Does the classicist sell more oil?: CEO education and its effect on the innovation and strategic distinctiveness of the firm

Researchers in economics, organizational theory, and strategic management have produced significant theory and evidence about how the characteristics of top executives affect organizational decisions and performance outcomes. An important focus of empirical research in this upper echelons tradition has examined executive backgrounds, including education. It has had little to say, however, about a fundamental aspect of what differentiates the formative needs of a top executive from lower-level managers: the importance of it being general. This study focuses on an early educational experience that may have a direct relation to educating someone as a generalist: a liberal arts education. Liberal arts education is conceptualized and a framework presented asserting its difference from functional education in order to argue that it reduces both the boundedness of rationality and sensitivity to uncertainty inherent in CEOs’ decision making processes. This argument is tested against two elements of firm performance where these attributes might counter organizational inertia: Strategic Distinctiveness and Innovation. I theorize that a liberal arts education will have a positive relationship to firm level strategic distinctiveness and firm level innovation. Additionally, I theorize these relationships will be stronger when environmental complexity and its associated uncertainty is high. I will test my ideas using twelve years of data from S&P 500 organizations, along with CEO biographical information and suitable control variables. This study will answer calls for additional research into executive judgement contributing new understanding of complex problem solving, quantify evidence of the value of liberal arts education, and provide new insights into the fit between CEO and firm.