IT Pros with MBAs Earn 46% More, Says Management Insights

Management Insights, a regular feature of the journal, is a digest of important research in business, management, operations research, and management science. It appears in every issue of the monthly journal.

“Human Capital and Institutional Effects in the Compensation of Information Technology Professionals in the United States” is by Sunil Mithas of the University of Maryland and M. S. Krishnan of the University of Michigan.

The researchers asked if information technology (IT) professionals should pursue an MBA degree or acquire more IT experience. The paper answers this question by studying economic returns on an MBA degree and IT-related experience for IT professionals.

The authors use data on the demographics, salary, education, and experience of over 50,000 IT professionals in the United States for the 1999–2002 time period. The results show that an IT professional with an MBA earns 46% more than an IT professional with a bachelor’s degree and 37% more than an IT professional with a master’s degree other than MBA. This finding is contrary to prior research that questions the economic benefits of an MBA degree.

The authors find that firms value IT experience more than non-IT experience for IT professionals, and that firms compensate for IT experience at other firms more highly (3.2% per year) than they compensate for IT experience within the firm (2% per year). Given these findings, if firm-specific IT experience is more valuable to the firm, the authors write that these firms should consider subsidizing investments in MBA education to help retain their IT professionals.

The authors add that IT professionals are better off investing in MBA education because the economic returns on an MBA degree are significantly higher than the returns on IT experience.

The current issue of Management Insights is available at http://mansci.journal.informs.org/cgi/reprint/54/3/iv. The full papers associated with the Insights are available to Management Science subscribers. Individual papers can be purchased at http://institutions.informs.org. Additional issues of Management Insights can be accessed at http://mansci.pubs/informs/org/.

The Insights in the current issue are:

Managerial Expertise, Private Information, and Pay-Performance Sensitivity by Sunil Dutta
Foreign Investments of U.S. Individual Investors: Causes and Consequences by Warren Bailey, Alok Kumar, David Ng
The Sound of Silence in Online Feedback: Estimating Trading Risks in the Presence of Reporting Bias by Chrysanthos Dellarocas, Charles A. Wood
Online Consumer Review: Word-of-Mouth as a New Element of Marketing Communication Mix by Yubo Chen, Jinhong Xie
The Predictive Power of Three Prominent Tournament Formats by Dmitry Ryvkin, Adreas Ortmann
Corporate Venturing, Allocation of Talent, and Competition for Star Managers by Jean-Etienne de Bettignies, Gilles H. Chemla
Pricing and Operational Recourse in Coproduction Systems by Brian Tomlin, Yimin Wang
A Simultaneous Model of Consumer Brand Choice and Negotiated Price by Yuxin Chen, Sha Yang, Ying Zhao
Revenue Management of Callable Products by Guillermo Gallego, S. G. Kou, Robert Phillips
Scheduling Arrivals to Queues: a Single-Server Model with No-Shows by Refael Hassin, Sharon Mendel
Incorporating Asymmetric Distributional Information in Robust Value-at-Risk Optimization by Karthik Natarajan, Dessislava A. Pachamanova, Melvyn Sim
Mean Variance Vulnerability by Thomas Eichner
Allocation Models and Heuristics for the Outsourcing of Repairs for a Dynamic Warranty Population by Li Ding, Kevin D. Glazebrook, Christopher Kirkbride
Customized Bundle Pricing for Information Goods: A Nonlinear Mixed Integer Programming Approach by Shin-yi Wu, Lorin M. Hitt, Pei-yu Chen, G. Anandalingam
Revisiting “Retailer- vs. Vendor-Managed Inventory and Brand Competition” by Hag-Soo Kim

INFORMS journals are strongly cited in Journal Citation Reports, an industry source. In the JCR subject category “operations research and management science,” Management Science ranked in the top 10 along with two other INFORMS journals.

The special MBA issue published by Business Week includes Management Science and two other INFORMS journals in its list of 20 top academic journals that are used to evaluate business school programs. Financial Times includes Management Science and four other INFORMS journals in its list of academic journals used to evaluate MBA programs.

About INFORMS
The Institute for Operations Research and the Management Sciences (INFORMS®) is an international scientific society with 10,000 members, including Nobel Prize laureates, dedicated to applying scientific methods to help improve decision-making, management, and operations. Members of INFORMS work in business, government, and academia. They are represented in fields as diverse as airlines, health care, law enforcement, the military, financial engineering, and telecommunications. The INFORMS website is www.informs.org. More information about operations research is at www.scienceofbetter.org.

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