The University as a Business?

136 Pages·2011·1.025 MB·English

by  H. Ian Macdonald (auth.), Paolo Rondo-Brovetto, Iris Saliterer (eds.)

Paolo Rondo-Brovetto · Iris Saliterer (Eds.)
The University as a Business?
VS RESEARCH
Paolo Rondo-Brovetto
Iris Saliterer (Eds.)
The University
as a Business?
VS RESEARCH
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1st Edition 2011
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ISBN 978-3-531-18045-8
Content

Foreword ............................................................................................................... 7(cid:3)
The University in the Modern Marketplace .......................................................... 9(cid:3)
H. Ian Macdonald(cid:3)
Why Universities are not Businesses .................................................................. 21(cid:3)
Dietmar Bräunig(cid:3)
Determinants for University Excellence ............................................................. 33(cid:3)
Peter Eichhorn(cid:3)
The University Business in Transition: Of Stars, Cash Cows and Dogs ............ 39(cid:3)
Arie Halachmi(cid:3)
“Improved” Accounting for Universities? .......................................................... 53(cid:3)
Thomas H. Beechy(cid:3)
Demographic Change as a Challenge to Human Resources Development ......... 65(cid:3)
Dorothea Greiling(cid:3)
Intellectual capital steering in universities – realizing an external/internal
governance fit?.................................................................................................... 91(cid:3)
Iris Saliterer/Daniela Ebner/Sanja Korac(cid:3)
The University as a Business? .......................................................................... 109(cid:3)
Paul Kellermann(cid:3)
Managing the University of Botswana ............................................................. 119(cid:3)
D. Mpabanga (PhD)/L. Lekorwe (PhD)(cid:3)
An Examination of the Major Challenges Impacting University Delivered
Executive Education ......................................................................................... 133(cid:3)
Tom Wesson/David Barrows/Arthur Barrows/Alan Middleton(cid:3)
Index of Authors ............................................................................................... 143(cid:3)
Foreword

Throughout the world, public sector management has undergone dramatic
changes since the 1980ies and at the same time universities have been the object
of broad reform processes, in the face of a strong pressure to introduce `manage-
rial` governance systems to keep up with the various challenges and the growing
competition in the higher education sector. These developments in general have
been identified as the post-bureaucratic paradigm of public management
(O’Flynn 2007) and have brought different ways of financing and new manage-
ment methods with them as well as a change of governance structures, patterns
of responsibility and modes of control, which are often seen as essential elements
to improve the management and decision-making of public organizations and to
increase their efficiency, effectiveness, accountability and transparency.
The 10th York-Mannheim Symposium in 2007 was held at the Alpen-Adria-
Universität Klagenfurt and ventured into, as Ian MacDonald put it, a somewhat
more distant territory with the topic: The University as a Business? This book
contains the conference proceedings of this symposium and reflects recent aca-
demic progress subsequent to the venue discussions, offering updated interesting
and also competing perspectives from leading social science and public man-
agement scholars, with respect to the role of universities within society, to the
strategic challenges higher education organizations are facing, and to the suit-
ability of ‘new’ managerial concepts in order to deal with them.

Paolo Rondo-Brovetto/Iris Saliterer
The University in the Modern Marketplace

H. Ian Macdonald

1 Introduction

In the intervening ten years since the first York-Mannheim Symposium, we have
covered an assortment of topics in a variety of places. The umbrella theme is
“issues in public management” often broadly, though I trust not loosely, inter-
preted. This year, we are venturing into somewhat more distant territory with the
topic: The University as a Business? In the process, we will be sailing in rela-
tively unchartered seas. Where business is concerned, there is abundant literature
on the theory of business as an institution. With the publication of Adam Smith’s
Wealth of Nations and the development of the limited liability corporation, the
nature of the institution of modern business was clearly defined. Business would
operate in the marketplace which, in turn, was to be a place of competition. The
“invisible hand” of competition would work to the advantage of the consumer of
goods and services by ensuring that only the most efficient businesses survived,
thereby generating quality goods and services at acceptable prices. In a world of
risk, made up of potential winners and losers, only some would be successful
while others would be eliminated. As Professor Frank H. Knight described in his
classic work: Risk, Uncertainty and Profit, it was a Darwinian world of survival
of the fittest.
Now compare the theory and history of the university from the earliest days
in Padua and Bologna, Oxford and Cambridge, through Cardinal Newman’s
classic on the university to present times. There is no such institutional frame-
work or corporate theory. Rather, the university has been described, operated and
developed according to its particular product mandate (to use a modern meta-
phor): teaching, research and public service. The performance of the university
is not measured by market survival, or by the bottom line of profit, or by the
modern criteria of shareholder value. It is evaluated according to its reputation
for teaching, research and public service. I suppose the nearest it would come to
modern business practice would be corporate social responsibility.
Nor is there any prevailing institutional model to describe a university. It
can take the form of the small, liberal arts college or the mega-university. Teach-
ing can take the form of individual tutorials, large lecture courses, the Worker’s
Educational Association providing teaching at the pithead or by distance learning
P. Rondo-Brovetto, I. Saliterer (Eds.), The University as a Business?,
DOI 10.1007/978-3-531-93195-1_1,
© VS Verlag für Sozialwissenschaften | Springer Fachmedien Wiesbaden GmbH 2011
10 H. Ian Macdonald
through an open university. Remarkably, universities have functioned for centu-
ries without being driven by the business imperative. We simply accept that they
are there and, because there is an accepted public function, they will survive.

