Can countries benefit from having their domestic firms acquired by foreign companies?

When a foreign company acquires a domestic firm, it often leads to outcries of indignation, nostalgia (“another of our once great companies in foreign hands”), and calls for legislation to prevent any more foreign poaching. Politicians and union leaders proclaim that the foreign owners may not be dedicated to keep up investment in the subsidiary, and that the take-over threatens national jobs and other economic interests. “Most governments are reluctant to see their corporate treasures fall into foreign hands”, the BBC wrote in an article devoted to the topic.

But is all this (slightly xenophobic) fear justified? Well, maybe not; at least not on all dimensions. Because we have increasing evidence that foreign ownership of a firm may actually also benefit firms, specifically in terms of their innovativeness. And this increased innovativeness may clearly benefit the host country.

Professor Annique Un, from Northeastern University in Boston, for example, did a pointy study. She collected data on 761 manufacturing firms operating in Spain, examined which ones were foreign hands and what their innovation output was in terms of new products introduced in the market. And the answer was pretty clear: foreign owned firms were more innovative than purely domestic firms.

Interestingly, Annique also corrected her models for the amount of R&D investments spent in the companies, and it turned out that this was not what was driving it; foreign owned companies were not just more innovative because they were investing more. Instead, they were more innovative irrespective of R&D. As a matter of fact, they were able to generate more product innovations for the same level of investment; meaning that they were simply better at it.

The study’s results suggested that they were better at it for two reasons. First, foreign parents seemed to use their domestic subsidiary to channel innovation into the country. Put differently, it seemed a foreign-owned company could tap into its parent’s superior repository of innovative stuff, and most of them gratefully made ample use of that option. Secondly, the foreign-owned companies were simply also better at coming up with new stuff on their own, in comparison to their domestic counterparts. Apparently, something about them being foreign-owned stimulated them to be more agile and creative, which resulted in more product introductions.

Whatever the reason behind this foreign-driven surge in innovation, the host country was better off for it; the evidence clearly showed that the foreign mercenaries stimulated diversity in the markets, giving customers more choice, while raising the bar for everyone. And this is not a benefit we hear many politicians, newspapers, and union leaders proclaim and acknowledge, when yet another foreign corporation is eyeing up their country’s corporate treasures.

Don’t be mistaken, bankers kill (but they give life too)

"In terms of power and influence, you can forget the church, forget politics. There is no more powerful institution in society than business” the equally famous as illustrious CEO and founder of the BodyShop – the late Dame Anita Roddick – said. And of course she was right. The most comprehensive and dominant institution in today’s society is business.

Business is more influential than people often realize, simply because it creates – or destroys – wealth. And wealth impacts pretty much anything we care about. Whether you analyze crime rates in a particular country, malnutrition, happiness, or infant mortality; a huge influence is how wealthy the particular society is. And wealth is created by business.

As a consequence, for example, the 2008 banking crisis undoubtedly killed people. Infant mortality is closely related to wealth and consequently an economic crisis will among others lead to a surge in infant mortality, somewhere, in some country down the road. It also means that the strategic business choices made by CEOs such as Lehman’s Richard Fuld or RBS’s Fred Goodwin indirectly but significantly influence the survival chances of some baby boy or girl born on the outskirts of London, Cairo, or Detroit. And therefore, whether you like it or not, bankers kill.

But let’s not forget that they give life too. The inverse of “bankers kill” is true too. If banks make wise choices, given their pivotal role in our economies, they can trigger a huge boost to the prosperity of many industries. And the profits, employment, and general wealth created through this boost will really improve the health and survival chances of the baby cradled by her mother somewhere on the outskirts of London, Cairo, or Detroit.

Given the research we have on the link between economic prosperity and infant mortality it would not even be too onerous to come up with some estimate of the direct relationship between Royal Bank of Scotland’s balance sheet and the probability of a baby surviving. We could relatively easily calculate the link between profit and the number of lives saved. I could even imagine that the computer terminals that give live updates of a company’s fluctuating share price – which many corporations have dotted across their entrance halls and offices for everyone to see – would be reprogrammed to display the number of children’s lives saved. Traders walking over to their lunch break could have an immediate update of how many baby lives the deal they just closed saved – or destroyed.

