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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