1.1 The Issue

I believe it is fair to say that we simply assumed that the universities would al-
ways be there. Although the same might be said of major corporations, still the
marketplace is littered with corporate casualties. Nor can I think of any busi-
nesses that are seven hundred and fifty years old such as my Oxford College. I
confess that, during my ten years as President of York University, I had to con-
front many troubling issues; however, it never occurred to me to wonder if the
university would survive. The over-riding question then is: why has this
changed? Why are there increasing references in the Chronicle of Higher Educa-
tion and in the Times Higher Education Supplement to “creeping corporatism” as
being characteristic of the modern university? That is the question which I wish
to address, and I believe it will help to set the stage for many of the specific issue
papers to follow.

1.2 A Caution and a Qualification

Before I proceed further, let me issue a caution and a qualification about my
general thesis. I am speaking about the many public universities that are in the
majority or occupy an exclusive place in so many jurisdictions, not the private
universities. In Canada, the notion of a private university is still only a gleam in
the eye of some educators. Where private universities exist, they have always
been obliged to follow market principles from eminent institutions to cost-
recovery correspondence courses. And yet, once launched, once established, and
once secure in their academic reputation, they have had no difficulty in surviv-
ing.

1.3 Outline

In my paper to follow, I propose to deal with the following topics:

(cid:131) the basic change in university funding which is driving them toward the
marketplace;
The University in the Modern Marketplace 11
(cid:131) the resulting situation of “students” becoming customers;
(cid:131) the limits of efficiency;
(cid:131) the process of applying management concepts to the university;
(cid:131) the potential challenge to the universities’ responsibility for social criticism;
(cid:131) the danger of creating bias in research;
(cid:131) the issue underlying the commercialization of research;
(cid:131) the limitation of choice through corporate funding and resulting monopo-
lies;
(cid:131) how do you evaluate the universities’ performance, over what period and
by whom;
(cid:131) how do you maintain the balance between basic education and occupational
preparation;

Probably those ten issues are as much as you want to hear from me, but I will
conclude with one over- arching question. If globalization provides new corpo-
rate forms (e.g. out sourcing), will universities find the same opportunities and, if
so, what are the likely consequences?

2 The Basic Change in Funding

There are numerous funding models ranging from countries like Germany where
fees have been non-existent, with government assuming the responsibility for the
universities, to mixed situations of private and state universities. In Canada, we
have an excellent model of a system moving rapidly in the market direction.
There is a network of over seventy-five public universities. In earlier years, some
of these were small institutions supported by a particular religious denomination.
However, in the frenzy of post-war university expansion to accommodate the so-
called “baby boom”, these were gradually absorbed as affiliates of larger univer-
sities or assumed public, non-religious status. The most interesting example is
that of a small college in Waterloo, Ontario known as Waterloo Lutheran Uni-
versity which became Wilfred Laurier University. And so it evolved from Martin
Luther to Wilfred Laurier, a Canadian Prime Minister in the early part of the
twentieth century. Even the marketplace characteristic - branding - was evident
in retaining the initials WLU.
At that time, and down to the new “corporate period” beginning around
1995, the funding structure was relatively consistent at fifteen per cent student
fees and eighty five per cent government funding. Of course older institutions
like McGill University in Montreal and the University of Toronto were sustained
by long-term private endowments in addition to student fees and government