Academy of Manageraen! Executive, 2000. Vol. 14, No,

Beyond social capital: Howsocial skills can enhance

entrepreneurs' success

Robeit A. Baion and Gideon D. Marfcman

Executive OverviewWhy are some entrepreneurs so much more successful than others in starting new

ventures? Previous efforts to answer this question have generally focused either on thepersonality traits or susceptibility to various cognitive errors of individual entrepreneurs,or on such external factors as the number of competing businesses. We suggest thatentrepreneurs' social skills—specific competencies that help them interact effectivelywith others—may also play a role in their success. A high level of social capital, built ona favorable reputation, relevant previous experience, and direct personal contacts, oftenassists entrepreneurs in gaining access to venture capitalists, potential customers, andothers. Once such access is gained, the nature of the entrepreneurs' face-to-faceinteractions can strongly influence their success. Specific social skills, such as the abilityto read others accurately, make favorable first impressions, adapt to a wide range ofsocial situations, and be persuasive, can influence the quality of these interactions.Moreover, by helping entrepreneurs expand their personal networks, social skills mayalso contribute to their social capital. Because social skills can readily be enhancedthrough appropriate training, entrepreneurs who fate advantage of such opportunitiesmay reap important benefits.

In 1993 and 1994 the first author of this articleobtained two patents for a new product—a desk-top unit that combined air filtration with such ad-ditional features as noise control. Since he hadonly limited manufacturing experience, he de-cided that the best way to bring this invention tomarket was to license these patents to an estab-lished business. The author contacted a number ofcompanies that appeared to be potential partners,and was invited to visit several. The third companyhe visited ultimately licensed both patents.

The events of the fateful visit to that companyare stamped indelibly on the author's memory.They began when he entered a room where the toppeople in the company were already seated: thepresident and CEO, the COO, and the vice presi-dents for engineering and marketing. After briefintroductions, the CEO turned to the author andsaid: "Okay, Professor, show us what you've got."The author then made a brief presentation, duringwhich he described the benefits of his invention

and demonstrated its major features. When he wasdone, the president rose and announced: "We'll beback in a few minutes." At that point, he and theother executives filed out of the room. Less than tenminutes later they returned, and when the presi-dent held out his hand and smiled, the author knewthat things had gone well. "Okay, Professor," thepresident remarked, "we definitely want your prod-uct. I'll leave you to work out the details with Nevilleand Stan" (the V.P. for engineering and the COO).

In the months that followed, the author got toknow the president of the company quite well, andon one occasion asked him how he was able tomake a decision about the author's product soquickly. His answer was enlightening: "Your pro-totype was good and I could see that you hadsomething new. But it was the way you handledyourself during the meeting that mattered most. Icould tell right away that you get things done—that you're not just talk. And I could see that youwere someone I could work with. I'd never make a

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2000 Baron and Markman 107

deal with anyone if they didn't measure up onthose dimensions."

But there was more: He went on to explain thatthe author would never have gotten in the door ifhe hadn't been a professor at a well-known univer-sity. In addition, the president revealed that hiscompany had done a background check on theauthor prior to his visit. Aiter all, as the presidentput it, "We didn't know you from a hole in the wall,and wanted to make sure that you were not somekind of flake."

This personal anecdote illustrates two of the ma-jor points of this article. First, social capital—theactual and potential resources individuals obtainfrom their relationships with others (through a fa-vorable reputation, high status, and personal re-ferrals)— often helps entrepreneurs get through thedoor, to gain access to venture capitalists, poten-tial customers, and others. Second, once inside,their ability to interact effectively with others—their social skills—plays a key role in their subse-quent success.

What is Social Capital and What Benefits Does ItOffer?

