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Dr. Leo Goedegebuure - Mergers and More: The Changing Tertiary Education Architecture in the 21st Century
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Dr. Leo Goedegebuure - Mergers and More: The Changing Tertiary Education Architecture in the 21st Century

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  • 1. MERGERS AND MOREThe Changing Tertiary Education Landscape in the 21st CenturyLeo GoedegebuureHedda 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 … unlessthey are based on a soundstrategic rationale, arethoroughly planned, and wellexecuted… 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 andWorld 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: strategicrepositioning – 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 12
  • 13. But what are the conditions to be part of „the top‟?(i) a high concentration of talent (faculty andstudents),(ii) abundant resources to offer a rich learningenvironment and to conduct advancedresearch, and (iii) favourable governance features thatencourage strategic vision, innovation andflexibility „that enable institutions to makedecisions and to manage resources withoutbeing 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
  • 15. Competition brings more than justmergers Source: PWC, 2010 15
  • 16. Examples of „stimulated collaboration‟• France: Poles (PRES: Pôles de Recherche et de lEnseignement 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 collaborationMost businesses succeed only if others alsoSucceed.Business is cooperation when it comes tocreating a pie and competition when it comesto dividing it up. In other words, business isWar and Peace. But it’s not Tolstoy – endlesscycles of war followed by peace followed bywar. It’s simultaneously war and peace. .. Thecombination makes for a more dynamicrelationship than the words ‘competition’ and‘cooperation’ suggest individually. 18
  • 19. Table 2: The ‘best’ university systems in the worldNote: 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 haveevolved 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 21