Impact Of Psychological Empowerment Business Essay

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Only those organizations are surviving today, which are more creative and innovative as compare to their competitor. As they want to attract more customers towards their products and services therefore companies are coming up with new types of product and service. But to come up with new ideas for improve products and services more innovation and creativity is required. To create & innovate human efforts are required. Every company wants to hire psychologically empowered people because they are more innovative and creative. But individual creativity gets affected by factors of psychological empowerment. The objective of this study is to find out the relationship between the factors of psychological empowerment and entrepreneurship. For this purpose we have a sample of 181, which comprises of both male and female of middle and lower management level. The organizations that we targeted are into Software, Manufacturing, Consulting, Banks; FMCG etc. we have used the method of correlation and regression to find out the effect of independent factors over dependent. Through this research we got to know that the psychological empowerment is one of the factors that influence the entrepreneurship. It decides the 18% of entrepreneurship only. Every factor of psychological empowerment has some impact on entrepreneurship but the competence plays the maximum role among all the 4 factors.


Meaning, Competence, Self-Determination, Impact, Entrepreneurship, Psychological Empowerment


During the last some time change is taking place in corporate environment and industrial environment. As the competition has reached to the peak to meet the competition a need has arise to tackle the change in the environment. The company should have the ability to initiate, innovate and create to meet the competitive edge.

According to Hess(2012) "The entrepreneur personally has to continually evolve and grow as the business grows,". Entrepreneur is one who is having quality like innovation, capacity, creativity, initiative. Innovation is the process of applying new method. To achieve an artistic work imagination is required that imagination is known as creativity. The power to start a work before anybody else does is known as initiative. The processes of applying these qualities in order to make change are known as entrepreneurship. The organization in which the change occurred is known as enterprise. In an organization manager plays a vital role in the achievement of goal but there is a difference between a manager and an entrepreneur. Entrepreneur gets the change in the organization so he has to take more risk. The manager feels zeal of entrepreneurship on work only if he feels psychologically empowered.

According to Thomas and Velthouse (1990) Empowerment is viewed as a state of power and control within the individual that is enabling and facilitative of a state of intrinsic task motivation for the individual. Empowerment is the ability of an individual or a group. Concept of empowerment increases motivation in the organization. As per Kuo et al. (2009) many organizations have tried to maintain job effectiveness and efficiency by empowering employee in order to foster more committed workers to overcome problems such as complex job features, demanding customer needs, Diverse work group, flatter organizational structure and so on. Four types of empowerment is identified which are social empowerment, psychological empowerment, cultural empowerment, and political empowerment.

Psychological empowerment focuses on psychological experience at work. Employees feel more personal control over the performance of role. Psychological empowered people are aware about the path to choose to perform a task better. Employee role satisfaction and psychological empowerment are related. An employee feel more empowered if he is happy with the role. This is an important paper in finding the impact of psychological empowerment on the role of an entrepreneur. We will analyze the effect of following factor of psychological empowerment over an entrepreneur in an organization.

The dimension of meaning represents an individual's intrinsic care about a task and is evaluated in relation to one's own standards (Thomas & Velthouse, (1990). When employee are able to derive personal meaning from their job, they will be motivated and a higher level of job satisfaction will be resulted (Sprietzer,1995 ; Thonmas & Velthous, 1990).

The dimension of competence is a belief that possesses the skills and necessary to perform a job well (Thomas and Vethouse, 1990). A feeling of lower competence leads to anxiety and avoidable behavior while a high level of self-efficacy often results in initiating behavior and work enjoyment (Bandura, 1997 ; Gist, 1987).

Self-determination refers to the feelings of having choice and control over one's work (Thomas & Velthouse,1990 ). It addresses an employee need for autonomy during the course of work (Fock et al. ,2011).

