Dr. Leo Goedegebuure - Mergers and More: The Changing Tertiary Education Architecture in the 21st Century
1. MERGERS AND MORE
The Changing Tertiary Education Landscape in the 21st Century
Leo Goedegebuure
Hedda 10th Anniversary Conference, Oslo November 4, 2011
2. Contents
• Introduction
• Typologies of institutional mergers
• The rise of international competition
– World Class?
• Competition and collaboration
• Diversification and branching out
– A brief case study of Australia
• Some conclusions and points for discussion
2
3. Introduction to mergers
• Fairly underresearched in higher education in the 1980s
• Dutch polytechnic restructuring through mergers one of Cheps‟ first major
research projects
• Australia copied the policy architecture
• And I wrote a thesis (1992) …
• Mergers remained quite prominent until the early 2000s and then sort of
faded away a bit
• Recent resurgence, but clearly ‟things have changed‟
• Central argument for today: our old frameworks and conceptualisations only
help us to a certain extent and we need to expand on those to allow us to
bring in the full complexity of tertiary education over the years to come
3
4. Typologies
• Classic frameworks
– Traditional theory of the firm (Coase): mergers are
undertaken to maximise profits shareholder
value
– Alternative theories of the firm (Williamson): mergers
are undertaken to further managers‟ interests
salaries, bonuses, power
• Empirical literature is inconclusive
– Realizing economies of scale, increased profits, shareholder welfare:
little explanatory power …
4
5. Typologies (cont)
• Mergers in higher education (1980s)
– research not very theory-based
– not empirically robust
• Govermental policies based on questionable assumptions:
– economies of scale (efficiency)
– economies of scope (effectiveness)
• HOWEVER
– In retrospect they have not been a total disaster, so: did they get it right?
5
6. Typologies (cont)
Mergers do nor deliver … unless
they are based on a sound
strategic rationale, are
thoroughly planned, and well
executed…
Merely adding together two
entities with their respective
attributes, weaknesses and
challenges, creates a larger
entity with the same underlying
structure
6
7. Two propositions about complexity
• Proposition: large-scale systems restructures through merger are so
complex that any clear-cut cost-benefit analysis is doomed to fail
– Time-scale distorts cause-effect
– As much politial processes as socio-economic
– And policy development and implementation is messy:
• Semi-rational
• Semi-structured
• Semi-planned
• Proposition: large-scale system restructures through merger by their very
nature are adaptive processes that develop a logic of their own and
generate substantive unanticipated actions and effects
7
8. Typologies (cont)
• Policy-induced mergers • Incidental mergers
– NL, AUS, NOR, CHIN, HUNG, SA, – Far more ideosyncratic in terms of
FLA drivers
– Policy responses to perceived – HK UGC (2004) identifies 16
deficiencies were larger size was different rationales based on lit
perceived to be the answer review
– Size a policy proxy for stronger, – But: can probably be reduced to
more capable, more professional three:
– Basic assumption: bigger is • Securing cost eficiency
• Optimising scale of operation
necessary and ultimately bigger is
• Brand leverage
better
– Have been part of system
developments in the past and will
– TAKING MATURING SYSTEMS continue at an increasing pace
TO THE NEXT LEVEL because of increasing competitive
pressures
8
9. Typologies (cont)
• Policy-induced mergers Type I and II
– Type I ‟to the next level‟, system-wide
– Type II ‟to the top‟, selective and prestige-inspired
9
10. International competition and
World Class
• Within the tertiary education system, research
universities play a critical role in training the
professionals, scientists and researchers needed
by the economy and generating new knowledge in
support of the national innovation system (World
Bank, 2002). In this context, an increasing pressing
priority of many governments is to make sure that their
top universities are actually operating at the cutting edge
of intellectual and scientific development (2009: 2-3)
10
11. Type II Mergers: some examples
• Finland
– Helsinki University of Technology +
Helsinki School of Economics + University of Art and Design
• France
– Paris-Saclay Campus
• 22 unis, research institutes &
Grande Ecoles
20,000 staff and 30.000+ students by 2020 – technically not a merger
• Germany
– Excellence Initiative
• Karlsruhe Institute of Technology: University of Karlsruhe + Forschungszentrum
Karlsruhe Gmbh
11
12. Incidental mergers: strategic
repositioning – some examples
• The University of Manchester: Victoria University
of Manchester + Manchester University of Science
and Technology (2004)
– Top 25 by 2015 (currently 38 from 53 in 2005)
• The University of Duisberg – Essen (2003)
– Pooling academic strengths, sharpening
Profile, efficiencies in T&R, ready for competition
• SKEMA Business School: CERAM Business School
+ Groupe ESC Lille
– To become the largest business school in France
to face international competition
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13. But what are the conditions to be part of „the top‟?
