Author: Pamela Tom

Would you tell a lie to help someone else? A new study says women won’t lie on their own behalf, but they are willing to do so for someone else if they feel criticized or pressured by others.

In contrast, research by Prof. Laura Kray of UC Berkeley’s Haas School of Business and Asst. Prof. Maryam Kouchaki of Northwestern University’s Kellogg School of Management, found that men are the opposite: they do not compromise their ethical standards under social pressure regardless of whether they’re advocating for themselves or anyone else.

Their paper, “‘I’ll Do Anything For You.’ The Ethical Consequences of Women’s Social Considerations,” received the Best Empirical Paper Award from the International Association of Conflict Management (IACM) on Jun 28.

“We found that when women act on their own behalf, they maintain higher ethical standards than men. However, women will act less ethically, such as telling a lie, when they fear being viewed as ineffective at representing another person’s interests,” says Kray. “When women negotiate on behalf of someone else, they are willing to make compromises in order to satisfy the needs of others.”

But at what cost?

Kray says there’s a tradeoff for women, who face a “Catch 22.” Men are typically less constrained by social expectations. But when women are asked to advocate for others they face a conflict because they must either relinquish or reduce their usual moral standards, or open themselves up to possible social backlash.

The authors write, “they are damned if they lie because it goes against their communal mandate with respect to their negotiating counterpart, however they are damned if they do not lie because it goes against their communal mandate with respect to the party they are representing.”

The findings are a result of four studies, each involving from 160 to 235 participants.

In the first study, participants were assigned either self-advocacy or friend-advocacy roles and asked to consider the appropriateness of various negotiating tactics.  As hypothesized, women who negotiated on behalf of someone else were less ethical than when advocating for themselves.

The second study was designed to better understand the psychological process behind unethical negotiating tactics. Participants advocating for others answered questions about how much they anticipated social backlash if they did not reduce their ethical standards to help others. For example, “How much would your friends like to socialize with you?” and “How likely would your colleagues be to go with you if you invited them out for drinks after work?” The findings were the same as in the first study. However, women were not found to completely disregard — only lower — their moral obligations regardless of whether they were advocating for themselves or others.

“This suggests that women did not see unethical tactics as more acceptable when helping others but instead, they lowered their ethical standards because they felt pressured to do so,” says Kray.

The third study focused on the anticipation of social backlash. Female participants were asked to read a description of a salary negotiation from a self-advocacy perspective; for example, as new recruits negotiating their own starting salary. They also read a description depicting an other-advocacy situation such as a friend negotiating salary on behalf of a new recruit whom she referred for the position. The ethical dilemma of each script is whether to tell the hiring manager that they (or the friend) had another job offer even though one didn’t really exist. The alternative option was to be honest with the hiring manager and tell him that they (or the friend) had no other job offers. Women were more inclined to lie when negotiating for the friend.

In the final study, the authors recruited participants (49% male; 51% female) to complete an actual negotiation and assigned them to be either a property seller or a buyer. In the scenario, the seller wants to sell to a buyer who would retain the property for residential use. However, buyers were instructed that their intent was to turn the property into a high-rise, commercial building against the wishes of the seller. Would those negotiating on behalf of the buyer be deceptive as a result of social pressure? Again, women who chose to be dishonest expected greater social backlash when negotiating for themselves than on behalf of others. And, women who chose not to lie anticipated greater backlash when representing someone else’s interests.

Across all studies including men, the men’s ethics were not affected whether they represented themselves or another person. Also, their ethical standards were lower than women representing themselves.

The study’s results may appear disturbing to women who are trying to do the right thing, but Kray contends that when considering whether to compromise one’s usual ethics, consider the particular situation. Women may be unaware that they have this tendency to lower their moral standards when trying to help others.

“Ask yourself, ‘What are the constraints and social pressures? If I was doing this for myself or someone else, how would I act differently,” says Kray.

Five decades of Himalayan treks show how collectivism operates in diverse groups

By studying climbers summiting Mount Everest, Professor Jennifer Chatman learned when collectivism works, and when it can be deadly.

