Posted by: Louis Lavelle on November 23, 2010
If you’re an MBA or prospective MBA, there aren’t many reasons to be cheerful this holiday season. The job market for MBA talent is coming back, but slowly, and the persistent criticism of the degree is enough to suck the life right out of career night. So any reason to give thanks is a cause for celebration, and today we have one. New research suggests that MBAs are not, repeat not, the evil monsters everybody thinks they are.
The paper, by Daniel Slater of Union University and Heather Dixon-Fowler of Appalachian State University, was published in the September issue of the Academy of Management Learning & Education. To come to their conclusion the two researchers analyzed 416 chief executives who led S&P 500 companies in 2004. To determine if the CEOs had the planet’s best interest at heart, they then examined their companies’ “corporate environmental performance” rating from KLD Research and Analytics, a research outfit used by institutional investors to determine whether companies are “socially responsible.” The environmental rating takes into account each company’s impact on the environment, including pollution prevention, use of green energy, and other aspects of their operations.
If B-schools really did produce monsters, the researchers should have found that the companies run by CEOs with MBAs had lower ratings than those run by CEOs without the degree. But they didn’t. Even after correcting for numerous variables including the CEO’s age and tenure, industry, and firm size, the CEOs with MBAs scored significantly better on the KLD rating scale (median score: 2.865) than those without (median score: 2.730). “Contrary to other studies which have found effects of business education…this outcome is positive,” the authors write. “CEOs with MBAs are making a positive contribution to the environmental sustainability of the planet.”
Slam dunk, right? Maybe. The criticism that many MBA programs face these days isn’t that their graduates are despoiling the planet more than their less-educated brethren. It’s that they’re treating it like their own personal ATM. It wasn’t giant smokestacks that brought down Merrill Lynch and Bear Stearns; it was risk-taking gone horribly bad.
To find out where CEOs with MBAs stand on that score there are other measures Slater and Dixon-Fowler could have chosen, and they didn’t have to go far. KDL’s social ratings measure, among other things, “investment controversies” and “negative economic impact.” Had that measure been used instead of the environmental rating, the study might have come to a much different conclusion.
Slater doesn’t disagree, but says the environmental rating was used because the indictments of MBAs that motivated the study dealt primarily with environmental concerns. The pair may undertake a follow-up study looking more broadly at how CEOs with MBAs score on all facets of social responsibility, he says.