Social capital refers to the actual and potentialresources individuals obtain from knowing others,being part of a social network with them, or merelyfrom being known to them and having a good rep-utation.' In a sense, social capital provides indi-viduals with an important type of credential—afavorable social identity that can be converted intosignificant, tangible benefits. What kind of bene-fits does a high level of social capital yield? Theseinclude enhanced access to information^—themore people one knows, the more information, andoften, the more accurate information, one re-ceives — and increased cooperation and trust fromothers.^ After all, a friend—or even merely an ac-quaintance of a friend—is easier to trust than atotal stranger. In addition, social capital has beenfound to translate directly into financial outcomes;it is positively related to the compensation re-ceived by both managers and CEOs. That socialcapital is also beneficial to entrepreneurs is sug-gested by recent findings that entrepreneurs pos-sessing high social capital based on networks, sta-tus, personal ties, and referrals are more likely toreceive funds from venture capitalists than entre-preneurs who are lower on this dimension.^

The Importance of Social Skills

As important as social capital is, we believe it isonly part of the total story where entrepreneurs'

success is concerned. We propose that socialskills, too, play an important role. Perhaps thebest means of illustrating this point is throughthe following simple exercise. Consider thisquestion: How do organizations select new em-ployees—especially those who will play a keyrole? Is this function carried out solely on thebasis of the candidates' social capital, such astheir reputation and referrals? Probably not. Inmost cases, we believe, this is a beginningrather than an end to the selection process. Onlycandidates possessing high levels of social cap-ital are initially considered—persons with favor-able reputations, an established record in thefield, a degree from one of the right schools, workexperience with good employers, and so on.Once a short list of persons possessing high so-cial capital is assembled, however, it is the im-pression the candidates make on the individualsinvolved in the final selection that largely deter-mines whether they are actually hired. Somecandidates for employment appear to walk onwater prior to a visit, but once present in theflesh, quickly sink beneath the surface. Such in-dividuals possess high levels of social capital,but are lacking in skills that permit them to in-teract effectively with others, and this becomesreadily apparent during face-to-face encounterswith them.

A number of specific skills play a role in deter-mining the capacity of individuals to interact ef-fectively with others. These include the ability toread other persons accurately, to make a good firstimpression on them, and to persuade or influencethem. Several of these skills will be examinedbelow.''

A second reason for our focus on entrepre-neurs' social skills is that, in our view, socialcapital is often the result of such skills. How, forinstance, does a good reputation originate?What determines the breadth and depth of anindividual's social network? The ability to inter-act effectively with others often provides an im-portant foundation for these aspects of socialcapital. Understanding the role of social skills inentrepreneurs' success may contribute to our un-derstanding of the origins and impact of socialcapital. The relationship between social capitaland social skills is analogous, in some respects,to the relationship between resource stock andresource flows in organizations.^ Social capitalcan be viewed as an accumulated asset, whileskills in interacting with others are one factorthat influences the level of this asset.

Third, the effects produced by social skills maybe broader or longer-lasting than those of social

108 Academy of Management Executive February

capital. Social capital may well exert its primaryimpact fairly early in the process, determiningwhich entrepreneurs gain initial access to venturecapitalists, customers, and suppliers. In contrast.

The relationship between social capitaland social skills is analogous, in somerespects, to the relationship betweenresource stock and resource flows inorganizations,

the effects of skill in interacting with others maypersist and continue to shape the nature of entre-preneurs' relations with such persons on a long-term basis. Capitalists, customers, or suppliers ul-timately respond to the entrepreneurs' actualbehavior—what they say or do—not solely to theentrepreneurs' reputation or status. As the Englishnovelist Samuel Butler put it : "We are not won byarguments that we can analyze, but by tone andtemper, by the manner which is the person him-self." Social skills come into play in many situa-tions^—especially ones that are tense or stressful.Thus, their effects can be long-term and long-last-ing, and may continue to shape relations betweenentrepreneurs and other persons for as long asthey do business.

Which social skills are most important to entre-preneurs' success? And how do these skills influ-ence entrepreneurs' efforts to start new businessventures?

