Two years ago, Efriam Benmeleck, associate professor of finance at the Kellogg School, and Carola Frydman, visiting associate professor of finance at the Kellogg School, set out to study what type of impacts having a CEO with military experience would have on a company.
The two were already studying how individual leadership personalities effect corporate outcomes, and became more and more interested in military CEOs after noticing an interesting trend. Since 1980, the amount of CEOs with a military background had significantly decreased to only 6.2% among publicly held firms.
Frydman and Benmeleck collected CEO data from over 800 US firms for the years 1980 through 1991, and from over 1500 publicly traded US firms for the years 1992 to 2006. The researchers wanted to not only know if the CEO served in the military, but also in what branch, at what rank and for how long.
After analyzing all the data, they were able to determine three major outcomes:
- Firms in decline or times of stress perform much better when they have a CEO with a military background. It is thought that the training received in the military would help a CEO be better prepared to make tough decisions under pressure.
- Military CEOs are less likely to make more conservative decisions when it comes to investment in physical capital, or research and development.
- Military CEOs are also less likely to commit fraud compared to civilian-only CEOS.
Upon completion of the study, the researchers were left wondering why more companies aren’t hiring military CEOs. Though the research doesn’t provide a clear explanation for the decline in military CEOs, both Frydman and Benmeleck think it warrants further investigation, especially from firms and higher education institutions.
They even go so far as to recommend making it easier for veterans to get into MBA programs by recognizing the merit in their service, and see a benefit to using military training as inspiration for business leadership.
Professional Diversity Network is proud to support our veterans through our Military 2 Career Network. If you are a veteran seeking a job, don’t forget to join this network, which connects you with companies recruiting military veteran professionals, or update your profile.