MODULE 1

Entrepreneurs
Entrepreneurs are innovators, willing to take risks and generate new ideas to create unique
and potentially profitable solutions to modern-day problems. This innovation may result in
new organizations or revitalize mature organizations in response to a perceived opportunity.
The most obvious form of entrepreneurship is starting a new business (referred as a startup
company). In recent years, the term has been extended to include social and political forms
of entrepreneurial activity, which are often referred to as social entrepreneurship.
Entrepreneurial activities differ substantially depending on the type of organization
and creativity involved. Entrepreneurship ranges in scale from solo projects (that can even
involve the entrepreneur working only part-time) to major undertakings that create many job
opportunities. Many high-value entrepreneurial ventures seek venture capital or angel
funding (seed money) to raise capital for building the business.
Fostering Entrepreneurship
When entrepreneurship describes activities within a firm or large organization, it is referred
to as intrapreneurship and may include corporate venturing, in which large entities create
spin-off organizations. Corporations have become aware of the potential advantages
of internal entrepreneurial activity and often have innovation specialists in their
organizations to develop creative solutions for complex problems. Google has become well
known for allowing all employees to dedicate 20 percent of their time to any new project of
their choosing. Entrepreneurs have become an integral part of business.
Many kinds of organizations now exist to support would-be entrepreneurs, including
specialized government agencies, business incubators, science parks, and some nongovernmental organizations. More recently, the term entrepreneurship has been extended to
include elements unrelated to business formation activity. Concepts of entrepreneurship as a
specific mindset have emerged, resulting in initiatives like social entrepreneurship, political
entrepreneurship, and knowledge entrepreneurship.
Disruptive and Incremental
Joseph Schumpeter describes an entrepreneur as "a person who is willing and able to
convert a new idea or invention into a successful innovation." Entrepreneurship employs
what Schumpeter called the gale of creative destruction. Schumpeter's idea encompasses
more than single innovations, as he further explains how innovative thinking allows for a
sustainable and long-term economic growth for societies that enable it. Creating new goods
and new ways of doing things allows for consistent job growth, more consumption, and more
economic dynamism. Innovative thinking allows for so-called disruptive innovations
innovations which make leaps and bounds over existing products. One classic example is the
iPhone.
Schumpeter's view is not the only one, however. Incremental innovation is also largely
recognized as a vital entrepreneurial pursuit. The idea of incremental innovation is simple:
large change is a byproduct of small innovations compounded with others. Incremental
innovators find ways to improve the efficiency of established processes to drive efficiency.
An example of this kind of innovation is Toyota's just-in-time inventory management.
Incremental innovations are often process-based, while disruptive innovations are usually
new goods or processes themselves.

THE CONCEPT OF ENTREPRENEURSHIP

Entrepreneur

Entrepreneurship

Enterprise

Person

Process of action

Object

Concept of Entrepreneur

Basically an entrepreneur is a person responsible for setting up a business or an

enterprise. He has the initiative , skill for innovation and who looks for high
achievements. He is a catalytic agent of change and works for the good of people .
He puts up new green field projects that create wealth, open up many employment
opportunities and leads to growth of other sectors .

ENTREPRENEUR

The word "entrepreneur" is derived from a French root entreprendre,

meaning, "to undertake". The term "entrepreneur" seems to have been introduced
into economic theory by Cantillon (1755) but Say (1803) first accorded the
entrepreneur prominence. It was Schumpeter however, who really launched the
field of entrepreneurship by associating it clearly with innovation. Druckers
definition of entrepreneurship, namely a systematic, professional discipline, brought
a new level of understanding to the domain (Maurer, Shulman, Ruwe & Becherer
1995:526). Sharma and Chrisman (1999:12) identified two clusters of thought on
the meaning of entrepreneurship. One group focused on the characteristics of
entrepreneurship (e.g. innovation, growth, uniqueness) while a second group
focused on the outcomes of entrepreneurship (e.g. the creation of value).

He is a person who develops and owns his own enterprise

He is a moderate risk taker and works under uncertainty for achieving

the goal.

He is innovative

He peruses the deviant pursuits

Reflects strong urge to be independent.

Persistently tries to do something better.

Dissatisfied with routine activities.

Prepared to withstand the hard life.

Determined but patient

Exhibits sense of leadership

Also exhibits sense of competitiveness

Takes personals responsibility

Oriented towards the future.

Tends to persist in the face to adversity

Convert a situation into opportunity.

An entrepreneur is a person who starts an enterprise. He searches for change and

responds to it. A number of definitions have been given of an entrepreneur-

The economists view him as a fourth factor of production along with land labour and
capital.

The sociologists feel that certain communities and cultures promote

entrepreneurship like for example in India we say that Gujaratis and Sindhis are
very enterprising.
Still others feel that entrepreneurs are innovators who come up with new ideas for
products, markets or techniques.

To put it very simply an entrepreneur is someone who perceives opportunity,

organizes resources needed for exploiting that opportunity and exploits it.
Computers, mobile phones, washing machines, ATMs, Credit Cards, Courier Service,
and Ready to eat Foods are all examples of entrepreneurial ideas that got converted
into products or services.

Some definitions of an entrepreneur are listed below:

Stems: from the French word entrependre meaning one who undertakes or one
who is a go-between

Richard Cantillon: An entrepreneur is a person who pays a certain price for a

product to resell it at an uncertain price, thereby making decisions about obtaining
and using the resources while consequently admitting the risk of enterprise.

J.B. Say: An entrepreneur is an economic agent who unites all means of productionland of one, the labour of another and the capital of yet another and thus produces
a product. By selling the product in the market he pays rent of land, wages to
labour, interest on capital and what remains is his profit. He shifts economic
resources out of an area of lower and into an area of higher productivity and greater
yield.
Schumpeter: According to him entrepreneurs are innovators who use a process of
shattering the status quo of the existing products and services, to set up new
products, new services.

David McClleland: An entrepreneur is a person with a high need for

achievement [N-Ach]. He is energetic and a moderate risk taker.

Peter Drucker: An entrepreneur searches for change, responds to it and exploits

opportunities. Innovation is a specific tool of an entrepreneur hence an effective
entrepreneur converts a source into a resource.

Kilby: Emphasizes the role of an imitator entrepreneur who does not innovate but
imitates technologies innovated by others. Are very important in developing
economies.

Albert Shapero: Entrepreneurs take initiative, accept risk of failure and have an
internal locus of control.

G. Pinchot: Intrapreneur is an entrepreneur within an already established

organization.

Definition of Entrepreneurs Today

Entrepreneurship is the process of creating something new and assuming the
risks and rewards.
Four aspects of being an entrepreneur today:
Involves creation process.
Requires devotion of time and effort.
Involves rewards of being an entrepreneur.
Requires assumption of necessary risks
The Myths of Entrepreneur

Myth 1: Entrepreneurs Are Doers, NotThinkers

Myth 2: Entrepreneurs Are Born, Not Made
Myth 3: Entrepreneurs Are Always Inventors

Myth
Myth
Myth
Myth
Myth
Myth
Myth

4: Entrepreneurs Are Academic and Social Misfits

5: Entrepreneurs Must Fit the Profile
6: All Entrepreneurs Need Is Money
7: All Entrepreneurs Need Is Luck
8: Ignorance Is Bliss For Entrepreneurs
9: Entrepreneurs Seek Success But Experience High Failure Rates
10: Entrepreneurs Are Extreme Risk Takers (Gamblers

Concept of Entrepreneurship

Entrepreneurship involves decision making, innovation, implementation, forecasting

of the future, independency, and success first and this is how enterprenuership
developed

Entrepreneurship is a discipline with a knowledge base theory. It is an outcome of

complex socio-economic, psychological, technological, legal and other factors. It is a
dynamic and risky process. It involves a fusion of capital, technology and human
talent. Entrepreneurship is equally applicable to big and small businesses, to
economic and non-economic activities. Different entrepreneurs might have some
common traits but all of them will have some different and unique features. If we
just concentrate on the entrepreneurs then there will be as many models as there
are ventures and we will not be able to predict or plan, how and where, and when
these entrepreneurs will start their ventures.

Entrepreneurship is a process. It is not a combination of some stray incidents. It is

the purposeful and organized search for change, conducted after systematic
analysis of opportunities in the environment. Entrepreneurship is a philosophy- it is
the way one thinks, one acts and therefore it can exist in any situation be it
business or government or in the field of education, science and technology or
poverty alleviation or any others.

