PsyPost | Beth Ellwood | Aug 20, 2021

A meta-analysis including data from over 65,000 business owners points to the importance of emotional intelligence in entrepreneurship. The study, published in the Strategic Entrepreneurship Journal, found that emotional intelligence was a stronger predictor of entrepreneurial success than general mental ability.

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General mental ability refers to the cognitive skills necessary for higher-order thinking, such as reasoning and problem solving. Emotional intelligence, by contrast, describes the ability to recognize, understand, and effectively manage one’s emotions.

While general mental ability has been found to be most important for success in workplace settings, study authors Jared S. Allen and his colleagues proposed that emotional intelligence should be more important for success in entrepreneurship. They reasoned that given the uncertain context, social demands, and emotional challenges involved in starting a business, emotional intelligence should be particularly beneficial in this setting.

When analyzing the data, the researchers found that both general mental ability and emotional intelligence were positively tied to entrepreneurial success. However — as they had predicted — emotional intelligence was a far stronger predictor of success than mental ability. While emotional intelligence explained 89.1% of the variance in entrepreneurial success, mental ability explained only 10.9%. Even when controlling for the type of success (e.g., financial success, firm growth), emotional intelligence remained a stronger predictor of success than mental ability. Neither firm size nor the age of the firm were found to moderate the relationships of either mental intelligence or emotional intelligence on success.

“While our study shows that emotional intelligence is more important for entrepreneurial success compared to cognitive intelligence, we were not able to test possible interactive effects between the two,” Allen noted. “It is possible that cognitive intelligence has a stronger relationship to entrepreneurial success when emotional intelligence is high. Individuals with high levels of cognitive resources perform better when experiencing less stress, suggesting emotional intelligence could aid in the utilization of high cognitive ability.”

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Allen and his colleagues say that the context of entrepreneurship differs from typical workplace settings in ways that might explain their findings. Building business relationships, dealing with unexpected losses, and remaining motivated through ups and downs are everyday realities for entrepreneurs, and these are all skills that require emotional intelligence. Indeed, studies suggest that people high in emotional intelligence are better at forming positive relationships with others, more resilient in the face of stress, and more self-motivated.

“​Our study highlights the fact that entrepreneurship is truly a unique work setting that favors those who can manage themselves and others effectively. The promise of entrepreneurship is that it provides a setting for people to chart their own direction in life through the development of a venture. This development requires the ability to work through one’s own emotions and to influence others,” Allen told PsyPost.

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