A ridiculous thought? Why? Don’t you care (even) more about the life or death of a baby than your company’s fluctuating share price? I am guessing you do. And you know these bankers aren’t so different from (other) human beings. Your company’s performance also creates wealth, and wealth saves lives. Why then only monitor its financial performance? I tell you, the sandwich you’re having for lunch will taste a whole lot better, knowing that this morning you just saved some unknown baby’s life, somewhere on the outskirts of London, Cairo, or Detroit.

Boards and fraud – who gets the sack and who gets to stay?

We have seen lots of corporate scandals over the past decade, and in many of these cases the boards of directors were up for some heavy criticism. Whether it was Enron, Tyco, WorldCom, or one of the toppled investment banks, their boards took some flack, since of course they are ultimately responsible for the corporation’s actions.

But what happens to such directors? What happens to these people in the business elite when their company, for example, is caught being involved in financial fraud? Well, perhaps not surprisingly – and this may come as a relief – they often get the sack (as research by Professor Arthaud-Day from from Kansas State University and colleagues convincingly showed). Directors associated with financial misrepresentations are often dismissed from the board of their fraudulent company but, interestingly, subsequently they also regularly get the boot at another board. As you may know, outside directors often serve on the boards of multiple companies and a study by Professor Srinivasan from the Harvard Business School showed that they lose about 25 percent of these (rather lucrative) jobs if one of the companies in their portfolio is caught up in fraud.

Yet, this also implies that 75 percent of companies retain a particular board member, even though he or she is compromised having served on the board of another company while it was committing fraud. And that begs the question, what firms decide to retain such a tainted board member, and which ones decide give them the sack?

Professors Amanda Cowen and Jeremy Marcel from the University of Virginia decided to examine this. They managed to collect data on 277 directors who served on multiple boards concurrently, one of which was associated with financial fraud. Their statistical analysis showed that companies that were covered by more equity analysts and governance-rating agencies were more likely to dismiss compromised board members; up to twice as likely. These external observers apparently serve as a bit of watchdog. However, surprisingly, when a company had a relatively large number of public pension fund investors amongst its shareholders, they were less likely to dismiss a compromised board member. Cowen and Marcel speculated that this was because these pension fund shareholders do the monitoring themselves, so that they don’t care much about the company’s directors; tainted or not.

You also have to realize who does the firing; and that is the rest of the board. Cowen and Marcel’s research also showed that very prestigious, well-networked boards were less likely to fire their tainted fellow director. It is well known that boards of directors form a rather cliquish corporate elite. It is not easy to find your way into this world, but once your solidly in, not even a little financial fraud is going to convince your corporate buddies to throw you out.

So, you think you have a strategy? Five poor excuses for a strategy

Most companies do not have a strategy. Ok, I admit it, I do not have any solid statistics (if such a thing were possible) as evidence to back up this statement, but I do see a heck of a lot of companies, strategy directors, and CEOs present their “strategies” and I tell you, I think 9 out of 10 (at least) don’t actually have one.

Sure, it depends on the all-evasive question “what is strategy?” but even if you would take the most lenient of definitions, few companies actually have one. Let me not tire you with some real strategy textbook definitions but if I would just put it as “you know what you are doing, and why”, most firms would already fall short on this one.

Most companies and CEOs do not have a good rationale of why they are doing the things they are doing, and how this should lead to superior performance.

I’d say there are 3 types of CEOs here: 1) CEOs who think they have a strategy; they are the most abundant; 2) CEOs who pretend to think that they have a strategy, but deep down they are really very hesitant because they fear they don’t actually have one (and they’re probably right); these are generally quite a bit more clever than the first category, but alas fewer in numbers; 3) CEOs who do have a strategy; there are preciously few of them, but invariably they head very successful companies.

So what do all these CEOs do, when confronted with the question “what is your strategy?” Well, of course they will retaliate with a powerpoint presentation, headed by the title “our strategy”, and there is stuff on it. It just ain’t strategy.

