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MEDIA ADVISORY

Media Contact:

Abbey Breshears: [email protected]
Dora Chai: [email protected]

WHAT

The ninth annual Berkeley-Haas >play conference is a day of memorable keynotes from industry titans, panels on the latest digital media trends, a product expo and rocket pitch, plus a career fair.

The >play conference is entirely produced by MBA students from UC Berkeley’s Haas School of Business.

This year’s theme, “Always On,” reflects the rapidly changing dynamics between users and their devices. Panel topics will include fitness technology, photo technology, social commerce, and music streaming.

This year’s sponsors include Autodesk, Visa, GoDaddy, Microsoft, and TubeMogul.

More information at: www.playconference.net

WHEN

Friday, October 25, 2013
9 a.m. to 6 p.m. Conference
6 p.m. to 9 p.m. After-party

WHERE

Hotel Nikko, 222 Mason Street, San Francisco, CA 94102 | (415) 394-1111

WHO

Speakers

§  Rich Lyons, dean of UC Berkeley’s Haas School of Business – opening remarks

§  John Zimmer, Lyft, co-founder – interviewed by Michael Copeland, Andreessen Horowitz, Partner

§  Tim Campos, Facebook CIO – interviewed by Robert Scoble, blogger and tech evangelist

UNIVERSITY OF CALIFORNIA, BERKELEY'S HAAS SCHOOL OF BUSINESS –Colleagues and friends at the University of California, Berkeley are celebrating Haas School of Business Professor Janet Yellen’s nomination by President Obama today to become the first woman to head the nation’s Federal Reserve Board of Governors.

If confirmed, Yellen will succeed current Fed Chair Ben Bernanke, who will step down in January 2014. The Federal Reserve Board is tasked with setting economic policy to promote price stability and employment, which she has described as “not just statistics to me.”

Yellen, the Eugene E. and Catherine M. Trefethen Professor Emeritus of Business Administration, taught macroeconomics for more than two decades at the Haas School, where much of her research focused on unemployment and labor markets, monetary and fiscal policies, and international trade and investment policy. Earlier this year, she was named a Berkeley Fellow, joining an honorific society of distinguished friends of UC Berkeley chosen in recognition of their contributions to the campus.

Yellen has served as vice chair of the Federal Reserve’s Board of Governors since 2010.  She was president and chief executive officer of the Federal Reserve Bank in San Francisco from 2004 until 2010. She has been a vocal advocate for transparency of Federal Reserve policies and actions. Yellen also chaired the President’s Council of Economic Advisers from 1997 to 1999 during the Clinton administration.

“I could not think of a sharper mind or a more thoughtful citizen to lead the world’s most influential central bank in its effort to regain the economy’s full potential,” said Berkeley-Haas Dean Rich Lyons, “She is part of a rich and proud history of Haas faculty who continue to serve the nation at the highest levels of government.”

Yellen is one of several female UC Berkeley professors who have successfully challenged the barriers to the White House’s primarily male circle of economic advisers.  Like Yellen, her Berkeley-Haas colleague, Professor Laura Tyson, also chaired the President’s Council of Economic Advisers during the Clinton administration, and economics Professor Christina Romer held the job for four years in the Obama administration.

“Janet Yellen has the knowledge, the experience inside and outside the Fed, the experience inside and outside of Washington, and the temperament to lead the Fed effectively, especially in the conditions that the economy faces and will perhaps face over the next few years,” said James Wilcox, a Berkeley-Haas professor and former senior economist at the Federal Reserve.

“By force of her arguments, openness to those of others, and record of accomplishments, Yellen has earned great credibility with and the respect of central bankers here and abroad, of economists, of business, of legislators, and of policy analysts,” added Wilcox.

A native of Brooklyn, Yellen studied economics at Brown University and earned a PhD at Yale University, studying under now Nobel Prize-winning economist Joseph Stiglitz, who shared the 2001 Nobel Prize in economics with Yellen’s husband, UC Berkeley economist and Emeritus Professor George Akerlof, and Michael Spence of Stanford University.

Yellen spent 26 years – from 1980-2006 – as a Berkeley-Haas faculty member. She taught thousands of undergraduate and MBA students in required macroeconomics courses, and many more in graduate electives in international economics and trade. Her popularity with students twice earned her the school’s Earl F. Cheit Award for Excellence in Teaching, in 1985 and 1988. Yellen also held an affiliated appointment in the university’s economics department.

“I hired her and have been pleased ever since. At the Haas School, her colleagues and students admired her scholarship and her teaching,” said Earl “Budd” Cheit, dean emeritus of Berkeley-Haas. “As a dean, I especially admired her willingness to be an institution builder. To me, her defining characteristic is quiet competence.”

Yellen has drawn crowds to campus when delivering Federal Reserve speeches in recent years. 

Former Yellen student Juan Manuel Matheu, MBA 04, is the chief executive officer with Banco Falabella in Santiago, Chile. He said he was impressed by Yellen’s “ability to listen respectfully to different points of view, contrast them with her clear ideas, and even incorporate part of them in her own thinking.”

Matheu recalled one class in which discussions started in the classroom and ended with Yellen and her students continuing the conversation with pizza in the Haas School courtyard. “She cares and embodies our values; she is the living example of all four of the Berkeley-Haas Defining Principles, especially ‘Confidence Without Attitude.’”

Colleagues and students across the campus have been watching the Federal Reserve nomination process with anticipation for months.

Yuriy Gorodnichenko, an economics professor specializing in macroeconomics and international economics, focused on just that at a recent fundraiser for graduate students. He auctioned a promise to pay $500 to the highest student bidder if Yellen – or Christina Romer – becomes Fed chair in the near future.

“I offered this to not only help raise funds for the graduate association, but also to draw attention to how prominent Berkeley faculty members are, not only in research, but also in policy,” he said.  “It is pretty incredible.”

See the Janet Yellen Fact Sheet

Read a Profile of Janet Yellen in BerkeleyHaas Magazine Fall 2012

UNIVERSITY OF CALIFORNIA, BERKELEY’S HAAS SCHOOL OF BUSINESS – Most know that hiding something from others can cause internal angst. New research suggests the consequences can go far beyond emotional strife and that being forced to keep information concealed, such as one’s sexual orientation, disrupts the concealer’s basic skills and abilities, including intellectual acuity, physical strength, and interpersonal grace—skills critical to workplace success.

“With no federal protection for gays and lesbians in the work place, our work suggests that the wisdom of non-discrimination laws should be debated not merely through a moral lens, but with an appreciation for the loss of economic productivity that such vulnerabilities produce,” says Clayton R. Critcher, assistant professor at UC Berkeley’s Haas School of Business. Critcher, a member of the Haas Marketing Group, conducts research on consumer behavior and social psychology, including questions of self and identity.

Critcher’s paper, “The Cost of Keeping it Hidden: Decomposing Concealment Reveals What Makes it Depleting,” forthcoming in the Journal of Experimental Psychology: General and co-authored with Melissa J. Ferguson of Cornell University, details multiple negative consequences of concealment. The findings, says Critcher, stem from the difficulty of having to constantly monitor one’s speech for secret-revealing content that needs to be edited out.

The researchers conducted four studies, each of which was a variation on a single paradigm. When participants arrived at the study, they learned they would be taking part in an interview. Following a rigged drawing, all participants learned they were assigned to be an interviewee. Another supposed participant—who, in reality, was an actor hired by the experimenter—was the interviewer.

Some participants were given special instructions about what they could reveal in the interview. In three of the four studies, some participants were told they should make sure not to reveal their sexual orientation while answering the questions. For example, participants were told that in answering questions, instead of saying “I tend to date men who …,” the participants could say, “I tend to date people who ….”

