MBAs - much less popular at family businesses

Photo by Waldemarus/iStock / Getty Images
Photo by Waldemarus/iStock / Getty Images

Despite the boom in MBAs with a family business emphasis over the last 10 years, CEOs at family companies are much less likely to have the prestigious business degree, compared with their colleagues at non-family businesses.

Out of the top 100 family businesses, as listed by the University of St Gallen’s Family Business Index, 22 CEOs of these businesses had MBAs. For family members running these businesses the numbers are even less - out of those 100 family businesses, 38 CEOs come from members of the owning family, but only six of them have MBAs.

In contrast, out of the top 100 listed businesses in 2017, as compiled by Forbes, 34 have MBAs. That’s more than a third greater than the numbers for family businesses.

Although few family businesses would say they don’t value an MBA qualification for their top managers, there could be an implicit, or even explicit, bias towards valuing loyalty and length of service more at these businesses, compared with having an MBA. Factors like loyalty and length of service, although important, probably play less of a role in determining CEO positions at the big non-family listed businesses.

Many of the bigger family business owners probably see Inditex’s Pablo Isla as a good role model CEO. Isla has worked with Inditex, which is owned by the Ortega family and is most famous for its Zara fashion brand, for more than 20 years. Last year, the Spaniard was named by the Harvard Business Review as the best boss in the world. And Isla doesn’t have an MBA.

Even though MBAs might be less popular among the owners of family businesses, compared with the big non-family multinationals, the degree is likely to have gained greater acceptance among family businesses in the last 20 years. Although there are no comparative figures, the number of family business leaders with MBAs has more than likely grown substantially in the last 20 years.

Also, although most of the CEOs of the top family businesses don’t have MBAs, a sizable number of them have first degrees with an emphasis on business. This suggests that some sort of academic business background is valued at family businesses.  

Many of the most prestigious business schools in the world have upped their efforts in the family business sector in recent years. Courses at top business schools that have emphasized the subject for some time like Kellogg School of Management, INSEAD, and IMD have been adding resources in the area. And many other business schools, where family business studies were non-existent a few years ago, have now started to offer family business courses for the first time.

A lot of these efforts are designed to attract the next generation of family business owners to their courses. But these efforts - as the numbers above suggest - might not be reaching the top echelons of management of these companies as much as these business schools would probably like.