To address the first question, we carefully re-viewed the extensive body of literature on socialskills with two criteria firmly in mind: relevance ofeach social skill to outcomes in business settings,and relevance to tasks performed by entrepre-neurs. Four specific social skills w^ere identified asbeing most germane to entrepreneurs' success.'^These skills are social perception, impressionmanagement, persuasion and influence, and so-cial adaptability.

SociaJ Perception

Social perception refers to accuracy in perceivingothers, including perceptions of others' motives,traits, and intentions. It refers to the ability to cor-rectly gauge current moods or emotions of others,their underlying motives, and their personal char-acteristics. This skill appears to be very useful inmany business contexts. For instance, interviewershigh in social perception do better at choosing thebest job applicants than those who are lower inthis skill." Managers who are more adept at read-

ing their subordinates are better able to saywhether substandard performance is the result oflack of motivation or resources or some othercause. Accurate identification of the causes of poorperformance is a necessary first step in selectingeffective corrective actions.'^

Skill in social perception is relevant to entrepre-neurship in several ways. For example, considerthe process of negotiation. Entrepreneurs engagein this activity frequently, especially during theearly days of their new ventures.'^ They must ne-gotiate with partners, prospective employees, ven-ture capitalists, suppliers, customers, and manyothers. Individuals who are skilled at social per-ception often find it easier to determine whethertheir opponents are being honest or are bendingthe truth to their own advantage. Because knowl-edge of an opponent's actual break-even pointplays an important role in successful negotia-tions,'•* proficiency in social perception may be animportant plus for entrepreneurs, and can contrib-ute significantly to their success. A concrete exam-ple of this skill in action is provided by recentnegotiations between representatives of Tektronix,Inc. and the owner of a Malaysian electronics fac-tory. Economic turmoil in Asia had lowered theprice of the factory to the point where the Americancompany viewed it as a potential bargain. Duringface-to-face negotiations, however, one member ofthe Tektronix team suspected that the Malaysianowner was not being entirely candid about variousliabilities of his operation, such as long-term debt.This perception, based on subtle nonverbal cues,turned out to be accurate—the owner was conceal-ing several liabilities. Tektronix's negotiatingteam held out for even better terms, and ultimatelypurchased the factory for 20 percent less than itsown initial offer. ^

Social perception is also relevant to another keytask performed by entrepreneurs—choosing part-ners and key employees. Individuals often attemptto conceal their true motives and intentions, andusually strive to place themselves in a favorablelight. The ability to cut through such subter-fuge—to perceive others accurately despite theirefforts to conceal such information—can be in-valuable to entrepreneurs when choosing partnersand hiring key employees. Being adept at perceiv-ing others accurately can be of considerable ben-efit in these contexts, and provide entrepreneurswith an important competitive edge.

Impression Management

Impression management involves proficiency in awide range of techniques for inducing positive re-

2000 Baron and Maikman 109

actions in others—from efforts to enhance one'sown appearance and image, through agreeingwith others, flattering them, and giving them smallgifts during an initial meeting. Skill with respect toImpression management has been found to makejob applicants more likely to get the job,'^ and toboost the ratings received by employees in annualperformance reviews.''' Skill at impression man-agement may also be extremely helpful to entre-preneurs in their efforts to obtain needed capital.In describing how they go about making the deci-sion to support or not support a particular project,'^venture capitalists report how that entrepreneurspresent themselves during face-to-face meetingsand presentations is often a factor to which theygive considerable weight.^^ For example, the firstauthor has worked with a consulting firm in theBoston metropolitan area that specializes in find-ing financial backing for entrepreneurs. The firststep in the process is an initial meeting betweenentrepreneurs and staff of the consulting company,during which the entrepreneurs are asked to de-scribe their ideas and the reasons they are seekingfinancial support. After this meeting, the consult-ing company's staff meet to decide whether or notto work with the entrepreneur. The quality andfeasibility of the entrepreneur's idea receive care-ful attention; but the overall impression the entre-preneur has made on staff of the consulting com-pany usually carries the most weight.

