MBA Salary Levels Rise With B-School Research

A study has found that the amount of research a business school produces each year affects the salaries that the schools’ MBA alumni enjoy post-graduation.

MBA salary figures can increase by as much as 21% according to the study entitled ‘Does Business School Research Add Economic Value for Students?’ which can be found in the journal Academy of Management Learning and Education.

When considering the study’s results alongside the QS Top MBA Jobs and Salary Trends 2010/11 report’s regional MBA salary data, this can mean a gain in MBA salaries of around US$18,500 in North America, US$14,500 in both Latin America and Asia, US$18,000 in Western Europe and around US$10,000 in Central Europe, the Middle East and Africa.

“In response to the critiques and commentaries, we find evidence that the research conducted at business schools is relevant and valuable to practitioners as evidenced by the considerable longer-term economic value added to MBA student salaries,” concludes the study.

Co-authored by Jonathan O’Brien of the Rensselaer Polytechnic Institute, Paul Drnevich and Craig Armstrong of the University of Alabama, and Russell Crook of the University of Tennessee, the paper sampled 658 business schools over an eight year period.

The results of the study discourages the popular notion that the research produced by business schools can be irrelevant and of little value to those students paying tuition fees.

Too much of a good thing

The paper also warns that too much research, or studies that have little value to society, could have a negative impact on MBA salary levels.

“The economic value created for students appears to plateau, or can even diminish, when the level of research activity becomes too excessive or is overly restrictive,” claims the study. “Thus, while more research activity in [well respected] journals would appear to be better for most schools, there appears to be diminishing returns from research that can even turn negative from excessive levels of research activity.”

A plausible explanation offered by the authors of the study for this negative impact on MBA salary figures is that as business schools have limited budgets, extra funds spent on research might impact the available funds that can be spent on general education. At business schools where large proportions of total funds are devoted to research, students would most likely benefit from less research and more funds spent on education, the study notes.

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