models describe the activities that the employees actually perform. This model becomes an integral part of entrepreneurial behaviour because entrepreneurial behaviour is concerned with what is actually taking place in the organization and how do people actually behave.

Role & Importance of Entrepreneurial Behaviour

The role of entrepreneurial behaviour is as under:

• Understanding human behaviour: The main function of an enterprise is to understand the human behaviour. Entrepreneurial behaviour plays an important role to develop full knowledge about the behaviour of employees. Entrepreneur needs information about human behaviour for the achievement of entrepreneurial goals and for day to day functioning.
  
  
• Predicting human behaviour: Entrepreneurial behaviour also helps in predicting the future employee behaviour. Entrepreneurs would be able to predict which employees might be dedicated or which might be disruptive. This would allow them to take preventive actions.
  
  
• Control and direct behaviour: Entrepreneurial behaviour assists entrepreneur to direct and control the human behaviour to build successful enterprise. Entrepreneur needs to be able to improve results through the controlled activities of the employees.
  
  
• Entrepreneurial effectiveness: It can be ensured through entrepreneurial behaviour. It helps in better use of raw materials and other resources to improve the quality of work in the enterprise.
  
  
• Motivation: An entrepreneur has to get things done through employees. Entrepreneurial behaviour helps the entrepreneurs to identify the needs and requirements of the employees and other processes of the organization.
  
  
• Better human relations: Entrepreneurial behaviour also helps in maintaining cordial human relations in the enterprise. It assists in finding the causes of industrial conflicts.

Reasons for Promoting Entrepreneurs

There are various reasons for promoting entrepreneurs which are as follows:

• Profit earning: Every enterprise is started to earn profits. Profits the basic incentive to entrepreneurship. Profits are required to face various business uncertainties like trade cycle, fluctuations in money markets. Entrepreneurship needs profits not only for its existence but also for expansion and diversification.
  
  
  The investors want an adequate return on their investments, workers want higher wages and the entrepreneur needs money for reinvesting. All these demands and requirements will be met only when some profits are made. The profit motive does not mean that the entrepreneur should start exploiting consumers by charging higher prices or selling low quality goods.
  
  
• Production of goods: The profit can be earned only when production of goods takes place. The next objective is to produce more goods for selling them to the consumers for a price. The entrepreneurs estimate the demands for goods and produce accordingly.
  
  
  The tastes, preferences and paying capacity of consumers must be given due consideration while producing goods. An entrepreneur creates form, place and time utilities and meets the requirements of the society.
  
  
• Creating markets: The aim of the entrepreneur is to sell products in markets. Marketing consists of those efforts which affect the transfers. In ownership of goods from entrepreneur to consumers. Marketing covers all those activities which relate to the creation of time, place and possession utility.
  
  
  The entrepreneur searcher for new consumers to increase his sales. An effort is also is also made to retain old consumers by supplying them better quality goods at reasonable prices. The new markets are also exploited to keep a steady demand for good. An enterprise cannot exist without finding out new markets for products.
  
  
• Technological improvement: An entrepreneur should always try to use new methods of production in the world of competition everybody tries to sell its products by offering goods quality products at lower prices. This is only possible when latest technology is used for producing goods. Which help to increase production and reduce costs? The entrepreneur should try to devise new methods so that he may keep pace with the changing business world.
  
  
• Welfare of employees: The employees should be treated as human beings. The employees of an enterprise helps in increasing the profitability and they should also be given a due share in profits in the forms of bonus, increased allowances or spending money on their welfare. The worker should be rewarded for their hard work. The entrepreneur should looks after the welfare of his workers by providing physical comforts, materials incentives, appreciation, dignity of labour and better working condition which will motivates the worker to worker dedicatedly with devotion.
  
  
• Satisfaction of consumer: The consumer should be provided better quality goods at reasonable prices. The tastes, linking and requirement of the consumer should be given due weight age. The product is meant for consumer and their satisfaction should be the main objective of the entrepreneurship.
  
  
• Availability of goods: The entrepreneurship should ensure the supply of goods to meet the requirement of the society. The entrepreneurship should estimate the total demand for varies commodities and the production accordingly. The governments are also undertaking the work of co-coordinating entrepreneurial activities according to the society. Better quality goods should be providing to society at reasonable rates.
  
  
  
• Supply of quality goods: The supply of quality goods and services to consumer at reasonable price is the responsibility of the entrepreneur. The entrepreneur should aim at consumer satisfaction. The supply of inferior quality, unusable or harmful to health will be against business ethics. An enterprise cannot flourish in the long run if it ignores the interests of consumer and provide them with quality goods at reasonable prices.
  
  
  
• Creation of more employment: The entrepreneur can help the society by creating more job opportunities. An entrepreneur provides more job to unemployed or setting up of new units.
  
  
• Utilizing national resources properly: The entrepreneur should put the scarce national resources to the best possible use. Wastage of money material men etc. will not only be the loss of the enterprise but it will be a national loss. The use of improved technological methods for the production of goods can be helpful in raising production and reducing costs.
  
  
• Survival: The first objective of the enterprise is survival. It has to ensure that only those activities are taken up which are beneficial to the society. It should try to create demand for its products so that it is able to produce profits. Various factors of production are paid out for profits. A losing concern cannot survive for long. 1
  
  
  
• Growth: A business enterprise may be compared to human being. As a human body grows through various stages, i.e., from infancy to childhood, from childhood to adolescence, from adolescence to adulthood and from to maturity, an enterprise unit also passes through various phases during its existence.
  
  
  An enterprise unit tries to utilize its resource properly so that it is able to plough back its profits for further expansion and diversification. A stagnant business will not be able to face changing economic, political and social environment. Every business house aims at its proper growth. A number of plans and polices are framed to facilitate future growth of every units.
  
  
• Earn recognition and prestige: A business enterprise always aims to get recognition and good will. This is possible only if services them well. It should have good report with the suppliers and dealers by keeping proper schedules of payment and supply of good.
  
  
  The consumer should be supplied good quality products at reasonable prices. The payments of various taxes, etc. to the government should be timely. All these acts will earn goodwill for the enterprises and its prestige wills enhance. A properly run units may become indispensable for various sections of society.
  
  
• Helping national efforts: An enterprise aims at helping the national efforts of improving economic position of the society. The entrepreneur should enter those fields of industrial activity which remained neglected so far.
  
  
  Entrepreneur should set up new units in backward and underdeveloped areas so that people living there get employment opportunities and resources available there are fully utilized. It is the duty of the business entrepreneurs to produce goods on the basis and not on the basis of needs and not on the basis of profit margins.
  
  
• Development of small entrepreneurs: Every country needs trained and skilled personnel for the development of its industrial. Business enterprise can provide technical knowledge and training to their employees. This help in skill formation for the country growth and development. In India, some business houses have set up engineering and technology institutes which supply trained personnel to the nation.
  
  
• National self dependence and export development: Enterprise can play an important role in making the country self reliant. It should substitute all those goods which are imported. Efforts should also be made to produce those goods which find ready market in foreign countries. This will help in earning foreign exchange; a self reliant nation has more prestige in international community.
  
  
• Development of skilled personnel: Every country needs trained and skilled personnel for the development of its industry. Business enterprise can provide technical knowledge and training to their employees. This will help in skills houses have set up engineering and technology institutes with supplied trained personnel to the nation.