Entrepreneurial Competencies: 3 Components, Developing Method

What is Competency?

In simple terms, competence is an underlying characteristic of a person that leads to his/her effective or superior performance in a job. Job competence is a good combination of one’s underlying characteristics such as ‘one’s knowledge, skill, motive, etc. which one uses to perform a given job well.

It is important to mention that the existence of these underlying characteristics may or may not be, known to the person concerned. This implies that the underlying characteristics may be unconscious aspects of the person. The underlying characteristics possessed by an entrepreneur which result in superior performance are called the ‘entrepreneurial competencies’ or ‘traits’.

Entrepreneurial Competencies

The true entrepreneur is one who is endowed with more than average capacities in the task of organizing and coordinating the various other factors of production. He should be a pioneer, a captain of industry. The supply of such entrepreneurship is however quite limited and all are not endowed with such talent.

The modern entrepreneur is one who detects and evaluates a new situation in his environment and directs the making of such adjustments in the economic systems as he deems necessary. He conceives a new industrial enterprise and displays considerable initiative, grit, and determination in bringing his project to fruition.

Some people believe that entrepreneurs are born not made. In other words, business family background is essential to the success of entrepreneurs. Other people believe that entrepreneurs are made not born.

According to some people, a person with proper knowledge and skills acquired through education and experience can become a successful entrepreneur. In view of the above controversy in order to understand clearly what it takes to be a successful entrepreneur, research institutions and behavioral scientists, through their research studies, have tried to resolve the controversy on what makes a successful entrepreneur.

Components of Entrepreneurial Competencies

To understand more and better about entrepreneurial competencies, let us first understand the components of entrepreneurial competencies. These are explained one by one as follows:

  1. Knowledge
  2. Skill
  3. Motive


In simple terms, knowledge means the collection and retention of information in one’s mind. Knowledge is necessary for performing a task but not sufficient. For example, a person having knowledge of cricket playing could be in a position to describe how to play.

But, mere description will not enable the listener to play cricket unless something more than knowledge is there. We see in real life that people possessing mere knowledge have miserably failed while actually performing the task. What this implies is that one also needs to have skills to translate the knowledge into action/practice.


Skill is the ability to demonstrate a system and sequence of behavior that results in something observable, something that one can see. A person with playing ability, i.e., skill can properly identify the sequence of actions to be performed to win the cricket match.

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Remember, while knowledge of playing cricket could be acquired by reading, talking or so on, the skill to actually play cricket can be acquired by practice i.e., playing on a number of occasions. This means both knowledge and skill are required to perform a task.


In simple terms, the motive is an urge to achieve one’s goal which McClelland terms ‘Achievement Motivation’. This continuous concern of goal achievement directs a person to perform better and better. Coming back to the same example of cricket playing, one’s urge to become the best player helps him constantly practice, playing to look out for ways and means to improve his play.

Thus, in order to perform any task effectively and successfully including establishing and running an industrial unit, a person (entrepreneur) needs to possess a set of knowledge, skills, and motives that could be together labeled as ‘competencies’ or ‘traits’.

Developing Entrepreneurial Competencies

As mentioned earlier, competency results in superior performance. This is exhibited by one’s distinct behavior in different situations. The popular Kakinada experience has proved beyond doubt that entrepreneurial competency can be injected into human minds through education and training.

Competency finds expression in human behavior. How to develop and sharpen entrepreneurial competency is suggested in the following method or procedure. The procedure involves four steps. These are:

  1. Competency Recognition
  2. Self-Assessment
  3. Competency Application
  4. Feedback

Competency Recognition

Acquisition of a new behavior begins with understanding and recognition of what a particular behavior means. In other words, the first step involved in developing a particular competence is first to understand and recognize a particular competence.


Once the particular competence is understood and recognized, the next step towards acquiring a particular behavior/competence is to see whether one possesses the particular competence or not. If yes, then to see how frequently one exhibits the same in his practical life.

Where one stands with respect to a particular competence or what is the level of one’s competence can be ascertained by posing and answering relevant questions to a competence.

Competency Application

Having known where one stands concerning a particular competency, one needs to practice the same continuously in various activities. To make a new behavior a part of one’s personality, the particular behavior/competency needs to be applied frequently even in the simplest activities that one performs in one’s day-to-day life. This is because “practice makes a man perfect”.


After understanding, internalizing, and practicing a particular behavior or competence, one needs to make an introspection of the same to sharpen and strengthen ‘one’s competency. This is called ‘feedback’. In simple terms, feedback means to know the strengths and weaknesses of one’s new behavior.

This helps one know how the new behavior has been rewarding. This enables one to sustain or give up the exhibition of a particular behavior or competence in his future life.

FAQs Section

What are the components of entrepreneurial competencies?

Knowledge, Skill, and Motive, Knowledge, are the three major components of entrepreneurial competencies.