Cooperation is valued as a key attribute of successful groups, encouraging cohesion among diverse members. But Chatman discovered that there can be a high cost when it comes to decision-making and performance because the tentative ties among diverse group members cause them to overemphasize their shared group identity and overlook the individual differences in skills and experience that can help the group succeed.

She calls this a “blurring effect,” which is detailed in her new study, “Blurred Lines: How Collectivism Mutes the Disruptive and Elaborating Effects of Demographic Diversity on Group Performance in Himalayan Mountain Climbing.” The paper is co-authored by Eliot Sherman (PhD 2016, MS 2012), London Business School, and Bernadette Doerr (MS 2015), CrossLead Inc.

The study focuses on the impact of a collectivistic versus individualistic orientation among diverse climbing groups. Promoting a collective mindset is one of the most common solutions to the challenge of managing diverse work groups. But sometimes, emphasizing collectivism can cause groups to blur not only disruptive attributes, but also important differences among members, such as a veteran climber’s expertise.

“This blurring effect, which is cognitive in nature, is among the most profound I’ve seen in my research career. It is easily manipulated and has dramatic consequences. By simply asking people in a diverse group to focus on commonalities within the group, they appear to be unable to also focus on the attributes that differentiate group members from one another. It is like asking people to focus on the forest, which seems to preclude them from also focusing on the trees,” says Chatman, who studies how group norms and group composition influence group performance at UC Berkeley’s Haas School of Business.

To study how collectivism fails, the researchers tapped the Himalayan Database, a compilation of all expeditions in the Nepalese Himalaya since 1950. Journalist Elizabeth Hawley began compiling this database in 1960, when she moved from the U.S. to Kathmandu, Nepal, and interviewed thousands of climbers who are required to register their expeditions with the Nepalese government.

The archive documents all climbs, including information about climbers: climbing experience, nationality, and details about the expedition, such as route choices and weather conditions. Chatman focused on a dataset of 5,000 treks and nearly 40,000 climbers and measured them by climbing experience.The comprehensive data set enables researchers to better understand work teams with a single, common goal: to reach the summit, Chatman said.

“Work teams don’t always have a single objective goal. In contrast, the Himalayan expeditions do, making it easier to examine the factors affecting performance with great precision,” she says. “Further, these expeditions are truly international. Most cross-cultural research has been limited to perhaps two or three countries; the Himalayan data includes climbers from a wide range of countries.”

Though all of the climbers had the same goal, to summit, the researchers discovered very different results among the groups based on how they managed the group’s diversity.

The research showed when climbers collectively focused on reaching the summit, rather than more individualistic approaches to doing so, they “blurred”—didn’t pay attention to—their fellow climber’s nationality. This blurring of national differences led to greater summiting successes because nationality is only a disruptive attribute and not one that is related to climbing skill.

But when a broad range of experience that was critical to the climb existed among climbers (for example, some had scaled a Himalayan mountain up to 15 times, while others had only attempted one climb), a different and more deadly pattern emerged. More people died on expeditions with different levels of experience when the group emphasized collectivism because it caused them to ignore the diversity of experience among members.

“They ‘blur up,’ pushing each other more because they fail to recognize that novices have less capability, and consequently, more people died,” says Chatman.

To further test their findings, the researchers also studied decision-making using a simulated expedition in a lab setting. They asked 280 participants or “climbers” to make two critical decisions: how to allocate portable oxygen canisters, and to decide which route to take to Annapurna, the world’s 10th highest mountain.

Participants were told their fellow climbers’ nationality and mountain climbing experience and later asked to recall that information. Subjects cued to be collectivistic were significantly less accurate in recalling differences among their team members than those who were cued to be individualistic.

These collectivists were more likely to give oxygen to foreigners and to someone who would benefit most. (While oxygen is critical, it also adds weight to one’s gear.) National diversity became blurred when collectivism was a priority, resulting in better group performance.

