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60% of top CEOs in India do not have an MBA degree: INSEAD and HBR study

Naveen Jindal with other top industrialists (Photo: World Economic Forum)

If you studied an MBA, there is a 40% chance that you will reach the Chief Executive Officer (CEO) position in a top Indian company — is the implication of a study carried out by INSEAD, the Harvard Business Review (HBR) and Business Today magazine. According to the study, 40% of India’s top CEOs have an MBA degree. Or in other words, 60% do not.

The first such global ranking of Indias best performing CEOs — a study carried out by INSEAD professors Balagopal Vissa, Morten T Hansen, Herminia Ibarra and Urs Peyer rates Naveen Jindal, CEO of Jindal Steel & Power Limited (JSPL) as the country’s best CEO. Although he does hold an MBA degree from the University of Texas at Dallas (the business school there is now named after Naveen Jindal), AM Naik of Larsen & Toubro who stood second in the ranking does not. Nor does YC Deveshwar, CEO of ITC who is at the third position.

In fact, the only other CEO in the top 10 with an MBA degree is Bhaskar Bhat at fourth position who is an alumnus of the Indian Institute of Management (IIM), Ahmedabad. Some others however, have completed short-term courses at various b-schools. Mukesh Ambani of Reliance had dropped out of the Stanford Graduate School of Business after the first year.

The CEOs taken into consideration for the study had served their companies between 1995 and 2011, according to INSEAD. The study began by considering CEOs from companies that had been in the Standard & Poor CNX 500 for at least four consecutive years. It then measured the financial performance of the companies until the last day of the CEOs tenure or until June 30, 2011 (for the ones who were still in office then). The ranking combined three measures: country-adjusted shareholder return, industry-adjusted shareholder return, and change in market capitalisation during tenure. In total, 374 CEOs from 202 publicly traded companies were ranked, of which the top 25 CEOs names were revealed.

Prof Bala Vissa, the main researcher and INSEAD’s associate professor of entrepreneurship said that the perspective taken was the most objective one. “We looked at shareholder returns that the CEO delivered over his or her whole term on the top,” Vissa said.

Commenting on why Jindal made it to the top, Vissa said that it was his turnaround of a sponge iron mill using deals that managed cheap access to valuable raw materials such as coal and iron ore at a time when the industry as such was giving these issues little attention.

According to Vissa, this strategy protected JSPL from price volatility in commodity markets, thus bringing down production costs and boosting profitability. Between 1998 and 2011, Jindal’s total shareholder return of 13,784% had increased JSPLs market capitalisation by about US$ 12.1 billion.

The professor added that for fast-growing Indian companies, the key decision was to take functional managers who had an expertise in specific areas such as sales and marketing and transform them into business leaders. The prevalence of professional managers armed with MBA degrees suggested that the visible hand of managerial capitalism may be playing an increasingly important role in the Indian economy.

Prof Bala Vissa

When asked whether the MBA degree had made any difference at all, the INSEAD professor said that he was not too sure.”Yes, our statistical analysis reveals that, other things equal, having an MBA degree improves a CEOs ranking by 15 places. We can only speculate as to why this happens it could be due to the skills learnt during the MBA program, the network of contacts acquired during the program or maybe smarter people do an MBA to begin with.

Adding to that Vissa said that since the average age of the CEOs was 54 years, it meant that those at the top who did their MBAs from India had done so in the 80s, “Which was 30 years ago and in those days people only went to the IIMs and XLRI Jamshedpur.”

Speaking further on the MBA impact, Vissa said that one of the most interesting findings was that CEOs who started their job when they were younger and had an MBA degree were more likely to attain a better ranking success. “Our statistical analysis revealed that other things being equal, a CEO who started his job 10 years younger than the average age improved his ranking by 15 places. More interestingly, other things being equal, having an MBA degree also improved the place in the ranking by 15 places,” he explained.

Among the other highlights of the study was that there seemed no ‘significant difference in the performance of CEOs of domestic private enterprises or Indian subsidiaries of foreign multi-national companies.’ According to Vissa, it was a positive sign. “Family-run business houses have created an environment where competent people are able to remain at the top. Which also means that an Indian leader’s talent is not so much connected to the company he is working in but more with his basic knowledge of how to run a business.”

