Human Capital and Institutional Determinants of Information Technology Compensation: Modeling Multilevel and Cross-Level Interactions

Soon Ang (), Sandra Slaughter () and Kok Yee Ng ()
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Soon Ang: Nanyang Business School, Nanyang Technological University, Nanyang Avenue 639798, Singapore
Sandra Slaughter: Graduate School of Industrial Administration, Carnegie Mellon University, Pittsburgh, Pennsylvania 15213
Kok Yee Ng: Nanyang Business School, Nanyang Technological University, Nanyang Avenue 639798, Singapore

Management Science, 2002, vol. 48, issue 11, 1427-1445

Abstract: Compensation is critical in attracting and retaining information technology (IT) professionals. However, there has been very little research on IT compensation. Juxtaposing theories of compensation that focus on human capital endowments and labor market segmentation, we hypothesize multilevel and cross-level determinants of compensation. We use hierarchical linear modeling to analyze archival salary data for 1,576 IT professionals across 39 institutions. Results indicate that compensation is directly determined by human capital endowments of education and experience. Institutional differentials do not directly drive compensation, but instead moderate the relationship of human capital endowments to compensation. Large institutions pay more than small institutions to IT professionals with more education, while small institutions pay more than large institutions to IT professionals with less education. Not-for-profit institutions pay more than for-profits to IT professionals with more or IT-specific education. Further, information-intensive institutions pay more than non information-intensive institutions to IT professionals with more or IT-specific education. We interpret these results in the context of institutional rigidity, core competencies, and labor shortages in the IT labor market.

Keywords: Compensation; Hierarchical Linear Modeling; Management of IT Professionals (search for similar items in EconPapers)
Date: 2002
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Citations: View citations in EconPapers (46)

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