Research universities have traditionally been protected by a “moat” created by a value structure that produced very high barriers to entry for new players, and discouraged rapid change. Although that moat is still deep, there are numerous developments taking place that could ultimately remove the moat and introduce real multi-player competition into higher education.
I presented a keynote address at a conference at USC in November 2000 that was organized by our Center for Higher Education Analysis entitled A New Game in Town: Competitive Higher Education. That talk later was expanded and revised and published by Information, Communication & Society, 4:4 , p. 479-506 (2001), and in a companion book Digital Academe: the New Media and Institutions of Higher Education and Learning, eds. Dutton, William H. and Loader, Brian D. Chapter 6. (Routledge, 2002). Interested readers should consult the later, more complete versions of the manuscript.
In this paper, I discussed elements of the protective moat. The cost associated with the various elements of the highly integrated missions of the university is one such element. The difficulty in evaluating quality of education is a major component of the cost. Because of this difficulty, undergraduate education becomes basically a credence good, and quality surrogates must be found. One is that the more it costs, the better it must be. Another surrogate of educational quality is the quality of faculty as measured by research productivity. Such faculty are very expensive to attract and hold, and the research itself is very expensive because of infrastructure requirements. The social infrastructure of the university – residential colleges, social organizations, student unions, cultural events – have also become a surrogate for measuring quality, and all of this is quite expensive. Breadth of offerings, often despite minimal student interest, and quality of physical plant provide additional surrogates. All in all, a very costly enterprise in which none of the elements pays for itself. Thus endowments and gifts, IP commercialization, continuing education or taxpayer support must provide the needed income. New entrants would certainly find the cost of creating a new research university to be quite daunting.
Another element of the moat is credentialing – both legal, resulting from accreditation, and reputational, in which a highly ranked university certifies a graduate to be among the best and brightest of her generation. Although the moat from accreditation is rapidly disappearing, the reputational moat takes decades or centuries to cross.
I discuss in detail various forms of new competitors: for-profit colleges and universities, non-traditional non-profit colleges and universities such as the Open University. I also discuss new, alternative forms of credentialing. The possible role of distance learning in providing a catalyst for new competition is discussed. I then analyze some of the ways in which these new competitors might pass over the protective moat by unbundling the interrelated components of the research university. The process in many ways would be similar to the way in which HMO’s attacked the bundled mission of health care, teaching and research of Medical Schools.
I concluded with suggestions for ways in which universities could respond to the challenges of increased competition. Primary among these are increased mission focus, enhanced creation of excellence, and greater flexibility in looking at organizational change to respond to external competion.
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