Entrepreneurship can be described as a process of action an entrepreneur

undertakes to establish his enterprise. Entrepreneurship is a creative activity. It is
the ability to create and build something from practically nothing. It is a knack of
sensing opportunity where others see chaos, contradiction and confusion.
Entrepreneurship is the attitude of mind to seek opportunities, take calculated risks
and derive benefits by setting up a venture. It comprises of numerous activities
involved in conception, creation and running an enterprise.

According to Peter Drucker Entrepreneurship is defined as a systematic

innovation, which consists in the purposeful and organized search for changes, and
it is the systematic analysis of the opportunities such changes might offer for
economic and social innovation

Entrepreneurship is a dynamic process of vision, change, and creation. It

requires an application of energy and passion towards the creation and
implementation of new ideas and creative solutions. Essential ingredients
include the willingness to take calculated risks- in terms of time, equity, or
career; the ability to formulate an effective venture team; the creative
skill to marshall needed resources; the fundamental skills of building a
solid business plan; and, finally, the vision to recognize opportunity where
others see chaos, contradiction, and confusion.
ENTERPRISE
Entrepreneur is a person who starts an enterprise. The process of creation is called
entrepreneurship. The entrepreneur is the actor and entrepreneurship is the act.
The outcome of the actor and the act is called the enterprise. An enterprise is the
business organization that is formed and which provides goods and services,
creates jobs, contributes to national income, exports and over all economic
development.

Wage Employment

Entrepreneurship

Work for Others

Own Boss

Follow Instructions

Make own plans

Routine Job

Creative activity

Earning is fixed,

Can be negative

never negative
surplus

Does not create wealth

sometimes, generally

Creates Wealth,
contributes to GDP

Can choose from-

Can choose from-

Government service

Industry

Public Sector

Trade or

Private Sector

Service Enterprise

TRADER

ENTREPRENEUR

A trader is not always an

An entrepreneur also a trader

entrepreneur
Involve in buying and selling

Involve in creating new

product

Always work out to gain profit

Besides profit, also considered

about satisfaction and
successful

Not interested in new

Always alert and follow any

technology evolvement and

new changes and technologies

new changes
Selling common stuff

Introduce new products

Competition is a common

Competition is a challenge

challenge

that needs further details

Focus on daily matter

Farsighted and try to improve

in the future

Short term profit oriented

Long term profit oriented

10 Characteristics of Successful Entrepreneurs

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10 Characteristics of
Successful Entrepreneurs
By Shobhit Seth | Updated August 11, 2016 11:47 AM EDT

Do you have the qualities of a successful entrepreneur?

Although there is no "one size, fits all" theory for entrepreneurship, a few
guidelines may help those with a good idea become successful entrepreneurs.
The following insights can help you embark on your next entrepreneurial venture
with due diligence.
1. Passion & Motivation

If there's one word that describes the fundamental trait in an entrepreneurship, it

would be passion.
o Is there something that you can work on over and over again, without
getting bored?
o Is there something that keeps you awake because you have not finished it
yet?
o Is there something that you have built and want to continue to improve
upon, again and again?
o Is there something that you enjoy the most and want to continue doing for
the rest of your life?
Your demonstration of passion and motivation will determine your success in any
entrepreneurial venture. From building and implementing a prototype, to pitching
your idea to venture capitalists, success is a function of passion and
determination. (For more, see: Turn Your Passion into a Profitable Side
Business.)
2. Risk Taking
Entrepreneurs are risk takers ready to dive deep into a future of uncertainty. But
not all risk takers are successful entrepreneurs. What differentiates a successful
entrepreneur from the rest in terms of risk? Successful entrepreneurs are will to
risk time and money on unknowns, but they also keep resources, plans and
bandwidth for dealing with "unknown unknowns" in reserve. When evaluating
risk, a successful entrepreneur will ask herself, is this risk worth the cost of my
career, time and money? And, what will I do if this venture doesn't pay off?
3. Self-belief, Hard work & Disciplined Dedication
Entrepreneurs enjoy what they do. They believe in themselves and are confident
and dedicated to their project. Occasionally, they may show stubbornness in their

intense focus on and faith in their idea. But the flip side is their demonstrated
discipline and dedication.
4. Adaptability & Flexibility
Its good to be passionate or even stubborn about what you do. But being
inflexible about client or market needs will lead to failure. Remember, an
entrepreneurial venture is not simply about doing what you believe is good, but
also making successful business out of it. Market needs are dynamic: changes
are a recurring phenomenon. Successful entrepreneurs welcome all suggestions
for optimization or customization that enhances their offering and satisfies client
and market needs. A product you develop for yourself alone may qualify as a
hobby, but a product for the market should satisfy market needs.
5. Understand Your Offering And Its Market
Entrepreneurs know their product offering inside and out. They also know the
marketplace and its dynamics inside and out. Remaining unaware of changing
market needs, competitor moves and other external factors can bring even great
products to failure (for example, Blockbuster).
6. Money Management
It takes time to get to profitability for any entrepreneurial venture. Till then, capital
is limited and needs to be utilized wisely. Successful entrepreneurs realize this
mandatory money managementrequirement and plan for present and future
financial obligations (with some additional buffer). Even after securing funding or
going fully operational, a successful businessman keeps a complete handle on
cash flows, as it is the most important aspect of any business.
7. Planning (But not Over-planning)
Entrepreneurship is about building a business from scratch while managing
limited resources (including time, money and personal relationships). It is a longterm commitment, and attempting to plan as much as possible at the beginning is
a noble impulse. In reality, however, planning for everything and having a ready

solution for all possible risks may prevent you from even taking the first step.
Successful entrepreneurs do keep some dry powder in reserve, but more
importantly they maintain a mindset and temperament to capable of dealing with
unforeseen possibilities.
Do a feasibility analysis; identify time and capital thresholds; take the deep dive
with your limited resources. If your thresholds are crossed, look for alternatives
and be prepared to take the next exit.
8. Networking Abilities
How do you tap your network for solutions? Many people seek comfort in
commiseration: friends, colleagues and neighbors are happy to complain with
you about "the global slowdown, poor demand, or unfair competition; but that
won't improve the bottom line. What do successful entrepreneurs do? They reach
out to mentors with more experience and extensive networks to seek valuable
advice.
Having such networking abilities, including more experienced mentors, is a key
characteristics of successful entrepreneurs.
9. Being Prepared to Take the Exit
Not every attempt will result in success. The failure rate of entrepreneurial
ventures is very high. At times, it is absolutely fine to take the practical exit route
and try something new, instead of continuing to make sunk cost investments in
the same venture. Many famous entrepreneurs weren't successful the first time
around. But they had the serenity and foresight to know when to cut their losses.
10. Entrepreneurs Doubt Themselves But Not Too Much
You may ask yourself, am I an entrepreneur? And the very question may put you
in doubt about the answer. Even if you don't have the flair of Steve Jobs or the
hair of Elon Musk, if you have the courage to ask yourself intimidating questions
Can I do this? Do I want to do this? you have the stuff to be an entrepreneur.

What is the Role of an Entrepreneur in Economic Development ?

The entrepreneur who is a business leader looks for ideas and puts them into effect in
fostering economic growth and development. Entrepreneurship is one of the most important
input in the economic development of a country. The entrepreneur acts as a trigger head to
give spark to economic activities by his entrepreneurial decisions. He plays a pivotal role not
only in the development of industrial sector of a country but also in the development of farm
and service sector. The major roles played by an entrepreneur in the economic development
of an economy is discussed in a systematic and orderly manner as follows.
(1) Promotes Capital Formation:
Entrepreneurs promote capital formation by mobilising the idle savings of public. They
employ their own as well as borrowed resources for setting up their enterprises. Such type
of entrepreneurial activities lead to value addition and creation of wealth, which is very
essential for the industrial and economic development of the country.
(2) Creates Large-Scale Employment Opportunities:
Entrepreneurs provide immediate large-scale employment to the unemployed which is a
chronic problem of underdeveloped nations. With the setting up.of more and more units by
entrepreneurs, both on small and large-scale numerous job opportunities are created for
others. As time passes, these enterprises grow, providing direct and indirect employment
opportunities to many more. In this way, entrepreneurs play an effective role in reducing the
problem of unemployment in the country which in turn clears the path towards economic
development of the nation.
(3) Promotes Balanced Regional Development:
Entrepreneurs help to remove regional disparities through setting up of industries in less
developed and backward areas. The growth of industries and business in these areas lead
to a large number of public benefits like road transport, health, education, entertainment,
etc. Setting up of more industries lead to more development of backward regions and
thereby promotes balanced regional development.
(4) Reduces Concentration of Economic Power:

Economic power is the natural outcome of industrial and business activity. Industrial
development normally lead to concentration of economic power in the hands of a few
individuals which results in the growth of monopolies. In order to redress this problem a
large number of entrepreneurs need to be developed, which will help reduce the
concentration of economic power amongst the population.
(5) Wealth Creation and Distribution:
It stimulates equitable redistribution of wealth and income in the interest of the country to
more people and geographic areas, thus giving benefit to larger sections of the society.
Entrepreneurial activities also generate more activities and give a multiplier effect in the
economy.
(6) Increasing Gross National Product and Per Capita Income:
Entrepreneurs are always on the look out for opportunities. They explore and exploit
opportunities,, encourage effective resource mobilisation of capital and skill, bring in new
products and services and develops markets for growth of the economy. In this way, they
help increasing gross national product as well as per capita income of the people in a
country. Increase in gross national product and per capita income of the people in a country,
is a sign of economic growth.
(6) Improvement in the Standard of Living:
Increase in the standard of living of the people is a characteristic feature of economic
development of the country. Entrepreneurs play a key role in increasing the standard of
living of the people by adopting latest innovations in the production of wide variety of goods
and services in large scale that too at a lower cost. This enables the people to avail better
quality goods at lower prices which results in the improvement of their standard of living.
(7) Promotes Country's Export Trade:
Entrepreneurs help in promoting a country's export-trade, which is an important ingredient
of economic development. They produce goods and services in large scale for the purpose
earning huge amount of foreign exchange from export in order to combat the import dues
requirement. Hence import substitution and export promotion ensure economic
independence and development.

(8) Induces Backward and Forward Linkages:

Entrepreneurs like to work in an environment of change and try to maximise profits by
innovation. When an enterprise is established in accordance with the changing technology,
it induces backward and forward linkages which stimulate the process of economic
development in the country.
(9) Facilitates Overall Development:
Entrepreneurs act as catalytic agent for change which results in chain reaction. Once an
enterprise is established, the process of industrialisation is set in motion. This unit will
generate demand for various types of units required by it and there will be so many other
units which require the output of this unit. This leads to overall development of an area due
to increase in demand and setting up of more and more units. In this way, the entrepreneurs
multiply their entrepreneurial activities, thus creating an environment of enthusiasm and
conveying an impetus for overall development of the area.

Entrepreneur Vs Intrapreneur

Comparison Chart
BASIS FOR
COMPARISO
N

ENTREPRENEUR

INTRAPRENEUR

Meaning

Entrepreneur refers to a
person who set up his own
business with a new idea
or concept.

Intrapreneur refers to an
employee of the organization
who is in charge of undertaking
innovations in product, service,
process etc.

Approach

Intuitive

Restorative

Resources

Uses own resources.

Use resources provided by the

BASIS FOR
COMPARISO
N

ENTREPRENEUR

INTRAPRENEUR

company.
Capital

Raised by him.

Financed by the company.

Enterprise

Newly established

An existing one

Dependency

Dependent

Independent

Risk

Borne by the entrepreneur

himself.

Taken by the company.

Works for

Creating a leading
position in the market.

Change and renew the existing

organizational system and
culture.

Definition of Entrepreneur

An entrepreneur is an individual who conceives the idea of starting a new

venture, take all types of risks, not only to put the product or service into reality
but also to make it an extremely demanding one. He is someone who:

Initiates and innovates a new concept,

Recognises and utilises opportunity,

Arranges and coordinates resources such as man, material, machine and

capital,

Take suitable actions,

Faces risks and uncertainties,

Establishes a startup company,

Adds value to the product or service,

Takes decisions to make the product or service a profitable one,

Is responsible for the profits or losses of the company.

Entrepreneurs are always the market leader regardless of the number of
competitors because they bring a relatively new concept in the market and
introduce change.

Definition of Intrapreneur

An intrapreneur is nothing but an entrepreneur within the boundaries of the

organisation. An intrapreneur is an employee of a large organisation, who has the
authority of initiating creativity and innovation in the companys products,
services and projects, redesigning the processes, workflows and system with the
objective of transforming them into a successful venture of the enterprise.
The intrapreneurs believe in change and do not fear failure, they discover new
ideas, looks for such opportunities that can benefit the whole organisation takes
risks, promotes innovation to improve the performance and profitability,
resources are provided by the organisation. The job of an intrapreneur is
extremely challenging; hence they are appreciated and rewarded by the
organisation accordingly.
From last few years, it has become a trend that large corporations appoint
intrapreneur within the organisation, to bring operational excellence and gain
competitive advantage.
Definition of Intrapreneur

An intrapreneur is nothing but an entrepreneur within the boundaries of the

organisation. An intrapreneur is an employee of a large organisation, who has the
authority of initiating creativity and innovation in the companys products,
services and projects, redesigning the processes, workflows and system with the
objective of transforming them into a successful venture of the enterprise.
The intrapreneurs believe in change and do not fear failure, they discover new
ideas, looks for such opportunities that can benefit the whole organisation takes
risks, promotes innovation to improve the performance and profitability,

resources are provided by the organisation. The job of an intrapreneur is

extremely challenging; hence they are appreciated and rewarded by the
organisation accordingly.
From last few years, it has become a trend that large corporations appoint
intrapreneur within the organisation, to bring operational excellence and gain
competitive advantage.

Key Differences Between Entrepreneur and Intrapreneur

The important distinguishing points between entrepreneur and intrapreneur, are

given in the following points:
1.

An entrepreneur is defined as a person who establishes a new business

with an innovative idea or concept. An employee of the organisation who
is authorised to undertake innovations in product, service, process, system, etc. is
known as Intrapreneur.

2.

An entrepreneur is intuitive in nature, whereas an intrapreneur is

restorative in nature.

3.

An entrepreneur uses his own resources, i.e. man, machine, money, etc.
while in the case of an intrapreneur the resources are readily available, as they
are provided to him by the company.

4.

An entrepreneur raises capital himself. Conversely, an intrapreneur does

not need to raise funds himself; rather it is provided by the company.

5.

An entrepreneur works in a newly established company. On the other

hand, an intrapreneur is a part of an existing organisation.

6.

An entrepreneur is his own boss, so he is independent to take decisions. As

opposed to intrapreneur, who works for the organisation, he cannot take
independent decisions.

7.

This is one of the salient features of an entrepreneur; he is capable of

bearing risks and uncertainties of the business. Unlike intrapreneur, in which the
company bears all the risks.

8.

The entrepreneur works hard to enter the market successfully and create a
place subsequently. In contrast to Intrapreneur, who works for organization-wide
change to bring innovation, creativity and productivity.

Conclusion

Since, last few decades, it has been noticed that people give more value to
innovations, which lead to the rise in the number of startup companies year on
year. This is because the world is changing rapidly with the advancement in
technology. It has also resulted in the competition among companies. Now, if the
enterprise wants to stand in competition with other enterprises, it should bring
something new in their products. Entrepreneur and Intrapreneur play a major
role here, to enter into new business and even markets.

Difference Between Entrepreneur and Manager

The term entrepreneur is often contrasted with the term manager, as they are
the key persons in an enterprise that help in the organisation, management,
control and administration of the company. An entrepreneur is a person with an
idea, skills, and courage to take any risk to pursue that idea, to turn it into reality.
On the other hand, manager, as the name suggests, is the person who manages
the operations and functions of the organisation. This article makes an attempt to
shed light on the difference between entrepreneur and manager.
Entrepreneur Vs Manager
Comparison Chart

BASIS FOR
COMPARISO
N

ENTREPRENEUR

MANAGER

Meaning

Entrepreneur refers to a
person who creates an
enterprise, by taking
financial risk in order to get
profit.

Manager is an individual
who takes the responsibility
of controlling and
administering the
organization.

Focus

Business startup

Ongoing operations

Primary

Achievement

Power

BASIS FOR
COMPARISO
N

ENTREPRENEUR

MANAGER

motivation
Approach to
task

Informal

Formal

Status

Owner

Employee

Reward

Profit

Salary

Decision
making

Intuitive

Calculative

Driving force

Creativity and Innovation

Preserving status quo

Risk orientation

Risk taker

Risk averse

Difference Between Entrepreneur and Manager

June 16, 2016 By Surbhi S 1 Comment

entrepreneurThe term entrepreneur is often contrasted with the term manager,

as they are the key persons in an enterprise that help in the organisation,
management, control and administration of the company. An entrepreneur is a
person with an idea, skills, and courage to take any risk to pursue that idea, to
turn it into reality. On the other hand, manager, as the name suggests, is the
person who manages the operations and functions of the organisation. This
article makes an attempt to shed light on the difference between entrepreneur
and manager.