After the interview, participants thought they were moving on to an unrelated study. In actuality, this second part of the experiment was related, offering researchers the opportunity to measure whether participants’ intellectual, physical, or interpersonal skills were degraded by concealment. The studies revealed the variety of negative effects of concealment.

In one study, participants completed a measure of spatial intelligence that was modeled after items on military aptitude tests. Participants randomly assigned to conceal their sexual orientation performed 17% worse than those who went through the interview without instructions to conceal. In another experiment, participants tasked with hiding their sexual orientation exhibited reduced physical stamina, only able to squeeze an exercise handgrip for 20% less time than those in a control condition. Additional studies revealed that concealment led people to show less interpersonal restraint. For example, the participants responded to a “snarky” email from a superior with more anger than politeness. During another test, participants demonstrated poorer performance on a “Stroop task,” a commonly-used measure of executive cognitive function. 

In consequent experiments, participants’ abilities were assessed both before and after the interview. This permitted the experimenters to more directly observe that merely going through an interview does not affect one’s strength of cognitive control, but going through an interview while having to conceal one’s sexual orientation led to significant declines.

In addition, the researchers varied whether questions focused on participants’ personal or dating life, or on topics for which one’s sexual orientation would never be revealed. Concealment caused similarly sharp declines in both cases.

“Environments that explicitly or implicitly encourage people to conceal their sexual orientation—even when employers adopt a ‘Don’t Ask’ policy—may significantly harm workers,” says Critcher, “Establishing a workplace climate that supports diversity may be one of the easiest ways to enhance workplace productivity.”

See Abstract.

New study finds hiring managers often make poor choices because they systematically rely strictly on generic performance measures rather than considering situational context.

UNIVERSITY OF CALIFORNIA, BERKELEY’S HAAS SCHOOL OF BUSINESS –Have you ever applied for a job and wondered why it is offered to someone who appears to be less qualified than you?  A new study by Associate Professor Don Moore finds employment managers tend to ignore the context of past performance.  

The article, “Attribution Errors in Performance Evaluation,” (PLoS One, July 24, 2013), is co-authored by Samuel A. Swift, a Berkeley-Haas post-doctoral fellow; Zachariah S. Sharek, director of strategy and innovation at CivicScience; and Francesco Gino, associate professor at Harvard Business School.

“We would like to believe that the people who are making judgments that affect our lives—where we get hired or what school we are admitted to—have the wisdom to understand who we are, what we are capable of, what shortcomings aren’t our fault,” says Moore, “But our research shows people evaluating us have a great deal of trouble considering situational factors or context.”

Study participants were asked to evaluate a situation similar to this hypothetical scenario:

John and Dave are applying for a senior management position at Los Angeles International Airport (LAX). John works at the Oakland International Airport (OAK), and David works at San Francisco International (SFO). They offer comparable experience. One key measure of performance for the LAX job is the percentage of flights that leave on time at the applicant's airport. SFO is considered to be the more difficult airport to land planes, in part because it has more overcast days and only two of four runways in use. Therefore SFO rates lower in on-time departures, and John from OAK gets the job.

In addition to studying hiring decisions by human resource managers, the researchers also studied graduate school admissions decisions and found similar results. For example, applicants with higher GPAs from schools known for easier grading systems beat out applicants with lower GPAs from universities with stricter grading policies.

“Our results suggested that alumni from institutions with lenient grading had a leg up in admission to grad school, and the reason for that is the admissions decision makers mistakenly attributed their high grades to high abilities,” says Moore.

Moore describes this behavior as an example of the “correspondence bias”—a social psychology term that describes when people have the tendency to draw inferences about a person’s disposition while ignoring the surrounding circumstances.

The study found that while the decision makers said they wanted to consider situational influences on performance, when given the opportunity, they failed to do so. The paper documents a systematic bias in the habit of thought.

Moore, however, remains hopeful that changing that behavior is possible on an individual and collective level.

“If you are a hiring manager, ask for more information about other people in the applicant’s department and how the person you are considering is better or worse than others in the same situation,” says Moore, “If you are an admissions director, ask for class rank.” In addition, Moore says, applicants should offer more information about their performance.

See full paper.

The E2e Project aims to give decision-makers real-world evidence on the most cost-effective ways to reduce energy and emissions.

Haas Media Relations:
Pamela Tom
[email protected]
(510) 642-2734

MIT Energy Initiative (MITEI)
Victoria Ekstrom
[email protected]
(617) 253-3411

BERKELEY, CA and CAMBRIDGE, MA –Energy efficiency promises to cut emissions, reduce dependence on foreign fuel, and mitigate climate change. As such, governments around the world are spending tens of billions of dollars to support energy-efficiency regulations, technologies and policies.

But are these programs realizing their potential? Researchers from the MIT Energy Initiative (MITEI) and University of California at Berkeley’s Haas School of Business have collaborated to find out.

The researchers’ energy-efficiency research project, dubbed “E2e,” is a new interdisciplinary effort that aims to evaluate and improve energy-efficiency policies and technologies. Its goal is to support and conduct rigorous and objective research, communicate the results and give decision-makers the real-world analysis they need to make smart choices.

The E2e Project is a joint initiative of the Energy Institute at Haas and MIT’s Center for Energy and Environmental Policy Research (CEEPR), an affiliate of MITEI — two recognized leaders in energy research.

The project’s name, E2e, captures its mission, the researchers say: to find the best way to go from using a large amount of energy (“E”) to a small amount of energy (“e”), by bringing together a range of experts — from engineers to economists — from MIT and UC Berkeley. This collaboration, the researchers say, uniquely positions the E2e Project to leverage cutting-edge scientific and economic insights on energy efficiency.

“Cutting energy has lots of potential to help us save money and fight climate change,” says Michael Greenstone, MIT’s 3M Professor of Environmental Economics and a member of MITEI’s Energy Council. “It’s critical to find the local, national and global policies with the biggest bang for the buck to use governments’, industry’s and consumers’ money wisely while slowing climate change.”

Greenstone is leading the project with Christopher Knittel, co-director of CEEPR, and Catherine Wolfram, associate professor and co-director of the Energy Institute at Haas.

“When deciding on the best energy measures to implement, decision-makers should compare model predictions to actual consumer behaviors. That’s where this project comes in,” Wolfram says. “The E2e Project is focused on singling out the best products and approaches by using real experiments centered on real buying habits. It will provide valuable guidance to government and industry leaders, as well as consumers.”

The group’s motivations for studying energy efficiency are derived, in part, from the McKinsey Curve — a cost curve that shows that abating emissions actually pays for itself.

“Our goal is to better understand what the costs and benefits of energy-efficient investments are — where the low-hanging fruit is, as well as how high that fruit is up the tree,” says Knittel, MIT's William Barton Rogers Professor of Energy Economics at the MIT Sloan School of Management. “The McKinsey curve would suggest the fruit’s already on the ground. If this is true, we want to figure out why no one is picking it up.”

Former U.S. Secretary of State George P. Shultz, a member of the E2e advisory board, says, “I like the saying ‘A penny saved is a penny earned,’ which rings true from the standpoint of energy. Energy that is used efficiently not only reduces costs, but is also the cleanest energy around. The E2e Project will allow us to better understand which energy-efficiency programs save the most pennies.”

Shultz is a distinguished fellow at Stanford University’s Hoover Institution, where he leads the Energy Policy Task Force. The board also includes MIT Institute Professor John Deutch, former undersecretary of the Department of Energy; Cass Sunstein, a professor at Harvard Law School and President Obama’s former director of regulatory affairs; Susan Tierney, managing principal at Analysis Group and a former Department of Energy official; and Dan Yates, CEO and founder of Opower.                                                  

The E2e Project seeks to answer questions such as: Are consumers and businesses bypassing profitable opportunities to reduce their energy consumption? What are the most effective ways to encourage individuals and businesses to invest in energy efficiency? Are current energy-efficiency programs providing the most savings?

