When is Human Capital a Valuable Resource? The Performance Effects of Ivy League Selection Among Celebrated CEOs

Strategic Management Journal, June 2015; Volume 36 Issue 6, Page 930-944

University of Alberta School of Business Research Paper No. 2014-01

32 Pages Posted: 1 Apr 2014 Last revised: 8 Mar 2016

Danny Miller

HEC Montreal

Xiaowei Xu

Independent

Vikas Mehrotra

University of Alberta - Department of Finance and Statistical Analysis

Date Written: February 6, 2014

Abstract

This note investigates whether and when human capital selectively trained at the highest levels constitutes a resource that will sustain superior rents. Our study of a group of over 400 star CEOs who have been celebrated on the covers of major U.S. business magazines established that there is an advantage accruing to graduates of highly selective universities. CEOs from such schools were shown to have led firms with higher market valuations and also have a greater ability to sustain that valuation than other CEOs in the group. The advantage was strongest for undergraduate rather than graduate programs, the former being more apt to select and train for the kinds of subtle talent demanded of a CEO. The performance edge also was greatest in smaller firms where CEO discretion might be highest and for younger CEOs who benefit most from education and are less able to appropriate rents. Finally, the advantage accrued to graduates of more recent years, when selective schools had become less socially elitist and increasingly meritocratic, thus favouring the effects of human versus social capital.

Keywords: human capital, resource-based view, CEO demographics

Suggested Citation

Miller, Danny and Xu, Xiaowei and Mehrotra, Vikas, When is Human Capital a Valuable Resource? The Performance Effects of Ivy League Selection Among Celebrated CEOs (February 6, 2014). Strategic Management Journal, June 2015; Volume 36 Issue 6, Page 930-944; University of Alberta School of Business Research Paper No. 2014-01. Available at SSRN: https://ssrn.com/abstract=2408099

Danny Miller (Contact Author)

HEC Montreal ( email )

3000, Chemin de la Côte-Sainte-Catherine
Montreal, Quebec H2X 2L3 H3T 2A7
Canada

Xiaowei Xu

Independent

No Address Available

Vikas Mehrotra

University of Alberta - Department of Finance and Statistical Analysis ( email )

School of Business
University of Alberta
Edmonton, Alberta T6G 2R6
Canada
780-492-2976 (Phone)
780-492-3325 (Fax)

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