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Higher Scores on the GMAT are associated with Unethical Business Practices

How Cultural Factors Influence the GMAT and Ethical Business Behavior

As a professor who teaches ethics to business school students I was intrigued to read about a recently published study that equates high scores on the Graduate Management Admission Test  -- the entrance exam required for most graduate business schools -- and the likelihood of engaging in unethical behavior in business. According to the study published in the Journal of Business Ethics, higher GMAT scores are associated with cultural traits that may lead to unethical business behavior. Higher results are associated with less of a tendency for ethical behavior in business school and business professions.

The GMAT study's authors, Raj Aggarwal, Joanne Goodell and John Goodell started with a gender gap hypothesis: if women achieve at least as much success as men in graduate business school and in business professions, why are their average GMAT scores significantly lower than men's?

They looked at the GMAT scores of business school candidates in 25 countries from 2004 to 2010. Narrowing in on cultural factors across national differences, they examined traits that are prevalent in corporate settings, many of which, they suggest, have significant influence on unethical business behavior.

Here are three traits that make a person more likely to succeed on the GMAT (and how they may affect an individual’s business performance):

  1. You Don't Like Taking Risks: If you're conservative about taking risks, you're likely to score higher. Researchers found a positive association between "uncertainty avoidance" (i.e. safety first behavior), and doing well on the test that would seem to discourage entrepreneurial activity.
  2. You're Individualistic: Test-takers from more individualistic backgrounds also do better on the GMAT. Individualism has plenty of positive associations in the business community, like more competitive drive, but the self-reliance seen among successful test-takers makes them less likely to adapt their behavior to formal codes of ethics and informal norms around them.
  3. You're Less Ethical: Higher GMAT scores are associated with less of a tendency for ethical behavior. Focus on freedom and achievement means high-scorers are more inclined to see their actions as above reproach.

So what about the GMAT allows people with these traits to shine?

There is research exploring how multiple choice questions, experiential bias, guessing penalties and time constraints differentially impact test-takers based on gender and background, something the Graduate Management Admission Council (GMAC) -- the organization that develops the test – claims to account for in the test.

One problem with the study is that the authors have not tested for any causal relationship between the mechanics of the GMAT and traits of those who succeed. Nor did they subject individual high-scorers to ethics tests.

The findings of the researchers are limited to a positive association between high scores and the expression of the above-listed cultural characteristics. However, there seems to be some contradiction in the results. For example, if the results are valid it seems to be that hard-charging individuals would do better on the GMAT. However, these are also individuals who would be less conservative about taking risks so the observations from the study conflict. I would think more conservative traits would lead to more ethical practices in business while individualism might lead a person to emphasize self-interest above all else – including ethical behavior.

The findings also indicate some negative associations between certain cultural traits and higher scores. Higher GMAT scores are associated with less gender differentiation and less emphasis on social hierarchy (meaning that test-takers who display cultural traits of male dominance and a preference for hierarchy score lower).

The authors ask: "Do women score less well on the GMAT because more talented women choose careers other than business? Can business schools make graduate study more appealing to women? Can business schools focus more on developing trust-building and team-building amongst its students?"

My own experience is that business schools are attracting a higher percentage of women than ever before. In my field, accounting, the make-up of students in a first-year accounting course is 2/3 women and 1/3 men. Perhaps business schools are not attracting female students in great numbers to other concentration areas such as finance and information technology. Nevertheless, at my college – Cal Poly San Luis Obispo – the women often do better than the men and, with respect to graduate studies, meet the strict GMAT standard for admission in greater numbers.

The real question here for me is whether the trend towards unethical business practices that helped usher in the economic recession in the 2007-2009 period can be blamed on decisions by males and transitioning to a more female-oriented workplace, especially in top management, will make a difference down the road. Time will tell.

Blog posted by Steven Mintz, aka Ethics Sage, on September October 1, 2013