The impressions of entrepreneurs formed by ven-ture capitalists, prospective customers, and othersare not entirely the result of conscious efforts atimpression management by the entrepreneurs. Onthe contrary, the past experience, attitudes, andpersonal characteristics of the people with whomentrepreneurs interact play an important role.Moreover, recent findings indicate that many fac-tors influencing first impressions are not directlyunder the voluntary control of the persons involvedand are not readily managed by them. These in-clude certain aspects of their physical appearanceand subtle features of their speech.^^ In manycases, however, overt efforts at impression man-agement are effective, so being adept at this skillcan indeed yield important benefits for entrepre-

neurs.

Persuasion and Influence

Persuasion and influence are skills for changingthe attitudes or behavior of others in desired direc-tions. Because other people don't always share ourviews, and often behave differently from the waywe would prefer, most oi us try to influence theattitudes, beliefs, or behavior of others every day.

Individuals vary greatly in their ability to use suchtactics.22 Research findings indicate that such dif-ferences are related to success in a wide range ofoccupations, including sales, law, and medicine.^^Consider Paul Brown, an inventor who recentlydevised a means for sending data over electricpower lines.2^ A venture capital firm offered fund-ing for his start-up company, but only if he couldfirst conduct a successful field test. To meet thisrequirement. Brown turned his powers of persua-sion on his neighbors, and convinced 25 of them toconvert their homes to his system so that all theirphone calls and Internet connections would be car-ried over power lines. The field test was success-ful, and Brown, whose effectiveness at persuasionwas an important plus, received the funding hesought.

The television documentary about the origins ofthe personal computer industry, "Triumph of theNerds," offers another example of the potentialbenefits for entrepreneurs of skill at persuasive-ness. Describing why his company decided to ad-vance millions of dollars to a start-up ventureknown as Apple Computer, a senior venture capi-talist says he was impressed with the energy, in-telligence, and especially the persuasiveness of itsyoung founder, Steve Jobs. Jobs' social capital waslow, or nonexistent, and he dressed like a hippy,but he expressed his ideas so forcefully and per-suasively that he got the funding he sought.

Social Adaptability

Social adaptability involves the ability to adjust toa wide range of social situations and to feel com-fortable with individuals from diverse back-grounds. People high in social adaptability areable to talk to virtually anyone about almost any-thing, can introduce themselves to strangers withrelative ease, and readily adjust to a wide range ofnew social situations. In short, they can be de-scribed as social chameleons, capable of adaptingtheir behavior in order to blend comfortably intoalmost any social context. A large body of researchfindings suggests that persons high in such abili-ties attain greater success and more rapid promo-tions in many different contexts than those low insuch abilities.25 Indeed, it has even been foundthat professors high in social adaptability receivehigher ratings from their classes than those low insocial adaptability.

Social adaptability appears to be relevant toactivities performed by entrepreneurs that are cru-cial to the success of their new ventures. For in-stance, especially early on, entrepreneurs mustmake many cold calls on strangers. These persons

no Academy o/ Management Executive February

may be totally unfamiliar with the entrepreneurand his or her company, yet entrepreneurs mustapproach them and attempt to form business rela-tionships. A high level of social adaptability canbe very beneficial to entrepreneurs in this context.Consider, for instance, the efforts of Tace Chalfa, aSeattle entrepreneur, to build a thriving businessin the resale of vintage sneakers.^^ To obtain herunusual merchandise, Chalfa approaches theowners of scores of thrift stores and places hun-dreds of cold calls to people listed in back issues ofRunner's World magazine. She also randomlyphones employees of Nike and other large sneakermanufacturers, because they often have discontin-ued models from their companies. Evidence thatChalfa is successful in these efforts is that herstore. Red Light, did over $1 million in business inits first year of operation.

