Are MBA CEOs better for their employees?
No. But they make their shareholders happy.
Management is doing things right; leadership is doing the right things.
| Peter Drucker
Michele Zanini posted Do MBAs Make Better Managers?, but he is asking the wrong question, it turns out.
His article is based on research by economist Daron Acemoglu and colleagues that tested the differences in business performance and employee wages with MBA and non-MBA CEOs.
As the authors state:
We provide evidence from the US and Denmark that CEOs with a business degree (“business managers”) reduce wages and the labor share (relative to non-business managers). Within five years of the appointment of a business manager, wages decline by 6% and the labor share by 5 percentage points in the US, and by 3% and 3 percentage points in Denmark. Firms appointing business managers are not on differential trends and do not enjoy higher output, investment, or employment growth thereafter. [...] We establish that a key mechanism for these wage effects is changes in rent-sharing practices following the appointment of business managers and provide evidence suggesting that these effects are driven by business managers prioritizing shareholder value.'1
MBA CEOs are more likely to be driven by neoliberal principles than non-MBA CEOs, meaning they are eager to cut wages — seeing workers as an expense, not as foundational to business performance — which they do in a 5-year timeframe. The proceeds are directed to shareholders, which is a characteristic of the poisoned modern financialized organization, like Boeing.
The real question should be 'Are MBA CEOs better for their employees'? and the answer is ‘no’.
I leave aside the cleverness in the research that winnowed out whether there was a transition from a non-MBA to an MBA CEO.