BUSHOR-1278; No. of Pages 10
Business Horizons (2016) xxx, xxx—xxx
Available online at www.sciencedirect.com ScienceDirect
www.elsevier.com/locate/bushor
Competition and strategy in higher education:
Managing complexity and uncertainty
a b,
Francesca Pucciarelli , Andreas Kaplan *
a
ESCP Europe, Torino Campus, 10134 Torino, Italy
b
ESCP Europe, Paris Campus, 75011 Paris, France
KEYWORDS Abstract Like several other nonprofit and for-profit industries, the higher education
Academia; sector has been subject to a series of fundamental challenges in the past decade.
Alumni; Education used to be considered a public good, provided by nonprofit organizations
Business schools; that were unexposed to market pressure and had clear societal missions. Now,
Higher education; education is becoming a global service delivered by quasi-companies in an ever-more
Public service; complex and competitive knowledge marketplace. To cope with these challenges,
Research; higher education institutions need an appropriate strategy, a necessity reflected in
Strategy; numerous calls for research on strategy in the higher education sector. This article’s
Teaching; purpose is to contribute to this discussion by providing prescriptive guidance to higher
University education managers and policy makers. To this end, it proposes a SWOT (strengths,
management weaknesses, opportunities, threats) analysis illustrating eight key trends that will
impact higher education and academia in the short-to-medium term. Drawing from
these trends, three core challenges are identified that higher education institutions
will face and that have fundamental implications for research and practice: (1) the
need to enhance prestige and market share; (2) the need to embrace an entrepre-
neurial mindset; and (3) the need to expand interactions and value co-creation with
key stakeholders.
# 2016 Kelley School of Business, Indiana University. Published by Elsevier Inc. All
rights reserved.
st
1. Higher education: Between affecting 21 century society–—an increasingly
global, digital, and dynamic environment. Scholars,
business reality and societal aspiration
opinion leaders, and institutional decision makers,
who actively shape the academic landscape, have
Higher education (HE) has become a crowded global
attempted to predict how the field of HE will be
marketplace and, as such, is not immune to changes
influenced by environmental trends. There is a gen-
eral consensus that the future of academia is and
will be complicated, challenging, and uncertain;
* Corresponding author
some authors view this future with optimism,
E-mail addresses: [email protected] (F. Pucciarelli),
whereas others foresee doomsday scenarios.
[email protected] (A. Kaplan)
0007-6813/$ — see front matter # 2016 Kelley School of Business, Indiana University. Published by Elsevier Inc. All rights reserved. http://dx.doi.org/10.1016/j.bushor.2016.01.003
BUSHOR-1278; No. of Pages 10
2 F. Pucciarelli, A. Kaplan
Most analyses of the current and future states of decade, however, the field of education–—most
HE converge on several conclusions. One such con- notably in Europe, but also elsewhere in the
clusion is that business ethos and practices are world–—has undergone substantial deregulation,
becoming acceptable in HE. Indeed, some authors and as a result, the sector currently faces a stron-
have emphasized the need to adapt pure market and ger need to react to the competitive environment.
marketing logics to the university setting (Gibbs & This process is very similar to what the telecom-
Murphy, 2009). Another common claim is that HE munications and utilities industry underwent some
institutions need to develop competitive strategies 10—15 years earlier.
to assess drivers of change, to devise adequate Despite deregulation, governments and other
responses to such change, and to develop policies supranational entities are contributing–—and are
and strategic guidelines that allow for evolution (or likely to continue contributing–—to the rethinking
even revolution) to happen. of academia through various sectorial interventions
Universities have three basic missions: teaching, ranging from regulations, policies, and recommen-
research, and public service. These missions have dations to quality assurance procedures and stand-
always been in conflict with one another (Altbach, ards, and public resource allocation (Altbach et al.,
Reisberg, & Rumbley, 2009). This has become even 2009; Kaplan, 2014). Yet academic institutions can-
more salient in recent years, as the environment of not suffice with these interventions and must still
the HE sector has become increasingly marketized. develop adequate strategies that will enable them
On the one hand, to survive, HE institutions must to address the new environment of an ever-more
behave like for-profit organizations, prioritizing rev- competitive educational market.
