According to the advocates of this theory, entrepreneurship is most likely to emerge when a society has sufficient supply of individuals possessing particular psychological characteristics.

David Mccelelland (1961) developed his theory to explain the psychological roots of entrepreneurship. He argued that certain needs are learnt and socially or basic human motives drive individual towards entrepreneurial activates. He identified the following types of needs.

(i)    Need for achievement (n Ach) : a drive to excel, advance and grow.
(ii)    Need for power (n Pow) : a drive to influence others and situations.
(iii)    Need for affiliation (n Aff) : a drive for friendly and close inter personal relationships.

Need for Achievement. Some people have a compelling drive to succeed they strive personal achievement rather than the rewards of success that accompany it. They have a desire to do something better or more efficiently than it has been done before. This drive is the achievement need (nAch). From resorcinol the achievement need, McClelland found that high achievers differentiate themselves from others by their desire to do things better. They seek situations where they can assume personal responsibility for finding to problems. where they can receive rapid feedback on their perforation so they can set moderately challenging goals. High achievers are not gamblers they dislike succeeding by chance. They prefer the challenge of working at a problem and accepting the personal reasonability for success or failure, rather than leaving the outcome to chance or the actions of others.

People with achievement motivation are enterprising in nature as is obvious from the following traits:

(i)    They take calculated risks in achieving such targets for which they have to apply their imagination and stretch their limbs.

(ii)    They give single minded attention to accomplishment of their tasks.

(iii)    High achievers find goal achievement intrinsically satisfying and they do not necessarily crave for material rewards.

Need for Power. The need for power(nPow) is a drive to have impact, to be influential, and to control others. Individuals high in nPow enjoy being “in charge”, strive for influence over other, prefer to be placed into competitive and status-oriented situations, and tend to be more concerned with gaining influence over others and prestige than with effective performance. Power-motivated people wish to Crete an impact on their organizations and are willing to take risks to do so.

Need for Affiliation. The need for affiliation (nAff) can be viewed as the desire to be liked and accepted by others. It is the need of human companionship. Individuals with a higher affiliation motive strive fore friendship, prefer cooperative situations rather than competitive ones, and desire relationship involving a high degree fo mutual understanding.

Research has shown that people with a high nAff generally display the following characteristics:

(i)    a strong desire for approval and reassurance from others,

(ii)    a tendency to conform to the wisher and norms of those whom they value, and

(iii)    a sincere interest in the feelings of others. Such people are motivated to express their emotions and feelings to others and expect other people to do the same in return High nAff individuals tend to take job characterized by much of inter-personal contacts. They receive an inner satisfaction from socializing with people with little regard for personal feelings about them. They play important integrative roles in group or inter-group activates. But their overemphasis on social relationships may interfere with the process of accomplishing the task.

People possess the above needs in varying degrees. However, one of the needs will tend to be more characteristic of the individual rather than the other two individuals with a high need for achievement thrive on jobs and projects that tax their skills and abilities. Such individuals are goal-oriented in their activities seek a challenge and want task relevant feedback. Individuals with high affiliabition needs value interpersonal relationships an exhibit sensitivity towards other people’s feeling. but individuals with the high power needs seek to dominate influence or have control over others.

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