How The MBA Changed CEO Decision Making - Poets&Quants

B-Schools Influence Decision-Making More Than You Think

Business school may be influencing how students make decisions later on.

New research published by the Harvard Business Review explores whether or not a B-school education truly has the power to shape students’ minds and decisions once they reach positions of power at major corporations and financial institutions.

“The overarching goal of most business schools is to train future leaders to lead,” authors Jiwook Jung and Taekjin Shin write. “But how well schools meet this goal, and to what extent their teaching influences their students’ leadership, is an open question.”

Methodology

To explore this questions, Jung and Shin collected data from 2,031 CEOs who ran 640 large U.S. corporations from 1985 to 2015. Additionally, Jung and Shin took note of their educational backgrounds, such as which b-school they attended and when they graduated.

Here’s a breakdown of their sample:

• 20% of CEOs in the 1980s had an MBA, and throughout the 1980s and the 1990s the percentage steadily increased to 33%, where it remained during the 2000s
• Sample split into three cohorts — CEOs who earned an MBA before 1970, those who matriculated in the 1970s, and those who did so after 1980

Through the three cohorts, Jung and Shin examined whether or not the groups made different decisions regarding corporate diversification.

According to Chron, diversification means “branching out into new business opportunities, not just expanding your existing business.”

Earlier MBAs More Likely To Pursue Diversification

In their study, Jung and Shin found that CEOs who earned their MBA before the 1970s were 17% more likely to pursue diversification during their tenure.

Those who earned their MBA in the 1970s were 24% less likely to pursue diversification. Those who earned an MBA after the 1970s were 30% less likely.

So, what does this mean? Well, for one, Jung and Shin argue that their findings are pertinent to those teaching b-schools students.

“Although some academics deplore how little influence management theory has on business practices and society, our study demonstrates that it does seem to have an impact in the long run,” Jung and Shin write.

If anything, Jung and Shin argue that their study offers a warning to b-schools worldwide.

“As more students, scholars, leaders, and pundits are now reflecting on the influence of business schools, it is precisely the time when business educators should realize their responsibility and potential,” Jung and Shin write. “What they teach matters, and their impact on society becomes clear only after many years.”

Sources: Harvard Business Review, Chron

Summer Reads From Harvard Business School

Summer is wrapping up and many b-school students are looking to make the most of their limited free time.

Business Insider recently released a list of summer books that Harvard Business School professors are reading and recommend for students.

Check out some highlights from the list below.

Contagious: Why Things Catch On by Jonah Berger

In the internet age, an idea can go from being relatively unknown to being spread like wildfire. All in a matter of minutes. In this book, Wharton professor Jonah Berger delves into his research on why certain products or ideas go viral.

For any entrepreneur looking to fast track their idea, Berger offers six steps that make products or ideas catch on.

“If you’ve wondered why certain stories get shared, e-mails get forwarded, or videos go viral, Contagious explains why, and shows how to leverage these concepts to craft contagious content,” the book recommendation site Goodreads explains. “This book provides a set of specific, actionable techniques for helping information spread – for designing messages, advertisements, and information that people will share.”

Work and Authority in Industry: Ideologies of Management in the Course of Industrialization by Reinhard Bendix

According to Business Insider, in Work and Authority in Industry, Berkeley sociologist Reinhard Bendix explains how the entrepreneurial class took on the challenge of creating and managing an industrial workforce in countries like the US, England, and Russia.

In a review for the book, the American Sociological Review says, “Bendix makes a major contribution to sociology in two of its fields which need such a contribution most—the sociology of knowledge and the sociology of work relations… sociological research of the first rank.”

The Second Machine Age: Work, Progress, and Prosperity In a Time of Brilliant Technologies by Erik Brynjolfsson, Andrew McAfee

In The Second Machine Age, MIT’s Erik Brynjolfsson and Andrew McAfee explore the impact of digital technologies on our work and our lives.

“As the full impact of digital technologies is felt, we will realize immense bounty in the form of dazzling personal technology, advanced infrastructure, and near-boundless access to the cultural items that enrich our lives,” according to W. W. Norton & Company, Inc.—the book’s publisher. “Amid this bounty will also be wrenching change. Professions of all kinds―from lawyers to truck drivers―will be forever upended. Companies will be forced to transform or die. Recent economic indicators reflect this shift: fewer people are working, and wages are falling even as productivity and profits soar.”

See the full list at Business Insider.

Sources: Business Insider, Goodreads, W. W. Norton & Company, Inc.

This B-School Is Prepping Humanities In Math

The GRE is opening b-school doors to a diverse pool of applicants. And many don’t possess anything resembling a quantitative background.

In an article for the Pittsburgh Post-Gazette, contributor Courtney Linder explores how one b-school is preparing non-quant students for a seamless transition into the MBA world.

GRE Opens MBA To Humanities Applicants

61% of b-schools schools surveyed by Kaplan Test Prep say that the GRE said has resulted in the enrollment of more students from nontraditional backgrounds.

Kelly Wilson, executive director of masters admissions at Carnegie Mellon Universitys Tepper School of Business, tells the Pittsburgh Post-Gazette that since fall 2016, there has been a 37% increase in MBA applications from humanities majors.

Brushing Up On Math Skills

To help students brush up on their math skills, Tepper offers a four-week online math course that goes over basic business calculus.

“The class includes modules on first and second differentials, partial differentiation, how to plot curves and understand local maxima and minima, limits and basic integrals,” Linder writes.

The course isn’t new, but it is reaching a wider population.

In the past, roughly 30% of admitted students were required to take the online course before beginning their first semester, according to Tepper. But now, the course is available for any incoming student interested in brushing up on math skills.

The Technology Leadership Track

While the MBA is seeing a rise in non-traditional backgrounds, there is one field at Tepper that still has limited access. The technology leadership track.

“Students who apply for the technology leadership track — one of five options in the MBA program, which also offers entrepreneurship, business analytics, energy business and management of innovation and product development — typically need to come from a tech background,” Linder writes.

While the technology leadership track doesn’t require a background in math, it does require that applicants have a certain level of experience in tech.

“MBA graduates of this track are exceptionally prepared to address the complex issues that lie at the intersection of business and technology,” Tepper’s website reads. “They are trained to lead their future organizations in developing and executing technology strategies and managing technology projects.”

Sources: Pittsburgh Post Gazette, Kaplan Test Prep, Carnegie Mellon University

 

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