enue creation. On the other hand, they must also This article contributes to the debate on the
serve as nonprofit organizations, prioritizing the future of HE by providing an updated picture of
public good and serving as providers of knowledge key trends that decision makers in the sector should
and a path for educational development (Council of consider, in addition to an outline of three strategic
the European Union, 2014). Similar challenges are recommendations that may assist decision makers in
faced by other not-for-profit players and public responding to these trends.
entities–—in the health care sector, for example–—
which must continue to work for public welfare
while maintaining profitability and cutting costs.
2. An analysis of key trends and
In fact, even for-profit companies are increasingly
facing such tensions, as corporate social responsi- developments affecting HE
bility and societal value have gained prominence in
the public eye. Using previous literature, such as the work carried
Herein, we adopt the premise that the societal out by de Boer et al. (2002), as a starting point, we
nature of HE (i.e., its role as a public good) is one identify key trends affecting today’s HE sector.
of its core characteristics (Nedbalova´, Greenacre, Table 1 presents a high-level synthesis of eight trends
& Schulz, 2014), despite observations that some that we observe, categorized within the format of a
1
institutions have been tempted to neglect societal classic SWOTanalysis. In presenting this categoriza-
aspects in the rush for income and prestige. Thus, tion, we aim to help university managers and policy
we suggest that any discussion of strategy in this makers to prepare themselves and to be able to act
sector should carefully consider the societal scope quickly to prevent potential future crises.
and nature of the organizations involved. This Our analysis highlights the fact that while many
means that in working to develop a path for its trends faced by the sector are currently well ac-
future, a given HE institution must focus on knowledged and have straightforward strategic im-
both the organizational level (i.e., sustain its plications (e.g., the need to preserve the principle of
ability to compete in the market; Friga, Bettis, the public good as an essential component of the
& Sullivan, 2003) and on the sector level (i.e., university’s mission, the need to adopt a private
maintain its capacity to provide value for society fundraising strategy to balance decreases in public
through knowledge creation and dissemination; funding), several other trends have multifaceted
Healey, 2008). influences on HE and warrant further discussion.
The increasing complexity and uncertainty For example, the process of deregulation that the
characterizing today’s society are phenomena that sector has undergone over the past decade has de-
businesses have to cope with on a daily basis. Yet, creased protections afforded to established public
in its role as a provider of public services, the HE
sector has, until recently, been spared the need
1
to deal with these developments. Over the past SWOT: strengths, weaknesses, opportunities, threats
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Competition and strategy in higher education: Managing complexity and uncertainty 3
Table 1. SWOT analysis of current key trends impacting higher education
Strengths Weaknesses
Essential source for a society’s talent and Substantial delay in entrance of business practices
innovativeness into HE
- Institutionalized public service with a societal - Tradition of being a public service financed and
mission protected by the State
- Important provider of knowledge and innovation - Resistance of faculty, who are often organized in
strong public sector unions
National driver and global ambassadors
- HE as domestic resource, engine of growth and Low responsiveness to changes within the
economic recovery corporate world
- International expansion and global knowledge - Little adaptation of programs and curricula to
dissemination recruiters’ needs and job expectations
- Myopic ‘publish-or-perish’ research strategies
leading to purely academic publications without
consideration of other stakeholders
Opportunities Threats
Fast-evolving HE environment through ICT Continuous decrease in public funding
- Development of new markets, potential - Necessity for external fundraising and increased
productivity gains, and branding possibilities self-financing
- Advancement of both general knowledge and - Need for marketization of HE, potentially lowering
network society academic standards and quality
Rapid transformation encouraged by socio- Increasingly competitive environment
demographics - Domestic deregulation leading to new market
- Millennials seeking augmented educational entrants
experience - Globalization broadening competition to an
- Growing and changing student population international scale
institutions, thereby permitting the entrance of new Union, 2014). In practice, HE’s contributions to
private players. At the same time, however, deregu- society stem from providing education and nurturing
lation has increased the autonomy of those same talent, and from the advancement of research to
institutions in choosing their competitive strategies produce applicable knowledge as a strategic re-
and allocating their resources. source (de Boer et al., 2002).
