Relational Skills, Endogenous Matching, and Business Performance: a Field Experiment with Entrepreneurs in Togo
Abstract: Why do some entrepreneurs have better networks of peer relationships than others? We argue that relational skills—the ability to communicate effectively and interact collaboratively with new acquaintances—are an important but overlooked factor in the formation of peer relationships between entrepreneurs. We hypothesize that improving entrepreneurs’ relational skills will affect the relationships they form and their business performance. To test our theory, we conducted a pre-registered field experiment in Togo with 301 entrepreneurs who were randomized into a relational skills training that was embedded in a business training program. We found that entrepreneurs who were exposed to relational skills training formed 50% more relationships with peer entrepreneurs. These relationships exhibited more matching based on managerial skills and were more ethnically diverse. Finally, relational skills training also substantially increased entrepreneurs’ business performance. Our findings highlight how soft skills, such as relational skills, play a central role in entrepreneurs’ ability to overcome social barriers, match with peers, and create value.