About Mumbai, India’s financial capital, the research revealed that state-owned enterprises represented about a fifth of the Mumbai markets capitalisation. Outright privatisation hasn’t been done in a while but many state-owned enterprises are getting listed on the stock market, which is hopeful for the future, observed Vissa.


Rank CEO Company Start year End year (if retired)
1 Naveen Jindal Jindal Steel & Power 1998 NA
2 AM Naik Larsen & Toubro 1999 NA
3 YC Deveshwar ITC 1996 NA
4 Bhaskar Bhat Titan Industries 2002 NA
5 Sunil Bharti Mittal Bharti Airtel 1995 NA
6 R Sridhar Shriram Transport Finance 2000 NA
7 Mukesh Dhirubhai Ambani Reliance Industries 2002 NA
8 Vijay Jindal Zee Entertainment Enterprises 1996 2000
8 Pankaj R Patel Cadila Healthcare 2001 NA
8 Pangal Jayendra Nayak Axis Bank 2000 2009
11 Subir Raha Oil & Natural Gas Corporation 2001 2006
12 Kalyan Ganguly United Breweries 2002 NA
13 Madhukar B Parekh Pidilite Industries 1998 NA
13 Sunil Duggal Dabur India 2002 NA
15 VK Rekhi United Spirits 2001 2011
16 VS Jain Steel Authority of India 2002 2006
17 Prakash Kulkarni Thermax 2000 2007
18 LA Dean Sesa Goa 2003 2006
18 AK Puri Bharat Heavy Electricals 2004 2008
20 Ashok Soni Voltas 2001 2009
21 B Muthuraman Tata Steel 2001 2009
22 SS Kohli Punjab National Bank 2000 2005
23 Anand Mahindra Mahindra & Mahindra 1997 NA
24 R Seshasayee Ashok Leyland 1998 2011
25 Kamal K Sharma Lupin 2003 NA

About the CEOs’ performance, the survey said that the only 5% of the CEOs evaluated were founders of their companies. Sunil Mittal of Bharti Airtel and Nimmagadda Prasad of Matrix Laboratories are the only founder-CEOs among the top 25. Over the last 15 years, India has seen an explosion of entrepreneurial ventures but entrepreneurs dont always make it to the top,” added Vissa. He reasoned out that it could be because of sizeable trade sale activity of small startups becoming big and getting acquired by other incumbents thereby not even making the initial public offering (IPO) stage.

The study made an interesting note of the companies’ health when a new CEO took over. Vissa said that it was easier to score better when following in the footsteps of a poorly-performing CEO. There is a runway effect at play, where taking over from a low base provided greater opportunity for success, he explained. The data showed the median age when the executives became CEOs was 54 years, and those still in office had had an average tenure of 6.7 years. Only 1.3% were women among the top CEOs in India.

About women CEOs, Vissa said that the phenomenon why women do not or have not as yet made to the top as vibrantly as the male CEOs was because many women slowed down post-marriage and got back into the scene after a break. “This definitely slows down chances but yes, in the years to come one does expect to see more women up there. Already the banking sector in India does have quite a few women at the top,” Vissa said.

The lead researcher of the study also pointed out that the list of top 25 CEOs did not figure those from telecommunications and IT sectors except for Sunil Mittal of Bharti Airtel. When asked why favourite CEOs such as Wipro’s Azim Premji and Infosys’ NR Narayans Murthy were not in the list, Vissa answered that the ranking covered people who began their CEO stints during January 1995 and June 2009 but Murthy and Premji had taken charge before 1995.

In conclusion, Vissa said that the scenario looked hopeful. A group of young CEOs, some from the top Indian business schools, are delivering shareholder value in an economy where it is a challenge to sustain competitive advantage. Executives have had to step up to innovate, grow and stay ahead of the competition and a number of these high-quality CEOs are able to perform extraordinarily well in any type of private enterprise firms linked to Indian business houses or to foreign multinationals.”

The survey was built on an earlier research in HBR’s January 2010 issue which had ranked 1,999 corporate leaders from 1,205 global companies on the shareholder performance they had delivered over the course of their tenure. Steve Jobs had topped this list.

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