Content: Entrepreneur Vs Manager

Comparison Chart
Definition
Key Differences
Conclusion

Comparison Chart

BASIS FOR COMPARISON

ENTREPRENEURMANAGER

Meaning
Entrepreneur refers to a person who creates an enterprise, by taking
financial risk in order to get profit. Manager is an individual who takes the
responsibility of controlling and administering the organization.
Focus Business startup Ongoing operations
Primary motivation

Achievement

Approach to task Informal

StatusOwner
Reward

Power

Formal

Employee

Profit Salary

Decision making Intuitive

Calculative

Driving force

Creativity and Innovation

Risk orientation

Risk taker

Risk averse

Preserving status quo

Definition of Entrepreneur

The term entrepreneur is a French origin which means go between or betweentakers. An entrepreneur is a person who creates a new enterprise by assembling
inputs (i.e. land, labour and capital) for production purposes. He assumes all risk
and uncertainty, in order to achieve profit and growth of the business venture by
identifying new opportunities and combining resources for the purpose of
capitalising them. He innovates new ideas and business processes.

They are classified as an innovative entrepreneur, imitating entrepreneur, fabian

entrepreneur, drone entrepreneur. Further, they can be classified on the basis of
business, technology, motivation, area, stages of development, etc. The
characteristics of a successful entrepreneur are given below:
Risk taker

Commitment and Conviction

Capacity to analyse
Initiative and Independence
High personal efficiency
High need for achievement
Definition of Manager

By the term manager we mean a person who gets the things done through his
subordinates, with the aim of accomplishing business objectives efficiently and
effectively. The five primary functions of a manager are planning, organising,
directing and motivating, coordination and control.

The manager is in charge of the particular division, unit or department of the

company. He may directly command to workers, or he may direct the
supervisors, who will command workers. Therefore, he is the one under whose
supervision, his subordinates work and report to him. Managers can be top level
managers, middle-level managers, low-level managers.

Key Differences Between Entrepreneur and Manager

The difference between entrepreneur and manager can be drawn clearly on the
following grounds:
1.

A person who creates an enterprise, by taking a financial risk in order to

get profit, is called an entrepreneur. An individual who takes the responsibility of
controlling and administering the organisation is known as a manager.

2.

An entrepreneur focuses on business startup whereas the main focus of a

manager is to manage ongoing operations.

3.

Achievements work as a motivation for entrepreneurs. On the other hand,

the primary motivation is the power.

4.

The managers approach to the task is formal which is just opposite of an

entrepreneur.

5.

An entrepreneur is the owner of the enterprise while a manager is just an

employee of the company.

6.

A manager gets salary as remuneration for the work performed by him.

Conversely, profit is the reward for the entrepreneur.

7.

An entrepreneurs decisions are driven by inductive logic, courage, and

determination; that is why the decision making is intuitive. On the contrary, the
decision making of a manager is calculative, as they are driven by deductive logic,
the collection of information and advice.

8.

The major driving force of an entrepreneur is creativity and innovation. As

against this, a manager maintains the existing state of affairs.

9.

While entrepreneur is a risk taker, the manager is risk averse.

Conclusion

After reviewing the above points, it is quite clear that entrepreneur and manager
are two different persons in an organisation. So they cannot be juxtaposed. While
managers concerned with managing available resources, entrepreneur focuses on
spotting and capitalising opportunities.

Rural Entrepreneurship and its Types

India is a country of villages. About three-fourth of India's population are living
in rural areas out of which 75% of the labour force is still earning its livelihood
from agriculture and its allied activities. Land being limited is unable to absorb
the labour force in agriculture. Therefore, there is a need to develop rural
industries to solve rural unemployment and rural migration to cities. Growth and
development of rural economy is an essential pre-condition to development of
the nation as a whole. The gap between rural urban disparities should be
lessened.
The standard of living of the rural people should be increased. Entrepreneurship
in rural sector provides an answer to the above problems. Indian rural sector is
no longer primitive and isolated. Therefore, entrepreneurship in the rural and
tribal areas looms large to solve the problems of poverty, unemployment and
backwardness of Indian economy. Rural industrialisation is viewed as an effective
means of accelerating the process of rural development. Government of India has
been continuously assigning increasing importance and support for the
promotion and growth of rural entrepreneurship.
Meaning:
Rural entrepreneurs are those who carry out entrepreneurial activities by
establishing industrial and business units in the rural sector of the economy. In
other words, establishing industrial and business units in the rural areas refers to
rural entrepreneurship. In simple words, rural entrepreneurship implies
entrepreneurship emerging in rural areas. Or, say, rural entrepreneurship implies
rural industrialisation. Thus, we can say, entrepreneurship precedes
industrialization.
Definition:

Rural industries and business organisations in rural areas generally associated

with agriculture and allied activities to agriculture. According to KVIC (Khadi and
Village Industry Commission), "village industries or Rural industry means any
industry located in rural areas, population of which does not exceed 10,000 or
such other figure which produces any goods or renders any services with or
without use of power and in which the fixed capital investment per head of an
artisan or a worker does not exceed a thousand rupees".
The modified definition of rural industries has been given by Government of
India in order to enlarge its scope. According to Government of India, "Any
industry located in rural area, village or town with a population of 20,000 and
below and an investment of Rs. 3 crores in plant and machinery is classified as a
village industry."
Types of Rural Industries:
All the village industries come under the following broad categories :
Agro Based Industries: like sugar industries, jaggery, oil processing from oil
seeds, pickles, fruit juice, spices, diary products etc.
Forest Based Industries: like wood products, bamboo products, honey, coir
industry, making eating plates from leaves.
Mineral based industry: like stone crushing, cement industries, red oxide
making, wall coating powders etc.
Textile Industry: like spinning, weaving, colouring, bleaching.
Engineering and Services: like agriculture equipments, tractors and
pumpsets repairs etc.
Women Entrepreneurship in India

WOMEN ENTREPRENEUR
Women Entrepreneurship in India

Women are generally perceived as home makers with little to do with economy or commerce.
But this picture is changing. In Modern India, more and more women are taking up
entrepreneurial activity especially in medium and small scale enterprises.

Even as women are receiving education, they face the prospect of unemployment. In this
background, self employment is regarded as a cure to generate income .The Planning
commission as well as the Indian government recognizes the need for women to be part of the
mainstream of economic development. Women entrepreneurship is seen as an effective
strategy to solve the problems of rural and urban poverty.

Traditionally, women in India have been generally found in low productive sectors such as
agriculture and household activities. Human Development Report 2004 ranks India 103 in
Gender related Development Index (GDI). As per 2001 census; women constitute nearly half of
Indias population. Out of this total, 72% were engaged in agriculture, 21.7% in other non
agricultural pursuits with only 6.3% in household industries.
Women entrepreneurs in India are handicapped in the matter of organizing and running
businesses on account of their generally low levels of skills and for want of support system. The
transition from homemaker to sophisticated business woman is not that easy.

Step Taken By Government to Develop Women Entrepreneurs in India

The growth and development of women entrepreneurs required to be accelerated because
entrepreneurial development is not possible without the participation of women.
Therefore, a congenial environment is needed to be created to enable women to participate
actively in the entrepreneurial activities. There is a need of Government, non-Government,
promotional and regulatory agencies to come forward and play the supportive role in promoting
the women entrepreneur in India.
The Government of India has also formulated various training and development cum
employment generations programs for the women to start their ventures. These programmes
are as follows:
1. Steps taken in Seventh Five-Year Plan:
In the seventh five-year plan, a special chapter on the Integration of women in development
was introduced by Government with following suggestion:
(i) Specific target group:
It was suggested to treat women as a specific target groups in all major development programs
of the country.
(ii) Arranging training facilities:
It is also suggested in the chapter to devise and diversify vocational training facilities for women
to suit their changing needs and skills.

(iii) Developing new equipments:

Efforts should be made to increase their efficiency and productivity through appropriate
technologies, equipments and practices.
(iv) Marketing assistance:
It was suggested to provide the required assistance for marketing the products produced by
women entrepreneurs.
(v) Decision-making process:
It was also suggested to involve the women in decision-making process.
2. Steps taken by Government during Eight Five-Year Plan:
The Government of India devised special programs to increases employment and incomegenerating activities for women in rural areas. The following plans are lunched during the EightFive Year Plan:
(i) Prime Minister Rojgar Yojana and EDPs were introduced to develop entrepreneurial qualities
among rural women.
(ii) Women in agriculture scheme was introduced to train women farmers having small and
marginal holdings in agriculture and allied activities.
(iii) To generate more employment opportunities for women KVIC took special measures in
remote areas.
(iv) Women co-operatives schemes were formed to help women in agro-based industries like
dairy farming, poultry, animal husbandry, horticulture etc. with full financial support from the
Government.
(v) Several other schemes like integrated Rural Development Programs (IRDP), Training of
Rural youth for Self employment (TRYSEM) etc. were started to alleviated poverty.30-40%
reservation is provided to women under these schemes.
3. Steps taken by Government during Ninth Five-Year Plan:
Economic development and growth is not achieved fully without the development of women
entrepreneurs. The Government of India has introduced the following schemes for promoting
women entrepreneurship because the future of small scale industries depends upon the
women-entrepreneurs:
(a) Trade Related Entrepreneurship Assistance and Development (TREAD) scheme was
lunched by Ministry of Small Industries to develop women entrepreneurs in rural, semi-urban
and urban areas by developing entrepreneurial qualities.