Another example relates to the increasing degree In a globalized world, knowledge, research, and
to which HE institutions are becoming international. innovation are becoming increasingly important re-
On the one hand, such internationalization provides sources, and these developments are influencing the
universities with access to a large pool of talents societal role of universities (Va¨limaa & Hoffman,
(and other types of resources). Yet, on the other 2008). Specifically, the capacity to commercialize
hand, it exposes universities to other competitors knowledge has become crucial toward ensuring the
who seek to capture the same resources. In effect, future growth of individual universities (e.g., com-
internationalization forces universities to compete mercialization drives universities’ ability to secure
not only in a national arena but also in a global funds and to strengthen relationships and collabo-
arena; these two competitive arenas are distinct but rative partnerships with key stakeholders, such as
feed into each other (Marginson, 2006). What fol- an institution’s alumni; Altbach et al., 2009). These
lows is a detailed discussion of the SWOT analysis considerations influence the manner in which
summarized in Table 1. knowledge is generated and the assessment of the
value of knowledge.
2.1. Strengths: Importance for a nation’s Furthermore, in a global market in which national
development and global reputation economies compete with one another, HE institutions
are key players in enhancing the positions and rep-
Education has been, and still is, largely considered a utations of their respective countries by fostering
public good (Nedbalova´ et al., 2014), the purpose of innovation (de Boer et al., 2002). This role implies
which is to disseminate knowledge and contribute to that HE institutions maintain strong national affilia-
the development of society (Council of the European tions and can be considered national resources, an
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4 F. Pucciarelli, A. Kaplan
engine of growth and economic recovery (European Part of this delay is explained by structural sectorial
Commission, 2012). This can be compared to key factors: For centuries, education has been consid-
industries in specific countries, such as the auto- ered a public good, shaped by many entities at both
motive industry in Germany or the luxury industry in supranational and national levels, with the conse-
France, with the slight difference that HE serves a quence that concepts such as autonomy and ac-
national resource in virtually all countries around countability are relatively new for the individual
the world. university. Moreover, faculty members–—the core
Despite their national orientation, HE institutions of any university–—are not necessarily likely to be
strive for internationalization–—in terms of faculty, market-oriented, and may potentially be organized
students, and curriculum–—as a source of opportu- in strong public sector unions, thus further hindering
nities and resources (Altbach et al., 2009). More- the capacities of HE institutions to adapt to the
over, for countries importing foreign students, changing marketplace.
international HE is a lucrative business (Altbach, There are numerous manifestations of the rather
2004; Lee, 2014). HE institutions are eager to be- limited capacity of HE institutions to respond to the
come global providers by serving new geographies developing demands of society. For example, in
(e.g., by entering foreign countries with satellite today’s job market, an increasing number of work-
campuses or through alliances with universities and places require an HE degree, yet the skill sets and
other organizations abroad; Friga et al., 2003) or competencies that students must acquire to enter
simply by expanding the scope of international re- the job market differ from those required in the past
cruitment for their home campuses (Altbach, 2004). (European Commission, 2012). Numerous calls for
This trend of internationalization suggests that we redesigned curricula have been put forward by
will observe increasing competition at institutional, scholars, practitioners, and governments alike, of-
national, and international levels in which each ten without adequate response (European Commis-
geographical region becomes more crowded with sion, 2013).
institutions: established universities, new institu- A second example regards knowledge creation.