In the second decision, after hearing advice from an experienced team member, participants had to choose between two routes: One that was more direct but dangerous, and the other—recommended by the experienced member—that was less risky but a bit longer. Those who were cued to be collectivistic tended to disregard the advice provided by a more experienced team member because they blurred his or her experience and considered everyone to have similar experience. The downside: not acknowledging and following the advice of a more knowledgeable climber could result in increased injuries, even death.

In the workplace, Chatman’s results suggest that managers should not assume that emphasizing team cooperation is always the best strategy and that some differences among members are important to highlight, even if it means sacrificing some group cohesion. This is because imposing a cooperation norm can cause people to blur distinctions that they should value in order to perform effectively.

Study finds cause for banning public investment advice

Are investors “mad” to follow CNBC’s Mad Money show host Jim Cramer’s stock advice? Would they be better off without media’s insights?

When investment information is public—such as being broadcast to thousands of viewers—all that “noise” excites investors and causes them to lend more weight to the information than they should, even when the quality of the information is low. As a result, new research suggests that society may be better off making the public release of such information illegal.

“People put an enormous amount of weight on information delivered via the media. As a result, we found that investor behavior becomes more random and investors become less likely to use the information in an optimal fashion to price the stock,” says John Morgan, an economist at UC Berkeley’s Haas School of Business. “The cost of our markets functioning based on mispriced stocks is greater than the benefits of having public information.”

In the working paper, “Experiments on the Social Value of Public Information,” Prof. Morgan and co-author Donald J. Dale of Muhlenberg College suggest that policymakers must balance the costs of transparency—meant to maintain accountability—with the effects of distorted information.

“The ‘echo chamber’ effect of public information can ruin the way the market should function,” says Morgan.

Media critics began challenging the “CNBC effect”—the result of noise, confusion, and incomplete information—in business journalism during the beginnings of the subprime crisis a decade ago. The phenomenon revealed that new sources of information, such as Mad Money, could move investor sentiment to depend less on stock fundamentals and become more reliant on the public information provided by the press.

“Without public information, each investor would only have a little private information,” says Morgan, referring to the kinds of insights shared privately by people whom investors consider to be knowledgeable of the industry or product. “If you add a new source such as Mad Money, even if it’s a poor source about fundamentals, you know that everyone else will hear it, and this can trump your private information.” Investors therefore are inclined to follow what’s popular.

Because the researchers wanted to make sure that the results held true among the general population, and not just sophisticated stock traders, the researchers used a subject pool of undergraduate college students.

The participants were first given two types of private information or signals in a stock trading game: high quality/reliable and low quality/less reliable, correlating with fundamentals information (a stock’s intrinsic or true value, not market value) Later, they were given public information. Participants tended to overweight the low-quality information in all rounds of the experiment.

The signals were indications of the true value of the firm, but always reported with error,” says Morgan. “One of the signals was less error-prone than the other and the subjects paid too much attention to the more error-prone signal.”

When the participants were given a modest amount of public information— enough information that a layperson could use it to his or her benefit—the participants consistently over-weighted the public information, resulting in a lower payoff.

The payoff for each participant was determined in two ways: 1) by the difference between one’s choice and the average of all choices, and 2) by the difference between one’s choice and the true fundamental value of the firm. A firm’s true value, according to finance theory, represents the net present value of its future cash flows.

“It places investors on the horns of a dilemma,” says Morgan. “We would all be better off cooperating but our individual interests are strong. If everyone else is following the news story, then most people think the best thing they can do for their investment strategy is to follow along even if they know they may be wrong.”

Capitalizing on the power of consumer peer pressure to develop sustainable new products  

If you purchased a Toyota Prius, you may have been driven by the desire to conserve the environment or to save yourself some money at the gas pump.  But consumers may also choose to buy sustainable products to make themselves appear socially responsible to others. Before making purchases, they evaluate how their decisions will stack up against their peers’, according to a new study.

The study, “Social Responsibility and Product Innovation,” forthcoming in Marketing Science, examines how understanding this phenomenon, known as “conspicuous conservation,” may help leading companies shape their product innovation strategies, especially in ubiquitous product categories such as cars.