(b) Women Comkp0onent Plant, a special strategy adop0ted by Government to provide

assistance to women entrepreneurs.
(c) Swarna Jayanti Gram Swarozgar Yojana and Swaran Jayanti Sekhari Rozgar Yojana were
introduced by government to provide reservations for women and encouraging them to start
their ventures.
(d) New schemes named Women Development Corporations were introduced by government to
help women entrepreneurs in arranging credit and marketing facilities.
(e) State Industrial and Development Bank of India (SIDBI) has introduced following schemes to
assist the women entrepreneurs. These schemes are:
(i) Mahila Udyam Nidhi
(ii) Micro Cordite Scheme for Women
(iii) Mahila Vikas Nidhi
(iv) Women Entrepreneurial Development Programmes
(v) Marketing Development Fund for Women
4. Consortium of Women entrepreneurs of India provides a platform to assist the women
entrepreneurs to develop new, creative and innovative techniques of production, finance and
marketing.
There are different bodies such as NGOs, voluntary organizations, Self-help groups, institutions
and individual enterprises from rural and urban areas which collectively help the women
entrepreneurs in their activities.
5. Training programmes:
The following training schemes specially for the self employment of women are introduced by
government:
(i) Support for Training and Employment Programme of Women (STEP).
(ii) Development of Women and Children in Rural Areas (DWCRA).
(iii) Small Industry Service Institutes (SISIs)
(iv) State Financial Corporations
(v) National Small Industries Corporations
(vi) District Industrial Centres (DICs)
6. Mahila Vikas Nidhi:

SIDBI has developed this fund for the entrepreneurial development of women especially in rural
areas. Under Mahila Vikas Nidhi grants loan to women are given to start their venture in the field
like spinning, weaving, knitting, embroidery products, block printing, handlooms handicrafts,
bamboo products etc.
7. Rashtriya Mahila Kosh:
In 1993, Rashtriya Mahila Kosh was set up to grant micro credit to pore women at reasonable
rates of interest with very low transaction costs and simple procedures.

Importance of Women Entrepreneurship in India

Women in the present day have been recognized as an indivisible part of the global struggle for
a stable economy. Same is the case in India where women have recently become the symbol of
change.
Reasons that motivate womens entry in commerce vary but despite all of their variations in
socioeconomic backgrounds, they have proved their worth time and again. They have taken
risks in businesses and managed to make them pay off. Over and over, Indian women have
competed with men and proven to be equal in every race, including entrepreneurship.

Women Entrepreneurs in India

Indian Government defines woman owned business as an entity where a woman or a group of
women owns at least 51% of the capital and give 51% of generated employment to women.
Women are 48% of Indian population but their participation is still below par as only 34% of
Indian women are engaged in financial and economic activities, many of which are unpaid or
underpaid workers. With gender-bias problems in some regions of India, women have also
become victims of unemployment.
This bias has proven to be advantageous to certain extent as women have taken up
entrepreneurship to fill the void and prove their critics wrong.

Significance of Women in Indias Entrepreneurial Sector

Indian women have been at the receiving end of criticism but much to the dismay of their
skeptics, they have mostly appeared triumphant as the dust of criticism settled. The industry has
much to gain and literally nothing to lose with women in business. The merits are innumerable.

Indian industrys think-tank gets bigger.

New opportunities are created.
More employment opportunities are generated.
Per-capita income increases.
Indians enjoy better standard of living.
Education and awareness becomes common.
Future becomes brighter for the next generation.
Women gain a better understanding of managing family and business concurrently.
Indian women achieve a sense of self-realization and self-fulfillment.
Women gain better ability to take risks and business decisions.
Women become more confident.

Opportunities to Indian Women Entrepreneurs

Educated, gifted, and qualified females can enter virtually any business. Successful women
have been representing and still continue to represent brands like Times of India, PepsiCo,
ICICI, TAFE, HP, HSBC and J.P Morgan along with other names. The list in the lines to come
puts forward few sectors where women entrepreneurs of India can excel as senior managers
and owners.

Eco-friendly/ Bio-friendly sectors

IT sector

Event Management
Lifestyle sector
Beauty and cosmetic
Healthcare
Travel and tourism sector
Food, food processing and beverages
Telecommunications
Financing
Plastic manufacturing
Local and international trading
Property and estate

Barriers to Indian Women Entrepreneurs of India

But like mentioned before, countless hurdles have been laid for Indian women over the years.
Surpassing all of these hurdles successfully is still a challenge. These are some of the problems
women face after starting their business:

Family problems
Management of Finance
Managing manpower
Professional disrespect

The key reason of women being blocked from business is that they are women. Male prejudice
is still prevalent in India. Male is still considered the dominant gender and sole bread provider.
The view that Indian women lack self-confidence, willpower, mental composure and
entrepreneurial attitude has made devastating effects on India. This view has kept the women
from becoming leaders and has also instilled fear in women.
This age-old prejudice has also convinced a portion of women that they are unable to take risks;
that they are unable to access technology, deal effectively with workers and that the best job for
them is to raise a family.
However, India is full of examples new and old that a woman can be an entrepreneur and a
successful one at that. Compared to men, fewer female businesses fail because of poor
financial management once their business gets a kick start.

Solutions to Barriers
The problems women face pose a challenge for government and the authorities to tackle, but
with the right approach and some time, they can be solved. Every Indian must understand the

importance of women entrepreneurship. On top of all, women need motivation and any
discouragement must be dealt with. Following are some measures that can be taken to make
women empowered so that they can continue their business activities as confidently as Indian
men.
Creating better education opportunities.
Making provisions for personality development and training.
Improving communication skills.
Institutions where women can learn entrepreneurial skills and risk taking abilities.
Measures to change the attitude of society concerning women and women entrepreneurs in
India.
Attempts from nongovernmental bodies like agencies, trusts, welfare societies and NGOs.
More womens associations for better financing and capital management.
Providing nationwide platform for women like forums to discuss prevalent issues and
solutions to deal with such shortcomings.

Review
Of course education, socio-cultural values and primary motives have played a crucial role, but
womens determination, talent and sheer will have also been a contributor in making them a
productive force for Indian Economy. Indias fast track to success becomes accessible only
when Indians accept the importance of women in entrepreneurship and also Indian women are
found international trading from India.

Module 2
Theories of entrepreneurship
McClelland's Human Motivation Theory
Discovering What Drives Members of Your Team

One of your team members recently created a report that was so thorough and well-written that
the board of directors asked you to make sure that she was praised for her efforts.
So, at your monthly staff meeting, you stood up in front of the group, and congratulated her on
her achievement, and for the good impression she made for the team. However, instead of
smiling and appreciating the attention, she looked embarrassed. She lowered her head, and as
soon as she could, she left and went to her office.
What did you do wrong?
Managing a group of people with different personalities is never easy. But if you're managing or
leading a team, it's essential to know what motivates your people, how they respond to
feedback and praise, and what tasks fit them well. David McClelland's Human Motivation Theory
gives you a way of identifying people's motivating drivers. This can then help you to give praise
and feedback effectively, assign them suitable tasks, and keep them motivated.
Using McClelland's theory in the example above would have helped you structure your feedback
for the person. You would have known that your team member's main motivational driver is
affiliation, which means that she never wants to stand out in a crowd. So, your feedback would
have been far more effective, and appreciated, if you had praised her in private.

