Question

Joseph feels like people focus on needs and will only do what satisfies needs. This is why he thinks more people don't become entrepreneura: This type of theory is called???

Answer 1

This type of theory is called ERG theory. ERG theory is developed by Clayton P. Alderfer in 1969. It condenses Maslow’s five human needs into three categories: Existence, Relatedness and Growth.

Existence needs include all material and physiological desires (example- food, water, air, clothes, safety, physical love and affection).

Relatedness needs- encompass social and external esteem; relationships with family, friends, co-workers and employers. This means to be recognized and feel secure as part of a group.

Growth needs- internal esteem and self actualization impel a person to make creative effects on him and environment (example, to progress toward one’s ideal self. This includes desires to be creative and productive, and to complete meaningful tasks.

Even though the priorities of these needs differ from person to person, ERG theory prioritizes in terms of the categories’ concreteness. Existence needs are most concrete, and easiest to verify; relatedness needs are less concrete and depends on a relationship between two o more people; growth needs are least concrete in that their specific objectives depend on the uniqueness of each person.

From this explanation we can understand that people like to focus on needs and will do what satisfies their needs, because it is important. Entrepreneurship exists in growth needs where people want to be creative and innovative. Most people do not reach at the third need in their life that’s why they do not become entrepreneurs. Entrepreneurship is a risky, time consuming, and expensive process. Usually people are not ready to sacrifice their existence and relatedness needs to attain their growth needs. Therefore people focus on needs and will only do what satisfies needs, that’s why more people do not become entrepreneur.