“The design of the Prius is easily noticed by other people on the road, and consumers care about that. The value that I get from driving a Prius may depend upon how many other people in my social circle are also driving environmentally friendly cars. The value is higher if I’m the only one,” says Ganesh Iyer, a professor in the Marketing Group at UC Berkeley’s Haas School of Business, and one of the study’s authors. “Conversely, if an individual is the only one in his or her social circle who is driving a gas-guzzler, there will be pressure to conform.”

The paper is co-authored by David Soberman of the University of Toronto’s Rotman School of Management.

Refraining from buying a product that damages the environment can generate social value for consumers. This need by consumers to measure up to their peers – a concept called social comparison preference – can provide marketers with valuable insights about how they can enhance the desirability of their products.

“We are trying to capture this issue of social comparison in markets, which is important for visible products like cars and clothing,” says Iyer. “Making a product better on a social or environmental dimension is not the same as simply improving its quality, it is about leveraging social comparison preferences.”

The researchers developed a model linking the R&D decisions of firms to the interplay of consumers’ social comparison preferences (their need to stack up) and how much they are willing to pay. The analysis shows that social comparison can provide incentive for a company to develop innovations in sustainability when the product category is mature and most consumers are already users of that category. In the case of the Prius, for example, most consumers already drive.

Heightened media attention also helps green products become more socially valuable, according to the research. For instance, as the media focused more and more on the effect of palm oil production on deforestation, many consumer product companies started producing palm-oil free products.

The paper also cites Levi’s Water<Less™ jeans and Clorox’s Green Works cleaners as examples of innovative products developed to respond to consumers’ social preferences. Levi’s spent three years developing a process to create denim that requires less water and fewer chemicals to produce, and Clorox spent over $20M to produce eco-friendly, natural cleaning products.

The research study’s findings, says Iyer, underscore the value for companies to understand their consumers’ preferences with respect to social responsibility and to use that understanding in determining long-term innovation and product strategies.

Understanding how to adapt in a fluid, competitive world

If there’s one skill that today’s executive may want to hone, it’s the ability to adapt and transform.

Homa Bahrami, a senior lecturer at UC Berkeley’s Haas School of Business, studies knowledge workers in the technology sector where flexibility is essential. She coined the term, “super-flexibility,” and has developed a playbook to teach professionals how to transform the way they organize, lead, interact, and drive change continuously.

“Super-flexibility is the ability to engage in a constant balancing act. What do I need to maintain stability, but where do I need to adapt my team, structure, or product,” says Bahrami. “Flexibility is the secret sauce.”

And that secret sauce is the topic of Bahrami’s new online course, Accelerating Change Readiness & Agility.

Bahrami says enrolled executives find the program engaging and transformative because they work through their actual workplace challenges during the program. That opportunity allows them to become better equipped to develop real change or react rapidly to change.

First on the menu: understandings how receptive or unreceptive to change executives are and what their natural aptitude for driving change is. Bahrami says as change agents, executives must be self-aware.

Bahrami breaks down change readiness into five types of “adaptive DNA.” Each person tends to have an innate response for dealing with change but may learn how to adapt to alternate approaches to create change, depending on what the situation requires. These DNA types are:

Resilient DNA people see a problem and like to fix it.
Hedging DNA people are planners; they think about different scenarios and “what if” contingencies.
Agile DNA people prefer to implement the minimum necessary.
Robust DNA people are visionary and persistent.
Versatile DNA people have strong sensors and can adapt their style when interacting with different people.

A crisis manager is an example of someone with resilient DNA while salespeople tend to have versatile DNA, according to Bahrami’s research. Innovative, disruptive entrepreneurs who thrive on change and uncertainty possess robust DNA.

Bahrami’s work is also based on three types of adaptation. Forced adaptation is when change occurs because people are forced to change. Accidental adaptation is a by-product of timing and luck; it is about being at the right or wrong place at the right or wrong time. Bahrami says the third kind or deliberate adaptation is the most powerful. It is about intentional adaptation, knowing where you want to go and setting out to get there.

“Former Cisco CEO John Chambers said we don’t have competition, we compete against market transition,” says Bahrami. “Cisco is a giant organization but how do they successfully reinvent products and services on an ongoing basis?”