In this article, we'll explore McClelland's Human Motivation Theory, and look at how you can use
it to manage and lead your team more effectively.
Note:
McClelland's Human Motivation Theory is also known as Three Needs Theory, Acquired Needs
Theory, Motivational Needs Theory, and Learned Needs Theory.
Understanding McClelland's Theory
In the early 1940s, Abraham Maslow created his theory of needs . This identified the basic
needs that human beings have, in order of their importance: physiological needs, safety needs,
and the needs for belonging, self-esteem and "self-actualization".
Later, David McClelland built on this work in his 1961 book, "The Achieving Society." He
identified three motivators that he believed we all have: a need for achievement, a need for
affiliation, and a need for power. People will have different characteristics depending on their
dominant motivator.
According to McClelland, these motivators are learned (which is why this theory is sometimes
called the Learned Needs Theory).
McClelland says that, regardless of our gender, culture, or age, we all have three motivating
drivers, and one of these will be our dominant motivating driver. This dominant motivator is
largely dependent on our culture and life experiences.
These characteristics are as follows:
Dominant
Motivator

Characteristics of This Person

Has a strong need to set and accomplish challenging goals.

Takes calculated risks to accomplish their goals.

Likes to receive regular feedback on their progress and

achievements.

Achievement

Often likes to work alone.

Affiliation

Wants to belong to the group.

Wants to be liked, and will often go along with whatever the

rest of the group wants to do.

Dominant
Motivator

Characteristics of This Person

Power

Favors collaboration over competition.

Doesn't like high risk or uncertainty.

Wants to control and influence others.

Likes to win arguments.

Enjoys competition and winning.

Enjoys status and recognition.

Note:
Those with a strong power motivator are often divided into two groups: personal and
institutional. People with a personal power drive want to control others, while people with an
institutional power drive like to organize the efforts of a team to further the company's goals. As
you can probably imagine, those with an institutional power need are usually more desirable as
team members!
Using the Theory
McClelland's theory can help you to identify the dominant motivators of people on your team.
You can then use this information to influence how you set goals andprovide feedback ,
and how you motivate and reward team members.
You can also use these motivators to craft, or design, the job
ensuring a better fit.

around your team members,

Let's look at the steps for using McClelland's theory:

Step 1: Identify Drivers
Examine your team to determine which of the three motivators is dominant for each person. You
can probably identify drivers based on personality and past actions.
For instance, perhaps one of your team members always takes charge of the group when you
assign a project. He speaks up in meetings to persuade people, and he delegates
responsibilities to others to meet the goals of the group. He likes to be in control of the final
deliverables. This team member is likely primarily driven by the power.
You might have another team member who never speaks during meetings. She always agrees
with the group, works hard to manage conflict when it occurs, and visibly becomes

uncomfortable when you talk about doing high-risk, high-reward projects. This person is likely to
have a strong need for affiliation.
Step 2: Structure Your Approach
Based on the driving motivators of your workers, structure your leadership style and project
assignments around each individual team member. This will help ensure that they all
stay engaged , motivated, and happy with the work they're doing.
Examples of Using the Theory
Let's take a closer look at how to manage team members who are driven by each of
McClelland's three motivators:
Achievement
People motivated by achievement need challenging, but not impossible, projects. They thrive on
overcoming difficult problems or situations, so make sure you keep them engaged this way.
People motivated by achievement work very effectively either alone or with other high
achievers.
When providing feedback, give achievers a fair and balanced appraisal. They want to know
what they're doing right and wrong so that they can improve.
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Affiliation
People motivated by affiliation work best in a group environment, so try to integrate them with a
team (versus working alone) whenever possible. They also don't like uncertainty and risk.
Therefore, when assigning projects or tasks, save the risky ones for other people.
When providing feedback to these people, be personal. It's still important to give balanced
feedback, but if you start your appraisal by emphasizing their good working relationship and
your trust in them, they'll likely be more open to what you say. Remember that these people
often don't want to stand out, so it might be best to praise them in private rather than in front of
others.
Power
Those with a high need for power work best when they're in charge. Because they enjoy
competition, they do well with goal-oriented projects or tasks. They may also be very effective
in negotiations or in situations in which another party must be convinced of an idea or goal.
When providing feedback, be direct with these team members. And keep them motivated by
helping them further their career goals .
Comparative Theories
McClelland's theory of needs is not the only theory about worker motivation. Sirota's ThreeFactor Theory also presents three motivating factors that workers need to stay motivated
and excited about what they're doing: equity/fairness, achievement, and camaraderie.
Sirota's theory states that we all start a new job with lots of enthusiasm and motivation to do
well. But over time, due to bad company policies and poor work conditions, many of us lose our
motivation and excitement.
This is different from McClelland's theory, which states that we all have one dominant motivator
that moves us forward, and this motivator is based on our culture and life experiences.
Use your best judgment when motivating and engaging your team. Understanding a variety
of motivational theories will help you decide which approach is best in any given situation.
Note:
You may also see these abbreviations for McClelland's three motivators: Achievement (nAch),
Affiliation (nAff), and Power (nPow).
Key Points
McClelland's Human Motivation Theory states that every person has one of three main driving
motivators: the needs for achievement, affiliation, or power. These motivators are not inherent;
we develop them through our culture and life experiences.

Achievers like to solve problems and achieve goals. Those with a strong need for affiliation don't
like to stand out or take risk, and they value relationships above anything else. Those with a
strong power motivator like to control others and be in charge.
You can use this information to lead, praise, and motivate your team more effectively, and to
better structure your team's roles.
maslow's hierarchy of needs
Abraham Maslow's Hierarchy of Needs motivational model
Abraham Maslow developed the Hierarchy of Needs model in 1940-50s USA, and the Hierarchy
of Needs theory remains valid today for understanding human motivation, management training,
and personal development. Indeed, Maslow's ideas surrounding the Hierarchy of Needs,
concerning the responsibility of employers to provide a workplace environment that encourages
and enables employees to fulfil their own unique potential (self-actualization), are today more
relevant than ever. Abraham Maslow's book Motivation and Personality, published in 1954
(second edition 1970) introduced the Hierarchy of Needs, and Maslow extended his ideas in
other work, notably his later book Toward A Psychology Of Being, a significant and relevant
commentary, which has been revised in recent times by Richard Lowry, who is in his own right a
leading academic in the field of motivational psychology.

Abraham Maslow was born in New York in 1908 and died in 1970, although various publications
appear in Maslow's name in later years. Maslow's PhD in psychology in 1934 at the University
of Wisconsin formed the basis of his motivational research, initially studying rhesus monkeys.
Maslow later moved to New York's Brooklyn College.

The Maslow's Hierarchy of Needs five-stage model below (structure and terminology - not the
precise pyramid diagram itself) is clearly and directly attributable to Maslow; later versions of the
theory with added motivational stages are not so clearly attributable to Maslow. These extended
models have instead been inferred by others from Maslow's work. Specifically Maslow refers to
the needs Cognitive, Aesthetic and Transcendence (subsequently shown as distinct needs
levels in some interpretations of his theory) as additional aspects of motivation, but not as
distinct levels in the Hierarchy of Needs.

Where Maslow's Hierarchy of Needs is shown with more than five levels these models have
been extended through interpretation of Maslow's work by other people. These augmented
models and diagrams are shown as the adapted seven and eight-stage Hierarchy of Needs
pyramid diagrams and models below.

There have been very many interpretations of Maslow's Hierarchy of Needs in the form of
pyramid diagrams. The diagrams on this page are my own interpretations and are not offered as
Maslow's original work. Interestingly in Maslow's book Motivation and Personality, which first
introduced the Hierarchy of Needs, there is not a pyramid to be seen.

Free Hierarchy of Needs diagrams in pdf and doc formats similar to the image below are
available from this page.

See also the free Maslow's Hierarchy of Needs Quiz, which can be used to test/reinforce the
learning offered in this article.

(N.B. The word Actualization/Actualisation can be spelt either way. Z is preferred in American
English. S is preferred in UK English. Both forms are used in this page to enable keyword
searching for either spelling via search engines.)

maslow's hierarchy of needs

Each of us is motivated by needs. Our most basic needs are inborn, having evolved over tens of
thousands of years. Abraham Maslow's Hierarchy of Needs helps to explain how these needs
motivate us all.

Maslow's Hierarchy of Needs states that we must satisfy each need in turn, starting with the
first, which deals with the most obvious needs for survival itself.

Only when the lower order needs of physical and emotional well-being are satisfied are we
concerned with the higher order needs of influence and personal development.

Conversely, if the things that satisfy our lower order needs are swept away, we are no longer
concerned about the maintenance of our higher order needs.

Maslow's original Hierarchy of Needs model was developed between 1943-1954, and first
widely published in Motivation and Personality in 1954. At this time the Hierarchy of Needs
model comprised five needs. This original version remains for most people the definitive
Hierarchy of Needs.

maslow's hierarchy of needs - free pdf diagram and free doc diagram
1. Biological and Physiological needs - air, food, drink, shelter, warmth, sex, sleep, etc.