tions, and private providers (Schofield, Cotton, Universities have often drawn criticism for adopting
Gresty, Kneale, & Winter, 2013). myopic publishing strategies: too often they encour-
age publications written from a purely academic
2.2. Weaknesses: Delay in adopting perspective, focusing on scientific research that is
business practices and an entrepreneurial publishable in top academic journals read mainly by
approach other academics. Along the lines of the ‘publish-or-
perish’ dogma, such publications are often the sole
To compete in the marketplace, HE organizations determinants of a professor’s promotion or success-
are required to engage in increasingly complex ful tenure application. This approach to knowledge
marketing activities, encompassing multiple tar- completely neglects other stakeholders–—practi-
gets, media, and geographies (Gibbs & Murphy, tioners and students in primis–—whose support is
2009). As a result of such marketization of the HE crucial for the acquisition of resources (Cotton &
sector, management approaches and practices that Stewart, 2013).
are typical to private sectors are increasingly being
applied to universities. Several studies have sought 2.3. Opportunities: ICT and socio-
to observe how broad marketing concepts can be demographic trends encourage rapid
applied in the context of HE, such as service and transformation
relationship marketing, scope, adaptation needed,
and limits (Kaplan & Haenlein, 2009). Notably, the Information and communication technology (ICT) is
HE sector’s attempts to catch up with other, more disintermediating and changing the rules of the
commercial sectors in terms of marketing and other game in literally all sectors, HE included. The media
managerial practices are associated with serious industry in general, and the music industry in par-
risks to the quality of education and research, as ticular, experienced the consequences of the ICT
these areas may be neglected in the pursuit of revolution the hard way several years ago, and some
recruitment (Nicolescu, 2009). foresee similar scenarios for the HE sector. Yet, the
HE institutions have been slow to adjust to the advancement of ICT could be an enormous opportu-
need for a more business-oriented approach. For nity for those HE institutions able to leverage Web
example, Friga and colleagues (2003) state that 2.0 solutions for their own benefit. ICT solutions
although business schools have adopted a renewed provide new channels for growth (e.g., through
strategic emphasis, their strategies and structures borderless, virtual education), which can enable
remain fairly similar to those set out in the 1950s. HE institutions to address the increasing demand
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Competition and strategy in higher education: Managing complexity and uncertainty 5
for education worldwide, a demand that cannot be are facing greater demand from a more diverse set
fully met solely through offline channels (Friga of candidates. University classes are currently com-
et al., 2003). ICT can also contribute toward cost posed of students from a multitude of social, reli-
reduction, as the transition from physical to digital gious, ethnic, and geographical backgrounds. This
solutions can improve efficiency and save costs trend is driving reforms in the educational system
(EPRS, 2014). Finally, innovative technological sol- (Altbach et al., 2009; Friga et al., 2003) and has led
utions can enable universities to improve their own to corresponding drastic shifts in students’ expec-
positioning by offering a response to the quest of tations regarding the classroom experience. In par-
tech-savvy millennials for an augmented education- ticular, students are currently looking for high
al experience (McHaney, 2011). exposure to diversity (Budde-Sung, 2011).
More generally, ICT developments have substan-
tially enhanced the potential of universities for 2.4. Threats: Scarce resources within an
knowledge creation and dissemination. On one ever-more competitive and global HE
hand, the digital environment has vastly increased market
the number of sources of knowledge available, as
well as the ease and immediacy of accessing such Public funding for universities has generally de-
sources (McHaney, 2011), bringing substantial ben- creased (Altbach, 2004), which threatens the devel-
efits to many HE stakeholders. From a researcher’s opment potential of these institutions and increases
perspective, for example, online resources, such as the importance of designing fundraising activities
scholarly databases, enable research to be rapid, that target companies and alumni, and of developing
comprehensive in scope, and efficient; likewise, the executive education activities. The deregulation of
same infrastructures make the researcher’s own the HE sector, most prominently in Europe but in
work visible and accessible, potentially enhancing other regions as well, has increased universities’
its impact. On the other hand, ICT has facilitated autonomy, self-organization, and accountability
the creation of a network society, giving rise to an (Hoecht, 2006), yet it has also facilitated some level
expansion and reconfiguration of collaboration in- of privatization of the sector and entrance of new
side institutions and among organizations, overcom- players. This trend, coupled with the massification of
ing the limitations of traditional forms of education (as reflected, for example, in the avail-
cooperation (Castells, 2011). The network society ability of massive open online courses [MOOCs]), has
thus encourages HE institutions to strengthen their made competition in the HE sector even more strin-
relationships with core stakeholders and to engage gent (Schofield et al., 2013).