In sum, accuracy in social perception, skill atimpression management, skill at persuasion andinfluence, and a high level of social adaptabilitymay be relevant to important activities carried outby entrepreneurs as they attempt to establish newventures and become successful. We should notethat, initially, we considered including an addi-tional skill, emotional intelligence, within ourframework. This term refers to the ability to regu-late one's own emotions and influence the emo-tions of others, as well as to motivate oneself andrestrain impulses.^'' Although emotional intelli-gence has received a great deal of attention inresearch and the media, efforts to study it system-atically suggest that its components may, in fact,be largely independent, rather than part of a sin-gle concept or cluster. Among these components,skill at social perception is perhaps the most im-portant.^^ Further, no measures of emotional intel-ligence exist that meet accepted standards of reli-

ability. For these reasons, we felt that includingemotional intelligence in the current frameworkwas not justified.

How Entrepreneurs' Social Skills Can InfluenceTheir Success

Having identified several social skills that may berelevant to entrepreneurs' success, we will nowexamine some of the mechanisms by which theseskills work. Table 1 describes the potential rele-vance of each of the social skills to the perfor-mance of important tasks faced by entrepreneurs.

Research findings^^ indicate that a substantialproportion—perhaps an actual majority—of newventures are founded by teams of entrepreneursrather than by single individuals.^"^ For instance, ina recent survey. Inc. magazine reported that 57percent of its sample of 500 high-growth privateU.S. companies were started by at least twofounders. To the extent that these partners possessexcellent social skills, face-to-face interactions be-tween them should be facilitated and this, in turn,may contribute to the success of their new ven-tures.

The potential importance of such factors is notedby John Doerr, a partner of the venture capital firm,Kleiner Perkins Caufield & Byers, and a prominentfigure in Silicon Valley. As Doerr puts it; "Whatthere is in our business is plenty of plans, plenty ofentrepreneurs, and plenty of money. What there's ashortage of is great teams."^^ This experiencedventure capitalist, who has funded a large numberof successful new companies, rates close and ef-fective teamwork between founding partners as acrucial ingredient in entrepreneurs' success. In ourview, such relationships are often encouraged by a

Table 1Social Skills Potentially Relevant to Entrepreneurs' Success

Social skill DescriptionExamples oi potential relevance

to entrepreneurial success

Social perception

Impression management

Ability to perceive accurately the emotions,traits, motives, and intentions of others

Tactics designed to induce liking and afavorable first impression by others

Persuasion and social influence Ability to change others' attitudes and/or theirbehavior in desired directions

Social adaptability Ability to adapt to, or feel comfortable in, awide range of social situations

Making presentations to investors andcustomers, attracting and selecting partnersand employees, conducting negotiations

Obtaining financing, attracting keyemployees, dealing with customers andsuppliers

Obtaining financing, recruiting keyemployees, dealing with customers andsuppliers, conducting negotiations

Establishing business relationships withstrangers (i.e., cold calls), and working withpeople from diverse backgrounds

2000 Baron and Markman 111

high level of social skills on the part of the entre-preneurs.

A second way in which excellent social skillsmay prove beneficial to entrepreneurs involvesface-to-face interactions between the entrepre-neurs and many persons outside their companies.Effective interactions may assist entrepreneurs inperforming tasks that are crucial to their success,^^such as raising needed capital, attracting and se-lecting competent employees, and persuading cus-tomers and suppliers to do business with theircompany under favorable terms. ^ The more effec-tively they perform such tasks, the greater theiroverall success.

