Are Military CEOs Better Business Leaders?

May 29, 2012 in Daily Bulletin

A lot of contemporary research focuses on how the identity of the CEO affects the direction of a company, writes L.V. Anderson. What do researchers have to say about military CEOs? Highlights of the report include:

  • Between 1980 and 2006 30% of CEOs in America’s top companies had some experience with the military. This was primarily because of the draft and the Vietnam and Korean wars.
  • Military CEOs are only half as likely to engage in fraud when compared to non-military experience CEOs. This is especially true when pressure is highest and industry profitability is lowest. Civilian CEOs are almost five times more likely to doctor the books then.
  • In general companies with military CEOs perform better during harsh economic times.
  • However military CEOs perform worse when economic times are good.
  • This is perhaps because they are less risk-taking, which, while creating stability, means that they don’t capitalize on opportunities when they come.
  • Military CEOs spent up to 20% less on R&D than their civilian counterparts.
  • On balance, if you consider both the good and bad years, military CEOs perform slightly worse than civilian ones.

To read many more details including why fraud might just be a burden that society has to bear, the merits of having an MBA, the methodology of the study, some famous case studies, and what business schools should try to foster, click here.

Source: Slate