Daron Acemoğlu, a prominent economist at MIT, conducted a study examining the impact of CEOs with business degrees, such as MBAs, on their companies’ performance. The analysis, based on corporate and employee data from the US and Denmark, reveals that these CEOs do not improve metrics like revenue, productivity, or investment. Instead, the researchers found that employee wages decreased after the appointment of CEOs with business degrees in both the US and Denmark. Additionally, the share of wages relative to revenue declined. Source: manager-magazin.de

“This year’s economic sciences laureate Daron Acemoglu was born in 1967 in Istanbul, Türkiye. He earned his PhD in 1992 from The London School of Economics and Political Science (LSE), UK and is currently a professor at Massachusetts Institute of Technology, Cambridge, USA.”. Source: The Nobel Prize

The study suggests that business schools, particularly before the year 2000, heavily emphasized profit maximization and cost-cutting, which might be reflected in the actions of their graduates. Acemoğlu notes that these CEOs could potentially harm their companies’ long-term profitability by driving away highly qualified employees through salary reductions. He proposes that the business school experience may need to be fundamentally rethought, particularly in how students build connections, networks, and gain experience with everyday workforce challenges.

These findings raise concerns about the effectiveness of business schools and the long-term impact of leaders with such degrees on the companies they manage.

Why Business Schools Must Evolve: Beyond Profit to Empathy, Social Responsibility, and Societal Benefit

Recent studies, such as the one conducted by MIT economist Daron Acemoğlu, reveal a crucial gap in the traditional approach to business education. The study highlights how CEOs with MBAs or business degrees often fail to improve their companies’ performance in critical areas like revenue and productivity, while simultaneously driving down wages and employee satisfaction. This research signals an urgent need for business schools to rethink their curricula.

For decades, many business schools—particularly before the year 2000—focused heavily on profit maximization and cost-cutting as core strategies. While these principles may have once been seen as the pillars of corporate success, they no longer suffice in today’s increasingly complex and interconnected world. The time has come for institutions that have not yet updated their programs to integrate a broader, more holistic approach to leadership.

A Shift in Focus: From Profit to People

Monetary profitability must no longer be the primary focus of business education. The singular pursuit of profit, while important, often overlooks the broader and more essential elements of corporate leadership: social responsibility, empathy, and the ability to positively impact society. A shift toward these values is not just a moral imperative but a business one as well. In an era of rapidly evolving consumer expectations, businesses that fail to align with the values of empathy and social good are likely to fall behind.

Today’s leaders need to be more than just financially savvy; they need to understand and value the broader impact their decisions have on employees, communities, and the world at large. CEOs should be trained to think not only in terms of how to maximize short-term shareholder value but also in terms of how to create long-term, sustainable value that benefits society as a whole. Business schools must step up and provide the education that will shape these kinds of leaders.

Social Responsibility: A Critical Competency

Incorporating social responsibility into the core of business education means preparing future leaders to manage the ethical, environmental, and social impacts of their decisions. Companies today are expected to play an active role in solving some of society’s biggest challenges, from climate change to inequality. Leaders who fail to take social responsibility seriously risk not only their company’s reputation but also their long-term profitability.

Business schools must embed the concepts of corporate social responsibility (CSR) and environmental, social, and governance (ESG) criteria into their curricula. These are no longer optional electives—they are essential tools for navigating today’s global marketplace. Leaders with an understanding of CSR are better equipped to make decisions that benefit not just shareholders but employees, customers, and society at large.

Empathy: A Core Leadership Skill

Beyond social responsibility, empathy is an often-overlooked but vital leadership trait that can directly impact company culture and employee well-being. The findings from Acemoğlu’s study illustrate that CEOs focused solely on cost-cutting tend to undermine their workforce, which leads to lower employee satisfaction and higher turnover. These leaders fail to consider the human side of business, where fostering a positive and supportive work environment can be just as important to a company’s success as balancing the books.

Business schools must teach future CEOs that leadership is not just about managing resources but about understanding and supporting people. Empathy—once seen as a “soft skill”—is increasingly recognized as a critical element of effective leadership. Leaders who genuinely care about the well-being of their employees and customers are better equipped to inspire loyalty, drive innovation, and create a productive workplace.

Benefit to Society: The Broader Purpose of Business

The purpose of business is evolving. It is no longer enough for companies to merely turn a profit; they are now expected to contribute positively to society. The idea of “purpose-driven leadership” is becoming more widespread, where businesses are seen as engines for social change. This shift requires a fundamental transformation in the way we educate future leaders.

Schools that have yet to adopt this mindset must now move swiftly to ensure that their graduates understand the full scope of their responsibility. Business is no longer about winning at all costs—it is about creating value that benefits society as a whole. This includes fostering diversity and inclusion, supporting environmental sustainability, and ensuring ethical governance. Leaders who can integrate these priorities into their strategies will not only succeed in the long term but also leave a positive legacy.

A Call for Curriculum Reform

The evidence is clear: a purely profit-driven focus is outdated and often counterproductive. Business schools need to reflect this reality by overhauling their curricula to emphasize values beyond profit. Courses in ethics, corporate governance, social responsibility, and human-centered leadership must become central to business education.

Incorporating real-world case studies that demonstrate the success of socially responsible companies and empathetic leadership would help solidify this shift in focus. Students should be encouraged to engage in community projects, social enterprises, and internships that give them firsthand experience of how businesses can positively impact society.

Ultimately, schools must teach that the most successful leaders of the future will be those who balance the demands of profitability with the needs of people and the planet.

The findings from Acemoğlu’s study are a wake-up call for business schools worldwide. Schools that have not yet reformed their curricula to reflect the changing priorities of the modern world must act now. The pursuit of monetary profitability at all costs can no longer be the primary objective. Instead, business schools must prepare leaders who are not only financially astute but also socially responsible, empathetic, and driven to make a positive impact on society.

This is not just an evolution in business education—it is a necessary revolution. Only by embedding these values into the foundation of their programs can business schools ensure they are developing leaders who are truly fit for the future.