Social Interaction Theory: Factors that Impact a Person's 'Fit' with their Environment & Team

Team-driven entrepreneurship is both prevalent and more successful than for ventures founded and led by solo entrepreneurs. According to Upper Echelons Theory, the main advantage of teams derives from the positive effects of combining a nucleus of people with diverse functional KSAs. This is particularly valuable in entrepreneurship and venturing where the nature of challenges and decisions to be made is complex and ambiguous. But it is naïve to assume that simply installing a team leads to successful performance. The situation is confounded by the fact that the diversity of talent brings with it a diversity of personalities and characteristics that often generate conflict of various types – a reality that must be managed through team processes to avoid dysfunctionality & delays and realize the benefits of teamwork.

Understanding how teams can be most effective in the entrepreneurial context is important to multiple stakeholders in our entrepreneurial ecosystems. Social interactions are a fundamental and essential component of team processes, impact task performance, and determine team effectiveness (both short-term and long-term) & ultimately enterprise performance. Social interaction processes involve ‘the six Cs’ of communication, coordination, conflict, conflict resolution, cohesion, and cooperation/collaboration, as well as information exchange and interdependent structures This article explains these factors and how they work together.

Why is this so important to entrepreneurial venturing and related investment? Because as these enterprises transition through the venture life cycle, the challenges and opportunities they must address become more varied and complex. This requires team additions which compounds functional diversity and the potential for conflict and debilitating effects on team effectiveness. While teamwork remains crucial for for performance, it is unlikely to occur organically and requires conscious management of various social interaction processes in team design & development, including recruitment. Team commitment and leadership have strong and significant influences on venture success and to achieve success in all relevant dimensions, a team-centric approach to team-building that incorporates the notion of 'Person-Team fit' and not simply 'Person-Job fit' (e.g. hiring any professional accountant to be CFO) is required.