(i) a high concentration of talent (faculty and
students),
(ii) abundant resources to offer a rich learning
environment and to conduct advanced
research, and
(iii) favourable governance features that
encourage strategic vision, innovation and
flexibility „that enable institutions to make
decisions and to manage resources without
being encumbered by bureaucracy‟ (pp19-20).
And perhaps strong leadership??
13
14. And how does that compare?
Concentration of Abundant Favourable
talent resources governance
X
? ?
? ?
14
16. Examples of „stimulated collaboration‟
• France: Poles (PRES: Pôles de Recherche et de l'Enseignement
Supérieur) between universities and research institutes
– Started in 2006, 21 Poles created by 2011
– Aim: prominence at the international level
• Germany: Excellence Initiative
– Started 2006, 30 Centres of Excellence created and 9
Universities of Excellence selected
– Aim: prominence at the international level
• Australia: Collaborative Research Networks
– Started 2011, 12 networks established
– Aim: building research capacity in less research intensive
institutions through hubs-and-spoke model
16
17. The ultimate bottom up example
The University of Catalonia:
8 public universities
250,000 students
18,000 staff
EUR 1.5 Billion
17
18. The rationale for collaboration
Most businesses succeed only if others also
Succeed.
Business is cooperation when it comes to
creating a pie and competition when it comes
to dividing it up. In other words, business is
War and Peace. But it’s not Tolstoy – endless
cycles of war followed by peace followed by
war. It’s simultaneously war and peace. .. The
combination makes for a more dynamic
relationship than the words ‘competition’ and
‘cooperation’ suggest individually.
18
19. Table 2: The ‘best’ university systems in the world
Note: ratio is: #universities in ranking / #universities in system
There‟s more than just top…
Country JiaoTong 2010 THES 2010
The Netherlands 1 (.92) 1 (.77)
Israel 2 (.88) --
Sweden 3 (.69) 4 (.38)
New Zealand 4 (.63) 12 (.13)
Switzerland 5 (.58) 2 (.50)
Norway 5 (.57) 11 (.14)
Denmark 7 (.50) 4 (.38)
Hong Kong 7 (.50) 3 (.40)
Belgium 9 (.47) 12 (.13)
Australia 10 (.44) 9 (.18)
Ireland 11 (.43) 7 (.29)
Germany 12 (.38) 6 (.36)
Finland 12 (.38) 16 (.07)
UK 14 (.33) 8 (.25)
Canada 15 (.32) 12 (.13)
19
20. A brief example of dynamic relationships that have
evolved because of strong competitive pressures
20
21. Final Observations
• Merger is but one response to a complex set of drivers forcing
institutions to act: strategic partnerships, loosely of highly
formalised, collaborations of all sorts and kinds, consortia and
various forms of networked „interchanges‟.
• “Sorting the System” and “Raising the Stakes” (Types I and II)
• The Action-Reaction Dynamic
– Action – merger, alliance, partnership
– Reaction – the balance of power has changed and triggers
responses
– Reaction – and the spiral is started
• Very profound leadership challenges: system and institutional
• To map this the HE research community needs to collaborate
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