A third important context in which social skillscan contribute to entrepreneurs' success involvesthe formation of business alliances. '* Such alli-ances are a growing source of competitive advan-tage ior emerging firms. ^ As entrepreneurs striveto identify market inefficiencies, create new prod-ucts or services, gain access to financial resources,acquire legitimacy, and capture market share, theyfrequently recognize that alliances—particularlyones with strong, existing companies—can en-hance their odds of survival.^^ Indeed, businessalliances have been found to be positively associ-ated with the rate of new product development andthe creation of shareholder wealth for new ven-tures.3' Such alliances, in turn, often involve con-siderable information sharing and technologytransfer between the participating companies—conditions that require high levels of trust andcooperation. The success of such relationships of-ten rests on the development of positive personalrelationships between the partners. Recent find-ings suggest that a positive relationship betweenthe partners in business alliances is often a moreeffective deterrent to opportunism and exploitationthan traditional legal contracts.^^ High levels ofsocial skills on the part of key personnel in partic-ipating companies may contribute to such positivepersonal relationships between them, and henceto the success of the alliances they have formed.

The potential role of entrepreneurs' social skillsin their ability to form business alliances is illus-trated by Gwendolyn and Eric Johnson, African-American entrepreneurs who founded Geric HomeHealth Care, a company specializing in providingcare for bedridden people in inner-city neighbor-hoods. ^ Because most of the company's employeesare welfare mothers who live in the neighborhoodsthey serve, the company appears to face a daunt-ing set of problems. Despite this unusual employeebase, Geric has grown rapidly and is highly prof-itable. Its success is due, in part, to the Johnsons'ability to form business alliances with nursing

homes, hospitals, and public agencies. They ap-proach these organizations and explain their basicstrategy: by hiring employees who live near pa-tients, they can provide the kind of reliable servicethe nursing homes, hospitals, and public agencies

Recent findings suggest that a positiverelationship between the partners inbusiness alliances is often a moreeffective deterrent to opportunism andexploitation than traditional legal \contracts,

want, but cannot readily obtain. The Johnsons fur-ther explain that their employees, most of whomhave grown up in the neighborhoods they serve,are willing to visit patients in locations whereeven police officers sometimes fear to go. Theyalso offer to take the cases nobody else typicallywants—quadriplegics, multiple sclerosis patients,and people on ventilators who have been severelydamaged by a combination of alcohol and drugs.The result is impressive: The Johnsons have suc-ceeded in establishing mutually profitable busi-ness relationships with many other organizations.The Johnsons are so successful in part because oftheir ability to form close, personal ties with rep-resentatives of these companies and with prospec-tive employees. They are deeply religious, and im-press people with their sincerity and desire to helpthe patients they treat and to provide good jobs fortheir employees. As Eric Johnson puts it: "The spir-itual part is a very integral part of this business.Without caring, loving folks, we'd be headed fordisaster."

We suggest that social skills play an importantrole in entrepreneurs' success because such skillsfacilitate effective relations between foundingpartners, as well as with many people outside andinside their companies, and assist entrepreneursin establishing business alliances that are veryvaluable to their new ventures.

I

The Benefits of Social SkillsI

Numerous findings and proposals in the literatureon entrepreneurship indicate that entrepreneurs'social skills can influence their success. For exam-ple, it has been found that entrepreneurs whosecompanies are successful engage in more commu-nication with others, and are more effective in thisactivity, than entrepreneurs whose companiesfail.' ° Similarly, such cooperation may increasewhen the entrepreneur and venture capitalist

112 Academy oi Management Executive February

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share a positive social or business relationship.*^Along the same lines, personal contacts and rela-tionships are often included on lists of the keyingredients in new venture formation.*2 Finally,recent research designed to examine the impact ofsocial skills on entrepreneurs' success providesclear support for the relationship we suggest. Forexample, one study conducted with two differentgroups of entrepreneurs found that two socialskills—social adaptability and social perception—were significant predictors of the financial successof founders of high-tech companies and foundersof cosmetics distribution organizations.''^

