Is The GMAT The Root Of Business Evil?

by Vivek Wadhwa on

blog-gmatbooksYes, 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 emphasise 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 can’t be explained by normal economic and demographical 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.

Editor’s note: Guest writer Vivek Wadhwa  is an entrepreneur turned academic. He is a Fellow at Stanford Law School, VP of Innovation and Research at Singularity University, and Director of Research at the Center for Entrepreneurship and Research Commercialization at Duke University. You can follow him on Twitter at @wadhwa and find his research at www.wadhwa.com.
  • ViveksAGenius

    Vivek, I think you’re on to something. Everyone should go ahead and avoid high GMAT scores!

    I’ll quietly take my 750+ to the admissions office, and pray that they’ll take me despite the obvious risk of future bad behavior.

  • Shaniqua James

    Not entirely, there’s also the LSAT, the GRE, the SAT and the MCAT. And, in earlier years, the ISEE and SSAT.

  • ha

    lol wut?

  • CMcAboy

    Vivek,

    I like your ‘freakonomics’ approach to the GMAT. I completely agree with you that the GMAT is not a great indicator for future success. However, I don’t see these schools changing their admissions criteria since the bschool rankings weigh the average GMAT scores fairly heavily. If we want to fix this problem, we have to change the rankings system. Perhaps a more official ranking system could be put in place by the GMAC or some other type of official organization.

  • DevilsAdvocate

    Safety First, yet lower ethical standards? Seems slightly contradictory.

  • Chuck

    It is a GMAT arms race among BSchool and adcoms don’t have the courage to take applicants with below average Gmat and fall behind their peers in rankings. 12 years ago the average Gmat at Wharton was 690. Today 725 and many alumni muse if they would get admitted with their lower gmat scores.

  • Mr. Ex Bean Counter

    I was able to mathematically prove that the GMAT is not only the root of all business
    evil, but all evil in general. Summarized below is my proof.

    We can all agree that in order to succeed at the GMAT you need to invest time and
    money.

    Therefore,the mathematical expression is GMAT = Time x Money.

    A common idiom which is widely accepted as true is that Time is Money, therefore Time = Money so we get GMAT = Money x Money or to simplify it, GMAT = Money^2

    Another commonly accepted truth is that Money is the root of all evil or Money = SQRT(Evil)

    Thus,our formula can be simplified to GMAT = SQRT(Evil)^2 which can be further simplified to GMAT = Evil.

    I rest my case.

  • RealisticMAN

    I really do not know about this issue, yet, there is a common observation that people who are freaking good in mathematical things or quantitative problems, programming, numbers, and these kind of stuff, those people are generally wierd and strongly tend to be so selfish. I believe it is the price of being too much smart. The problem is when those kind of people were put in charge of business and people’s lives. Their natural place is in research centers, dealing with machines, doing hard stuff, but assuming leadership position will be disastrous. Leadership position should given to people with very very sense of human and lived the people’s problems, not for those who spend their time behind screens in a virtual world. real world need real people, experienced, appreciate others. I strongly believe this is the root of the financial crisis, when certain banking practices relied heavily on doing things merely for collecting money regardless of the real benefit economical impact on society.

  • GmatHighScorer

    While I have a lot of respect for Vivek Wadhwa because of some of the other articles he has written, I disagree with almost everything this particular article says. In the interest of full disclosure, I have a 780 on the GMAT and quit my full time job 2 years ago to start my own company.
    First, why do I think the GMAT is important? The GMAT gives you well defined questions with definite answers. If you cannot handle even simple questions like these, how will you handle the real world, where you don’t have well defined questions and there isn’t always one definite right answer? The real world is far more complex to handle and ability to handle that cannot really be tested objectively. Tests such as the GMAT give you some measure of a person’s ability to comprehend questions and reach the right answer quickly.
    It is true that the GMAT doesn’t measure everything that a person needs: people skills, perseverance, EQ, etc. But that’s okay. The GMAT is a measure of some important things, not everything. We don’t blame a blood test for not measuring a person’s mental health, bone density, temperature or heart rate. The GMAT, like the blood test, is one measure of some important characteristics a manager must have.
    What’s wrong with uncertainty avoidance? Anybody would gladly avoid risk if they could. It’s just that high GMAT scorers are better able to evaluate and deal with risk. Would you prefer a degenerate Vegas gambler in b school because he has less “uncertainty avoidance”?
    The only aspect of this article that there is some truth to is the one about high GMAT scorers being perceived as being less of a team player. If I was on a team tackling the GMAT, our team’s score would drop drastically if I focused on being nice, patient, and not being perceived as the weird one.

  • CORRELATIONISNOTCAUSATION

    ARE CELEBRITIES THE ROOT OF ALL DRUG PROBLEMS?!

    Yes, I know that that’s a very provocative title. But after analyzing data that TMZ sent me, this is what I now believe about Celebrities. Being famous is necessary to gain admission to top nightclubs wide. But, shockingly, what TMZ reported is that celebrity status correlates with some of the most negative traits of drug addictions: lack of morals, bankruptcy, excessive partying, and individualism. What’s worse is that they may be inversely correlated with modesty.

