Studies show that when colleagues laugh together, it can drive productivity and innovation in the workplace.

On top of that, researchers from Harvard Business School and the Wharton School of Business recently found that people perceive those who have a facility for humor as more confident and competent than those who don’t feel as comfortable telling jokes.

In one experiment, the researchers asked 166 participants to evaluate testimonials for a fictional company. The first testimonial was meant to be serious and the second one was meant to be funny. Participants perceived the presenter of the witty testimonial as more confident, and they were more likely to choose the witty presenter as the leader for another activity.

In another experiment, the researchers presented five job interview scenarios to participants, who read scripts of conversations between hiring managers and job candidates. In one scenario, the candidate answered a hiring manager’s question with a serious response. In another, the candidate told a workplace-appropriate and successful joke (the hiring manager laughed). In a third, the candidate told an inappropriate and successful joke. The final two scenarios involved an appropriate and failed (unfunny) joke and an inappropriate and failed joke. For each scenario, the researchers asked participants to evaluate the confidence and competence of the job candidate in question.

Based on the study participants’s responses to these exchanges, the researchers discovered that while a stab at humor with an inappropriate joke makes the teller seem self-assured, it also makes that person seem less competent and of lower status than someone who tells an appropriate joke.

However, the researchers concluded that if an untoward joke is well received, laughter can soften the blow to the teller’s reputation. On the other hand, attempting an appropriate joke will rarely, if ever, harm your colleagues’s opinions of you. Even if the joke doesn’t land, you will seem confident because you tried.

“Don’t be afraid of a flop,” writes study author Alison Wood Brooks in Harvard Business Review. “Bad jokes -- as long as they are appropriate -- won’t harm your social standing or affect how competent people think you are. They may even increase how confident you seem.”

To be successful in business, you must have an understanding of human nature and know your audience, and that skillset applies to comedy as well. While this might seem like common sense, now there is literature to back it up. The joke you tell to your best friend may not fly with your new client. Context is everything.

This article was first published on Entrepreneur