Bahrami’s course teaches the lessons of companies like Cisco, but she also designed the course to help program participants work on their own super-flexibility topics. For example:

• How do I change the way my company interacts with customers?
• We want to introduce new products geared toward millennials.
• I want to change the way my team operates.

Organizational culture also can enable or block change and agility. Profs. Jennifer Chatman and Jo-Ellen Pozner partnered with Bahrami to teach a module on diagnosing and leveraging one’s organizational culture for flexibility.

As she continues to study super-flexibility, Bahrami says her work has shown that the best way to initiate change is by taking a scientific approach.

“Take mini steps, experiment, iterate, and have an open mind,” says Bahrami. “When you run a marathon, you don’t think about the 25 miles ahead, you only think about that next step, then that next block, and pretty soon, you have reached the goal line.”

Bahrami’s class is offered through Berkeley-Haas’ Center for Executive Education and is available on ExecOnline. The next program begins May 2.

She also plans to teach an elective course on the topic in the Evening & Weekend Berkeley MBA Program in Fall 2016.

$19M UK grant will fund the five-year global research program aimed at South Asia and Sub-Saharan Africa

Energy holds the power to alleviate poverty and promote economic growth for the 2 billion people without access to reliable electricity. Yet little insight exists into how countries could maximize the benefits of their energy investments to this effect while minimizing economic and environmental costs.

This knowledge gap will be the focus of Energy for Economic Growth (EEG), a new research program led jointly by UC Berkeley’s Energy Institute @ Haas and Center for Effective Global Action (CEGA), and Oxford Policy Management (OPM), an international development consultancy based in the UK. Their program is funded by a five-year, $19 million research grant from the United Kingdom’s Department for International Development (DFID).

EEG brings together a global network of academic researchers and policymakers whose work will inform high-level decisions affecting the energy sector, with a focus on South Asia and Sub-Saharan Africa. The multi-disciplinary EEG consortium includes economists, engineers, and political scientists from around the world.

Berkeley-Haas professors Catherine Wolfram and Paul Gertler will lead the program. Wolfram will serve as EEG research director and Gertler will serve as deputy director. They both also serve as scientific directors of Energy & Environment at CEGA.

“Intuitively, we all know that energy is quite literally an engine for economic development. Yet we are still very much in the dark about how and to what extent energy drives growth, especially in low-income countries,” says Wolfram, Cora Jane Flood Professor of Business Administration and faculty director of the Energy Institute at Haas.

“We seek to better understand the mechanisms through which energy investment contributes to economic growth,” says Gertler, Li Ka Shing Professor in Economic and Policy Analysis. “This evidence gap presents a risk of misallocating scarce public resources, especially in low and middle income countries where energy demand is increasing. Without informed decision-making, large numbers of people are left to languish in poverty.”

During its first year, EEG will produce a comprehensive set of State-of-Knowledge papers in six thematic areas related to electricity supply, governance, sustainable urbanization, large-scale renewables, the role of extractives, and innovative “cleantech” design.

These papers will inform a research agenda for subsequent years of the program. In the future, EEG will allocate funding to teams of researchers and implement partners through a competitive “request for proposal” (RFP) process. Ultimately, the portfolio of evidence generated through EEG research will support economic growth and poverty reduction by helping to create sustainable, efficient and equitable energy systems.

People often over-claim their own contributions to the team

When Leonardo DiCaprio accepted his Oscar for Best Actor in “The Revenant” this year, he acknowledged the hard work of the movie’s entire team. But such generosity isn’t always the case. On large teams—such as big film production crews—size can lead people to inflate their own contributions while diminishing their team members’ work.

A new study finds that the bigger the teams, the more individual members of a team “over-claim” their contributions. It’s not that people intend to take more credit than due. Instead, people inadvertently fail to account for everyone’s contributions because they are naturally egocentric. It is harder to consider everyone’s contributions when groups are larger.

“People were surprised about the extent that over-claiming occurs. They think their reporting is accurate,” says Juliana Schroeder, an assistant professor of management at UC Berkeley’s Haas School of Business.

