Intrinsic and Extrinsic Entrepreneurship Propensity

Intrinsic Propensity

Intrinsic entrepreneurship propensity is based on an individual’s predisposition towards entrepreneurship and their likelihood to persist through the setbacks and failures that are inherent in the entrepreneurial process. Increasing interest in entrepreneurship development has emphasised the importance of an individuals’ beliefs about entrepreneurship, which influence their level of propensity. Intrinsic propensity is governed by internal factors related to the desire for personal growth.¹ The intrinsic aspects of entrepreneurship are associated with psychological theories of entrepreneurship which influence one’s entrepreneurial propensity to create new ventures. Research related to the psychological aspects of entrepreneurship has placed an emphasis on the personality traits and characteristics of entrepreneurs because they determine entrepreneurial actions.² Entrepreneurship propensity factors guide an entrepreneur’s decisions and actions, ultimately determining their success or failure. The measurement of the propensity to entrepreneurship requires reliable and valid scales and items relevant to the many contexts of entrepreneurship. 

Extrinsic Propensity

The extrinsic environment is seen as central to the measurement of entrepreneurship propensity based on the impact it has on human behaviour.³ If the environment is excluded in the measurement of human functioning, then the quantification becomes ineffective. Therefore, from an extrinsic perspective, it is important to gain an understanding of the entrepreneurship ecosystem, which can be seen as a system that consists of several mutually reinforcing aspects that interact in a highly complex and idiosyncratic way. An entrepreneurship ecosystem has a direct impact on creating either an enabling or an inhibiting environment for entrepreneurship. Variations in the quality of the entrepreneurial ecosystem result in variations in the estimated marginal effect of entrepreneurial activity on economic growth.⁴ An effective entrepreneurship ecosystem requires enabling policies, sound leadership, availability of and access to appropriate finance, an encouraging culture, a variety of institutional and infrastructural support, quality human capital, and venture-friendly markets. Central to the ecosystem is the entrepreneur and their entrepreneurial profile.

¹Arshad, Farooq and Farooq (2019), ²Campo (2010), ³Buys and Havenga (2006), ⁴Bruns, Bosma, Sanders and Schramm (2017)