There is a growing number of entrepreneurs around the world, with recent estimates suggesting nearly 600 million people run their own businesses. Indeed, a recent report from the Network For Teaching Entrepreneurship argued that entrepreneurship skills would be crucial not only when running a business but also in the future of work more broadly.
Often when we think of what it takes to be a successful entrepreneur, we look at the likes of Steve Jobs and Elon Musk, who have famously bent the world to their will on the journey to fame and fortune. Research from USC argues that moderate level of Machiavellianism and psychopathy can actually help startups to thrive knowledge-sharing. This is because they enable founders to better support their team as they are better able to manage any conflicts between team members. It’s only when these dark traits reach extreme levels that problems emerge.
Emotional intelligence
Just as it’s increasingly important for leaders of companies to display compassion and emotional intelligence, IE Business School from IE Business School suggests the same is true of entrepreneurs.
The researchers explain that the entrepreneurial journey is nothing if not an emotional one. After all, at its heart, it is an unpredictable and uncertain process that requires entrepreneurs and their teams to pivot as circumstances and market conditions change.
They argue that when founders can display high levels of emotional intelligence, they’re better able to navigate these turbulent waters and make smarter decisions.
Not created equally
While the study found that emotional intelligence was crucial to entrepreneurial success, it wasn’t something that all founders had. For instance, the researchers found that female entrepreneurs generally score higher for emotional intelligence than men, with the only exception being among Gen Z entrepreneurs. Similarly, in women, emotional intelligence increases with age, whereas it tends to decrease among men.
The researchers used the Wong and Law Emotional Intelligence Scale, which determines emotional intelligence across four dimensions: self-emotional appraisal (SEA), which gauges individuals’ capacity to comprehend their own emotions; others’ emotional appraisal (OEA), measuring individuals’ ability to perceive and understand the emotions of others; use of emotion (UOE), assessing individuals’ capability to leverage their emotions to improve performance; and regulation of emotion (ROE), which pertains to individuals’ ability to manage and regulate their own emotions.
The analysis found that emotional intelligence was crucial in underpinning the kind of transformative leadership that is so vital to entrepreneurial success. This was especially so when it comes to understanding others’ emotions and being able to regulate one’s own emotions. This runs counter to the Steve Jobs stereotype of an entrepreneurial leader who runs roughshod over the emotions of others and gets their way through sheer force of will.
Transformative leaders
Emotional intelligence plays a crucial role in effective transformational leadership, transcending factors such as gender, age, or experience. Entrepreneurs who exhibit high emotional intelligence levels demonstrate greater effectiveness, and creativity, while also fostering higher levels of engagement among their peers and employees. Consequently, they are better positioned to cultivate innovation within their businesses.
Though evidence indicates that entrepreneurs often gravitate towards a transformational leadership approach, there are still gaps in our comprehension of how entrepreneurs’ emotional aptitudes and managerial tendencies impact the development of new ventures.
Nevertheless, it’s understood that the forward-thinking vision inherent in transformational leadership aids stakeholders in mitigating uncertainty surrounding fledgling entrepreneurial endeavors. Additionally, the attributes associated with a transformational leadership style have a beneficial impact on the growth of firms navigating dynamic and innovative landscapes.
The results suggest that entrepreneurs possessing emotional intelligence enjoy a competitive edge. They excel in managing their own emotions, exhibit awareness of others’ emotions, foster positive interactions with stakeholders, devise effective strategies to surmount challenges encountered by their ventures, and ultimately attain superior performance across themselves, their team, and their venture.
