Emotional Intelligence in Entrepreneurs

           What makes a start-up company successful? Some say it is the product, the market, the competition and some say it is the

entrepreneur. It can be said that the company would fail without any of these components. Thus, these components must be analyzed in depth to determine the probability of success. However of all the components, how can an entrepreneur’s ability be measured? The first measure that comes to mind would be his resume, but experience alone cannot make an entrepreneur successful. IQ is definitely a factor, but according to Malcolm Gladwell in Outliers, studies have showed that after the threshold of 120 IQ, any higher IQ does not really have an effect. A term called emotional intelligence seems to be the missing “X” factor.

Emotional Intelligence is a relatively new field and thus currently a very popular topic of discussion. At the same time, there are also plenty of research left to be done and material to write about.

Here is a general outlook of the relationship between EI and entrepreneurship based on the research that has been done so far. Before looking into how EI relates with entrepreneurs, let’s look at…

What makes an Entrepreneur?

  1. Discipline – To create a business the entrepreneur has to have the discipline to spend time working through every aspect of the business, especially in the beginning. Everything should be planned out. That will include a lot of mundane tasks such as bookkeeping. As an entrepreneur there are no bosses to keep them in line. Finally, 80% of new ventures fail in the first year; there will be many obstacles and it takes discipline to get back up.
  2. Calmness – Things never go as planned in creating a business. A good entrepreneur must know how to keep cool during crisis, and not let it affect the rest of his work. There will always be things not going according to plan, an entrepreneur has to be level-headed to prioritize and juggle so many things at once.
  3. Attention to Detail – In the beginning of a new venture, an entrepreneur would have a lot to handle before hiring workers to pay attention to the detail. A quick look at any company’s financials would show that skipping over a tiny detail can cost a company thousands of dollars. Entrepreneurs need to be very organized.
  4. Risk Tolerance – Being and entrepreneur itself is a huge risk. An entrepreneur has to be willing to accept pretty big risks, with some level of comfort. Assessing risks is a crucial aspect.
  5. Balance – Any characteristic can be taken too far. Those listed above included. A person who is too calm can let important things slip by. Go beyond characteristics, an entrepreneur also has to learn how to balance the rest of his life and family with the company.


What does this have to do with Emotional Intelligence?

Emotional Intelligence balances these four traits.

Self-Awareness: ability of an individual to be in tune with his/her feelings and actions and to recognize the impact this has on others (risk tolerance).

Self-Management: ability to keep impulsive behavior under control and stay calm under stressful situations (discipline). Maintains a clear mind, positive outlook, emotional self-control, achievement orientation, and is very adaptable.

Social Awareness: ability to read or sense other people’s emotions and how they impact the situation. Empathy. Both self and social awareness require high attention to detail.

Relationship Management: ability to influence, guide and handle other people’s emotions.

Emotional Intelligence at Work

  • Decision making
    • Part of emotional intelligence is about awareness, prioritizing, and the ability to look at the bigger picture without being carried away by the details. Emotions are a huge component of decision making as well. Most big decisions generally are made based on emotions i.e. picking a college, spouse, car. Although emotions should not be ignored, they should not overwhelm the decision making process even in stressful situations.

  • Leadership
    • Leaders must communicate their vision to employees, accept responsibility for failure, build relationships, and be decisive. At the same time they need to be self-aware so that they can use their strengths, and build an A-Team according to their weaknesses.
  • Strategic and technical breakthroughs
    •   Researchers have found that creativity is generated by emotion. Creativity is construed as the ability to cognitively construct an idea or concept inspired by emotions. For entrepreneurs, the ability to formulate original ideas triggered by emotions is of the most utmost importance. Creativity plays a huge role in problem solving as it is used to match the solution with the problem.
  • Open, honest communication
    • In every interaction, there are ways people usually interact, and then there are better ways a person with high EI can more naturally achieve. When an employee is slacking, it takes understanding of a person’s feelings to approach them. In the book “One Minute Manager” a One Minute Reprimand includes the following two steps that would be hard for someone with low EI to achieve without prior practice.
      • Reprimand people immediately. Be specific. Tell people how you feel about what they did wrong in no uncertain terms. Stop for a few seconds of uncomfortable silence to let the feel how you feel.
      • Then shake hands, touch them in a way that lets them know you are on their side. Remind them how much you value them, and reaffirm that you think well of them.
  • Trusting relationships and team work
    • Relationships and connections are an important aspect of being an entrepreneur. Knowing the right people and knowing who to count on, can make all the difference. While working with others a high Emotional Quotient group would have a low number of interpersonal conflicts, high motivation, and easier communication.
  • Customer loyalty
    • Empathy helps understand what can be done differently in creating or delivering the product to make a customer happier. EQ helps understand consumer buying decisions and how to keep consumers engaged.

Still Not Convinced?

Longitudinal studies of Harvard graduates and Foreign Service Officers found that test scores on entrance exams did not predict career success. On the other hand Hay Mcber’s study of hundreds of executives at 15 global organizations, including Pepsi, IBM, and Volvo found that two-thirds of the competencies deemed essential to success were emotional competencies. In his role as a consultant in organizations, Daniel Goleman’s analysis of 181 jobs in 121 organizations found that emotional competencies were the best differentiations between star performers and typical performers. He found that EQ is twice more important than technical skills and IQ for jobs at all levels. Goleman also reported that EQ plays an increasingly important role at the highest levels of a company. When he compared “Star performers with average ones in senior leadership positions, nearly 90 percent of the difference in their profiles was attributable to EQ factors rather than cognitive abilities” (Goleman, 1998, p. 108)

Empathia, a leadership coaching company shows that EQ is an attribute that is three times more important than technical skills or business sense in driving effectiveness.

Through the use of qualitative methods, several Australian entrepreneurs were examined in relation to their Emotional Intelligence ability. EQ was examined via in-depth structured interviews. It was predicted that the entrepreneurs would significantly exhibit these ratios and hence an EQ level beyond the norm. Not only did the study yield such a result, it also showed that the entrepreneurs exhibited high levels of all the sub-scales in each model. The outstanding performance of each entrepreneur in Emotional Intelligence ability, as well as all the sub-scales, strongly supports the concept that EQ may be the missing factor that researchers have been searching for in entrepreneurship studies.


Gladwell, M. (2009). Outliers, the story of success. Little, Brown and Company.

Goleman, D. (1998). Working with emotional intelligence. Bantam.

Kamalian, A., Yaghoubi, N., Poori, M. (2011, April 25). Emotional intelligence and corporate entrepreneurship: an empirical study. Journal of Basic and Applied Scientific Research.

Lifehack. (2008, December 9). 5 key characteristics of a successful entrepreneur. Retrieved from             http://www.lifehack.org/articles/management/5-key-characteristics-of-a-successful-entrepreneur.html

Pahl, N. (2009). The role of emotional intelligence in leadership. GRIN Verlag.

Robins, M. (2007, November 1). Getting in touch with your emotions. Emotional Intelligence: What is it, and how can employers apply it to the workplace? Retrieved from      http://ebn.benefitnews.com/news/getting-touch-your-emotions-303387-1.html

Tischeler, L., Biberman, J., Makeage, R. (2002). Linking emotional intelligence spirituality and workplace performance, journal of managerial psychology, school of management,      University of Scranton, Philadelphia, USA.


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