Impact is the extent to which individual affects his/her work result. It reflects one's beliefs about individual performance outcome & person- environment relationships ( Mishra & Spreitzer,1998; Spreitzer, 1995)


Indian HRM departments are under severe pressure to bring about large-scale professionalized changes in their organizations in order to cope with the challenges brought about by economic liberalization (Rao et al., 2001; Som, 2002). According to Bhatnagar (2007) there has been evidence of a general need among the managerial cadre to build capabilities, resources, competencies, strategies to respond proactively to the environmental pressures caused by economic liberalization.

Empowerment that provides employees with greater decision making ability and discretionary power over how they perform their work and serve customer is considered an important management tool in the quality of service provision (Spreitzer, 1995; Hancer and George, 2003,). The idea of providing employees with flexibility, autonomy, and discretion to serve customers is intuitively appealing, empowerment is an approach which is not universally embraced by all countries (Hui et al.,2004; Randolph and Sashkin,2002). The effect of empowerment on job satisfaction vary according to an individual's power distance value (Hui et al : 2004). Similarly Robert et al.'s (2000) study found a negative effect for empowerment in india versus other countries sampled.

A study done by Gkorezis and Petridou (2012) suggests that financial incentives, promotion opportunities and organizational prestige had a stronger effect on private employee' psychological empowerment, whereas relations with supervisor and peers were significant predictors of public employee' psychological empowerment. Employee empowerment features as an essential managerial tool for both public (kennedy, 1995) and private (Siegall and Gardner, 2000) organizations.

In recent year organizations have sought to develop more comprehensive performance measurement system to provide managers and employee with information to assist in managing their firm's operations (Fullertone & McWalters: 2002; Itter et. al. : 2003 ; Lillis: 2002 ; Malina & Selto 2001 ; Ullrich & Turttle : 2004) A research done by Hall (2008) verifies that comprehensive performance measurement system is indirectly related to managerial performance through the intervening variables of role clarity and psychological empowerment. It highlights the role of cognitive and motivational mechanisms in explaining the effect of management accounting systems on managerial performance. The result of this study indicates that the comprehensive performance measurement system influences managers' cognition and motivation, which in turn influence managerial performance.

Review of literature suggests the influence of empowerment factors over the managers' and organizational effectiveness. So after reviewing the literature we have reached the following hypothesis.


The paper aims to determine the impact of psychological empowerment and its factors on the entrepreneurship. A Psychological empowerment scale developed by Spreitzer (1995) which comprises of 12 questions was used to determine the psychological status. The scale includes 3 questions from each factors i.e. meaning, compact, self-determination and impact. A Talent Management scale developed by Tayal and Rangnekar (2007) which consists of many factors of which entrepreneurship was one of the factor used for present study. Entrepreneurship consists of 5 items. These scales were distributed in different organizations and the responses were collected.


The objective of the study is to determine the impact of the psychological empowerment on entrepreneurship.

H1: Psychological Empowerment significantly predicts Entrepreneurship.

Sub hypothesis

Meaning affects the entrepreneurship.

Competence influences the entrepreneurship.

Self determination has significance on entrepreneurship.

There is a relationship between impact and entrepreneurship.


Worker in any organization comprises of lower level and middle level of executives. We distributed a questionnaire having the questions to determine the independent variable psychological empowerment factors i.e. meaning, competence, self-determination, and impact. And some questions were in it to determine the dependent variable i.e. entrepreneurship. A total of 264 questionnaires were allocated to the managers of different organizations and 181 were returned producing a response rate of 68.56%. They all were full time employee. The sample comprises of 17 female and 164 male having the educational background of at least bachelor level.


Data analysis is done by using SPSS 16.0 by applying correlation and regression analysis to achieve the objective of this study. We have used the coefficient of correlation to determine the relation between dependent and independent variables. The following table shows the relationship between the factors of psychological empowerment and entrepreneurship.



