“Many Hands Make Overlooked Work: Overclaiming of Responsibility Increases with Group Size,” co-authored by Schroeder along with Eugene Caruso and Nicholas Epley, both of the University of Chicago’s Booth School of Business, is forthcoming in the Journal of Experimental Psychology: Applied.

In the first of four experiments, the study participants—699 MBA students enrolled in a negotiations course—answered six questions to measure how much work they claimed. For example, they were asked, “Of the total work that your study group did last semester, what percent of the work do you feel like you personally contributed?” based on categories such as preparing case write-ups; providing insights; proposing teamwork suggestions, raising key questions; and providing answers to other group member’s questions. The study offered no reward for over-claiming one’s contribution.

The math didn’t add up. The percentages consistently added up to more than 100 percent, indicating over-claiming. Teams with eight or more members claimed credit totaling more than 140 percent!

The researchers also conducted experiments with academic authors, museum visitors, and a large-sale national sample—producing similar results supporting over-claiming.

Schroeder suggests ways to reduce over-claiming. “When you have large groups, you might want to consider breaking down the group into smaller teams,” says Schroeder. “It is also important to make the workflow very clear. If assignments are clearly divided, it’s easier for people to remember who is doing what.”

While the participants of the study’s four surveys were anonymous, what happens when group members in the real world learn that their colleagues are over-claiming their contribution to the team? Schroeder says asking people to report others’ contributions before their own tends to force people to be more accurate about self-reporting and ultimately, not “thank” themselves too much.

Muscular men perceived to be better leaders than physically weak ones

Forget intelligence or wisdom. A muscular physique might just be a more important attribute when it comes to judging a person’s leadership potential.

Take Arnold Schwarzenegger whose past popularity was a result of his physical prowess as a “Mr. Universe” bodybuilder. In the 2003’s historic recall election, the physically imposing Schwarzenegger easily defeated California Governor Gray Davis who is arguably weaker looking than “The Terminator.”

Coincidence? Maybe. But now there is also real evidence that physical strength matters.

Study participants in a series of experiments conducted by Cameron Anderson (left), a professor of management at UC Berkeley’s Haas School of Business, and Aaron Lukaszewski, an assistant professor at Oklahoma State University, overwhelmingly equated physical strength with higher status and leadership qualities. The paper, “The role of physical formidability in human social status allocation,” is forthcoming in the Journal of Personality and Social Psychology.

The experiments first measured the strength of various men using a handheld, hydraulic Dynamometer that measures chest and arm strength in kilograms or pounds.  After being rated on strength, each man was photographed from the knees up in a white tank shirt to reveal his shoulder, chest, and arm muscles. This way, researchers were able to control for reactions to height and attire rather than strength.

In one experiment, groups of men and women—about 50-50—were shown photographs of the different men on a computer screen. Before the participants saw the photos, they were told that they would be rating people who had been recently hired by a new consulting firm. The participants were asked to rate each subject on how much they admired him, held him in esteem, and believed he would rise in status. They were also asked questions such as, “Do you think this person would be a good leader?” and “How effective is this person dealing with other in a group?”

“The physically strong men in the pictures were given higher status because they are perceived as leaders,” says Anderson. “Our findings are consistent with a lot of real examples of strong men in positions of power.”

But how did the researchers know that participants weren’t simply equating strength with physical attractiveness, also known as a predictor of high social status? The researchers distinguished between the two by asking participants to also rate the photos on “overall physical attractiveness.”

In another experiment, to further test their results, the researchers used Photoshop to switch the bodies of the strong and weak subjects. For example, a weak man’s head was depicted on a strong man’s body, and vice versa.  The result: participants rated the weak men with stronger, superimposed bodies higher in status and leadership qualities.

The final experiment focused on the height factor. Using Photoshop again, the researchers photographed the men in three different lineups. From right to left: 1) two tall men and two short men; 2) two short men and two tall men; and 3) four men of equal height. In all, each subject was manipulated so he appeared short, tall, and of equal height to the other men in the lineup. The participants’ responses indicated that men of taller stature were perceived to have more strength; as in the other experiments, stronger subjects were rated higher in leadership and status.