The project’s first experiments are already underway. For example, the team is tracking consumers’ vehicle purchasing decisions to discover if better information about a car’s fuel economy will influence consumers to buy more fuel-efficient vehicles. If so, emphasizing the calculated fuel savings in the vehicle information presented to consumers may be productive.

Other initial projects include evaluating the Federal Weatherization Assistance Program, and determining why households invest in energy efficiency and the returns to those investments.

More information: e2e.haas.berkeley.edu or e2e.mit.edu

The E2e Project was funded with a grant from the Alfred P. Sloan Foundation.

UNIVERSITY OF CALIFORNIA, BERKELEY'S HAAS SCHOOL OF BUSINESS –Finance Professor Martin Lettau has received the 2013 AQR Insight Award for his research about how an extension of the widely taught capital asset pricing model can explain returns of equity, commodity, sovereign bonds, and currencies and offer a unified risk view of these investments. 

The winning paper, “Conditional Currency Risk Premia,” is co-authored with Haas alumnus Matteo Maggiori, Ph.D. 12, and Michael Weber, a current Haas Ph.D. student.  They will share the first prize of $60,000.

The paper weighs into the ongoing debate on whether currency returns can be explained by their exposure to risk factors.  The authors find that currency returns can be explained by a risk model where investors are particularly concerned about downside risk, called “the downside risk capital asset pricing model.” 

According to Lettau, it is well-known that high-yield currencies earn higher returns than low yield currencies.  The authors show that returns of high-yield currencies are highly correlated with aggregate market returns when market returns are particularly low.  Low-yield currencies have the opposite correlation pattern.  If investors are particularly concerned about times when market returns are very low, the difference in downside risk of high-yield currencies relative to low-yield currencies can explain their differences in returns.  This relationship is characteristic not only of currencies but also of equities, commodities, and sovereign bonds, thus providing a unified risk view of these markets.

Lettau is a member of the Haas Finance Group and the Kruttschnitt Family Chair in Financial Institutions.

The winning paper was presented to AQR investment teams in Greenwich, CT last month.

Applied Quantitative Research (AQR) provides global investment services, including investment philosophies based on empirical finance research.  AQR established the Insight Award to honor finance research that offers significant practical implications for improving investment performance.

“This paper is an example of relevant empirical research motivated by economic intuition and financial theory. It explores the implication of securities' downside risk (the risk of losses during period of market distress), a topic of extreme relevance for both asset managers and investors,” says AQR Co-Founding Principal David G. Kabiller. “This is the precisely kind of empirical research the AQR Insight Award was created to encourage: rigorous, relevant empirical analysis motivated by economic theory.”

See the full paper.

http://www.haas.berkeley.edu/groups/online_marketing/facultyCV/papers/lettau_risk.pdf

A study in Rwanda by Prof. Paul Gertler shows that financial incentives for medical providers improve service and health outcomes.

Everyone knows money talks. Prof. Paul Gertler found this to be the case in Rwanda, where, in conjunction with the national government, he evaluated a new and novel pay-for- performance model for the health care industry designed to increase access to high quality maternal and child health services.

He outlines his findings in his paper, “Using Performance Incentives to Improve Medical Care Productivity and Health Outcomes,” co-authored by Christel Vermeersch, a World Bank senior economist.

"Instead of investing more in the current healthcare system, we can try to get more out of our existing resources. The problem in Rwanda and most of the world is that medical care providers’ deliver a quality of care that is below their capabilities and training," says Gertler, director of the UC Berkeley Clausen Center for International Business and Policy and the Li Ka Shing Foundation Chair in Health Management.

Gertler found that when providers were offered financial incentives, their compliance with clinical care guidelines increased by 30 percent and their productivity increased 20 percent. The study showed that these improvements resulted in large increases in child health outcomes as measured by increased height and weight of children treated by these providers. 

The Rwandan government offered health care providers payments for services such as institutional childbirth deliveries and emergency referrals to hospitals for obstetric services, new contraceptive user visits, referrals of at-risk pregnancies to hospitals, and referrals of malnourished children to higher level facilities for treatment. For example, a provider receiving $.55 for four standard prenatal care visits received $1.47 for providing higher quality care such as administering tetanus and malaria vaccines or detecting a high-risk patient and referring her to a hospital.

The pay-for-performance model is now being tried in Africa and parts of Latin America and is an important part of Obamacare, according to Gertler.  “One of the nice things about the Affordable Care Act or Obamacare is the plan to offer financial incentives for providers,” Gertler explains. “If we are going to make progress in reducing costs of Medicare and Medicaid, pay for performance can make the system more efficient and dramatically improve the quality of health care.”

See full paper.

UNIVERSITY OF CALIFORNIA, BERKELEY’S HAAS SCHOOL OF BUSINESS―Derek Dean joins the Center for Executive Education (CEE) as its new CEO, bringing more than two decades of experience in consulting at The Exetor Group and McKinsey & Co. The Center for Executive Education at UC Berkeley’s Haas School of Business offers a portfolio of open enrollment and custom programs for today’s global executive.

Dean most recently worked at Exetor, where he designed and delivered development programs and coached executives and teams in the technology, advertising, professional services, and basic materials industries. Before that, he worked at McKinsey from 1990 to 2010, leading the firm's global semiconductor practice for 10 years and then managing the firm's San Francisco office.

"Derek's unique experience in strategy consulting at McKinsey and leadership development at Exetor will be a tremendous asset for CEE’s ambitious growth plan," says Rich Lyons, dean of the Haas School.  "We are fortunate to have a leader of such outstanding caliber taking the helm at CEE at this critical time."

Dean's arrival comes after CEE's April 1 restructuring into self-supporting, affiliated nonprofit of the Haas School in order to grow faster and help meet the school's financial goals. Under the new structure, the unit’s profits will continue to flow to the Haas School, with a portion also going to UC Berkeley. CEE has become a significant source of revenue that supports academic areas and operations of the Haas School. 

"The creation of a new entity opens up an opportunity to revolutionize the way education is delivered to corporate executives," Derek Dean says. "The new model also enables CEE to rapidly expand our custom programs and integrate content into those programs across not just Haas but other schools on campus to create unique interdisciplinary offerings."

"What I love about CEE is this notion of a consulting model working with clients to figure out what they need for their people to be more effective and to help them solve their problems by providing provocative ideas, tools, and maybe the environment outside of their office to really think creatively," he adds.

At McKinsey, Dean worked intensively with clients on specific projects or problems, helping them find solutions or drive change programs. His work at Exetor, meanwhile, focused much more on helping individual leaders overcome barriers in culture, mindset, or leadership that were preventing them from achieving their full potential.

"At CEE, I see a great opportunity to blend those two models from McKinsey and Exetor with the incredibly distinctive knowledge embodied in the faculty at Haas and the entire university," Dean says. He can't talk specifically about past clients, but says, "I'm attracted to problems that seem impossible. The most exciting clients I have had have been CEOs or other leaders who have said 'I want to change the world, I want to change the model, I want to reinvent this industry or this market, and I'm asking for help.'"

Dean earned an MBA from Stanford and a BA in American studies at Carleton College in Minnesota. He is a member of the San Francisco Symphony board of governors and vice chairman of the San Francisco SPCA board of directors. 

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UNIVERSITY OF CALIFORNIA, BERKELEY'S HAAS SCHOOL OF BUSINESS – While teaching a course on financial information analysis, Asst. Prof.  Panos Patatoukas observed that capital market participants and policy makers are increasingly turning to accounting earnings data from corporate financial reports for hints regarding the prospects of the aggregate stock market. This observation indicated that, at the aggregate level, accounting earnings data could be relevant for gauging the value of the entire stock market.