in interactions with partners, including other uni- Universities need to compete in a crowded, global
versities and industry partners (e.g., technology marketplace (Schofield et al., 2013), and the conse-
firms; Friga et al., 2003). quent need to market themselves (Friga et al., 2003)
Another opportunity faced by the HE sector re- to attract students, and thus to maximize revenues,
lates to sociocultural and demographic trends, in- has led many HE institutions to adopt a more consum-
cluding an influx of tech-savvy students, and general erist approach, catering more to students’ wishes
growth in HE demand and diversity in student pop- (Brown, 2011). This trend, however, has negatively
ulations. The strategies of HE institutions should impacted academic standards (Altbach et al., 2009)
address these developments. and threatens future academic quality.
Current university candidates are digital natives
who act as rational and informed customers when
selecting universities (Temple & Shattock, 2007).
3. Strategic recommendations and
Moreover, when these digital natives commence
guidelines for contemporary higher
their studies, the influence of their tech-savviness
is reflected in their approach to the educational education
process, beginning with their basic interactions with
their professors (McHaney, 2011). In particular, digi- A detailed examination of the strengths, weak-
tal natives seek to approach learning through social nesses, opportunities, and threats overviewed
networking and other forms of convenient, digitally above suggests that the HE sector must respond
based and multimedia-based delivery systems, of- to the following three core challenges, which we
fering immediate and personalized interaction call the Three E’s for Education:
(Budde-Sung, 2011).
Demographic and sociocultural trends have influ- 1. Core challenge 1: Enhance HE institutions’ pres-
enced not only student behavior, but also the com- tige and market share in a consolidating global
position of the student body itself. HE institutions educational market.
BUSHOR-1278; No. of Pages 10
6 F. Pucciarelli, A. Kaplan
2. Core challenge 2: Embrace a deeper entrepre- private sources. We suggest that HE institutions’
neurial mindset, with corresponding modus op- primary focus of sustaining institutional reputation
erandi and decision-making approaches. and serving society can be enriched by a sharp look
at how markets assess these institutions, and at how
3. Core challenge 3: Expand links, interactions, and market standing can be leveraged to gain resources
value co-creation with key stakeholders. for future growth, especially in light of reductions in
direct and indirect public funding. In particular, a
In Table 2, we propose a set of strategic guidelines university’s market standing has the potential to
that HE institutions might follow to address these become the definitive indicator of the institution’s
challenges. quality for a multitude of stakeholders. To improve
their market standing, we propose that HE institu-
3.1. Core challenge 1: Enhance HE tions address the core challenge of enhancing their
institutions’ prestige and market share prestige as well as their market share.
