Social Psychology and the Business World


Blog | Psychology Insights from Haas Faculty

Psychology is the study of behavior, cognition, and consciousness. Social psychology is understanding an individual’s behavior, decisions, and influences in specific social contexts. Business practices employ this knowledge in a wide array of areas ranging from marketing to management, utilizing theory to sell products or to become a more effective team leader.

One major area of focus in social psychology research looks at the various important relationships that are prevalent in the business world, such as those between the corporation and its customer base, upper management to the rest of the corporation, and between peers, to name a few. Social psychologists are also fascinated by power: power dynamics, the effect of power on those in leadership roles, and negotiations between parties. Additionally, psychologists examine business ethics and environment, factors that form a company’s culture. All of these topics investigate the construction of feelings, thoughts, beliefs, intentions, and goals and their influences on human interactions. As social beings, how we make sense of ourselves and wider social networks are enormously important parts of our daily experience.

Among the Berkeley Executive Education faculty, there are many notable psychologists that perform research and implement their peer-reviewed publications into their teaching. Dacher Keltner, faculty member for the Women’s Executive Leadership Program, examined the effect of power on those in leadership roles for Harvard Business Review in 2016. “While people usually gain power through traits and actions that advance the interests of others, such as empathy, collaboration, openness, fairness, and sharing,” he writes, “when they start to feel powerful or enjoy a position of privilege, those qualities begin to fade. The powerful are more likely than other people to engage in rude, selfish, and unethical behavior. The 19th-century historian and politician, Lord Acton, got it right: “Power does tend to corrupt.” Keltner describes this psychological effect as the power paradox, where people rise through the ranks based off their good qualities, but their behavior worsens as they rise. Additionally, the newer the leader, the more likely they are to lose their good attributes. Becoming aware of how power affects those who hold it can be critical to both leaders and their teams. How does one combat these consequences? Keltner says by practicing awareness, empathy and generous action.

Dr. Holly Schroth is the faculty director of our Negotiations and Influence program. She is also the author of multiple research articles on negotiations and conflict. In one particular study, she explores the role of anger and strong emotions in the negotiating process. In a recent research article, she looks into teaching strategies for managing and harnessing emotions evoked by conflict during negotiation. She says that there are two kinds of anger: tactical and genuine. There are ways to recognize and utilize such a strong emotion during negotiations. Schroth claims that the ability to manage your own and the other party’s anger is a powerful tool.

Dr. Laura Kray is the Warren E. and Carol Speiker Professor of Leadership and the faculty director for our Women’s Executive Leadership program. She has published over 60 articles on her work with stereotypes, ethics, and negotiations. One of her research articles from 2017 investigated gender differences during negotiations within a social-cognitive paradigm. Kray and her team used this framework to explain gender differences in ethics, differences that manifest as moral identities in negotiator behavior. The study found that women internalize moral traits in their identities. These moral identities suppress unethical behavior, and financial incentives increase women’s, but not men’s, unethical negotiating behavior. There are negative stereotypes surrounding women’s ability to negotiate as well as men, and Kray’s research could give light to the origin of these stereotypes and possible insight on how to break them down.

Dr. Jennifer Chatman is the Paul J. Cortese Distinguished Professor of Management and faculty director for our Leading-High Performance Culture program. One of her recent research articles asks if leadership has discernible effects on individual behavior and organizational outcomes. She examined the characteristics and behaviors of leaders to understand how they “garner followers, inspire small groups, how (they) capture entire organization’s attention and cultivate intense commitment among members to realize organizational goals” (Kray, 2017). These traits were not what you might expect: confidence, dominance, assertiveness, and intelligence did not have much predictive validity. Instead, diagnostic capabilities, breadth and flexibility of behavioral repertoire, and understanding of leadership paradox were good predictors of effective leadership. These qualities allow a leader to create a sense of membership within the group for their subordinates, resulting in a stronger team and stronger organization.

Understanding the psychology of various business practices can lead to improved solutions. Many areas of business use the tools of psychology to understand an individual’s behavior within a group, and social psychology may be the tool that can lead to even more efficient, adaptive, and innovative practices.

Written by: Corinne McGinley
UC Berkeley Executive Education Sales & Marketing Intern
UC Berkeley undergraduate student


Schroth, H. A. (2008). Some like it hot: Teaching strategies for managing tactical versus genuine anger in negotiations. Negotiation and Conflict Management Research, 1(4)