Patatoukas, Haas Accounting Group, became so intrigued that he decided to undertake an in-depth investigation of the information that decision makers interested in stock market valuation could extract from accounting earnings data aggregated across publicly traded firms in the U.S. 

Patatoukas’ study, “Detecting News in Aggregate Accounting Earnings: Implications for Stock Market Valuation” is published in The Review of Accounting Studies (March 2013).

Patatoukas’ study develops a theoretical framework for understanding the relation between aggregate accounting earnings and stock market valuation. Patatoukas shows that this relation is complicated by the fact that stock market prices are very sensitive to even small revisions in investors’ expectations about discount rates. His study provides strong empirical evidence that this is the case.

Using a comprehensive sample of U.S. publicly traded firms from 1981 to 2009, Patatoukas shows that aggregate accounting earnings are tied to news about both expected future cash flows and discount rates. A comprehensive investigation of the link to discount rates reveals that aggregate accounting earnings are tied to news about the real riskless rate, expected inflation, and the expected equity risk premium (i.e., the expected excess return of the stock market over the nominal riskless rate). In fact, over the sample period studied, cash flow news and discount rate news in aggregate accounting earnings move together and have opposite impacts on the value of the aggregate stock market. An increase in expected future cash flows is positive for valuation, while an increase in discount rates is negative for valuation. Importantly, however, prices capture the net impact of cash flow news and discount rate news and so the stock market appears to be insensitive to aggregate accounting earnings.

 “My findings illuminate the importance of separating cash flow news from discount rate news when evaluating the information content of aggregate accounting earnings for the stock market valuation,” says Patatoukas.  “Although the stock market appears to be insensitive to aggregate accounting earnings that does not mean that accounting earnings data are not informative. In fact, aggregate accounting earnings are very relevant for determining the value of aggregate stock market!”

Patatoukas’ theory and evidence has the potential to change how capital market participants and policy makers use accounting data from corporate financial reports when making inferences at the aggregate stock market level. “Maybe it is not a pure speculation to expect that future research will uncover even more evidence on the relevance of aggregate accounting data for stock market valuation,” says Patatoukas.

See full paper.

Watch Prof. Ross Levine talk about his research.

UNIVERSITY OF CALIFORNIA, BERKELEY’S HAAS SCHOOL OF BUSINESS–Independence. Creativity. Money. Those are the benefits associated with successful entrepreneurs such as Steve Jobs and Mark Zuckerberg. But is being an entrepreneur really more lucrative than working for a salary? And who is best cut out to succeed? A new study by Professor Ross Levine of the Haas Economic Analysis and Policy Group answers both of these questions.

Levine and co-author Yona Rubinstein of the London School of Economics and Political Science found that entrepreneurs earn on average 50 percent more than their salaried counterparts who are working in the same industry and have the same education, contrary to a large body of research finding that entrepreneurship does not pay. Levine explains that many previous studies broadly define entrepreneurship, including people who are self-employed such as an accountant or a plumber. In this study, an entrepreneur is defined as a person who undertakes a novel, risk-taking activity. Levine says think Michael Bloomberg or Bill Gates.

Furthermore, they found that successful entrepreneurs possess distinct traits identifiable back when they were teenagers. These traits turn out to be accurate predictors of entrepreneurial success. Some of the not-so-surprising traits include having a high IQ, coming from a stable family, having parents who earn a higher than average income, and having exceptionally high self-esteem and confidence. However, some other common traits are often associated with juvenile delinquency.

“Our data revealed that many successful entrepreneurs exhibited aggressive behavior and got in trouble as teenagers. This is the person who wasn’t afraid to break the rules, take things by force, or even be involved in minor drugs,” says Levine, the Willis H. Booth Chair in Banking and Finance.

The researchers combed data from the National Longitudinal Survey of Youth (NLSY79), a representative sample of 12,686 young men and women who were 14 to 22 years old when they were first surveyed in 1979. The interviews have continued ever since.

“What we find is that a particular constellation of traits turns out to be a strong predictor of who is going to become an entrepreneur later in life and whether that person is going to be a high-earner when he or she launches a business,” says Levine.

In terms of earnings, the study found that successful entrepreneurs displaying these traits typically started their careers as top high earning salaried workers, and when they branched out on their own and successfully established their companies, they tended to enjoy a boost in earnings of 70 percent more than they received as salaried workers.

See full paper.

Note: This is a joint news release by UC Berkeley’s Haas School of Business, UCSF, and Stanford’s Engineering Department.

Friday, February 22, 2013

UC Berkeley, UCSF, and Stanford Join Forces To Help Commercialize University Innovations

BERKELEY, SAN FRANCISCO, PALO ALTO –The University of California, Berkeley, UC San Francisco and Stanford University are collaborating on an educational program aimed at commercializing university research and fostering innovation locally and nationally, thanks to a three-year, $3.75 million grant from the National Science Foundation (NSF).

The “I-Corps Node: NSF Bay Area Regional I-Node Program” is one of three new Innovation Corps (or I-Corps) Nodes that the NSF is establishing across the United States, the NSF announced yesterday, Feb. 21, 2013. The goal of I-Corps is to increase the impact of NSF-funded research by setting up innovation ecosystems within universities that will train the next generation of entrepreneurs, encourage partnerships between academia and industry, and commercialize science and technology. The resources of the program are available to NSF principal investigators and their graduate students, as well as local and national startups.

The San Francisco Bay Area/Silicon Valley Node is coordinated by UC Berkeley in collaboration with UCSF and Stanford University. The node is headed by Richard Lyons, dean of UC Berkeley’s Haas School of Business, and Silicon Valley entrepreneur Steve Blank, entrepreneurship lecturer at Berkeley and Stanford. André Marquis, executive director of the Haas School’s Lester Center for Entrepreneurship, serves the role of Node manager.

“Our three universities are the source of so many ground-breaking discoveries that can be put into service of society and this grant will allow us to develop next-generation processes to tap them and bring them to market,” says Berkeley-Haas Dean Rich Lyons. “Getting better at this means more jobs, more economic value and better lives.”

Lyons and Blank are joined by co-investigators Erik Lium, PhD, assistant vice chancellor of Innovation, Technology & Alliances at UCSF, and Riitta Katila, associate professor of Management Science & Engineering at Stanford University.

All of NSF’s I-Corps nodes will teach the Lean Launchpad framework, a training program developed by Steve Blank that focuses entrepreneurs on developing business models, rather than business plans, and on iterating their models quickly and frequently based on customer feedback. The framework grew out of an earlier customer development course Blank taught at Berkeley-Haas after observing that few business plans ever survived first contact with customers. Blank teaches the Lean Launchpad framework in the Berkeley MBA Program and at Stanford’s School of Engineering. At UCSF, where Blank also will begin teaching this fall, this will be the first time the framework will be used in a bioscience setting.

“UCSF was the birthplace of biotechnology, launching some of the lead companies in the field, such as Genentech. As such, this program fits perfectly with our efforts to translate research into new bioscience companies,” says Lium, whose office also oversees the Entrepreneurship Center at UCSF. “Our goal is to expand the Lean Launchpad curriculum to address the life sciences, creating a model that biomedical entrepreneurs can use worldwide to build to successful companies.”

“Stanford is delighted to join with these two universities and the NSF in fostering entrepreneurship and driving the growth of a national innovation ecosystem,” says Stanford Engineering Dean Jim Plummer. “We welcome the opportunity to leverage our history of successful technology transfer to benefit our nation’s economy and improve the lives of our citizens.”

The Bay Area partner institutions will also build novel pedagogical tools to provide much of their training programs online and track the progress of their startups, which will help to advance best practices for teaching and fostering entrepreneurship in the future. The online trainings will be made available publicly.