The impact of social skills on entrepreneurs'success may be mediated by current feelings ormoods, as suggested by basic research on affir-mative states. Positive moods, in turn, can leadto enhanced judgments and decisions about theentrepreneur. (See Figure 1, which summarizesthese points and also illustrates the possibleimpact of social skills on social capital men-tioned earlier in this article.) A substantial bodyof evidence indicates that people who are high insuch social skills as impression managementand enhancing their own personal appearanceinduce higher levels of positive moods or feel-ings in others than people who are lower in suchskills.*^ Other research indicates that positiveaffective states can strongly influence judg-ments and decisions, making these more favor-able. This appears to be true even if the judg-ments and decisions in question are totallyunrelated to the causes of the positive moods orfeelings/^ Combining these findings, sociallyskilled entrepreneurs may well evoke higher lev-els of positive affect among those with whomthey interact. This, in turn, can lead others toevaluate the entrepreneurs' business plans,products, or companies more favorably. In short,because they evoke higher levels of positive af-fect in others,''^ entrepreneurs who are high insocial skills gain important advantages in ob-taining funding, attracting and hiring desirableemployees, establishing and maintaining effec-tive relationships with co-founders, and conclud-ing favorable business arrangements with cus-tomers and suppliers.'*'

Implications and Applications

Our assertion that social skills can play an impor-tant role in entrepreneurs' success has importantimplications for entrepreneurs and for others wish-ing to assist them in their efforts to start new ven-tures. The most important of these implications areas follows;

• Training in social skills can help many entrepre-neurs succeed. Such training would be espe-cially valuable in cases where entrepreneurs'ideas are sound, and where their experience,technical competence, and motivation are allhigh, yet they fail in their efforts to start newventures. Such negative outcomes may stemfrom a lack of social skills on the part of theentrepreneurs. They are lacking, to some degree,in the skills necessary to negotiate effectivelywith others, to persuade them, or to induce themto share the entrepreneurs' beliefs about whattheir new venture can and will become.'is As aresult, entrepreneurs lacking in social skillsmake poor first impressions, fail to generate en-thusiasm for their ideas or business, and mayeven annoy or irritate persons who hold the fateof their new ventures in their hands. Equippingsuch entrepreneurs with enhanced social skillscan assist them to avoid these pitfalls, and cancontribute to their ultimate success. Given theimportant contribution to society made by entre-preneurs, such efforts appear to be well-justi-fied ."

• Training in social skills is readily available—and it works. Psychologists have offered socialskills training for decades to assist individualsexperiencing problems that interfere with theircareers, marital relationships, or personal ad-justment. Such training is highly effective, andcan be carried out within a short time frame. Itoften involves very straightforward procedures,such as showing clients videotapes of their in-teractions with others. When they view suchtapes, many people gasp audibly, and utter suchcomments as, "I had no idea I came across likethat!" or "I didn't realize I was doing that!" Whensuch experiences are coupled with guided prac-tice in improved techniques for interacting withothers, rapid progress toward enhanced socialskills is often readily achieved.^°

• Training in social skills is already included inthe curricula of many business schools and isused by many organizations. At our university,and many others, all undergraduate businessmajors must take a one-credit course on leader-ship. This course focuses, in part, on practicalskills, such as performing well in job interviews,and considers social skills, as well. Similarly,many organizations train employees in salesand customer relations in techniques for inter-acting effectively with others. The success ofsuch efforts strongly suggests that entrepre-neurs, too, may benefit from training designed toenhance their social skills.

114 Academy d Management Executive February

• Enhanced social skills can contribute to entre-preneurs' social capital. Individuals who inter-act effectively with others leave a residue ofpositive feelings and good will behind them.This residue can help such persons expand theirpersonal networks and acquire excellent repu-tations—important ingredients in social capital.Increased social capital can facilitate entrepre-neurs' access to financial capital, information,and markets. A clear illustration of the link be-tween social skills and social capital is providedby a recent experience of the senior author, whoteam-teaches a course on the role of creativity inentrepreneurship with a Nobel laureate, physi-cist Ivar Giaever. Dr. Giaever recently served asa judge for presentations by graduating MBAs ata nearby college. After this experience, he of-fered two observations to the senior author'sclass. The MBA students who received the high-est ratings were generally the ones who, be-cause of excellent social skills, presented them-selves most effectively while delivering theirtalks. These students were also the ones whobenefited most from the networking session withmembers of the local business community inthat followed the presentations.