    What this means, to be blunt, is that the most famous people may be the most drug addicted. Ouch! I’m glad I wasn’t good enough to get my big break, become a celebrity and now I live underneath a bridge selling drugs in Hollywood

    Oh wait…

  • GmatHighScorer

    By the way, this is exactly the sort of article that will win consensus. By definition, 80 percent of the people will score at or below the 80th percentile level on the GMAT and would love to agree with what this article states. The opinions of anybody at the 99th percentile level will just get drowned out because he is simply outnumbered.
    In the business world too, the typical 99th percentiler’s opinion will be drowned out and he will lose almost anything that is up for a vote.
    On most real issues, the quality of an answer cannot be proven or measured. On such issues too, a high GMAT scorer is more likely to make a better guess, but he has no advantage in selling this better guess to the decision makers. Salesmanship counts for more than the quality of an idea. This is extremely frustrating to experience–when you see a better answer but it will not win a vote because the decision makers (co-workers, bosses, subordinates) cannot see it. It’s even more frustrating when time passes and it becomes clear that your answer was a better one, but nobody wants to hear anyone say “I told you so”.
    This explains why the high GMAT scorer/high measured IQ person is often perceived as weird, and as not being a people person.
    The allegation about having low ethical standards is just ridiculous and is not even worth countering.

  • GmatHighScorer

    By the way, being good at math is not a bad thing. Who would you want helping you with financial decisions? Somebody with a poor math background but is great at making friends with everybody? Who would you want making the important financial decisions at a company you invest in or work at?

  • Robin

    Holy Jealous, Populist Drivel, Batman!

  • Peer Review SCHMEAR REVIEW

    That bastion of thought leadership, U of Akron, really embarrasses the
    legitimate institutions of the world with this searing reporting!

    Excellent work explaining how random correlations can be warped into Value
    Judgments. GMAT is inverse to entrepreneurial tendencies? So smarter
    persons going to the schools actually worth going to, get the sought after jobs,
    while this brave genius of low demonstrable intelligence failed at
    entrepreneur-ing (grating preachy tone drove clients away perhaps?) Journal of Bus Ethics sounded shady enough already, but this seals its reputation as intellectual toilet paper for the masses.

    But really, I’m concerned he’s claiming to be at SLS & associated with Duke…someone should tell them. THE GMAT IS BIASED AGAINST ETHICAL BEHAVIOR! Wait, no, it’s just a test…and it’s no CFA with an entire ethics section (where the “correct” answers are evil), it’s actually dry nonsensical scenarios with 100% logic (ethics of math and grammar, anyone?) and no ethical component.

    Let this be a reminder, that 93% of all statistics are made up. Or in this case, 99%. An idiot with an agenda can be a sadly powerful thing.

  • SiteAdmin

    The title should read,

    “HBS, GSB, Wharton shocked when Uni Akron, Cornell and Thunderbird STORM all rankings; all 5 rankings reverse GMAT in methodology to make lower scores more selective, on back of Sneaky Raj study”

    SORRY everybody for the mix-up. Congrats to A/C/T

  • heyholetsgo

    I 100% agree. Also, why does society fetishize “team players”? Maybe people that score in the 99% are sick an tired of working with slackers that get credit for their ideas and effort.
    If the author really wanted to push for more candidates that like to take risks and are prone to entrepreneurship, he should advocate more men, because the male gender correlates positively with both…

  • PapuaG23

    well, you made three replies to your self! thats weird !!

  • JP

    Perfect.

  • JP

    I fully agree. Well said.

  • JP

    At one point I wasn’t sure if this article was serious.
    As Peer Review commented before, the GMAT is just a test. If high scorers had the same personalities, then the best B-Schools would be nightmares to attend.
    The GMAT, like all other entrance exams, is simply a tool to reduce the pool of applicants that b-schools have to sift through.
    It is not a personality test.

  • JP

    Vent much?
    Also, I’m a high scorer and I’m definitely NOT weird. I’m also a good team player. So you’re kind of speaking for yourself there.

  • evilgmattaker

    Well done!

  • Diversity_is_ridiculous

    Is everyone going insane? Have we become so politically correct that we choose to eliminate all quantitative testing in an effort to foster ‘diversity’ and ‘entrepreneurial spirit’. Absolutely ridiculous. I have a lot of respect for Mr. Wadhwa, but he’s just dead wrong on this one. Standardized tests are an invaluable resource. They separate the men from the boys.

  • compian

    I think the guy is talking about the “perception” of being weird or not a team player. He’s not claiming to be weird or a loner.

  • Whatever

    Wow! Classy post there!

  • Bill

    Garbage

  • SurvivorshipBias

    Great work on proving that business schools are aggregators of unethical, chauvinist men. Not that the GMAT really asks you to understand dispersion, but did your article evaluate the prevalence of those traits at all GMAT score levels or business schools in general? You aren’t applying for the Nobel Peace prize, you are going to business school to make more money and get a McKinsey offer. BTW, 99th percentile scorer here.

  • JohnJohn

    you just said you do not know about this issue, so why are you commenting about an issue you know nothing of? I do agree with you though that you know nothing about this issue, are quite moronic with your assumptions, and are propagating idiocy with false logic. I, for one, am glad that you are not in charge of anything. do everyone a solid and stay that way.

  • JohnJohn

    Let’s admit people in the bottom one percentile into schools because they have such great understanding of facts, logic, basic math, and basic english.

    I don’t know how you propose a standardised test to test for qualities such as empathy and visions workable not just for today but for the foreseeable future. That’s where essays, interviews, and recommendation letters come in. I’m mostly fine with the business school application process since it is a lot more holistic than most people realize. Just look at the average GPA of people going into top B-schools. They have to be looking at something more than sheer academic credentials to get those numbers.

  • Mo

    ^ Actually he’s got it right, because you just proved his point with such a sarcastic and cocky response.

  • Gimme a Break

    this guy’s a dumbass!!!! You really think GSB, HBS, MIT, etc. are not as entrepreneurial as Northern Eastern Cocksucker State University?!??!

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