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

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 to test if a short social skills training module improves who the participants choose to learn from within the program. We find that entrepreneurs who were exposed to the social skills training formed 50% more relationships with peers. These relationships exhibited more matching based on managerial skill and were more ethnically diverse. Finally, the training also substantially increased entrepreneurs’ business performance. Our findings suggest that social skills help entrepreneurs build relationships that create value for both themselves and their peers.  

Policy implications 
Many entrepreneurs are likely under-networked, but a brief training on social skills can help them improve the size and quality of their network. Social skills training can help entrepreneurs build relationships that create value for both themselves and their peers, generating value in a positive-sum fashion.
Dimitriadis, S., & Koning, R. , 2022. Social skills improve business performance: evidence from a randomized control trial with entrepreneurs in Togo. Management Science.