Machiavellian entrepreneurship
Niccolò Machiavelli (born 1469) was an Italian diplomat and infamous strategist who wrote extensive letters teaching cunning strategies to "princes" ruling over territories throughout Europe. 16th-century Europe was very divided compared to today, especially in and around Italy, which was composed of a large number of small autonomous and semi-autonomous territories (city-states and kingdoms).
Princes as Early Entrepreneurs
Although Machiavelli is often considered a figure in the history of political science, these rulers acted as what Baumol (1996) describes as entrepreneurs of their time. Princes would take territory, or castles, rather than fight over money.
Machiavelli's letters can be thought of as elaborating entrepreneurial strategies to get ahead in feudal times. However, many of these are largely inappropriate in the current business context.
Core Machiavellian Axioms
Many regard Machiavelli's strategies as unethical, yet his famous book The Prince continues to be cited and read within the business school community and by military practitioners. Along with Sun Tzu's Art of War, it is considered a classic work on strategy.
The core ideal of the theory is that the ends justify the means, as the end is total power over a territory and its resources. If a young prince wanted to achieve power, he needed to topple an older incumbent. Machiavelli recommended strategies including the use of killing to eliminate competitors, viewing this as superior to imprisonment or exile because those alternatives allowed competitors to stage a return.
Axioms credited to Machiavelli include:
- It is better to be feared than to be loved.
- Loyalty must be strong and resistance crushed.
- The ends justify the means.
Modern Application: Destructive Entrepreneurship
Perhaps Machiavelli was a realist writing during a time of weak institutions. Today, entrepreneurs often find themselves in trouble with the law when they pursue Machiavellian strategies to usurp incumbent firms.
The modern institutional systems in place regulate Machiavellian behaviors and act as a barrier to entry. However, these types of barriers may be considered desirable because they prevent what is now understood to be destructive entrepreneurship (Baumol, 1990), where the entrepreneur gains value but harms the broader society or network.
To understand how Machiavellianism translates from 16th-century feudalism to the modern boardroom, consider the hypothetical case of a Vice President (VP) at a tech firm aiming to usurp the CEO.
The Goal: Secure the CEO position (The Territory).
The Strategy:
- Information Control: The VP intentionally withholds critical market data from the CEO before a major board meeting, ensuring the CEO appears unprepared and incompetent.
- Strategic Alliances: The VP privately befriends key board members, not out of genuine friendship (affective trust), but to plant seeds of doubt regarding the CEO's vision (cognitive trust).
- The "Execution": When the CEO’s project fails due to the withheld data, the VP steps in with a pre-prepared solution, acting as the "savior."
The Analysis: This aligns with Machiavelli's axiom that it is better to be feared (respected for competence/power) than loved. The VP utilized instrumental manipulation, viewing colleagues merely as chess pieces to achieve the end goal of promotion.
Machiavelli's Advice for Modern Leaders (Video Overview)
The Psychology of Strategy: The Dark Triad
While Machiavelli was a political theorist, his name has been adopted by modern psychologists to describe a specific personality phenotype. In organizational psychology, Machiavellianism is a key component of the Dark Triad, a cluster of three offensive but non-pathological personality traits that often manifest in leadership roles.
Research suggests that while "High Machs" (individuals scoring high in Machiavellianism) can be effective in the short term due to their charm and confidence, they often cause long-term damage to organizational culture.
The Three Components
- 1. Machiavellianism: Characterized by a cynical worldview, lack of morality, and a focus on self-interest and deception. A "High Mach" measures success by their ability to manipulate others.
- 2. Narcissism: Defined by grandiosity, pride, egotism, and a lack of empathy. Unlike the calculator-like Machiavellian, the Narcissist is driven by a need for admiration.
- 3. Psychopathy: Characterized by enduring antisocial behavior, impulsivity, selfishness, callousness, and remorselessness.
In the context of Destructive Entrepreneurship, individuals possessing the Dark Triad traits are more likely to engage in unethical practices (e.g., fraud, exploitation of labor) to achieve rapid growth. They embody the "Ends justify the means" philosophy, stripping it of Machiavelli’s original intent of stabilizing the state, and using it solely for personal enrichment.
Sources
- Baumol, W. J. (1996). Entrepreneurship: Productive, unproductive, and destructive. Journal of Business Venturing, 11(1), 3-22.
- Machiavelli, N. (1940). The Prince and Discourses On the First Decade of Titus Livius. New York: The Modern Library.
- Paulhus, D. L., & Williams, K. M. (2002). The Dark Triad of personality: Narcissism, Machiavellianism, and psychopathy. Journal of Research in Personality, 36(6), 556-563.