Let me present you with five such common excuses for a strategy or, put differently, five examples of why the things on the powerpoint are not strategy:

Are you really making choices?
Strategy, above all, is about making choices; choices in terms of what you do and what you do not do. Future Plc for example has chosen to focus on specialty magazines for young males (decent magazines, by the way…) in English. This contains some very clear choices. The point is that what they are throwing away, i.e. choosing not to focus on is meaningful. They concerns things that could have made them money as well. For example, magazines for middle aged women might potentially be very profitable, but that is just not what they want to do, because they think concentrating on a clear set of consumers and products will help them do better. Most companies don’t do this; they cannot resist the temptation of also doing other things which, on an individual basis, look attractive. As a consequence, they end up with a bunch of stuff that appears attractive, but strangely enough they don’t manage to turn them into a profitable proposition.

Or do you just stick to what you were doing anyway…?
Another variant of this is the straightjacket of path dependency, meaning that companies write up their strategy in such a way that everything fits into it that they were doing anyway. And there might be nothing wrong with that, if it so happens that what you were doing anyway represents a nice coherent set of activities. Yet, more often than not, strategies adapted to what you were doing anyway results in some vague, amorphous statement that would have been better off in a beginners’ class on esoteric poetry, because it is meaningless and does not imply any real choice. The worst of the lot I have seen (although low on poetic value) was Ahold’s poor excuse for a strategy, which ended up doing so many different things in so many different corners of the world that they resided to calling their strategy “multi-format, multi-local, multi-channel”. This – not coincidentally – was shortly before the company collapsed.

Your choices have no relationship with value creation (you’re in “The Matrix”)
Sometimes companies make some choices, but it is wholly unclear why these choices would do you any good? It is not just about making choices, you need a good explanation why these choices are going to create you a heck of a lot of value. Without such logic, I cannot call it a strategy. Let me give you an example, which happens to be the most common strategy I have seen among multinational corporations: The Matrix. On the horizontal axis, one puts countries; on the vertical axis, one puts business lines. And the strategy is to tick boxes, as many as possible, as quickly as possible (preferably through acquisitions). But why would performing all your activities in all your countries be a good strategy? If you can give me an explanation of why this would lead to superior value creation, I might label it a strategy, but such an explanation is usually conspicuously absent. Without a proper rationalisation of why your choices are going to help you create value, I cannot call it a strategy.

You’re mistaking objectives for strategy
“We want to be number 1 or 2 in all the markets we operate in”. Ever heard that one? I think it is bollocks. A CEO who wrote to me the other day, after having read my book (“Business Exposed”), said of most of these things proclaimed to be strategies that they were like saying “I am going to win the 400 meters during the 2012 Olympics by running faster than anyone else”. Yes, that is very nice, but the real question is “how?” We want to be number 1 or 2 in the market; we want to grow 50 percent next year; we want to be the world’s pre-eminent business school, and so on. These are goals; these are objectives, and possibly very good and lofty ones, but strategy they are not. You need an idea and a rationale – a strategy – of how you are going to achieve all this. Without it, they are an aspiration, but certainly not a strategy.

Nobody knows about it
The final mistake I have seen, but scarily common, of why CEOs who think they have a strategy don’t actually have one (despite circumventing all of the above pitfalls), is because none of their lower ranked employees actually knows about it. A strategy is only really a strategy if people in the organisation alter their behaviour as a result of it. And in order to achieve that, they should know about it… Strategy by itself does nothing; the powerpoint presentation – regardless of how colourful and fine-tuned – is not going to resort to improved performance unless the choices and priorities it contains result into actions by middle managers and people on the work floor. A good litmus test is to simply ask around; if people within the organisation do not give you the same coherent story, chances are you do not have a strategy, no matter how colourful your powerpoints.

Five mistaken beliefs business leaders have about innovation

The vast majority of companies want to be innovative, coming up with new products, business models and better ways of doing things. However, innovation is not so easy to achieve. A CEO cannot just order it, and so it will be. You have to carefully manage an organisation so that, over time, innovations will emerge. And CEOs often make a number of common mistakes, that hamper rather than induce such processes.