“This is one of three new I-Corps nodes that will significantly expand our reach in bringing innovation education to faculty and students,” said NSF Program Director Don Millard. “This node builds on early work with Berkeley in developing the I-Corps effort. In the collaboration with UCSF and Stanford, we see it helping bring I-Corps training to a new level. The addition of the San Francisco Bay Area/Silicon Valley node will help advance the I-Corps program’s National Innovation Network.”

“The Nodes are the foundation of a national innovation ecosystem and focus on the front-lines of local and regional commercialization efforts. We are looking to them to provide long-term, critical education infrastructure and feedback to the programs that support the commercialization of our nation’s basic research portfolio,” says Errol Arkilic NSF I-Corps program director.

“The NSF has built an incredibly smart program to bring together the best of science and technology invention with all the advances we have made in teaching entrepreneurship over the past decade,” says node manager André Marquis. “Given our unique location within the national network for entrepreneurship, we have a great deal to bring to the I-Corps network.”

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About Berkeley-Haas

The Haas School of Business at the University of California, Berkeley, is one of the leading producers of new ideas and knowledge in all areas of business. One of the first business schools to teach entrepreneurship, starting in 1970, the Haas School later established the Lester Center for Entrepreneurship to foster academic programs, community outreach and campus-wide collaboration in new venture creation, entrepreneurship, and venture capital. Visit https://haas.berkeley.edu/

About UCSF and the UCSF Office of Innovation, Technology, and Alliances

UCSF is a leading university dedicated to promoting health worldwide through advanced biomedical research, graduate-level education in the life sciences and health professions, and excellence in patient care. Visit www.ucsf.edu.

The Office of Innovation, Technology and Alliances coordinates UCSF’s efforts in forging collaborations that translate cutting-edge science on campus into therapies and products that directly benefit patients worldwide. The office oversees intellectual property, technology transfer, and innovative alliances with commercial, non-profit, and government organizations.

About the Stanford School of Engineering
Stanford Engineering has been at the forefront of innovation for nearly a century, creating pivotal technologies that have transformed the worlds of information technology, communications, medicine, energy, business and beyond. The school’s faculty, students and alumni have established thousands of companies and laid the technological and business foundations for Silicon Valley. Today, the school continues to seek solutions to important global problems and educate leaders who will make the world a better place. Visit http://engineering.stanford.edu/

About the National Science Foundation’s I-Corps Program

The primary goal of NSF I-Corps is to foster entrepreneurship that will lead to the commercialization of technology that has been supported previously by NSF-funded research.

I-Corps Nodes are designed to support regional needs for innovation education, infrastructure and research. The Nodes will work cooperatively to build, utilize and sustain a national innovation ecosystem that further enhances the development of technologies, products and processes that benefit society. Visit http://www.nsf.gov/news/special_reports/i-corps/

View NSF’s Feb. 21 news release “New Grants to Innovation Corps ‘Nodes’ Further Enhance Public-Private Partnership” at http://www.nsf.gov/news/news_summ.jsp?cntn_id=127011

Haas School Media Relations:
Pamela Tom                                                                               
[email protected]

Gov. Jerry Brown and Bank of America CEO Brian Moynihan to speak at the “Summit Meeting on the Future of Housing in California” 

Presented by the Fisher Center for Real Estate and Urban Economics at UC Berkeley’s Haas School of Business
 

All Reporters: Please check in at the media registration table between 7 a.m. to 7:45 a.m.
The site is a secure state office building. Please allow time to enter through security. Late arrivals will be allowed in between 10 to 10:15 a.m. only. Gov. Brown’s press availability post-event TBD.
Broadcast Media: Please set up in the back of the auditorium; mult box available.
Due to limited space, advance media registration is required for admittance.
RSVP by Monday, 2/11, 12 noon.
Please send name, title, media organization, phone number and email to: [email protected]

WHAT

Berkeley-Haas’ Fisher Center for Real Estate and Urban Economics presents a discussion of the future of California’s housing climate by those shaping the market, including top real estate experts, policymakers, housing developers, investors, finance agencies, and consumer services organizations.

WHEN

Tuesday, February 12, 2013, 8 a.m. to 12 noon

o    7 a.m. – Registration and Continental Breakfast

o    8 a.m. – Welcome, Ken Rosen, chair, Fisher Center for Real Estate and Urban Economics

o    8:05 a.m. – “Homeownership versus Renting: The New Math of the Tenure Choice Decision” panel discussion presented by Ken Rosen

o    9 to 10 a.m.– “Issues and Outlook for the Rental Housing Market” panel discussion

o    10 to 10:15 a.m. – Break

o    10:15 to 11 a.m. – “The Future of Homeownership in California and Nationally,”

with Edmund G. “Jerry” Brown Jr., Governor of the State of California and Brian Moynihan, Chief Executive Officer, Bank of America. Moderated by Ken Rosen, chair, Fisher Center for Real Estate and Urban Economics, UC Berkeley's Haas School of Business. 

o    11 a.m. – “Policy Issues for California Housing” panel discussion

WHERE

Elihu M. Harris State Office Building, 1515 Clay Street, Oakland, CA 94612

WHO

Panel participants include :

“Homeownership versus Renting: The New Math of the Tenure Choice Decision”

Presented by Ken Rosen, chair, Fisher Center for Real Estate and Urban Economics

o    Doug Brien, Waypoint Homes

o    Daryl Carter, Avanath Capital Management

o    Steve Zuckerman, Self-Help

“Issues and Outlook for the Rental Housing Market”

Moderated by Professor Dwight Jaffee, co-chair, Fisher Center for Real Estate and Urban Economics

o    Yat-Pang Au, Veritas Investments

o    Adele Hayutin, Stanford Center for Longevity

o    Rick Holliday, BRIDGE Housing Corporation

o    William Witte, Related Companies

“Policy Issues for California Housing”

Moderated by Assistant Professor Carolina Reid, City and Regional Planning, UC Berkeley

o    Claudia Cappio, California Housing Finance Agency

o    Lori Gay, Neighborhood Housing Services of Los Angeles County

o    Jennifer Hernandez, Holland & Knight LLP

o    Jed Kolko, Trulia

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Finance Professor Ulrike Malmendier Receives 2013 Fischer Black Prize
 

UNIVERSITY OF CALIFORNIA, BERKELEY'S HAAS SCHOOL OF BUSINESS – Berkeley-Haas Finance Professor Ulrike Malmendier has been awarded the 2013 Fischer Black Prize from the American Finance Association, which honors the top finance scholar under the age of 40 years old.  The prize was announced to the public Jan. 7, 2013.

The prize was established in 2002 in honor of Fischer Black, who was a co-inventor, along with Myron Scholes, of the Nobel-prize winning Black-Scholes-Merton Options-Pricing Model. The prize is modeled after the Fields Medal in mathematics and the Clark Medal in economics.

Malmendier is the fifth recipient of the biennial prize. (No prize was awarded in 2005, when no candidate met the standards.) She holds a joint position as a professor of economics at UC Berkeley, which she joined in 2006, and has been at the Haas School of Business since 2010. 

“I’m thrilled and honored that the American Finance Association selected me for the award from a very select group of people,” says Malmendier.  “I can't fully believe that this has actually happened yet.”

The American Finance Association’s award citation referred to Malmendier’s work in corporate finance, behavioral economics and finance, contract theory, and the history of the firm, particularly noting the originality and creativity of Malmendier’s research.

“The Fischer Black Prize is one of the most prestigious academic prizes—this  is a great honor for an outstanding scholar,” says Berkeley-Haas Dean Rich Lyons. “We are delighted that the finance profession has recognized Malmendier’s accomplishments, and we’re proud that she’s a member of Berkeley-Haas.”

