Social Skills Improve Business Performance: Evidence from a Randomized Control Trial with Entrepreneurs in Togo

Abstract

Recent field experiments demonstrate that advice, mentorship, and feedback from randomly assigned peers improve entrepreneurial performance. These results raise a natural question: what is preventing entrepreneurs and managers from forming these peer connections themselves? We argue that entrepreneurs may be under-networked because they lack the necessary social skills—the ability to communicate effectively and interact collaboratively with new acquaintances—that allow them to match efficiently with knowledgeable peers. We use a field experiment in the context of a business training program in Togo to test if a short social skills training module increases the number and complementarity of peers that participants choose to learn from. We find that social skills training led entrepreneurs to match with 50% more peers and that more of those matches were based on complementary managerial skill. Finally, the training also increased entrepreneurs’ monthly profits by approximately 20%. Further analyses point to improvements in networking and advice as the drivers of performance improvements. Our findings suggest that social skills help entrepreneurs build relationships that create value for both themselves and their peers. This paper was accepted by Alfonso Gambardella, business strategy. Funding: This work was supported by the Ewing Marion Kauffman Foundation [Dissertation Fellowship] and the Strategic Management Society [SRF Dissertation Fellowship]. Supplemental Material: The online appendix and data are available at https://doi.org/10.1287/mnsc.2022.4334 .