Believe the numbers
One common mistake is to insist on “seeing the numbers” too much too soon. “What is the size of the market?”, “what is the Net Presen Value calculation?”, “payback time?”, and so on. What they are forgetting is that, for a truly innovative product, for example, it is impossible to reliably produce any numbers. If a CEO insists on hard numbers before the project is even started, it will by sheer definition kill off any truly innovative ones, simply because you cannot compute the size of a market that does not exist yet.

One CEO who understood this well was Intel’s Andy Grove, at the time that an engineer proposed to him to work on something called a “microprocessor”. The engineer could not produce any numbers, consumer research, and not even a good idea in what sort of applications this product was going to be used, but Grove gave permission and a budget anyway. It made Intel one of the most successful companies the world of business has ever witnessed.

Believe success has been attained
Another innovation killer is sustained financial success. We call it the success trap. When an organisation becomes very good at something, top of its industry, it usually starts to focus on the thing (product, technology, or business model) that made its success, crowding out other options and points of view. Initially, this may make it even more successful, but there is going to come a time that its business context is going to change: new technologies, consumer preferences or foreign entrants emerge. And then the company and its top management finds itself trapped in the one thing it does so well, rigidly believing that what brought it its success, will continue to make it prosper. But, in reality, it is rapidly becoming obsolete.

A great illustration of this is the 43 companies featured in the famous business book “In search of excellence” by Peters and Waterman in 1982. These companies were considered to be the most excellent companies in the world at the time but, at present, only 5 of them would still make the list; many of them having disappeared altogether (e.g. Atari, Tupperware, Digital). It illustrates that, paradoxically, it is especially the most successful companies, the top performers of their industry that find it difficult to adapt and survive when the world around them changes.

Believe they know the competition
What always strikes me, if I ask a CEO (or anyone else in an organisation for that matter) “who is your main competitor?”, they always reply with the company that is most like them. And subsequently they can tell me anything about that firm; its strength, weaknesses, products and plans. But in a way, when it comes to innovation, that is slightly delusional. The company that is most like you is really the least important competitor, simply because they are in the same boat as you are.

The most threatening competition often comes from a completely different angle: an adjacent industry, innovative start-up, or substitute. And that is a phenomenon of all times. Sailing shipping companies suffered from the steam engine, radial tyre champion Firestone was brought to its knees by the introduction of bias tyres, newspapers are being squeezed by the internet, while watchmakers suffer from the fact that nowadays everybody already has the time at hand on a mobile phone or laptop. Thinking your biggest competitor is the company most like you, will leave a company dangerously exposed to outside innovation.

Believe that because everybody had always done it this way, it is the best way of doing things
Industries are rife with habits and business practices from which no-one can quite remember why we do them this way. When challenging a CEO on one of those business practices, he lamented to me “Freek, everybody does it this way, and everybody has always been doing it this way; if it wasn’t the best way of doing things, I am sure it would have disappeared by now”.

And standard economic theory would support his point of view: The market is darwinian, therefore it should be weeding out bad practices. But, in reality, he is wrong. In many businesses, practices emerged with good reason, but once the circumstances changed, firms carried on using them for no reason whatsoever. Did newspapers have to be printed for so long on ridiculously large (and expensive) sheets of paper? Heck no; the english law, set up in 1712, that newspapers were going to be taxed based on the number of pages they printed was abolished in 1855. Could low-cost airlines not have worked many years earlier? Are buyback guarantees in book publishing (set up during the Great Depression) really still needed? Is detailingin the pharmaceutical industry still a useful practice? That everybody does it this way is no reason not to challenge it. The greatest innovations often come from challenging industry convention.

Believe the customer
The final error CEOs often make when it comes to innovation, is to ask their customers for their opinion. Pretty much any company I know has a yearly customer survey. However, there are two things wrong with this. Firstly, these people are already your customer; sure they are going to be satisfied with you; the others have already long voted with their feet. We call it selection bias. You are selecting to ask the ones who already like you, but what about the ones who don’t?

