Business leaders with MBAs do not perform better than those without MBAs and actually drive workers' wages down, reported CBS News April 4.
According to a working paper from the National Bureau of Economic Research, within five years of a CEO with an MBA taking over a company from a CEO without an MBA, worker pay significantly dropped. Researchers looked at companies in the U.S. and Denmark and found that in the U.S. employee compensation dropped by 6 percent and by 3 percent in Denmark when a CEO with an MBA took over.
The paper also emphasized that business managers do not bring any significant productivity benefits to the organization and do not produce higher output, investment, or employment growth. Furthermore, business managers do not share greater sales and profits with their employees whereas non-business managers do.
The authors of the study say that the popularity of business degrees can explain the decline of worker payment; "business managers can explain about 20 percent of the decline in the labor share [of income]. They also account for approximately 15 percent of the slowdown of wage growth since 1980."
"We interpret our results as reflecting the business-schoolled shift towards emphasizing shareholder values and attempts to reengineer corporations by making them leaner," the paper concluded.