Malmendier feels particularly thankful for the recognition since her area of research, the intersection between economics and finance or behavioral corporate finance, is less mainstream.  Malmendier says, “I have always been interested in both economics and finance and in particular, why and how individuals make decisions—specifically how individuals make mistakes and systematically biased decisions. Some applications are in finance, but often my research questions are far from mainstream finance.”

One of Malmendier’s recent research papers, “Depression Babies: Do Macroeconomic Experiences Affect Risk-Taking?” published in the Quarterly Journal of Economics in 2011 with co-author Stefan Nagel of Stanford, is representative of the originality and creativity of  her research. The paper shows that groups of people who have experienced macro-economic shocks such as low market returns, for example, tend to take less risk later in their lives, and vice versa. "Malmendier’s results have been observed anecdotally, but she was able to show them econometrically, which is not easy to do, ” says Haas Finance Professor Terry Odean, who holds the Rudd Family Foundation Chair and chairs the Finance Group at Berkeley-Haas.

Another research paper, “Paying Not to Go to the Gym,” published in the American Economic Review in 2006 and co-authored with Berkeley Economics Professor Stefano DellaVigna, shows that people with monthly gym memberships tend to use their membership far too infrequently to justify the monthly dues – paying per visit would be much cheaper. Regardless, they tend to stay enrolled rather than cancelling it.  Odean says, “For a gym member to actually end their membership is to admit that they won’t exercise—that they give up.  From an economist point of view, this is interesting because it is expensive to maintain this membership and to get no value out of the membership.”

Andrew Rose, associate dean and faculty chair at Berkeley-Haas and professor of economic analysis and policy, is proud of Malmendier and the school’s entire finance faculty who have recently won numerous awards, “In addition to Ulrike Malmendier’s Fischer Black Prize, Professor Adair Morse has recently won the Brattle Prize for the best corporate finance paper published in the Journal of Finance and Professor Nicolae Gârleanu has recently won the Smith Breeden Prize for the best finance research paper in the Journal of Finance in any area other than corporate finance.  We have much to celebrate with our outstanding finance faculty.”

Tax Evasion in Greece: Billions Earned by High Income Professionals Go Untaxed

UNIVERSITY OF CALIFORNIA, BERKELEY’S HAAS SCHOOL OF BUSINESS –Wide-scale tax evasion in Greece accounts for 28 billion Euros in unreported taxable income –just among the self-employed, according to a new study, “Tax Evasion Across Industries: Soft Credit Evidence from Greece,”  by  Adair Morse,  a visiting assistant professor of finance at Berkeley-Haas.  

At a tax rate of 40 percent, that’s a revenue loss responsible for nearly one-third of Greece’s deficit in 2009 or almost 50 percent of the deficit in 2008, according to the study co-authored by Margarita Tsoutsoura, assistant professor, University of Chicago Booth School of Business, and Nikolaos Artavanis, PhD candidate, Virginia Tech Pamplin College of Business.

Using bank data on household borrowing, the paper finds that highly paid, highly educated professionals are at the forefront of tax evasion in Greece:  doctors, engineers, private tutors, financial services agents, accountants, and lawyers. Morse contends the findings are troubling from a perspective of inequality in the financially struggling country.  

“The goal of the paper is to use our rich bank data to provide a country-representative estimate of tax evasion in aggregate and by occupation, and to offer analysis relating to factors that allow the tax evasion to persist,” says Morse.  “But we were also very aware that understanding who is paying taxes and who is not is important to the people of Greece. One might ponder how it can be a good thing that the higher-income professions ‘tax evade’ a higher proportion of this income.”

The researchers further sought to understand how such dramatic tax evasion could exist and continue, with two main conclusions. First, the tax evaders tend to work in occupations that are least likely to leave a verifiable “paper trail” for tax collectors. Second, legislation, including a 2010 bill addressing the widespread tax evasion, has been slow to win approval. Morse asserts that it may not be mere coincidence that the majority of Greek Parliament members’ professions correlate with the largest tax evaders’, even excluding lawyers.  “Industry associations are strong,” Morse suggests. “Parliament members face enormous loyalty pressure.”

The data consist of credit applications for consumer credit products at one of the ten large Greek banks from 2003 to 2010. The authors study situations in which the bank determines the credit level such as refinance loans, new credit cards, and a sample of loans in which borrowers requested more money than they received. In these situations, Morse uses the bank decision on the appropriate credit level to understand how much income the bank must perceive individuals to have to back out the bank’s estimate of true income. The authors term such lending “soft credit” since the information about true income is soft information. The researchers infuse this new insight with the observation that Greek banks have learned to adapt to an economy where income is often hidden to remain competitive.

Morse hopes the study’s findings will encourage EU and Greek policymakers to create incentives for more accurate income reporting such as paper trial mandates or occupation licenses for tax evading industries. Already the research is having an impact on the rhetoric in Greece, encouraging the population to think about the culture of tax evasion and how tax evasion does not equally benefit all Greeks. The Greek government recently approved new regulations requiring all businesses to issue receipts for transactions so it may track business taxes due. If a business doesn’t comply, the customer can reportedly walk away –without paying.

See full paper.

MEDIA ADVISORY

November 15, 2012

Contact:

Corina Vaughn
Fisher Center for Real Estate & Urban Economics
(510) 643-6107
[email protected]

Pamela Tom
Haas Media Relations
(510) 642-2734
[email protected]

UC Berkeley’s 35^th Annual Real Estate & Economics Symposium to Focus on How the Current Economy and Political Landscape Impact the Domestic Real Estate Market

WHAT

Practitioners in the real estate, finance, and legal professions will gather in San Francisco for the 35^th Annual Real Estate & Economics Symposium sponsored by the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley’s Haas School of Business.

This year’s theme is “Real Estate Markets, the Recovery, the Election and Beyond.”

Panel topics include :

• The Changing Face of Real Estate Finance
• The Imminent Residential Recovery?
• Finding the Sweet Spot in the Commercial Marketplace
• Entrepreneurial Development Strategies: New Frontiers

More information: http://groups.haas.berkeley.edu/realestate/ExecEd/symposiuminfo.html

WHEN

Monday, November 19, 2012, 8 a.m. to 5 p.m.

WHERE

Westin St. Francis Hotel, 335 Powell Street, San Francisco, CA 94102

WHO

Keynote Speakers:

Kenneth T. Rosen, chair, Fisher Center for Real Estate and Urban Economics

Rosen will share his real estate forecast, outlining how the current political and economic environment will affect real estate markets now and in the future.

John Chiang, controller, State of California

As the chief fiscal officer and a leader in pension and corporate governance reform, Chiang will share his insights for increasing financial efficiency in areas that impact real estate financing. 

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Contact: Pamela Tom
[email protected]
510-642-2734

Criminal punishment and politics: Elected judges take tougher stance prior to elections

UNIVERSITY OF CALIFORNIA, BERKELEY'S HAAS SCHOOL OF BUSINESS –The last few months leading up to an election can be a critical, political game changer. One right or one wrong move can quickly change a candidate's standing at the polls. New research suggests that judges who are elected, rather than appointed, respond to this political pressure by handing down more severe criminal sentences – as much as 10 percent longer –in the last three months before an election compared with the beginning of their terms.

"We can't say if more severe sentencing is better for society or worse, but our findings show us how political pressure can distort the sentencing process and can lead to starkly different sentences for similar criminals sentenced at different times," says Noam Yuchtman, assistant professor of business and public policy at the Haas School of Business.

Yuchtman and Carlos Berdejó, associate professor of law, Loyola Law School, are co-authors of "Crime, Punishment, and Politics: Analysis of Political Cycles in Criminal Sentencing," forthcoming in the Review of Economics and Statistics.