Secondly, even when a company is asking potential customers about their ideas for innovation, in the form of market research, it is tricky. It is usually some shape or form of asking respondents whether they would like (and buy) the new idea. Consumer research often is useful but not for truly innovative ideas and markets that do not exist yet. Research on the fax machine came back unambiguous: every respondent answered that they would never buy a machine like that; likewise for the mobile phone. As Farooq Chaudhry, producer at the highly innovative Akram Khan Dance Company, once put it to me: “Customers? Forget about them”; if you want to be really innovative, you have to be leading the customers; not be led by them.

Is leadership overrated? (maybe not, but only when it is genuine)

When the famous management professor Henry Mintzberg, in an interview for Dutch television, was asked “what would you recommend for leadership in the 21st century?” he answered, without delay or hesitation: “Less of it”.

Henry clearly thought we need less “leadership”, and more people who actually do stuff. And true; it has become a business buzz word and something that everyone puts on his list of career aspirations. However, not everyone can be a leader. Moreover, their effect often seems overestimated.

In reality, business leaders make very few decisions that really significantly impact the course of action of their firms. When a large corporation does well, we attribute it to the forceful, brilliant individual at the top (e.g. Jack Welch, Steve Jobs). When the corporation fails, we also hold the individual crook at its helm responsible beyond mercy (e.g. Jeff Skilling, Dick Fuld). Yet, these individuals’ influences might be overestimated, both positively and negatively, because their decisions often have very limited impact on the everyday practices in their firms.

Yet, I would say that that does not mean they have no influence. They surely do, but it might not be directly through their decisions. CEOs often have a much more symbolic role, in terms of providing inspiration and motivation. And that type of impact can be very real indeed.

Tolstoy – in his epic novel War & Peace, through the eyes of one of its main characters, Prince Andrei – seemed to understand that well. He described how one of the Russian commanders – prince Bagration – in a battle against Napoleon’s army, had very little real influence on how the battle unfolded: stuff just started to happen once the guns got rattling, whatever commands he did or did not shout. However, his presence, and perhaps his successful pretence of planning and control, did have some genuine impact:

Prince Andrei listened carefully to Bagration’s colloquies with the commanding officers and to the orders he gave them and remarked to his astonishment that in reality no orders were given but that Prince Bagration merely tried to make it appear as though everything that was being done of necessity, by accident or at the will of individual commanders, was performed if not exactly by his orders at least in accordance with his design. Prince Andrei noticed, however, that though what happened was due to chance and independent of the general’s will, the tact shown by Bagration made his presence extremely valuable. Officers who rode up to him with distracted faces regained their composure; soldiers and officers saluted him gaily, recovered their spirits in his presence, and unmistakably took pride in displaying their courage before him.

Hence, the impression we have of leaders’ actions, their determination and vision, do influence people lower in the organization, in terms of their commitment and motivation. For example, a study by professors Ping Ping Fu, of the Chinese University of Hong Kong and colleagues, published in the prestigious academic journal Administrative Science Quarterly, asked 177 executives of 42 companies to rate their CEOs in terms of the questions “the CEO shows determination when accomplishing goals”, “the CEO communicates high performance expectations”, “the CEO articulates a compelling vision of the future”, and “the CEO transmits a sense of mission”. They then surveyed 605 middle managers of these same companies in terms of their commitment to the firm and their intention to leave. And the results clearly showed that middle managers who worked for a company whose CEO seemed more determined and better at communicating and articulating a sense of mission and vision, were more committed to their companies. Hence, the image that a CEO managed to exhibit of his leadership and control had a significant impact on the motivation of his middle managers.

Then Ping Ping and colleagues did something interesting. Using an innovative survey technique (called the Q-sort method) they managed to construct a measure of the CEOs’ values. Particularly, they measured CEOs’ self-transcendence values (the transcendence of self interests, enhancement of others’ happiness, and the acceptance of others as equals) and self-enhancement values (which emphasize the pursuit of one’s own happiness, success, and dominance over others) and, surprisingly, the findings described above were only true for CEOs with a healthy dose of self-transcendence values. By contrast, if the CEO secretly harbored some pretty selfish values (i.e. was high on self-enhancement), middle managers were not much motivated and committed to the firm whatever the CEO said or did.

