Business evilYes, I know that that’s a very provocative title. But after analyzing data that B-school professor Raj Aggarwal sent me, this is what I now believe about the Graduate Management Admission Test. A high GMAT score is necessary to gain admission to top business schools—world wide. But, shockingly, what Aggarwal reported in a paper in the Journal of Business Ethics is that high GMAT scores correlate with some of the most negative traits of American business: lack of ethical orientation, male domination of executive ranks, uncertainty avoidance, and individualism. What’s worse is that they may be inversely correlated with entrepreneurship.

What this means, to be blunt, is that people with the highest GMAT scores may be the most corrupt, chauvinist, and arrogant. Ouch! I’m glad I didn’t get a high score and that New York University admitted me into its MBA program anyway.

Aggarwal, who was formerly dean of the business school of University of Akron, and his co-authors Joanne and John Goodell examined the GMAT scores of candidates in 25 countries from the period 2004–2010. They used panel-data analysis and other statistical procedures to examine the association of GMAT scores with cultural characteristics. They controlled for demographic and economic factors (such as wealth levels) that may also influence GMAT scores, and used four independent measures of culture developed by Dutch researcher Geert Hofstede.

On these four measures, the team found, to a high degree of robustness, that the focus on high GMAT scores promotes the following trends:

  1. Safety First. High GMAT scores are positively related to uncertainty avoidance (less tolerance for ambiguity), behaviors that discourage entrepreneurialism.
  2. Individualism. High GMAT scores emphasize individualism (less collectivism): those with high GMAT scores are less likely to be team players.
  3. Lower Ethical Standards. Whilst high GMAT scores encourage individualism, ethical behavior arises from awareness of collective virtues (the opposite of individualism). Also, high GMAT scores are associated with high power distance (the extent to which the less powerful members of organizations and institutions accept and expect that power will be distributed inequitably), a trait leading to corruption and unfair negotiating tactics – each an aspect of unethical behavior. In addition, a separate test indicated that GMAT scores negatively correlate with a composite cultural measure of ethical orientation.
  4. Male Gender. A focus on high GMAT scores favors males, reducing the number of females in upper management and in graduate business programs.

The team also found that Belgium has a higher average GMAT score than the United Kingdom does, despite Belgium’s not being an English-speaking country; and that Finland has the lowest average GMAT score despite its international reputation for outstanding student achievement scores at the secondary level. These variations cannot be explained by normal economic and demographic variables, and this means that there is something wrong with the GMAT.

These findings have important implications for businesses, business leadership, business schools, and societies. GMAT scores are an important gateway into business schools and business careers, and emphasizing high GMAT scores is likely to reflect the cultural biases of the GMAT in corporate leadership and in the ethical sensitivity and behavior of corporations.

Aggarwal says that one reason for the lack of ethical orientation in business and for the lack of success of whistleblower programs may be the bias against ethical awareness that the focus on high GMAT scores among corporate managers and leaders engenders. Their focus on high GMAT scores may also explain corporate leaders’ observations that business-school graduates lack team skills. Another bias that a focus on high GMAT scores promotes, according to Aggarwal, is an unwillingness to make decisions that are risky and involve distant horizons.

What this means is that business schools need to modify their admissions criteria explicitly to offset the cultural and ethical biases that the use of the GMAT score introduces as a component of the admissions process. And it means that there should be a concerted effort to recruit more female MBA students. After all, women are as successful in business as are men. It is the GMAT’s bias against ethical and entrepreneurial behavior that may be locking them out of business schools. In addition, business-school admissions criteria need to emphasize potential candidates’ backgrounds and activities and what they evidence of high tolerance of ambiguity; an ethical orientation; and extensive experience with collective work and play.

Or maybe business schools should just start selecting people with the lowest GMAT scores. Doing so will exclude the most unethical and the least visionary, and help right the sexual imbalance. But it will also exclude the most capable.

To give us the future business leaders we most need, the GMAT needs to take account of qualities other than raw business power: qualities such as empathy, holistic thinking, and the ability to fall into a mudstorm of problems and emerge clutching visions that are good not just for shareholders but for the planet; visions workable not just for today but for the foreseeable future.

Link to article on LinkedIn’s website

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  • Joe

    “These variations cannot be explained by normal economic and demographic
    variables, and this means that there is something wrong with the GMAT.”

    You are the King of dubious, illogical associations and methodologically flawed conclusions. You work in academia? Wow. I’d be nervous of my peers reading my notion of sound logic, if I were you.

    Furthermore, the entrepreneurial world surely laughs at your attempt to apply socialist values to their reality as if they are accepted fact. Those not in the game may be easily lulled by such romantic notions, but you seem ridiculous to everyone who has to compete for a living.

    Your devaluation of risk aversion (as a general concept) is particularly hilarious, especially as it hypocritically contrasts with your condemnation of individualism. You have a clear process of adapting your logic to fit your agenda.

    Last, your promotion of ostensibly innate skills of women to achieve claimed advantages in business leads us to the obvious conclusion, according to your model, that men also possess certain innate advantages. What are those innate advantages? Or is the logical mirror of your claims to politically incorrect for you to admit to?

  • chetan

    Great article.. but i failed to understand the correlation between high GMAT score to less women getting into B -Schools. Test procedure are same for both male and female student. Please help me in understading rationale behind this conculsion.