• Training in social skills—or at least discussionof this topic—should be part of all programs inentrepreneurship. The benefits of social skillstraining might be especially helpful for womenand minorities—groups that face important ob-stacles as entrepreneurs. Women and minoritiesare currently underrepresented among entrepre-neurs, and face daunting barriers to obtainingfinancing for new ventures. Statistics indicatethat in recent years, less than two percent ofavailable venture capital funds has beenawarded to women.^' Enhanced social skillsmight help them to overcome some of these ob-stacles.

• Entrepreneurs can be persuaded to seek suchtraining. That students can be exposed to dis-cussion of and practice in social skills as part oftheir studies is apparent. And the popularity ofcourses in leadership suggests that they are, infact, motivated to obtain such experiences. Butwe are also optimistic about the chances of at-tracting practicing entrepreneurs to such train-ing. Many successful entrepreneurs appear to beaware of the important role of effective socialskills in their own achievements. For instance,the most recent winner of our university's Entre-preneur of the Year award was asked, after herformal presentation, to pinpoint the majorcauses of her success. The first factor she men-tioned—and the one she emphasized most

strongly—was: "My ability to get along with awide range of people—that was absolutely cru-cial." Several members of the audience—bothcurrent and would-be entrepreneurs—ap-proached the senior author with requests for in-formation on how they might improve their ownsocial skills. The key, then, may simply lie ingetting the message out: Once entrepreneursrecognize the importance of their face-to-faceinteractions with others, they may quickly andvigorously seek to act on this conclusion.

"My ability to get along with a widerange of people—that was absolutelycrucial."

We are certainly not alone in recognizing theimportant role of social skills in personal success.When asked to describe the conditions necessaryfor a happy life, Albert Einstein^^ replied with thefollowing equation: "If A is success in life, then A =X -I- y + z, where x = work, y = play, and z =keeping your mouth shut." By "keeping your mouthshut," Einstein referred to specific social skills—forexample, the ability to read others accurately andso avoid making statements that would annoythem or produce a less-than-favorable first impres-sion. This article echoes Einstein's sentiment: So-cial skills—what he termed "the z factor"—maywell be one ingredient in the complex array ofvariables that, acting together, determine entre-preneurs' success.

Endnotes

' Nahapiet, J., & Ghoshal, S. 1998. Social capital, intellectualcapital, and the organizational advantage. Academy oi Man-agement Beview, 23:242-266.

^Boissevain, J. 1974. Friends oi iriends. Oxford: Basil Black-well.

^ Fukuyama, F. 1995. Trust: social virtues and (he creation ofprosperity. London: Hamish Hamilton.

^Belliveau, M. A., O'Reilly, III, C. A., 8E Wade, J. B. 1996.Social capital at the top: Effects of social similarity andstatus on CEO compensation. Academy oi Management Jour-nal. 39:1568-1593.

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116 Academy oi Management Executive February

Robert A. Baron is professor oimanagement at RensselaerPolytechnic Institute. His cur-rent research focuses on cogni-tive and social iactors in entre-preneurship. He has been avisiting iellow at Oxford Uni-versity and a program directorat the National Science Foun-dation. He holds three U.S. pat-ents and is the author oi numer-ous books, including Behaviorin Organizations, 7th ed., andSociaJ Psychology, 9th ed. Con-tact: baronr@rpi.edu.

Gideon D. Markman is an assis-tant professor oi entrepreneur-ship at the Laily School ofManagement and Technology,Rensselaer Polytechnic Institute.He received his Ph.D. in entrepre-neurship from the University ofColorado at Boulder. His re-search interests include innova-tion management and techno-logical entrepreneurship. parti-cularly the adversity quotient,cognitive mechanisms, and so-cial skills oi entrepreneurs. Con-tact: marftmg@rpi.edu.