The researchers say their findings also dispel the popular explanation that the strong succeed by aggressively intimidating their rivals into submission.

“Strong men who were perceived as being likely to behave aggressively toward other group members were actually granted less status than their apparently gentler counterparts,” says Prof. Lukaszewski. “Together, the results suggest that the conferral of status upon formidable men, perhaps counter-intuitively, serves a fundamentally pro-social function — to enhance the effectiveness of cooperation within the group.”

This phenomenon apparently applies to men only. There was little effect on participants’ perception of leadership skills when they were shown physically strong vs. weak women.

So, do smaller, shorter, or less formidable men have to work harder to gain status? Not necessarily.

“Perceived strength does give people an advantage but it’s not make or break,” says Prof. Anderson. “If you’re behaving in ways that demonstrate you are a leader or are not a leader, strength doesn’t matter.”

Cameron Anderson is the Lorraine Tyson Mitchell Chair in Leadership and Communication II and a member of the Haas Management of Organizations Group.

Study reveals the economic value of “soft power” in international commerce

Pop culture assets like Star Wars, Taylor Swift, and the NBA not only contribute to ramping up American appeal, they also increase demand for American goods abroad.

Economists call this “soft power,” the ability to attract and positively influence others. Even though countries tend to wield “hard power” by flexing their economic or military strength, a new study found that countries admired for their soft power tend to sell more exports in the global marketplace.

“Countries are always concerned about their image, but the soft power effect has a very tangible commercial payoff.  Germany is a much-admired country and an export powerhouse; North Korea and Iran are pariah states and both find it difficult to export goods,” says Andrew Rose, the study’s author and a professor at UC Berkeley’s Haas School of Business. Rose holds the Bernard T. Rocca, Jr. Chair in International Business & Trade.

In his working paper, “Like me, buy me: The effect of soft power on exports,” Rose studied the period between 2006 and 2013 and found that a 1% net increase in soft power raises exports by about 0.8%.  Rose says this responsiveness means that the monetary return to soft power can be immense.

The study tracks trade data for over 200 countries using the International Monetary Fund’s Direction of Trade Statistics (DOTS). The data set includes flows between pairs of countries for both exports and imports. Rose also factored in regional trade agreements from the World Trade Organization.

While soft power can be a driving force in international trade, so are other ubiquitous influences such as population, GDP, and political elections. In order to control for them, Rose incorporated these so-called “fixed effects” in his econometric model.

“Any influence, whether it is economic, social, political or cultural, that affects a country’s ability to export in a given year is swept away by these fixed effects, as are all effects on a country’s desire to import,” Rose explains.

But how do economists measure soft power?

In 2006, a BBC World Service/GlobeScan poll asked people in 33 countries what they thought about different countries—China, Britain, Russia, the United States, India, Japan, and Iran, France, and other countries in Europe—and whether these countries had a “mainly positive or mainly negative” influence in the world. The survey continues to be conducted annually. Today, the survey covers 17 countries and engages participants from 46 countries. The result: a quantitative measure of soft power.

Among nations, the United States is typically viewed as possessing the most soft power, though perceptions vary greatly from country to country. In 2013, only 17% of Russians considered American influence mainly positive, compared to 82% of Ghanaians.

The analysis also found that soft power changes vary over time. For example, Mexican positive perception of the U.S. rose from 10% in 2006 to 41% in 2013. Over the same period, French positive perception increased from 25% to 52%, while Brazilians’ increased from 33% to 59%.

Similarly, over the same seven years, positive views of China decreased substantially in Spain and Germany while remaining rather constant in Indonesia and Kenya.  Negative views toward China increased the most in Russia and Brazil.

U.S. and Chinese trade were but two examples in which exports correlated with their respective degrees of soft power.

Furthermore, the most negatively viewed countries—Iran, North Korea, Pakistan, and Israel—also saw fewer exports than they would if they had more positive influence in the world, according to Rose’s analysis.