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What motivates an entrepreneur?

Subodh Bhat & Richard McCline | April 19, 2005

Since the 1990s, there has been a phenomenal growth in the number of high-tech enterprises started in India.

To understand the reasons behind this phenomenon, Subodh Bhat and Richard McCline of San Francisco State University studied the motivations, resources, networks, attitudes and behaviours of these new entrepreneurs with both in-depth interviews with a dozen entrepreneurs and a survey that netted 33 usable responses.

What was the sample like? An overwhelming majority (93 per cent) was male, with close to two-thirds in the 26- to 39-year range. A quarter had just undergraduate degrees, while 69 per cent had master's degrees.

More than 63 per cent of the respondents' businesses had been in existence for three to six years and the median annual revenue of the businesses was Rs 1.5 crore (Rs 15 million) with 85 per cent having annual revenues of Rs 1 crore (Rs 10 million) or below.

The median number of employees was 15, with 84 per cent having less than 100 employees. Parents or close relatives of 28 per cent of the respondents owned their own businesses and the average number of people whom the respondents could call for help was 10.

The respondents had been employed for five to eight years before starting their first business. They were members of an average of three business or professional association and attended five seminars and trade fairs every year.

Entrepreneur motivation

The respondent entrepreneurs were motivated primarily by the desire to create something new, the desire for autonomy, wealth and financial independence, the achievement of personal objectives and the propensity for action ('doing').

The excitement of entrepreneurship was another major motivator -- this was nicely captured by one comment: "We are not sure what's coming down the curve but it is a thrill." Importantly, most entrepreneurs stressed that the objective was never money for its own sake.

They wanted to leave a legacy in the form of a profitable long-lasting business.

The driving force: what motivates Indian entrepreneurs
Motivator

% mentioning

Rewards of entrepreneurship
Autonomy57
Making money/financial independence43
Saw business opportunity/impact on industry27
Recognition of self and/or organisation23
Desire to create something new/innovate20
Build something important/make a difference17
Grow a business from scratch17
Desire to be entrepreneur/excitement of entrepreneurship3
Personal qualities
Intellectual challenge/achieve potential27
Instinct10
Others10
Career
Career growth/diversification/satisfaction13
Others3
Experience
Utilise previous experience6
Had technology/industry vision3
Non-monetary factors
Help India in various ways23
Non-monetary success/personal satisfaction7
Create value/jobs/wealth in society3

Support systems

Indian entrepreneurs rely on friends and family for help in starting the business, with the quality of help from friends, former co-workers and university mates in the startup and management stages being rated the best.

Assistance in terms of manpower was mainly from former co-workers. Help in marketing and access to markets was mainly from friends, former co-workers and university mates.

Finance was obtained from relatives and friends but not from former co-workers. One surprise was that few in the sample received much in the way of technological help from others.

Only 16 per cent received help from a government institution and 41 per cent from consultants. Several interviewees lamented the lack of a visible venture capital presence in India.

Success attributions

The respondents rated their success in business as quite high on various measures. They also reported that their businesses were quite profitable with median percentage annual growth in revenues, customers, and profits in the past three years of 25, 20 and 13 respectively.

They judged their success not only on the basis of business barometers like revenues, profits, growth and business reputation and monetary rewards, but also on personal factors like satisfaction and goal-achievement.

Most entrepreneurs felt their success was tied to creating something new and durable ('create a world-class company based on intellectual property') and to leaving a legacy ('leaving an indelible mark on the sands of time').

A few viewed success as being able to prove themselves and several emphasised the importance of the contribution of their business to the nation.

The respondents attributed their success mainly to hard work and focus or drive. Other factors were technical knowledge/experience and access to resources.

Emotional or mental strength, resilience ('I can't be kept too down for too long'), perfectionism and patience were other frequently mentioned qualities.

Leadership skills, particularly communication skills and good employee management, were highlighted as contributors to success.

Several entrepreneurs suggested that professional bodies play a more active role in encouraging entrepreneurship and representing the high tech industry and in educating the government and others in India on issues facing entrepreneurs and the high-tech industry.

Such organisations can develop programs to help entrepreneurs translate concepts into reality and to create role models. Another recommendation is to have schools play a more active role in encouraging entrepreneurship as a career by among other things, establishing training programs.

Surprisingly, our respondents did not report much networking and did not view it as very crucial to success.

Lessons learnt

What were the lessons the respondents learnt in the entrepreneurial process?

  • Do whatever it takes, whatever is necessary
  • Retain strong customer focus
  • Invest for the long-term
  • Invest in quality
  • Be hands-on
  • Multi-tasking is important
  • The need for the ability to tolerate ambiguity
  • Share profits with employees
  • Government's relative univolvement in the high tech industry is a blessing

    And what hampers the entrepreneurial process?

  • Financial struggle -- lack of money in the business as well as personally was the most cited negative factor
  • No government support -- however, a few entrepreneurs disagreed, saying that the government has been supportive and has given lots of concessions to the high tech industry
  • Dearth of sophisticated local investors and angel investors
  • Lack of a forum for discussing entrepreneurial issues
  • Difficulty in finding top-notch resources (for instance, recruiting from good schools)
  • Poor infrastructure
  • Corruption and bureaucracy


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    Number of User Comments: 6




    Sub: Entrepreneurship

    This Article proves to be a very useful fact provider for people thinking to start an Enterprise.Please Post more Articles on Entrepreneurship.


    Posted by Sailesh Kumar





    Sub: Nice Artilce....Success Cases should be added

    A nice article for understanding entrepreneurship behaviour. Success stories should be added


    Posted by Shreyas





    Sub: Entrepreneurs need more support .

    Hi, I read the article on Indian entrepreneurs.A large number of people are now leaving their high paying jobs to start their own establishments.The constant ...


    Posted by Manish Kumar Das





    Sub: Lots to be done

    What entrepreuners require today is a body that acts as the guiding factor in terms of management skills , project management,Finance management with a customised ...


    Posted by Kishor Jagirdar





    Sub: entrepreneurship

    Want more such articles on entrepreneurship.. theoritical and practical experiences.... etc


    Posted by mitash




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