The study examined the felony sentences of 265 full-time Superior Court judges between July 1995 and December 2006 in the state of Washington, covering three elections in 1996, 2000, and 2004. The authors focused on the most high-profile crimes such as murder, assault, rape, and robbery, which represent 6.7 percent of 18,447 sentences conferred. Case-specific controls included the defendant's age, gender, race, and prior criminal history, as well as an indicator of whether the sentence resulted from a plea agreement. The study also accounted for a number of potentially confounding variables such as changes in attorney behavior, case re-assignment, political cycles of other officials, and seasonal variations; for example, if more homicide sentencing hearings than usual happened to occur right before an election.

Yuchtman and Berdejó find that sentence lengths increase at the end of judges' political cycles, then sharply fall when their next term begins, only to rise again as their next election approaches.

Importantly, they do not find an increase in sentencing severity at the end of terms of judges who are not seeking re-election. Judges only increased the severity of their sentences at the end of a political cycle when they were facing re-election.

The findings also indicated that toward the end of their terms, judges tend to become more calculated in making their sentencing decisions, deviating from normal sentencing guidelines 50 percent more often at the end of the electoral cycle compared with the beginning. These deviations account for a large fraction of the harsher sentencing, suggesting that the influence of politics on sentencing crucially depends on the discretion judges have in sentencing.

History reveals that most judges are re-elected and don't even face competition at the polls. These findings from the state of Washington suggest that just the threat of political competition can affect behavior. "Judges may fear that a lenient sentence for a violent criminal might be turned into a political opportunity for an ambitious prosecutor seeking a harsher sentence," says Yuchtman.

Yuchtman and Berdejó's study helps to inform the debate on whether judges should be elected or appointed. The authors say while they cannot predict whether society would benefit from appointed-only judges across all jurisdictions, their results conclusively determine that sentencing patterns would differ.

Yuchtman says, "When you tell people in other countries that some American judges are elected, they are often shocked. Maybe they're right: we don't like to think of judges as being influenced by external pressure. On the other hand, our results suggest that elections do make judges feel accountable. This is a simple, but important, tradeoff."

See full paper.

###

Contact: Pamela Tom
[email protected]
510-642-2734

UC Berkeley study finds flirting can pay off for women

UNIVERSITY OF CALIFORNIA, BERKELEY'S HAAS SCHOOL OF BUSINESS –When Madeleine Albright became the first female U.S. Secretary of State, she led high-level negotiations between mostly male foreign government leaders. In 2009, comedian Bill Maher asked Albright if she ever flirted on the job and she replied, "I did, I did." Flirtatiousness, female friendliness, or the more diplomatic description "feminine charm" is an effective way for women to gain negotiating mileage, according to a new study by Haas School of Business Professor Laura Kray.

"Women are uniquely confronted with a tradeoff in terms of being perceived as strong versus warm. Using feminine charm in negotiation is a technique that combines both," says Kray, who holds the Warren E. and Carol Spieker Chair in Leadership at the Haas School.

The study, "Feminine Charm: An Experimental Analysis of its Costs and Benefits in Negotiations," was published in October in the journal Personality and Social Psychology Bulletin and co-authored by Haas PhD alumna Connson C. Locke of the London School of Economics and Haas PhD candidate Alex B. Van Zant.

Flirtation that generates positive results, says Kray, is not overt sexual advances but authentic, engaging behavior without serious intent. In fact, the study found female flirtation signals attractive qualities such as confidence, which is considered essential to successful negotiators.

To determine whether women who flirt are more effective in negotiating than men who flirt, the researchers asked 100 participants to evaluate to what extent they use social charm in negotiation on a one-to-seven scale.

Earlier that week, the participants evaluated their partners' negotiating effectiveness. Women who said they used more social charm were rated more effective by their partners. However, men who said they used more social charm were not regarded as more effective.

In the second experiment, the researchers asked subjects to imagine they were selling a car worth $1,200 and asked for how much would they sell the car. Next, the subjects read one of two scenarios about a potential buyer named Sue. The first group meets Sue, who shakes hands when she meets the seller, smiles, and says, "It's a pleasure to meet you,." and then "What's your best price?" in a serious tone. The second group reads an alternate scenario in which Sue greets the seller by smiling warmly, looking the seller up and down, touching the seller's arm, and saying, "You're even more charming than over email," followed by a playful wink and asking, "What's your best price?"

The result? Male sellers were willing to give the "playful Sue" more than $100 off the selling price whereas they weren't as willing to negotiate with the "serious Sue." Playful Sue's behavior did not affect female car sellers.

Kray says many of her students who are senior women executives admit they love to flirt and describe themselves as "big flirts." Kray maintains flirting is not unprofessional if it remains playful and friendly.

"The key is to flirt with your own natural personality in mind. Be authentic. Have fun. That will translate into confidence, which is a strong predictor of negotiation performance." 

See Abstract: http://psp.sagepub.com/content/38/10/1343.abstract

See Full Paper: http://psp.sagepub.com/content/38/10/1343.full

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Contact: Pamela Tom
[email protected]
510-642-2734

Organizational culture matters on the bottom line: Evidence from the high-tech industry

By Jennifer Chatman

Organizational culture has been the latest and greatest fad since the 1990s with many different views getting valuable airtime.  Conventionally, researchers have argued that strong cultures that align employee behavior with organizational objectives should boost performance.  More recently research has shown that a strong culture can actually stifle creativity and innovation in dynamic environments because people are adhering too closely to routines creating behavioral uniformity, inertia, and an inward focus. 

Despite all the differing views, existing research and debates have tended to oversimplify culture and have failed to definitively resolve one key question, namely, how does organizational culture influence an organization’s financial performance over time? 

My research with colleagues Charles O’Reilly at Stanford, Dave Caldwell at Santa Clara University, and Bernadette Doerr at University of California, Berkeley, sheds light on this question by suggesting that neither the conventional view of culture nor the recent view paints a full picture of the culture-performance relationship, and  instead, a third more nuanced relationship exists. 

Our research shows that strong cultures are not necessarily a disadvantage in dynamic environments.  In fact we learned that firms with strong cultures actually perform better financially, growing more over time, in economically turbulent periods but only if they intensely hold a cultural norm of adaptability.

More specifically, our data shows that strong culture firms with a high level of consensus across many norms and with an intensive emphasis on adaptability have higher revenues, net income growth, and ROI over the economically volatile three year period from 2009 through 2011. 

By “adaptability,” we mean a firm’s support of risk-taking, willingness to experiment, initiative-taking, along with the ability to be fast-moving and quick to take advantage of opportunities.  Firms that successfully cultivate adaptability tend to permit their people to express themselves in wide-ranging behaviors, and this freedom of expression helps employees to fully explore divergent solutions to a problem.

But, we also found that focusing intensely on adaptability is only advantageous if high consensus exists across the firm about its culture more generally. Our most surprisingly finding was that firms that emphasized adaptability intensely but had low consensus about their overall culture performed worse over the three year period—even worse than firms with weak cultures and no emphasis on adaptability. Firms that intensely value adaptability but have low agreement on their overall culture are typically more siloed in their orientation. As a result, their efforts to adapt to changing environmental circumstances were thwarted by a lack of coordination and strategic alignment.

One of the strengths of our research was the number of firms we studied, allowing us to draw conclusions with more confidence than looking at one or a few firms.  We focused our research on high technology companies since they operate in one of the most dynamic industries in terms of competitive challenges and the pace of technological advancements.  We analyzed the cultures of 54 of the largest and most prominent publically traded U.S.-based technology firms over a three-year period beginning in 2009.  We used a culture assessment approach that we have developed over the last 25-years, the Organizational Culture Profile, to assess participating firms’ cultures.  Over 800 informants provided culture profiles on their organization.

