Best in Class? the Returns on Endorsement in Business School Admissions

Friday, 3 July 2015: 10:15 AM-11:45 AM
TW2.3.03 (Tower Two)
Emilio J. Castilla, Massachusetts Insitute of Technology, Cambridge, MA
Benjamin A Rissing, Brown University, Providence, RI
Substantial research has focused on how organizational and network processes may affect the screening and hiring of individuals into organizations. Less attention, however, has been devoted to examining how socio-economic processes may also affect applicant assessment and selection, especially in the context of educational institutions. We begin to address this gap in the literature by investigating how endorsements —a common (formal and informal) practice involving the granting of support to certain applicants by high-status individuals― may influence admission and post-admission outcomes in an elite business school. In particular, we test five complementary explanations for why endorsed applicants (by faculty, business elite, or alumni, among others), compared to their non-endorsed counterparts, may be more successful in key organizational evaluation processes: Theymay 1) be assessed to be better qualified, 2) have superior knowledge of selection procedures, 3) benefit from perceptions of status associated with their endorsement (i.e., a status signal), irrespective of their qualifications, 4) accept offers at higher rates, and/or 5) be better matched to the position/organization. To test these explanations regarding the returns on endorsements, we analyze the population of 21,324 applicants to a full-time MBA program between 2002 and 2008. We only find support for the status signal explanation. Endorsed applicants are significantly advantaged over non-endorsed applicants during interview and admission decisions, even after controlling for key individual qualifications and competencies. Yet, endorsed applicants who join the program do not achieve superior academic performance or job market outcomes upon graduation. We conclude by discussing the implications of this study for understanding the role socio-economic processes may play in labor markets today.