The Effects of Business School Education on Manager Career Outcomes

This paper studies the effects of business school education on manager career outcomes, using evidence from the Engineering, Science, and Management War Training (ESMWT), that offered MBA-style education to middle managers and production supervisors working at U.S. war industrial facilities during WWII. Employing a regression discontinuity design (RD), the author shows that managers who scored right above the ESWMT entry exam threshold had a substantially higher probability of being promoted to both middle and top management positions during their career and engaged systematically more in self-employment and innovative entrepreneurial activities than similar managers who scored right below. These effects were stronger for nonwhite and female managers. In terms of mechanisms, the increased promotions followed sizable improvements in facility performance, consistent with the idea that the program content mattered, more than with a signaling hypothesis. Finally, exposure to a network of classmates from better-performing firms resulted in higher chances of moving into peer companies and founding a business with them.