Our research delves more deeply into culture than previous research to avoid oversimplification.  We deconstruct culture into three dimensions to better understand the link between culture and a firm’s financial growth: 1) culture content (e.g. norms like adaptiveness, teamwork, integrity); 2) culture intensity (how forcefully the culture is held by employees); and 3) culture consensus (how widely employees share and agree about cultural norms).    

Nailing down the advantages and disadvantages of organizational culture has been elusive because researchers haven’t been specific enough about the various aspects of culture.  We label an organization where members understand what top management values but attach no strong approval or disapproval to these beliefs as a high consensus but low intensity culture or a “vacuous culture.”  Low consensus, high intensity cultures can be characterized as “warring factions,” and low consensus and low intensity cultures as a “weak culture.”  A “strong culture” exists when there is both intensity around one or two key norms, and broader consensus about culture content (both high consensus and high intensity).

Distinguishing between the variations within culture content among strong culture organizations as well as distinguishing between culture content and culture consensus resolves conflicting perspectives about the culture-performance relationship.      

For example, we believe that recent research arguing that strong cultures, because of their uniformity and routines, lead to less reliable performance in turbulent environments is insufficient because the researchers failed to analyze the actual content of cultural norms.  When we deconstruct culture into our three dimensions (content, consensus, and intensity), we see that a firm with higher levels of consensus across many cultural norms, as well as an intensive emphasis on adaptability in particular, is actually more likely to recognize environmental volatility and discover alternative routines than are strong culture firms that focus on norms emphasizing behavioral uniformity.

Similarly, the conventional view that strong cultures boost performance might not always be true.  For example, a strong culture that emphasizes uniformity, even around performance-related norms like being results oriented, likely will not boost performance in dynamic environments that require greater nimbleness, adaptiveness, and innovation.

A secondary result that also came from our research is that firms with strong cultures that are adaptive also have better reputations—our data shows a strong correlation between cultural adaptiveness and a firm’s ranking on Fortune Magazine surveys in 2010 in several categories such as “Most Innovative,” “Most Admired,” and “Best Places to Work.”

Importantly, in our research, we controlled for other factors such as firm size and technology sector such as software or hardware, and we controlled for six other culture dimensions such as customer-oriented and results-oriented in order to rule out the possibility that our results could be due to other cultural norms besides adaptability.

Thus, based on our research, organizational culture is not just another business fad that firms should take lightly or ignore altogether.  Firms should reconsider the latest research that contends that those with strong cultures are at a disadvantage in turbulent environments, much like the environment we operate in today.  At the same time, a strong culture doesn’t always boost performance.  Rather, our research suggests that those firms that focus on and cultivate a culture that members agree about and that specifically focuses on adaptability will grow faster financially than their competitors. They will enjoy better external reputations, helping them to weather whatever current and future storms come their way.

See the full paper.

Contact:
Jo Mackness
(510) 642 – 6099
[email protected]

Winners of 2012 Moskowitz Prize for Sustainable, Responsible, Impact Investing Study Announced

STUDY:  CORPORATE SOCIAL RESPONSIBILITY ENGAGEMENTS WITH
US PUBLIC FIRMS YIELD EXCESS RETURN OF 4.4 PERCENT

Colorado Springs, CO.///October 3, 2012///Using 10 years of privately compiled data, three leading academics have tied positive market performance to corporate social responsibility (CSR) activities at major publicly traded U.S. companies.  Their research has netted them the Moskowitz Prize for Socially Responsible Investing, the only global prize recognizing outstanding quantitative research in the field of sustainable, responsible, impact (SRI) investing.

Pietra Rivoli, deputy dean and professor, McDonough School of Business at Georgetown University and a longtime Moskowitz judge, presented the 2012 Moskowitz prize to the winners last night at the 23rd SRI Conference.  The prize-winners are: Elroy Dimson, emeritus professor of finance, London Business School; Oğuzhan Karakaş, assistant professor, Carroll School of Management, Boston College; and Xi Li, assistant professor, Fox School of Business, Temple University.

Dimson, Karakaş, and Li examined highly intensive shareholder engagements on environmental, social, and governance issues from 1999 to 2009.  Their findings suggest that CSR activism creates shareholder value, consistent but in a different scale compared with traditional shareholder activism or hedge fund activism.

The winning paper, “Active Ownership,” was previously presented as a working paper titled, “Activism on Corporate Social Responsibility,” at theInquire Europe & Inquire UK 2012 Spring Seminar and Financial Management Association 2012 European Conference.  The research shows that the average one-year abnormal return (also known as the excess or “alpha” return) after initial engagement is 1.8 percent—just in-between the excess return of 4.4 percent for successful CSR investor engagements with U.S. companies, and zero for unsuccessful ones.

The positive returns documented were most pronounced for engagements on the themes of corporate governance and climate change.  Firms with more reputational concerns and higher capacity to implement CSR changes were found more likely to be targeted by CSR activists, and more successful in achieving the engagement objectives.  Targeted firms experienced improvements in operating performance, profitability, efficiency, and governance indices after successful engagements.  The paper’s findings provide new evidence on the value of shareholder activism on CSR issues.

Dozens of academic studies were submitted over the summer 2012 to be considered for the Moskowitz Prize.  Lloyd Kurtz, lecturer at the Berkeley-Haas Center for Responsible Business, Moskowitz Prize administrator, and chief investment officer at Nelson Capital Management, said:  “We had a very competitive year in 2012, with nine judges reviewing over 40 studies in detail, so the winning team can take credit for a very strong showing, and a very strong research effort.”

The Moskowitz Prize encourages and recognizes outstanding academic research on matters germane to the field of responsible investing.  The $5,000 Moskowitz Prize is named for Milton Moskowitz, one of the first investigators to publish comparisons of the financial performance of screened and unscreened portfolios.

Since its inception in 1996, the Moskowitz Prize has been awarded annually at the SRI Conference, the largest and longest running conference serving investors and investment professionals in the sustainable, responsible, impact (SRI) investment industry in North America.  The SRI Conference is produced by First Affirmative Financial Network, and the Moskowitz Prize is managed by the Berkeley-Haas Center for Responsible Business.  More information about the prize is available at: http://responsiblebusiness.haas.berkeley.edu/programs/moskowitzresearchprogram.html.

The 2012 Moskowitz Prize sponsors include Calvert Group, First Affirmative Financial Network, Nelson Capital Management, Rockefeller and Co., Neuberger Berman, and Trillium Asset Management.

About the Center for Responsible Business at The Haas School of Business, UC Berkeley
The Center for Responsible Business (http://responsiblebusiness.haas.berkeley.edu) is an “action tank” that builds on the Haas School of Business’ (http://www.haas.berkeley.edu) culture of innovation and UC Berkeley’s tradition to run–not walk–towards social progress.  Building upon nearly a decade of research, teaching and industry engagement, the Center for Responsible Business brings together students, company leaders, and forward-thinking faculty to redefine good business for a sustainable future.

About The SRI Conference
The SRI Conference (http://www.SRIconference.com) is the premier forum for investors and investment professionals engaged in the sustainable, responsible, impact (SRI) investment industry.

About First Affirmative Financial Network
First Affirmative Financial Network, LLC (http://www.firstaffirmative.com) is an independent Registered Investment Advisor (SEC File #801-56587) offering investment consulting and asset management services through a nationwide network of investment professionals who specialize in serving socially conscious investors.  First Affirmative produces The SRI Conference (http://www.SRIconference.com).

Media Contacts
Patrick Mitchell, The Hastings Group, 703-276-3266 or [email protected]
Jo Mackness, Haas School of Business, 510-642-6099 or [email protected]

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