2. Safety needs - protection from elements, security, order, law, limits, stability, etc.

3. Belongingness and Love needs - work group, family, affection, relationships, etc.

4. Esteem needs - self-esteem, achievement, mastery, independence, status, dominance,

prestige, managerial responsibility, etc.

5. Self-Actualization needs - realising personal potential, self-fulfillment, seeking personal

growth and peak experiences.

This is the definitive and original Maslow's Hierarchy of Needs.

While Maslow referred to various additional aspects of motivation, he expressed the Hierarchy
of Needs in these five clear stages.

Here is a quick simple self-test based on the original Maslow's 5-level Hierarchy of Needs. It's
not a scientific or validated instrument - merely a quick indicator, which can be used for selfawareness, discussion, etc.

1970s adapted hierarchy of needs model, including cognitive and aesthetic needs - free pdf
diagram and free doc diagram
1. Biological and Physiological needs - air, food, drink, shelter, warmth, sex, sleep, etc.

2. Safety needs - protection from elements, security, order, law, limits, stability, etc.

3. Belongingness and Love needs - work group, family, affection, relationships, etc.

4. Esteem needs - self-esteem, achievement, mastery, independence, status, dominance,

prestige, managerial responsibility, etc.

5. Cognitive needs - knowledge, meaning, etc.

6. Aesthetic needs - appreciation and search for beauty, balance, form, etc.

7. Self-Actualization needs - realising personal potential, self-fulfillment, seeking personal

growth and peak experiences.

N.B. Although Maslow referred to additional aspects of motivation, 'Cognitive' and 'Aesthetic', he
did not include them as levels or stages within his own expression of the Hierarchy of Needs.

1990s adapted hierarchy of needs including transcendence needs - free diagram and free doc
diagram
1. Biological and Physiological needs - air, food, drink, shelter, warmth, sex, sleep, etc.

2. Safety needs - protection from elements, security, order, law, limits, stability, etc.

3. Belongingness and Love needs - work group, family, affection, relationships, etc.

4. Esteem needs - self-esteem, achievement, mastery, independence, status, dominance,

prestige, managerial responsibility, etc.

5. Cognitive needs - knowledge, meaning, etc.

6. Aesthetic needs - appreciation and search for beauty, balance, form, etc.

7. Self-Actualization needs - realising personal potential, self-fulfillment, seeking personal

growth and peak experiences.

8. Transcendence needs - helping others to achieve self actualization.

N.B. Although Maslow referred to additional aspects of motivation, 'Cognitive', 'Aesthetic', and
'Transcendence', he did not include any of these as additional stages in the Hierarchy of Needs.

Here is a quick self-test based on the extended 8-level Hierarchy of Needs. Like the 5-level
Hierarchy of Needs self-test it is not a scientific or validated instrument - merely a quick indicator
for helping self-awareness, discussion, etc.

See also the free Maslow's Hierarchy of Needs Quiz, which can be used to test/reinforce the
learning offered in this article.

what hierarchy of needs model is most valid?

Abraham Maslow created the original five level Hierarchy of Needs model, and for many this
remains entirely adequate for its purpose. The seven and eight level 'hierarchy of needs' models
are later adaptations by others, based on Maslow's work. Arguably, the original five-level model
includes the later additional sixth, seventh and eighth ('Cognitive', 'Aesthetic', and
'Transcendence') levels within the original 'Self-Actualization' level 5, since each one of the 'new'
motivators concerns an area of self-development and self-fulfilment that is rooted in selfactualization 'growth', and is distinctly different to any of the previous 1-4 level 'deficiency'

motivators. For many people, self-actualizing commonly involves each and every one of the
newly added drivers. As such, the original five-level Hierarchy of Needs model remains a
definitive classical representation of human motivation; and the later adaptations perhaps serve
best to illustrate aspects of self-actualization.

Maslow said that needs must be satisfied in the given order. Aims and drive always shift to next
higher order needs. Levels 1 to 4 are deficiency motivators; level 5, and by implication 6 to 8,
are growth motivators and relatively rarely found. The thwarting of needs is usually a cause of
stress, and is particularly so at level 4.

Examples in use:

You can't motivate someone to achieve their sales target (level 4) when they're having problems
with their marriage (level 3).

You can't expect someone to work as a team member (level 3) when they're having their house
re-possessed (level 2).

maslow's self-actualizing characteristics

keen sense of reality - aware of real situations - objective judgement, rather than subjective
see problems in terms of challenges and situations requiring solutions, rather than see problems
as personal complaints or excuses
need for privacy and comfortable being alone
reliant on own experiences and judgement - independent - not reliant on culture and
environment to form opinions and views
not susceptible to social pressures - non-conformist

democratic, fair and non-discriminating - embracing and enjoying all cultures, races and
individual styles
socially compassionate - possessing humanity
accepting others as they are and not trying to change people
comfortable with oneself - despite any unconventional tendencies
a few close intimate friends rather than many surface relationships
sense of humour directed at oneself or the human condition, rather than at the expense of
others
spontaneous and natural - true to oneself, rather than being how others want
excited and interested in everything, even ordinary things
creative, inventive and original
seek peak experiences that leave a lasting impression
See the Maslow interviews DVDs - especially Maslow and Self-Actualization to understand the
subject more fully. These films were made in 1968 and are helpful on several levels, and both
wonderful teaching and learning aids.

See also the newer Maslow MP3 talks series.

These materials also help to illustrate the far-reaching and visionary nature of Maslow's thinking,
several decades ago.

The above materials are published by Maurice Bassett on behalf of the estate of Abraham
Maslow. Businessballs takes no commission and recommends them simply because they are
wonderful materials for all students and followers of Maslow's very special work.

maslow's hierarchy of needs in advertising

To help with training of Maslow's theory look for Maslow's Hierarchy of Needs motivators in
advertising. This is a great basis for Maslow and motivation training exercises:

Biological and Physiological needs - wife/child-abuse help-lines, social security benefits,

Samaritans, roadside recovery.
Safety needs - home security products (alarms, etc), house an contents insurance, life
assurance, schools.
Belongingness and Love needs - dating and match-making services, chat-lines, clubs and
membership societies, Macdonalds, 'family' themes like the old style Oxo stock cube ads.
Esteem needs - cosmetics, fast cars, home improvements, furniture, fashion clothes, drinks,
lifestyle products and services.
Self-Actualization needs - Open University, and that's about it; little else in mainstream media
because only 2% of population are self-actualizers, so they don't constitute a very big part of the
mainstream market.
You can view and download free Maslow's Hierarchy of Needs diagrams, and two free
Hierarchy of Needs self-tests, based on the original Maslow's five-stage model and later
adapted eight-stage model, ideal for training, presentations and project work, at the
businessballs free online resources section.

Free diagrams include:

Pyramid diagram based on Maslow's original five-level Hierarchy of Needs (1954).

Adapted seven-level Hierarchy of Needs diagram (which seems to have first appeared in the
1970s - after Maslow's death).
Adapted eight-level Hierarchy of Needs diagram (appearing later, seemingly 1990s).

interpreting behaviour according to maslow's hierarchy of needs

Maslow's Hierarchy of Needs is an excellent model for understanding human motivation, but it is
a broad concept. If you are puzzled as to how to relate given behaviour to the Hierarchy it could
be that your definition of the behaviour needs refining. For example, 'where does 'doing things
for fun' fit into the model? The answer is that it can't until you define 'doing things for fun' more
accurately.

You'd need to define more precisely each given situation where a person is 'doing things for fun'
in order to analyse motivation according to Maslow's Hierarchy, since the 'fun' activity motive
can potentially be part any of the five original Maslow needs.

Understanding whether striving to achieve a particular need or aim is 'fun' can provide a helpful
basis for identifying a Maslow driver within a given behaviour, and thereby to assess where a
particular behaviour fits into the model:

Biological - health, fitness, energising mind and body, etc.

Safety - order and structure needs met for example by some heavily organised, structural
activity
Belongingness - team sport, club 'family' and relationships
Esteem - competition, achievement, recognition
Self-Actualization drivers - challenge, new experiences, love of art, nature, etc.
However in order to relate a particular 'doing it for fun' behaviour the Hierarchy of Needs we
need to consider what makes it 'fun' (i.e., rewarding) for the person. If a behaviour is 'for fun',
then consider what makes it 'fun' for the person - is the 'fun' rooted in 'belongingness', or is it
from 'recognition', i.e., 'esteem'. Or is the fun at a deeper level, from the sense of self-fulfilment,
i.e., 'self-actualization'.

Apply this approach to any behaviour that doesn't immediately fit the model, and it will help you
to see where it does fit.

Maslow's Hierarchy of Needs will be a blunt instrument if used as such. The way you use the
Hierarchy of Needs determines the subtlety and sophistication of the model.

