Has the Mandatory MBA Era Arrived?

Question

Someone recently told me that the overwhelming majority of major CEOs have MBAs. This statement inspired me to do some empirical digging. Despite a common perception that MBAs make up the majority of CEOs in actuality only about 35% have MBAs. Another 35% are in the nil group with no advanced degree at all. Finally, about 30% have some form of advanced degree other than an MBA such as MS, MA, MD, JD/LLB, and PhD. Of the other advanced degree group, law and engineering are the most common. Note that there is generally a little overlap caused by joint MBA and other advanced degree holders. 

Before performing my analysis I predicted that the most recently installed CEOs would be more likely to have an MBA, that the no advanced degree group would shrink, and that MBAs combined with another advanced degree would become more common. Surprisingly, there was no compelling evidence that any of my predictions are true. The percentage of recently installed CEOs with MBAs and the percentage of the overall group with MBAs were essentially indistinguishable. The same story played out with CEOs with no advanced degree. Likewise,the percentage of recently installed other advanced degree holders and overall other advanced degree holders were effectively the same. 

While some commentators (often those trying to sell something) have alluded to an MBA becoming mandatory, this has yet to manifest itself in the data. I do expect the percentage of CEOs with MBAs to increase over the next few decades, most likely by displacing individuals with no advanced degrees. However, I believe that large percentages of individuals with other advanced degrees will continue in the CEO chair for decades to come, especially with the rise of quality PT and Exec MBA programs that allow them to add obtain an MBA while remaining employed.

ab · Answer

hmm...this puts me thinking again... :shock:

kryzak · Answer

good info to know, Hjort! Thanks for the research!

riverripper · Answer

Now how about the fact that there are how many people who graduated from college compared to how many have MBAs. Sure you might become a CEO without an MBA but hypothetically if 1 in 1000 college grads get an MBA from a top school then those 250 CEOs that have MBAs are drawn from a far smaller pool than the 250 CEOs that just have UG degrees. So though it may not be mandatory it definitely improves your odds.

aurobindo · Answer

Valid point I think

Hjort · Answer

This is a worthwhile point. I will quite readily concede that acquiring an MBA is a positive NPV project for most individuals. However, we are essentially in a regime of capital rationing in which we must adjust our criterion from accepting any and all positive NPV projects to identifying which projects provide the highest NPV within the constraints of our available investment. Since individuals have a range of endowments when they enter the MBA age threshold (different educational backgrounds, different career trajectories, different technical skills, different social networks, different leadership skills) the net benefit of an MBA differs across potential MBA applicants. For many individuals, an MBA will rank high in return relative to the student's investment. For students who already have a high standing on many of the attributes that are developed in MBA programs, a MBA will have a low rank relative to other potential uses of the time, money, and effort.

Has the Mandatory MBA Era Arrived?

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