How does knowledge and motivation facilitate entrepreneurial actions?

Entrepreneurial actions describe the act of looking for entrepreneurial opportunities.

It is defined as any activity entrepreneurs might take to form and exploit opportunities.

Entrepreneurial actions also refer to behaviour in response to a decision made under uncertainty, as a result of beliefs about a possible opportunity for profit.

How does knowledge and motivation facilitate entrepreneurial actions?

Knowledge and motivation facilitate entrepreneurial action in various ways.

This article looks at how the ultimate act of an individual becoming an entrepreneur, which involves taking action, is influenced by knowledge and motivation.

It also looks at the wider aspects of entrepreneurial actions.

Knowledge and entrepreneurial actions

Before an entrepreneur decides to look for entrepreneurial opportunities, the individual needs to be exposed to information.

The entrepreneur is exposed to different kinds of information which affect how opportunity is judged and the subsequent entrepreneurial action taken.

The judgment about entrepreneurial opportunities is made under uncertainty.

Also, the decision of whether to pursue a possible opportunity or not depends on two things:

  • the amount of uncertainty perceived and
  • the willingness to bear uncertainty.

The amount of uncertainty perceived could prevent entrepreneurial action and lead to missed opportunity because it could lead to doubt – influenced by hesitancy, indecisiveness, and procrastination.

However, only the entrepreneurs that possess applicable knowledge or information are able to undertake entrepreneurial actions.

This is because such applicable knowledge or information helps to perceive opportunity and reduce doubts.

For example, the information that drives entrepreneurial action can be of at least two kinds.

  • The first is the information about customers needs.
  • The second is information about possible (e.g. technological) solutions to customers’ needs.

Motivation and entrepreneurial actions

In addition to knowledge, motivation helps an entrepreneur determine whether an opportunity exists, in the marketplace.

The entrepreneur’s motivation influences the willingness to bear uncertainty through their beliefs and desires. That is, the entrepreneur’s belief that they can execute an entrepreneurial action and the desire to actually do so.

An entrepreneur’s belief in an entrepreneurial action and a desire to execute entrepreneurial action are intertwined with the knowledge possessed by the entrepreneur, and the information the entrepreneur is exposed to.

Therefore, an entrepreneur’s perception of opportunities and the willingness to pursue
entrepreneurial action, even in the face of expected uncertainty, depends on whether the entrepreneur is motivated enough to act.

Hence, when we talk about motivation and entrepreneurial actions, we are referring to the psychological and personal qualities of entrepreneurs that get them going despite uncertainty.

These are factors and qualities such as self-confidence, courage, boldness, vision, determination, and creativity.

All these factors are necessary to create the future in an uncertain world.

These motivation factors propel entrepreneurs to action beyond just being alert or clearly seeing an opportunity.

The positive and negative aspects of entrepreneurial actions

There are positive and negative wider implications of entrepreneurial action.

That is, the ultimate outcomes of entrepreneurial actions could be positive or negative.

For example, on one hand, an entrepreneurial action taken can have positive end results (productivity-enhancing outcomes).

This will result in benefits that are not just for the entrepreneur but also for the society.

On the other hand, entrepreneurial actions can have negative outcomes (rent-seeking).

Such action results in activities that generate personal value, but no social value.

Productivity-enhancing entrepreneurial actions

Entrepreneurial actions are productivity-enhancing when entrepreneurs take actions that make a positive contribution through innovative technologies, products and services, as a result of efficient activities that make use resources such as time, money and people.

In the short and long term, the technologies introduced, goods and services produced, the wastes reduced, and the jobs created benefit the society.

Rent-seeking entrepreneurial actions

Rent-seeking entrepreneurial actions occur when entrepreneurs engage in unproductive activity that is neither replicative nor innovative.

Entrepreneurial actions are rent-seeking when entrepreneurial opportunities are sought through taking actions that benefit individuals rather that the society.

Examples of such activities are bribery, corruption, piracy etc.

Mofoluke Akiode