Increased competition and the massification of
Competition in academia has always been a force, education have encouraged universities to increase
and universities are used to competing for status and their market share by expanding and diversifying
ranking, talent, and funding, either from public or their offerings (in terms of educational levels and
Table 2. Strategic recommendations for contemporary higher education
Moving from...... going toward
HE institutional prestige and value for society Guarantee resources for sustaining growth
- Focus on public good, education, and - Additional performance metrics to measure universities’
research excellence excellence, and ultimately enable them to access
- Decrease in direct and indirect public funds resources for future development; Market will assess
encourages HE institutions to search for which universities deserve to be part of the top leagues
private streams of resources and funding - More advanced stage of private fundraising, leveraging
university reputation to become preferred partner of
choice of key stakeholders (notably alumni, but also
students, professors, corporations, etc.) and new forms of
collaboration between the university and the rest of the
world
New managerialism in Public sector Entrepreneurial leadership at all levels of HE institutions
- Renewed attention to strategic emphasis, - Defined and formalized mission and strategy able to guide
marketing objectives, and curriculum an entrepreneurial approach at all levels of HE’s
- Pivotal role of academics in contributing to institution
HE institutions’ quality and reputation - Pivotal role of academic-managers in contributing to HE
- Substantial investment of resources for institutions’ quality and reputation and participating
research activities and limited autonomy in actively in management and decision making
investment strategies (reliance on public - Increased autonomy and accountability permit more
funds and investment guidelines) control over resources and freedom to choose investment
strategies. Management of HE has to encompass more
complex and urgent business decisions (e.g., the ICT
infrastructure)
Traditional relationships with key Increased connections, interactions, and value co-
stakeholders using traditional media creation with a larger set of key stakeholders
- Tech-savvy students and industry - Learn to navigate the new technology-oriented and
interlocutors versus heterogeneous ICT multimedia environment, with HE institutions supporting
competencies among academics academics as they acquire necessary skills
- Knowledge production using a limited set of - Deeper integration of Web 2.0 and networking in research
web solutions - New design of learning processes and infrastructures,
- Traditional learning process and aiming at co-learning through highly interactive and
heterogeneous adoption of participant- responsive pedagogies
centered pedagogies, mostly in class - Dialogue and participative communication, leveraging
- Service marketing strongly relying on new media (and in particular Web 2.0 and social media) to
traditional media and one-way address HE’s different audiences with customized
communication (from HE to rest of the world) messages
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Competition and strategy in higher education: Managing complexity and uncertainty 7
curricula) and the scope of their recruitment to master/doctorate) across Europe. Another is the
attract and serve new subgroups that have not facilitation of student mobility across European
yet been tapped. This mass market logic has led countries. This mobility system is based on the
some universities to fight for market share at the introduction of the European Credit Transfer Sys-
expense of lowering their academic standards. At tem, a standard for comparing students’ study per-
the other extreme of the competitive arena, some formance and attainment with the possibility to
top universities attempt to cope with the increase in transfer obtained credits from one European univer-
rivalry for resources by building and trading on their sity to another. While the Bologna Process proposes
strong reputations (e.g., by increasing the difficulty broad guidelines for convergence in the European
of the admission process to ensure access to only the HE sphere, it leaves sufficient room for keeping
most talented students). The latter approach is national specificities. Especially in Europe, which
based on the premise that a university’s prestige embraces ‘‘maximum cultural diversity at minimal
is crucial in determining access to resources in the geographical distances’’ (Kaplan, 2014, p. 532),
form of students who seek to enroll, private and maintaining cultural independence is key for limit-
public fundraising capability, alumni commitment ing resistance to such a unifying mechanism and
toward the institution, and desirability as a partner guaranteeing its success.
in research collaborations, applied projects, and University management and scholars, in turn,
executive education by corporations. should take on a central role in the design of a
Strategies deployed by the top league of interna- new assessment framework, promoting bottom-up
tionally established HE institutions reflect the idea initiatives and think tanks to bring concrete propos-
that to address the challenge of enhancing the als to political and institutional decision makers,
prestige of HE institutions, decision makers must which take into account the learner-centric and
focus not only on the quality of education and knowledge-centric focus of HE. Moreover, they
research produced but also on their institutions’ should also proactively become champions of
positioning in external accreditations and rankings change in their own HE institutions to ensure that
(including league tables) and in stakeholders’ these new logics are fully understood and imple-
minds. A key stakeholder group to be considered mented by all levels of the organization. Managers in
in this context is alumni, who are becoming ever academic institutions must act as leaders, able to
more crucial. This strategic focus has a salient balance prestige-driven and market-driven logics in
impact on the methods and criteria used to assess their decisions. Notably, considering that official
HE institutions’ success and, in particular, the per- initiatives to reshape the assessment of HE might
formance metrics used to measure universities’ be slow to take effect, institutions might attempt to
excellence. This focus also carries important impli- influence their own reputations more quickly
cations for each university’s strategy in terms of through new modes of communication. In our cur-
resource allocation–—which must prioritize activi- rent era of social media and viral marketing, word-
ties valued highly by the market–—and in terms of of-mouth communications by alumni will play an
criteria for awarding promotions and academic rec- increasingly important role in promoting HE institu-
ognition. tions.
