Corporate Strategy May Depend on When the CEO Earned Their MBA

Career Climbers / 10th April 2018

The Fowler College of Business at San Diego State University (SDSU) announced that research conducted by an SDSU professor indicated a direct correlation between when a CEO earned their MBA degree and corporate strategy trends, specifically, the marked decline in corporate diversification.

SDSU management professor Taekjin Shi and co-author, Jiwook Jung at the University of Illinois at Urbana-Champaign, studied data from 640 companies compiled between 1985 and 2015. They found that when those corporations were headed by CEOs who earned their MBA during the 1970s and 80s, corporate diversification decreased sharply.

The researchers found that the de-diversification trend correlated directly with the general ideology of business school faculty who viewed diversification as undermining shareholder value starting in the early 1970s through the 1980s.

The research, entitled “Learning Not to Diversify: The Transformation of Graduate Business Education and the Decline of Diversifying Acquisitions” has been accepted for publication and is currently available online in Administrative Science Quarterly.

Dozens of companies have de-diversified their holdings in the past 20 years including Proctor & Gamble (who shed Pringles, CoverGirl and other product lines) and PepsiCo (who spun off their restaurant holdings into YUM! Brands).

“Our study verifies the significant impact business schools have on corporate management, albeit with a long time lag,” said Shin. “We were able to demonstrate how a CEO’s education creates a ripple effect that impacts shareholders, corporate strategy and major economic trends over the long term.”

About the Fowler College of Business  
With over 5,000 students, the Fowler College of Business at San Diego State University is one of the largest business schools in the U.S. For over 60 years, the college has produced some of the most successful and influential business leaders in the world. For more information, visitbusiness.sdsu.edu.

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