‘What is surprising about that?’ you might think. Well, it may not be surprising that employees prefer their CEOs to have selfless instead of selfish values – I guess we all prefer our bosses to be selfless – but it is a lot more surprising that they are able to detect these values. Because what this study really shows is that, if you had multiple CEOs behaving in the exact same way – expressing a clear vision, showing determination, setting expectations, and what have you – only some of them would succeed in motivating their employees, where others would hopelessly fail. Because what sets the effective and ineffective leaders apart are the values they harbor, in terms of having their own or others’ interests at heart.

Apparently middle managers see right through you. If you, as a CEO, display all sorts of motivating, leadership type behavior, but secretly harbor some pretty selfish values, it simply ain’t going to work. You can shout and dance and do whatever you like, but this motivational stuff only renders the desired effect if you really mean it.

Six scientific ways to suck up successfully (it is not as easy as you might think it is)

Sucking up really isn’t so easy. You can’t just tell your boss “you’re the greatest” because (although he might believe you) he is likely to grasp that you’re trying to sweet talk him into giving you this job, a raise, or a positive appraisal. As a result, it might all backfire because, as we know from research, people who think you are trying to trick them are less likely to actually give it to you. No, sucking up – or ingratiation behavior, as we euphemistically call it in management research – is easier said than done.

But now we have some good evidence – from research by professors Ithai Stern from Northwestern and Jim Westphal from the University of Michigan – how you can make it work, so pay attention:

1. Frame your flattery as advice seeking. For example, asking someone “how were you able to pull off that strategy so successfully” is more likely to hide your underlying motive than “gosh you’re good”.
2. Pre-warn your target that you are going to flatter him or her. For example, let your sucking up be preceded by statements such as “you are going to hate me for saying this but… [gosh you’re good]” or “I know you won’t want me to say this but… [gosh you’re good]” or “I don’t want to embarrass you but… [gosh you’re good] – you get the picture.

Now you that you have mastered the previous two relatively simple skills, it is time to up your game. It requires a bit of planning, but then it is likely to be highly effective:

3. Repeat the opinion that your target expressed earlier to a colleague. You can’t just keep agreeing to everything your boss says in every meeting, now can you? So what can you do? Well, when you find out your boss’s opinion on a particular matter from a colleague, who had a meeting with him earlier, bring up that same topic and opinion to your boss next time you’re meeting with him, before he has had a chance to do so. He will be duly impressed with the sharpness of your analysis.
4. Compliment your boss to one of his friends. So, saying face-to-face to your boss over and over again “gosh you’re good” is unlikely to do the trick. What might work though is to say to one of his friends “gosh, he’s good”. That friend is likely to, at some point, mention to your boss “he sure thinks highly of you”. And since you did not say this to his face, he might actually think you were trying to avoid brown-nosing him! Expect a friendly smile and sudden pat on the back.

Now that you have gained these more subtle skills of sucking up, you are ready to move to the advanced level. This one is sure to work, and you do not even have to say to your boss (or anyone else) that he is the greatest. All you have to do is make him feel the two of you are birds of a feather.

5. Engage in value conformity. What we mean by this is that you start a discussion with your boss by expressing commitment to a cause, institution, or other code of conduct that you know your boss feels strongly about. For example, if your boss is a family-man, begin your casual talk with how important family is to you. Or refer to your joint religion, or if he is into environmental protection, become green too (at least verbally). When you start of with statements that indicate that you share the same set of values, your boss is going to look at everything you subsequently say in a different light.
6. Refer to common affiliations. Similar to the previous tactic, refer to your joint political party, religious organization, or alumni club. These tactics build on so called in-group out-group biases; all of us humans see people who are in the same groups as we are in a more positive light, and your boss is no exception. So emphasize your joint group affiliation, and he will like the rest of you too.

