Entrepreneurial motivation and its impact on business success

Complex and multifaceted is an individual’s motivation for becoming an entrepreneur such that individual perceptions as to why one chooses entrepreneurship may be idiosyncratic and sometimes the precise meaning of a particular motive is subject to debate[1].

Given that entrepreneurship is fraught with increased uncertainty, impediments, failures, and frustrations associated with the day-to-day running of a business or the process of initiating new venture creation, compel researchers to investigate the motivation of individuals for choosing self-employment; often thought to be as an aversive career choice. This leaves one to ask ‘‘what is it about certain people that drives them to take on the risk, the uncertainty and the independent structure of business ownership?’’

Of a certain, individuals do not just choose entrepreneurship as a career path, rather it is the end result of certain militating factors arousing an individual’s interest in entrepreneurship which have been carefully thought through and considered. In attempting to answer the question, one notable theory that has been widely adopted by researchers in examining the motivations of entrepreneurs is the ‘pull’ and ‘push’ factors proposed by Gilad and Levine[2]. 

‘‘Pull’’ Factors

The ‘pull factors’ are found to be characterized by factors having positive connotations often influenced by extrinsic pulls which are largely economic and intrinsic ones which relate to self-fulfilment that draw people to start businesses willingly[3]. These kinds of entrepreneurs are more opportunity-driven and attracted by the ‘incentive rewards’ entrepreneurship offers such as a perceived return on a market gap.

It is irrational to expect an individual to pursue a career that they envisage to be either profitless, unviable or unachievable. Ideally, a person would have thought through the prospective positive outcomes, choose the most desirable option and decide on whether it is viable to pursue it or not. More so, an entrepreneur will consider same since they are attracted by the desire to create wealth, higher economic incentives, the need to seek independence/freedom, make a positive impact in society and self-fulfilment which among other reasons[4] are the key prevalent drivers exerting a pulling force on both men and women into business ownership.

Regardless of differences in gender, race and cultural background, entrepreneurs are found to have a higher need for achievement and the desire to improve social recognition, which has been found to be influential in shaping their behaviour thereby pulling them into business ownership[5].

 ‘‘Push’’ Factors

On the other hand, the ‘push factors’ are characterised by negative personal or external factors that influence an individual to start his/her own business. Dominant negative internal stimulus or force (or a less desirable condition) drives the need for a person to find a solution to reduce the resulting tension as such ‘pushes’ the individual reluctantly into entrepreneurship and lend them the name; Necessity-driven entrepreneurs.

‘‘Where a group of people in a society feel marginalized, discriminated against or looked down upon, then there is the likelihood of a “psychological disequilibrium” to take place. In such a situation, a disadvantaged person could be driven into enterprising to make up for this disparity’’[6].

Business entry motives relating to work and family issues are mainly associated with push motivational factors. By far entrepreneurship for some people is the escape strategy to labour market discrepancies such as the absence of satisfactory work in the mainstream economy, unemployment and negative experiences faced in the labour market.

The need for work-family balance stands paramount amongst the motivations driving some individuals into venture creation. Common amongst female entrepreneurs, the difficulty associated with combining wage employment and domestic commitments exert a negative force on them to climb this career ladder.

Impact of Pull and Push Motivating Factors on Business Success

Diverse are the reasons for which people pursue the path of self-employment, however negative or positive the reason may be, it has the potential of impacting on the success of the business. According to the goal-setting theory, if some people perform better than others despite being equal in ability and knowledge, then the cause must be motivational[7].

Whilst positive motivations leading to the starting of a business is associated with positive business outcomes, negative motivating factors do otherwise. This is because necessity-driven entrepreneurs seem to be less content than opportunity-driven entrepreneurs.

Earnings of opportunity-driven entrepreneurs are 15% higher than those of necessity entrepreneurs because market opportunities exploited by these types of entrepreneurs on average are more profitable and based on a convinced choice[8].

Opportunity driven entrepreneurs tend to be more innovative and achieve a higher level of growth. “If the underlying motivation to start a new firm is explicitly linked to innovative projects, then a better post-entry performance may be expected than if a new firm is started on the basis of a purely ‘defensive’ motivation, such as the fear of becoming unemployed”[9]

In terms of job creation, research has proven that firms created by opportunity-driven entrepreneurs create more employment opportunities compared to necessity-driven entrepreneurs. For instance, a study found that opportunity-driven entrepreneurs are more likely than necessity entrepreneurs to expect their ventures to create more than 20 additional jobs within the first five years of existence[10].

The survival rate of enterprises established by opportunity-driven entrepreneurs tends to be higher than necessity-driven entrepreneurs. This is because comparably the former adequately prepare for their entry into business ownership than the latter. Nevertheless, specific vocational training boosts the earnings of necessity entrepreneurs and once a necessity entrepreneur starts a firm in a profession of his or her expertise, the survival chances increase and are similar to those of opportunity entrepreneurs.

Interestingly, evidence suggests that there exist entrepreneurs who are driven by a combination of positive and negative motivations for starting their firms which enhances their capacity to be successful both in relation to profitability and growth. Amit and Muller contend that “when both forces (“pull” and “push”) are at work one might expect superior performance”[11].

We hope you enjoyed reading this article and found it informative.

NOW IS THE TIME FOR SELF REFLECTION!

Tell us about the reason(s) you/your team decided to start your own business. How important are these entrepreneurial motives to you/your team? Ranking on a scale of 1 to 3, with #1 being the most important and #3 being the least important.

References

[1] Kirkwood, J., & Walton, S. (2010). What motivates ecopreneurs to start businesses?. International Journal of Entrepreneurial Behavior & Research, 16(3), 204-228.

[2] Gilad, B., & Levine, P. (1986). A behavioral model of entrepreneurial supply. Journal of small business management, 24(4), 45-54.

[3] Dawson, C., & Henley, A. (2012). “Push” versus “pull” entrepreneurship: an ambiguous distinction?. International Journal of Entrepreneurial Behavior & Research, 18(6), 697-719.

[4] Segal, G., Borgia, D., & Schoenfeld, J. (2005). The motivation to become an entrepreneur. International Journal of Entrepreneurial Behaviour & Research, 11(1), 42-57.

[5] McClelland, D. C. (1961). The achieving society. Princeton: Van Nostrand.

[6] Hagen, E. E. (1962). On the Theory of Social Change. Homewood: The Dorsey Press.

[7] Latham, G.P. and Locke, E.A. (1991). Self-regulation through goal setting, Organizational Behavior and Human Decision Processes 50 (2), 212-247.

[8] Block, J.H. and Wagner, M. (2007). Opportunity recognition and exploitation by necessity and opportunity entrepreneurs: Empirical evidence from earnings equations, in: Solomon, George T. (ed.), Proceedings of the Sixty-Sixth Annual Meeting of the Academy of Management, ISSN 1543-8643.

[9] Vivarelli, M. (2004). Are all the potential entrepreneurs so good? Small Business Economics 23, 41-49.

[10] Reynolds, P. D., Camp, S. M., Bygrave, W. D., Autio, E., & Hay, M. (2002). Global entrepreneurship monitor gem 2001 summary report. London Business School and Babson College.

[11] Amit, R. and Muller, E. (1995). “Push” and “pull” entrepreneurship, Journal of Small Business and Entrepreneurship 12 (4), 64-80.