1. Copyright © 2008 by Nelson, a division of Thomson Canada Limited ENTREPRENEURSHIP A PROCESS PERSPECTIVE Robert A. Baron Scott A. Shane A. Rebecca Reuber Slides Prepared by: Sandra Malach, University of Calgary

2. Copyright © 2008 by Nelson, a division of Thomson Canada Limited 4 Essential Skills for Entrepreneurs 1

3. Copyright © 2008 by Nelson, a division of Thomson Canada Limited Learning Objectives 1.Describe several social skills and explain how social competence (which is composed of these skills) can influence entrepreneurs’ success. 2.Describe the difference between calculus-based trust and identification-based trust, and explain their roles in the development of cooperative working relationships. 3.Define conflict and describe its major causes. 4.Explain how entrepreneurs can effectively manage conflict, especially affect-based conflict.

4. Copyright © 2008 by Nelson, a division of Thomson Canada Limited Learning Objectives 5.Describe the techniques that individuals use most frequently to influence others in work settings. 6.Describe various techniques that people use for gaining compliance—for getting others to agree to requests they have made—and the basic principles on which these rest. 7.Define stress and describe its major causes. 8.Describe the adverse effects of stress, and explain several techniques entrepreneurs can use to reduce the level of stress they experience.

5. Copyright © 2008 by Nelson, a division of Thomson Canada Limited Quotation “Marvelous is the power which can be exercised, almost unconsciously, over a company, or an individual, or even upon a crowd by one person gifted with good temper, good digestion, good intellects, and good looks.” (Anthony Trollope, 1863)

6. Copyright © 2008 by Nelson, a division of Thomson Canada Limited Social Skills Definition: A set of competencies (discrete skills) that enable individuals to interact effectively with others Being able to get along with others is an essential skill for entrepreneurs

7. Copyright © 2008 by Nelson, a division of Thomson Canada Limited 5 Social Skills for Entrepreneurs 1. Social Perception 2. Expressiveness 3. Impression management 4. Persuasion and influence 5. Social adaptability

8. Copyright © 2008 by Nelson, a division of Thomson Canada Limited Social Perception Accuracy in perceiving others accurately “Read People” Important when: Choosing Partners Hiring people Negotiation

9. Copyright © 2008 by Nelson, a division of Thomson Canada Limited Expressiveness Expressing one’s own reactions and emotions clearly Important when: Generating enthusiasm Sales Venture capitalists invest in people who display passion

10. Copyright © 2008 by Nelson, a division of Thomson Canada Limited Impression management Making a good first impression Important when: Acquiring capital

11. Copyright © 2008 by Nelson, a division of Thomson Canada Limited Persuasion and influence. Changing others’ attitudes or behaviour in desired directions Important when: Making sales Influencing Partners Motivating Employees

12. Copyright © 2008 by Nelson, a division of Thomson Canada Limited Social Adaptability Adapt to a wide range of social situations and to feel comfortable with individuals from a wide range of backgrounds Important when: Making “cold calls” to customers & suppliers

13. Copyright © 2008 by Nelson, a division of Thomson Canada Limited SOCIAL COMPETENCE Persons high in several social skills are described as being high in social competence Socially competent entrepreneurs are actually more successful, in terms of profitability

14. Copyright © 2008 by Nelson, a division of Thomson Canada Limited Working With Others Most new ventures are started by teams 2 basic criteria for effective teams: 1. Must work together cooperatively 2. Conflicts must be handled effectively

15. Copyright © 2008 by Nelson, a division of Thomson Canada Limited The Key Role of Trust Trust—one person’s degree of confidence in the words and actions of another. Trust is perhaps the most important factor in the development of cooperative working relationships When trust exists, people can be depended upon.

16. Copyright © 2008 by Nelson, a division of Thomson Canada Limited Kinds of Trust

17. Copyright © 2008 by Nelson, a division of Thomson Canada Limited Conflict Conflict is a process in which one party perceives that another party has taken or will soon take actions that are incompatible with its interests

18. Copyright © 2008 by Nelson, a division of Thomson Canada Limited Affective or Emotional Conflict A strong element of anger or disliking is introduced into the situation. They are upset with each other, do not trust each other, and experience strong, negative emotions Generally produces negative results “When emotions run high, reason flies out the window.”

19. Copyright © 2008 by Nelson, a division of Thomson Canada Limited Cognitive Conflict Individuals become aware of contrasting perspectives or interests, but focus on the issues and not on one another. Cognitive conflict can be constructive.

20. Copyright © 2008 by Nelson, a division of Thomson Canada Limited Causes of Affective Conflict Basic distrust between individuals or groups Pre-existing grudges Faulty attributions – errors concerning the reasons for poor outcomes Perception of personal objectivity and bias and irrationality in others Personality traits or characteristics

21. Copyright © 2008 by Nelson, a division of Thomson Canada Limited Conflict Resolution Negotiation If unsuccessful negotiations result in a deadlock the conflict will intensify Win-win solution Acceptable to both

22. Copyright © 2008 by Nelson, a division of Thomson Canada Limited Guidelines for Conflict Resolution Avoid tactics that reflect a win-lose approach Uncover the real issues Broaden the scope of the issues considered

23. Copyright © 2008 by Nelson, a division of Thomson Canada Limited Tactics of Influence Rational persuasion—Using logical arguments and facts Inspirational appeal—Appealing to the recipient’s values and ideals. Consultation—Asking for participation in decision making or in planning. Ingratiation—Getting someone to do what you want by putting that person in a good mood or getting him or her to like you.

24. Copyright © 2008 by Nelson, a division of Thomson Canada Limited Tactics of Influence Exchange—Promising some benefits in exchange for complying with a request. Coalition-building—Persuading by seeking the assistance of others, or by noting the support of others. Legitimating—Pointing out one’s authority to make a request, or consistency with organizational policies and practices. Pressure—Seeking compliance by using demands, threats, or intimidation.

25. Copyright © 2008 by Nelson, a division of Thomson Canada Limited Other Tactics of Influence Friendship/liking. The more other persons like us, the more willing they are to agree to our requests; Commitment/consistency. Strong pressure to comply with requests that are consistent with initial commitments. Scarcity. Reciprocity.

26. Copyright © 2008 by Nelson, a division of Thomson Canada Limited Stress A pattern of emotional states and physiological reactions occurring in response to demands from many different events in our lives

27. Copyright © 2008 by Nelson, a division of Thomson Canada Limited The Basic Nature of Stress

28. Copyright © 2008 by Nelson, a division of Thomson Canada Limited Stress & Entrepreneurs People said they gave up because they were working too hard and wanted to achieve more balance in their life. Self-employed Canadians work an average of 56 hours per week, and 24% work more than 70 hours per week!

29. Copyright © 2008 by Nelson, a division of Thomson Canada Limited Adverse Effects of Stress Stress plays an important role in from 50 to 70 percent of all forms of physical illness. Stress is a major cause of ‘burnout’ Physical Exhaustion Emotion Exhaustion Attitudinal Exhaustion Reduced sense of Accomplishment

30. Copyright © 2008 by Nelson, a division of Thomson Canada Limited Stress Prevention Good physical condition Healthy diet & exercise Worry only (or at least mainly) about important things that are at least partly under your control Avoid incompatible reaction procedure Stop awfulizing Magnifying adverse affects

31. Copyright © 2008 by Nelson, a division of Thomson Canada Limited We can’t always change the world (make it the way we wish), but we can change our reactions to it.