Does business education truly affect the decisions and behaviors of future business leaders?
Jiwook Jong, an assistant professor at the University of Illinois at Urbana-Champaign, and Taekjin Shin, an associate professor at the Fowler College of Business at San Diego State University, set out to answer this question by studying over 30 years of data on corporate diversification -- making new products for new markets.
They published their findings in a recent study in Administrative Science Quarterly.
They collected and studied data from 2,031 CEOs who ran 640 large US corporations from 1985-2015, gathering information on the CEOs' educational backgrounds and their years of graduation and looking at when corporate diversification trended.
What did they find? CEOs who earned MBAs before the 1970s were 17 percent more likely to pursue diversification compared to CEOs without an MBA. Those CEOs who earned MBAs in the 1970s were less likely to pursue diversification than their non-MBA colleagues.
That is, those CEOs who attended business school when corporate diversification was more en vogue practiced it, compared to those who did not. There was much skepticism of the practice in the 1970s, which led to outright disdain in the 1980s. Up until the 1960s, it was a respected strategy.
What does this mean for you? The implications surpass corporate diversification strategy. What business schools teach matters -- and their impact on the shape of business gains clarity over time.
It means you need to pay attention in class.
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