MBA Leads to Higher Salaries for IT Professionals

College Park, Md. – March 11, 2008 – Firms in the United States value IT professionals’ MBA degrees much more than IT experience, according to new research from the University of Maryland’s Robert H. Smith School of Business. An IT professional with an MBA degree earns 46 percent more than a counterpart with only a bachelor’s degree and 37 percent more than one with any other master’s degree, according to the study, published in this month’s Management Science journal.

“Our research confirms that getting an MBA is the single best move you can make to increase your value as an IT professional in today’s market,” said Sunil Mithas, Smith assistant professor of decision, operations and information technologies and lead author of the study. “Education is more valuable than experience because it provides more durable and versatile conceptual skills. In contrast, IT experience has high rate of obsolescence — learning new technologies only makes a professional valuable for a few years when those skills are in high demand. An MBA education teaches how to evaluate new technologies or how to strategically invest in and manage IT projects, which makes for a more valuable long-term employee that can use those skills in a variety of situations.”

On average, in dollar terms (deflated to 1999 figures), IT professionals with MBAs earn more than $24,000 per year than those with only bachelor’s degrees and more than $17,000 per year than those with other master’s degrees after controlling for a variety of demographic and institutional factors.

Mithas and co-author M.S. Krishnan of the University of Michigan found that firms place greater value on IT experience at other firms than at the current firm, explaining the high turnover culture in the IT profession and the notion that job-hopping is the way to get ahead in the industry. The researchers found no evidence that having both an MBA degree and significant IT experience boosted an employee’s salary more than having the MBA alone.

The study results also found a gender gap in earnings in the IT industry, with female professionals earning about 9 percent less than males.

The paper, “Human Capital and Institutional Effects in the Compensation of Information Technology Professionals in the United States,” by Sunil Mithas and M.S. Krishnan appears in the March 2008 issue of Management Science. For more information, contact smithas@rhsmith.umd.edu.

About the University of Maryland’s
Robert H. Smith School of Business
The Robert H. Smith School of Business is an internationally recognized leader in management education and research. One of 14 colleges and schools at the University of Maryland, College Park, the Smith School offers undergraduate, full-time and part-time MBA, executive MBA, executive MS, PhD and executive education programs, as well as outreach services to the corporate community. The school offers its degree, custom and certification programs in learning locations on three continents — North America, Europe and Asia.