Do Military Veterans Make Better CEOs?

Efraim Benmelech and Carola Frydman have conducted some intriguing research regarding military veterans in the business world.   Three key findings emerge from their work.  First, CEOs who have served in the armed forces perform better than other CEOs in industries that are experiencing turbulence, distress, or decline.  Second, CEOs with military experience are more conservative in their investment behavior.  They are less likely to make bold, risky capital and R&D investments.  Finally, CEOs with military experience are much less likely to commit fraud.   

Based on those results, one might be eager to search for senior executives with experience in the armed forces.  However, the authors found a dramatic decline in the number of CEOs with military service.   According to Kellogg Insights, which featured these scholars' research, "Among large, publicly held firms, the proportion of CEOs with military service in their background has decreased by an order of magnitude since 1980—from 59% to only 6.2%."   In sum, military veterans appear to make good corporate leaders, but the competition to attract these top notch former soldiers has become much more intense. 

CEOs with Military Experience

The Boston Innovation blog reported on a new study today about CEOs with military experience. New research by Efraim Benmelech of Harvard and Carola Frydman of Boston University found that CEOs with military experience tended to engage in less fraudulent behavior than those executives who had never served in the armed forces. The study findings suggest that the leadership training and emphasis on honor and ethics at the military academies may have a lasting impact on personal behavior - years after the individuals depart the military. Does this research suggest that we can teach ethics in places such as business school and thereby increase ethical behavior of business leaders? I'm not sure it is quite that simple. The military inculcates a certain sense of honor and character in many ways, well beyond the classroom. In short, the armed forces employ a holistic approach to building character. If business schools wish to enhance ethical behavior, they must do more than teach a class or two on ethics and morality.