Theories of entrepreneurship: Innovation theory by Schumpter, Theory of Achievement by McClelland, X-efficiency theory by Leibenstein, Theory of profit by Knight

1. THEORIES OF
ENTREPRENEURSHIP
PRESENTED BY
SIMRAN KAUR

2. CONTENTS
 Innovation theory by Schumpter
 Theory of high achievement by McClelland
 X-efficiency theory by Leibenstein
 Theory of profit by Knight

3. INNOVATION THEORY BY SCHUMPTER
 Joseph A. Schumpter proposed innovation theory in 1949
 Emphasized innovation being the key motivator, knowledge and creativity on the secondary
 Innovation may involve developing new products, new markets, new way of producing product,
new organizational culture.
 Schumpter linked innovation with business cycle indicating that entrepreneurship helps in
stabilizing economic growth of the country

4. THEORY OF HIGH ACHIEVEMENT BY
McCLELLAND
 David McClelland gave “Theory of needs” categorized into Theory of Achievement (nAch),
Theory of Affiliation (nAff) and Theory of Power (nPow)
 Individuals having strong nAch set challenging goals and always want to emerge as winners, no
matter how much risk they have to bear
 Individuals having strong nAff like to socialize and maintain good relationships without entering
into any competition
 Individuals having strong nPow want high status and greater authority, making them an impactful
leader

5. X-EFFICIENCY THEORY BY LEIBENSTEIN
 X-efficiency theory was proposed by Harvey Leibenstein
 Measures effectiveness of firm to produce an output with a given set of inputs
 Entrepreneur can measure the degree of technical efficiency of the firm which can be maintained
under imperfect competition

6. THEORY OF PROFIT BY KNIGHT
 Frank H. Knight proposed theory of profit for entrepreneurs
 Profit is the residual return of entrepreneur for bearing risks in business
 There are two types of risks: calculable risks and non-calculable risks
 Calculable risks can be estimated in advance and so they can be insured
 Non-calculable risks are unseen and cannot be estimated, thus are non-insurable

7. THANK YOU!!!