Do MBAs Make Better CEOs?

Three professors at INSEAD and University of California, Berkeley recently took a hard-nosed, statistical look at whether having an MBA actually improves a CEO’s long-term performance.

The authors sought to get past the anecdotal examples of such superstar CEOs as Bill Gates and Steve Jobs, who never even completed university. So they examined the track records for the 100 best-performing CEOs in the world, as published in the January-February issue of the Harvard Business Review, to get an objective gauge of the long-term performance. Performance was measured by return on shareholder investment and change in market capitalization during a CEO’s entire tenure at the company.

They did find a correlation. CEOs with MBAs ranked on average 40 places higher on the list. And half of the top 10 CEOs had gone to B-school. CEOs holding an MBA generated an average shareholder return of 93%, versus 81% for the rest of the group. Having an MBA had an even more dramatic effect on those who became CEOs before the age of 50.

So what is the magic ingredient in having an MBA that propels these executives to succeed? We’ll let you read the full article, which appears in Businessweek, for that. But one hint: it may have less to do with the actual skills acquired in B-school than it does about the attitude of people who decide to get an MBA in the first place.

What about an MBA and success in an investment banking job? Is it just as important? We’d like to hear your views. Just add your comments below.

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{ 1 comment }

S Eddy March 27, 2010 at 4:35 am

I would say, it is not necessary but would definitely add value. The result of the analysis does support that MBA’s performed better than those Non-MBAs. I agree with the point – “it may have less to do with the actual skills acquired in B-school than it does about the attitude of people who decide to get an MBA in the first place”.

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