Who Should Become a Business School Associate Dean? Individual Performance and Taking on Firm-Specific Roles

Abstract

The “firm-specific human capital dilemma” suggests that firms generally want employees to make firm-specific investments but that employees prefer not to make them. We suggest that individual performance may moderate this dilemma such that the dilemma increases as individual performance increases—that is, firms may prefer high performers in firm-specific roles while high performers may resist these roles more than their lower-performing counterparts. We examine our extended firm-specific human capital theory in a context in which the classic firm-specific human capital dilemma likely exists: business academia. Using a unique data set of 4,164 business school professors from 39 of the top 100 U.S. business schools, we examine how research performance affects propensity to become an associate dean and their compensation increases when taking on these roles. Even though associate dean roles come with a significant pay increase, we find that higher-performing individuals are less likely to become associate deans. Surprisingly, we find that lower performers receive higher pay increases when taking on these roles. We conduct exploratory interviews to understand this surprising finding, and discuss implications and opportunities for future research.