**. Correlation is significant at the 0.01 level (2-tailed).

The coefficient of correlation between entrepreneurship and meaning is .261, which indicates that meaning has moderate effect on entrepreneurship. But the coefficient for competence and impact is almost same i.e. .361 and .341 respectively. These coefficients show the moderate effect of independent variables on dependent variables. But in the case of self determination, the coefficient of correlation is .296 it also has moderate effect on entrepreneurship. But in case of meaning and self-determination, the effect of independent variable is less on dependent variable as compared to other variables. The level of self-determination varies person to person but if a person is very much self determined than he is psychological empowered enough to be an entrepreneur. Business empowerment was defined as relatively self-determined behaviors aimed at securing work effectiveness or at improving work efficiency within the organization (Conger and Kanungo, 1988; Laschley, 1999; Spreitzer, 1997; Thomas and Velthouse,1990). As per fock et. al (2011), the effect of impact was more relevant to job satisfaction for employees with a low collectivistic orientation than to those with a high collectivistic orientation. Because it depends upon individual only that up to what level he can influence his work.



Standard coefficient

( Beta)














In the regression table shown, significant level determines the impact of independent variables over the dependent variables. In case of meaning the significance level is 0.617 that is greater than 0.05 so it has less impact on entrepreneurship as compared to others. Same is the case with self-determination because the significance level is 0.106, though it is the personal need of an individual which motivates him/her to do work more precisely. Self-determination refers to the feeling of having choice and control over one's work (Thomas and Velthouse, 1990). It addresses an employee's need for autonomy during the course of work. We submit that employees with collectivistic orientations (high versus low) may cognitively interpret the effects of self-determination in dissimilar ways.

But in the case of competence and impact, the significant level is 0.002 and .030 respectively that means both the variables predict the entrepreneurship. We found that meaning is an important factor to influence the entrepreneurship because it is the intrinsic care of the task. As per a paper, When employees are able to derive personal meaning from their job, they will be motivated and a higher level of job satisfaction will be resulted (e.g., Spreitzer, 1995; Thomas and Velthouse, 1990).

Performance is oriented to benefit and meet the expectations of significant others (Markus and Kitayama,(2001), this statement support that competence is needed to support the entrepreneurship. performance depends upon the competency as well because if one is not able to do work as per requirement of the task than he cannot be an entrepreneur, because it always need innovation and creativity to be an entrepreneur.

Model Summary b



R Square

Adjusted R Square

Std. Error of the Estimate








Predictors: (constant) impact, competence, meaning, self-determination

Dependent variable: entrepreneurship

The above table shows the coefficient of determination. In the respective table, value of adjusted R Square is 0.18 which is quite satisfactory i.e. Psychological empowerment explains 18% of variance in entrepreneurship. We have used only psychological empowerment which is only one of the factors that influence entrepreneurship. This shows that all the factors i.e. meaning, competence, self-determination, and impact of independent variable predict the entrepreneurship as dependent variable with 0.18 of determination. Here 18% part of the dependent variable is explained by psychological empowerment only.


The main aim was to find the association between psychological empowerment and entrepreneurship. Though the influence of score of four factors of independent variable over the score of dependent variable i.e. entrepreneurship is determined. In this research the collected data was simply analyzed to find out the association. The respondent rated high the competence and lowest the meaning.

From the research it is concluded that the all the factors of psychological empowerment have some impact on the entrepreneurship. But the most significant predictor of entrepreneurship is competence, and the least significant predictor of the same is meaning. Self-determination and impact also have influence on entrepreneurship. The study supports the statement that all the variables of psychological empowerment have enough significance to predict the entrepreneurship. The psychological empowerment influences the entrepreneurship by 18% only, so 18% of entrepreneurship can be improved by making the workers psychologically empower.


Though the psychological empowerment affects the entrepreneurship by 18% only, therefore there is a lot of scope to find the effect of other factors on entrepreneurship, because other factors influence it by 82%. That is very much required to find out the factors that influence the entrepreneurship, so that the action can be taken to improve the performance of the workers in an organization. Further research can be done on consequences, trust, environment, commitment, etc.