For example: the common broad-brush interpretation of Maslow's famous theory suggests that
that once a need is satisfied the person moves onto the next, and to an extent this is entirely
correct. However an overly rigid application of this interpretation will produce a rigid analysis,
and people and motivation are more complex. So while it is broadly true that people move up (or
down) the hierarchy, depending what's happening to them in their lives, it is also true that most
people's motivational 'set' at any time comprises elements of all of the motivational drivers. For

example, self-actualizers (level 5 - original model) are mainly focused on self-actualizing but are
still motivated to eat (level 1) and socialise (level 3). Similarly, homeless folk whose main focus
is feeding themselves (level 1) and finding shelter for the night (level 2) can also be, albeit to a
lesser extent, still concerned with social relationships (level 3), how their friends perceive them
(level 4), and even the meaning of life (level 5 - original model).

Like any simple model, Maslow's theory not a fully responsive system - it's a guide which
requires some interpretation and thought, given which, it remains extremely useful and
applicable for understanding, explaining and handling many human behaviour situations.

maslow's hierarchy of needs and helping others

There are certainly some behaviours that are quite tricky to relate to Maslow's Hierarchy of
Needs.

For example:

Normally, we would consider that selflessly helping others, as a form of personal growth
motivation, would be found as part of self-actualisation, or perhaps even 'transcendence' (if you
subscribe to the extended hierarchy).

So how can we explain the examples of people who seem to be far short of self-actualising, and
yet are still able to help others in a meaningful and unselfish sense?

Interestingly this concept seems to be used increasingly as an effective way to help people deal
with depression, low self-esteem, poor life circumstances, etc., and it almost turns the essential
Maslow model on its head: that is, by helping others, a person helps themselves to improve and
develop too.

The principle has also been applied quite recently to developing disaffected school-children,
whom, as part of their own development, have been encouraged and enabled to 'teach' other
younger children (which can arguably be interpreted as their acting at a self-actualising level -

selflessly helping others). The disaffected children, theoretically striving to belong and be
accepted (level 3 - belongingness) were actually remarkably good at helping other children,
despite their own negative feelings and issues.

Under certain circumstances, a person striving to satisfy their needs at level 3 - belongingness,
seems able to self-actualise - level 5 (and perhaps beyond, into 'transcendence') by selflessly
helping others, and at the same time begins to satisfy their own needs for belongingness and
self-esteem.

Such examples demonstrate the need for careful interpretation and application of the Maslow
model. The Hierarchy of Needs is not a catch-all, but it does remain a wonderfully useful
framework for analysing and trying to understand the subtleties - as well as the broader aspects
- of human behaviour and growth.

self-actualisation, employees and organisations

Maslow's work and ideas extend far beyond the Hierarchy of Needs.

Maslow's concept of self-actualisation relates directly to the present day challenges and
opportunities for employers and organisations - to provide real meaning, purpose and true
personal development for their employees. For life - not just for work.

Maslow saw these issues fifty years ago: the fact that employees have a basic human need and
a right to strive for self-actualisation, just as much as the corporate directors and owners do.

Increasingly, the successful organisations and employers will be those who genuinely care
about, understand, encourage and enable their people's personal growth towards selfactualisation - way beyond traditional work-related training and development, and of course way
beyond old-style X-Theory management autocracy, which still forms the basis of much
organised employment today.

The best modern employers and organisations are beginning to learn at last: that sustainable
success is built on a serious and compassionate commitment to helping people identify, pursue
and reach their own personal unique potential.

When people grow as people, they automatically become more effective and valuable as
employees.

In fact virtually all personal growth, whether in a hobby, a special talent or interest, or a new
experience, produces new skills, attributes, behaviours and wisdom that is directly transferable
to any sort of job role.

The best modern employers recognise this and as such offer development support to their staff
in any direction whatsoever that the person seeks to grow and become more fulfilled.

classic 1968 maslow interviews now on dvd

Both filmed in 1968, after Maslow's heart attack, and obviously prior to his death in 1970, these
superb Maslow DVDs show Dr Maslow being interviewed, respectively by Dr Everett Shostrom,
and also interestingly, Warren Bennis.

Both films - available here - were made in 1968 and were remastered in black and white in
2007. The remarkable content, and the 1960s styling and production add to the seductive and
powerful effect of these films, which stems chiefly from Maslow's brilliant thinking and natural
charismatic presence.

Being Abraham Maslow is half an hour long, and features Maslow talking to Warren Bennis
about his life, his views of the world and his work. It is utterly compelling and shows Maslow's
staggering perception of the issues which challenge society and humankind today - and this
was recorded in 1968. The film, basically irresistible throughout, includes some marvelous
moments, such as Maslow's questioning observation as to "...how good a human nature does
society permit?...", and the visionary statement that: "...The Good Society now has to be one
world - it has to be one world or it won't work - nationalism is dead - it just doesn't know it yet..."

He said this in 1968 and still today our leaders don't see it.

Maslow and Self-Actualization is an hour long, in two parts, in which Maslow is interviewed by
Dr Everett Shostrom about Self-Actualization, in which Shostrom uses references and quotes
extracts from Maslow's book Motivation and Personality, and Maslow explains and develops the
themes. The structure is excellent - ideal for teaching and training.

Self-Actualization is presented by Maslow through a series of answers, working through the

concept in four sections: honesty, awareness, freedom and trust. Maslow brings these headings
to life, conveying some very complex intangible ideas - such as objectivity, detachment,
maturity, love, acceptance, modesty and grace - in the most understandable way. Personally
this video is one of the most powerful things I've ever seen.

The film can be used as a teaching aid, and/or as the presenter suggests, to help people
understand Self-Actualization as goals or values to aspire to: "...ideas for living and being, fully
functioning to one's full capacity..."

For anyone teaching or studying motivation, psychology, Maslow, and related areas - or simply
interested in living a fulfilled and good life - these films will be fascinating, and for some people
deeply inspirational too. Both films are available here.

In terms of format/compatibility, these US-made films wouldn't play on my (cheap) UK DVD

player, but they ran happily on my (cheap) UK PC.

The above dvd materials are published by Maurice Bassett on behalf of the estate of Abraham
Maslow.

additional maslow talks now on mp3

In August 2009 further exciting Maslow material became available for download in mp3 format
after extensive work by publisher Maurice Bassett.

Volumes One and Two include a total of 28 and a half hours of Abraham Maslow's talks and
workshops at the Esalen Institute, Big Sur, California, from the mid and late-1960s. The
materials comprise:

Volume One:
Self-Actualization (1 mp3 file, total playing time 1 hour)
Psychology and Religious Awareness (1 mp3 file, total playing time 1 hour)
The Aims of Education (1 mp3 file, total playing time 1 hour)
The B-language Workshop (5 mp3 files, total playing time 5 hours, 35 minutes)
Weekend with Maslow (9 mp3 files, total playing time 4 hours, 25 minutes)

Volume Two:
The Eupsychian Ethic (6 mp3 files, total playing time 5 hours, 45 minutes)
The Farther Reaches of Human Nature (10 mp3 files, total playing time 9 hours, 45 minutes)

Samples and the entire recordings are available at www.abrahammaslow.com/audio.html

The mp3 materials above are published by Maurice Bassett on behalf of the estate of Abraham
Maslow.

maslow's modern relevance

When you read Maslow's work, and particularly when you hear him speak about it, the
relevance of his thinking to our modern world of work and management is astounding.

The term 'Maslow's Hammer' is a simple quick example. Also called 'The Law of the Instrument',
the expression refers metaphorically to a person having just one 'tool' (approach or method
available or known/learnt) and so then treating every situation the same. Other writers have
made similar observations, but 'Maslow's Hammer' is the most widely referenced comment on
the subject. Maslow's quote is from his 1966 book The Psychology of Science - A
Reconnaissance:

"I suppose it is tempting, if the only tool you have is a hammer, to treat everything as if it were a
nail.." ('Maslow's Hammer' - Abraham Maslow, 1966)

Maslow's explanations and interpretations of the human condition remain fundamentally helpful
in understanding and addressing all sorts of social and behavioural questions - forty or fifty
years after his death.

You will particularly see great significance of his ideas in relation to modern challenges for work
such as in the Psychological Contract and leadership ethics, and even extending to
globalization and society.

Maslow is obviously most famous for his Hierarchy of Needs theory, rightly so, because it is a
wonderfully simple and elegant model for understanding so many aspects of human motivation,
especially in the workplace. The simplicity of the model however tends to limit appreciation of
Maslow's vision and humanity, which still today are remarkably penetrating and sensitive.