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http://ssrn.com/abstract=901609
 
 

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Human Capital and Institutional Effects in the Compensation of Information Technology Professionals in the United States


Sunil Mithas


University of Maryland - Robert H. Smith School of Business

Mayuram S. Krishnan


University of Michigan, Stephen M. Ross School of Business


Management Science, (54:3) 2008, pp. 415-428
Robert H. Smith School of Business Research Paper No. 888

Abstract:     
This paper studies the influence of supply-side and demand-side factors on the compensation of information technology (IT) professionals and considers the human capital and institutional explanations. We focus on returns to an MBA and the IT-related experience of IT professionals and use the largest data set of IT professionals that has been compiled to date in the United States to answer our research questions. We find that firms pay a significant premium for an MBA. Although firms value the IT experience of IT professionals, they value an MBA significantly more. The results of this study cast doubt on the belief that IT skills have a large firm-specific component. While IT experience is valued more than non-IT experience for IT professionals, firms value IT experience at other firms much more than they value firm-specific IT experience. Likewise, contrary to popular perception, we do not find evidence for complementarities among an MBA education and IT experience. Among institutional effects, firms in IT and IT-intensive industries pay significantly more to IT professionals than other firms and dotcom firms also paid significant premium in 1999 and 2000. However, these firms do not value an MBA or firm-specific IT experience any more than other firms. We discuss the implications of these findings for further research, for firms' compensation practices, and for individual IT professionals.

Number of Pages in PDF File: 32

Keywords: IT professionals, MBA degree, IT Experience, Tenure, Compensation, Human Capital

JEL Classification: J30

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Date posted: May 10, 2006 ; Last revised: June 8, 2014

Suggested Citation

Mithas, Sunil and Krishnan, Mayuram S., Human Capital and Institutional Effects in the Compensation of Information Technology Professionals in the United States. Management Science, (54:3) 2008, pp. 415-428 ; Robert H. Smith School of Business Research Paper No. 888. Available at SSRN: http://ssrn.com/abstract=901609

Contact Information

Sunil Mithas (Contact Author)
University of Maryland - Robert H. Smith School of Business ( email )
College Park, MD 20742-1815
United States
Mayuram S. Krishnan
University of Michigan, Stephen M. Ross School of Business ( email )
701 Tappan Street
Ann Arbor, MI MI 48109
United States
734-763-6749 (Phone)
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