Does getting an MBA make you a better leader?

Does having an MBA make you a better leader?

Although the economic value of getting an MBA degree is clear, few studies have examined whether and how MBA education contributes to developing business leaders, a core mission of such programs.

I think there might be too many MBAs running companies. There should be more focus on the project or service itself, less time on board meetings, less time on financials. 

Tweet from Elon Musk on Dec. 10, 2020

By Ann Peng

Skepticism about the value and efficacy of an MBA program is nothing new. Prominent management scholars have voiced their criticisms about the value of getting an MBA over the years. Prefer and Fong, for example, argued in 2002 that an MBA is more about profiting business schools rather than benefiting individuals, corporations and society. 

Scientific studies have painted a much brighter picture of the MBA, consistently reporting the positive economic return of such a degree. Using the Graduate Management Admission Council (GMAC) data of thousands of graduates over five years, management scholars Holtom and Inderriden reported a double-digit rate of return on investing in an MBA degree in 2007. They also found that individuals attending schools ranked outside the top 50 had a stunning rate of return of 20%, compared to 12% among those attending top 10 schools. Other studies found that getting an MBA contributed to salary increases, employability and promotion in both short and long terms. 

Ann Peng
Ann Peng

Although the economic value of getting an MBA degree is clear, few studies have examined whether and how MBA education contributes to developing business leaders, a core mission of such programs. My fellow researchers and I decided to examine that specific issue, surveying 336 part-time MBA students enrolled at a large Chinese university from 2020 to 2023. Our goal: To identify factors that facilitate the development of leadership capability. We focused on increases in leadership self-efficacy (LSE) throughout the MBA program. LSE measures beliefs about an individual’s own ability to successfully lead a group toward achieving its goals. It is a key source of motivation for leadership in the workplace.

Our findings revealed that an increase in LSE led to increases in leadership behavior in and outside the MBA program. Those reporting a larger increase in LSE in the first year were also more likely to be promoted by their employers during the last two years in the program. In addition, we learned:

Who becomes a more effective leader by attending an MBA program?

We surveyed our participants during the first week in their MBA program on personality traits, leader self-efficacy and leader identity and collected demographic information like work tenure, leadership experience, gender, education level, type of employer and job position. (Leader identity reflects the extent to which being a leader is an important part of one’s self-concept – seeing yourself as a leader.) By testing the variables simultaneously in a model predicting increases in LSE, we found that individuals who exhibited a greater increase in LSE were those who had a stronger leader identity, had a greater amount of leadership experience before joining the MBA program and had a relatively lower baseline LSE. None of the personality traits predicted increases in LSE, though extraversion and conscientiousness were positively associated with the initial level of LSE. Men and women did not differ in the development of LSE.

How can we design the MBA program to develop leaders?

Our findings suggest that recruiting MBA students based on their leadership experience instead of their years of general work experience can facilitate their leadership development. This finding echoes the early concern by management theorist Henry Mintzberg: “Using the classroom to help develop people already practicing management is a fine idea, but pretending to create managers out of people who have never managed is a sham.” 

We found that students reporting more engagement in courses and extracurricular activities focusing on leadership development during their first year in the program exhibited a greater increase in LSE. These leadership activities include taking coursework focusing on leadership theories and skills, attending guest talks and events on leadership topics, and participating in group exercises that offered opportunities to lead. This finding suggests that MBA programs can better develop leaders by intentionally designing course activities to focus on leadership competencies. Such activities may be particularly influential in the earlier stage of the program, as LSE increased the most during the first year and became largely flat in the subsequent two years in our sample.    

How do men and women differ in leadership development?

Despite women reporting a lower LSE than men at the start of the MBA program, we found no gender differences in terms of change in LSE over time. However, women and men differed in terms of the extent they benefit from having a stronger leader identity and engaging in leadership activities. Whereas men with a strong leader identity experienced a large increase in LSE, a strong leader identity did not help women gain confidence about leading. 

Leadership activities contributed to increases in LSE differentially depending on gender and leader identity. Among men, having a strong leader identity increased the benefits of engaging in leadership activities. In contrast, women with a weaker leader identity were more likely to benefit from participating in leadership activities. We reasoned that the clash between a female gender role and a leader role might have led to internal conflict among women with a strong leader identity. Such conflict, in turn, might have prevented these women from fully realizing the benefits of leadership activities. This is an issue we will examine in the future.

These results are part of an ongoing research project: The antecedents and consequences of the development of leadership self-efficacy.