Do these things really work? Yes they do. Ithai and Jim examined these tactics constructing and using an elaborate database on 1822 top executives, measuring their ingratiation behavior (assessed through questionnaires) and various other variables. Subsequently, they examined a rather important outcome variable to these folks: how likely their CEO (i.e. their boss; the target of their sucking up) was to nominate and appoint them to another board of directors on which he served. Directorships are highly coveted (and highly paid) jobs - that is, they want them! And all 6 aforementioned ingratiation tactics worked getting them.

Ithai and Jim also examined what sort of people were more likely to use these 6 tactics to their advantage. Executives with a background in engineering, accounting, or finance were plain clumsy at it. It is not that they did not try to suck up to their boss; they did, but they did it the coarse way (“gosh, you’re great”) and therefore were unlikely to succeed.

The people most skilled at successfully using the six sucking up tactics were executives with a background in sales, law, or politics. Perhaps not coincidentally, these are the professions we most mistrust (if not despise) to tell the truth: salesmen, lawyers, and politicians. They have had to practice these subtle ingratiation tactics all their lives. And it seems, also in the brown-nosing domain, practice makes perfect. And now they are reaping the benefits.

Criminals are ugly – yes, really

Has it ever struck you that in movies the villain is pretty much always ugly? Whether you take a James Bond film, a horror movie, or a Disney character, the bad guy is usually rather ‘esthetically challenged’, dotted with rather unsightly, coarse features.

Well, it now appears that these film makers are rather more realistic in their portrayal of the bad guys than you might have guessed. Criminals – as research by professors Naci Mocan from Louisiana State and Erdal Tekin from Georgia State University showed – are often indeed pretty ugly.

Naci and Erdal obtained data on 20,745 people, who were interviewed and rated at various points during their lives (in the period 1994 – 2002). A small army of independent interviewers rated the person’s level of attractiveness (ranging from very unattractive to very attractive). Subsequently, Naci and Erdal statistically compared this indicator of physical attractiveness with the incidence of the respondent having been involved in a crime, such as property damage, burglary, robbery, theft, assault, or drug-related crimes. And even when they corrected these models for all sorts of background characteristics, such as ethnic background, religion, family situation, income, and so on, the answer was pretty clear: criminals are ugly.

The intriguing question is, of course, how come? Although this involves a healthy dose of speculation, we do know quite a lot from prior research about the influence of physical attractiveness on such things as income and schooling, which might shed some light on the issue. For example, we know from prior studies that good-looking children receive more attention at school, are considered more trustworthy, and are judged to have higher academic potential.*

The problem is that many of these prejudices start to act as self-fulfilling prophecies. Ugly children start to do less well at school because of the low expectations placed on them: they have less belief in themselves, less confidence, they receive less personal attention from their tutors, and so on. And, as a consequence, the prophecy comes true; they do achieve less.

Once on the job market, they are then once again confronted with the same prejudice, making things even more challenging. For example, research has shown that, given the same qualifications, physically attractive applicants are considered more suitable for a particular job. They are also recommended to receive higher starting salaries.* Indeed, the handsome subjects in Naci and Erdal’s study also made substantially more money than their esthetically more challenged counterparts. To conclude, handsome children are helped to achieve more, once they reach adulthood they are more likely to be successful in a job interview, and once they are in the job they get paid more.

As a consequence of these effects, on the margin, ugly people are more often tempted – or perhaps pushed – into a life of crime than people who are physically attractive. The ugly ducklings amongst us are often devout of the opportunities that befall the beautiful and, therefore, comparatively are more prone to end up in crime. So next time Donald Duck traps the thugs, or 007 eliminates the villain, we should also allow ourselves to feel a slight sense of grief and sympathy for the ugly crooks, who might have achieved so much more in life had mother nature made them just that little bit more pleasing to our eye.


* How fundamental our human inclination is to look upon handsome people more favorably than on uglier ones is evidenced by research that shows that, interestingly, even babies pay more attention to the good-looking people peering into their pram than to their equally enthusiastic but less handsome aunts and uncles (Samuels & Elwy, 1985).

** One exception to this rule is that physically less attractive women are generally deemed more qualified than their attractive counterparts when the job they are being considered for is a stereotypical masculine job (Heilman & Saruwatari, 1979).