Beyond social capital: the role of entrepreneurs' social competence in their financial success

Two studies investigated the hypothesis that the higher entrepreneurs' social competence (their ability to interact effectively with others as based on discrete social skills), the greater their financial success. Entrepreneurs working in two different industries (cosmetics and high-tech) completed a questionnaire designed to measure several aspects of their social competence (e.g., accuracy in perceiving others, skill at impression management, persuasiveness). Results indicated that one aspect of social competence (e.g., accuracy in perceiving others) was positively related to financial success for both groups of entrepreneurs. In addition, social adaptability was related to financial success for entrepreneurs in the cosmetics industry, and expressiveness was related to such success for the entrepreneurs in the high-tech industry. The questionnaire employed to assess social competence was cross-validated with a third group of entrepreneurs who completed this measure themselves, and whose social competence was also rated by persons who knew them well. The two sets of ratings agreed closely, thus providing evidence for the validity of this measure. Overall, findings are consistent with the view that a high, level of social capital (e.g., a favorable reputation, extensive social. network, etc.) assists entrepreneurs. in gaining access to persons important for their success. Once such access is attained, however, entrepreneurs' social competence influences the outcomes they experience. (C) 2003 Elsevier Science Inc. All rights reserved.