The Specialist Discount: Negative Returns for MBAs with Focused Profiles in Investment Banking (original) (raw)

Administrative Science Quarterly, 2015

Abstract

ABSTRACT Is being specialized detrimental for job candidates? Leveraging scholarship that links the sociological notion of identity to the returns to labor market specialization, we provide arguments and evidence for a discount for specialized job market candidates. Specifically, we test whether there is a specialization discount for graduating elite MBAs, as this is a labor market with characteristics that may penalize job candidates who specialize. Using rich data on two graduating cohorts in 2008 and 2009 from a top-tier U.S. business school graduate program, we show that elite MBA graduates who established a focused (specialized) market profile of experiences relating to investment banking before and during the program were nearly one-third as likely to receive multiple offers and were offered $20,000 less in bonus compensation when compared to otherwise similar MBA candidates. In particular, focused investment banking candidates fared worse than peers whose profile had none or only partial experience with investment banking. Our theory and findings contribute to the literature on market identities with implications for the design of current MBA curricula and advisory activities.

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