Supranational entities and national governments An alternative strategic focus that academic
will have pivotal roles in rethinking the education managers might adopt when attempting to enhance
assessment model and adjusting it to comply with the market standing of their institutions relates to
market requirements while preserving the societal the capacity of university curricula to respond to the
scope of HE institutions. In particular, public author- evolving requirements of the job market. By adopt-
ities in charge should ensure the existence of a ing a focus on candidates’ employability, HE insti-
sustainable, well-funded framework to support tutions will gain better visibility–—particularly in
the efforts of higher education institutions. Indeed, light of rankings that consider, among other aspects,
in many countries, topics such as quality assurance the career progression of graduates–—and ultimately
and improvement, accountability, and qualification contribute to the greater social good by supporting
frameworks in the HE sector have risen to the top of economic recovery. Alumni have shown to be excel-
national policy agendas. lent sparring partners in this context. Universities
In Europe, for example, the 1999 Bologna Process that do not respond to corporate demand by adapt-
has fundamentally changed the higher education ing their curricula to the needs of the job market
arena by ensuring a more comparable, compatible, will find it difficult to compete with rapidly emerg-
and coherent system of HE within Europe. One of its ing corporate universities (i.e., educational enti-
main achievements has been the creation of a quasi- ties that are sponsored by corporations or even
homogeneous three-cycle system (i.e., bachelor/ operated in-house and whose educational
BUSHOR-1278; No. of Pages 10
8 F. Pucciarelli, A. Kaplan
goals are entirely aligned with the corporations’ 3.2. Core challenge 2: Embrace a deeper
objectives). entrepreneurial mindset
The practical aspects of updating and expanding
their competence bases are expected to pose a Universities should continue to attribute top priority
challenge to HE institutions. Broadly, universities to promoting a learner-centric and knowledge-
should support their academic staff and encourage centric focus. However, to cope with a changing world
them to develop skills for new pedagogical ap- characterized by limited resources (i.e., to adapt
proaches that have been opened up by digital tech- to market conditions as discussed above), academic
nologies and that are relevant to companies. Such institutions should become entrepreneurial with
skills are expected to provide opportunities to im- managers who adopt a business-oriented modus op-
prove the quality of teaching and learning (Altbach erandi, act as leaders, and balance prestige-driven
et al., 2009; Council of the European Union, 2014). and market-driven logics in their decisions.
Indeed, the European Commission–—for example, as Thus, to address the second core challenge (i.e.,
part of its Europe 2020 initiative–—has issued rec- to embrace managerialism in HE institutions such
ommendations on salient curricula and competen- that institutional managers act as entrepreneurial
cies that universities should foster to better prepare leaders), HE institutions must undergo a major shift
students for the job market of the future (European in terms of their managerial approach. Each univer-
Commission, 2012). The European Commission sug- sity’s management should commit to a complete
gests that to promote relevant curriculum develop- rethinking of its strategy, starting with redefinition
ment, universities initiate a participative dialogue of the institution’s mission, vision, values, and stra-
and partnerships among teaching staff, students, tegic guidelines.
graduates, and labor market actors (European Com- Embracing an entrepreneurial approach implies
mission, 2013). that academics must become academic managers,
A third aspect of enhancing the market standings meaning that although they will continue to con-
of HE institutions relates to the capacity to keep up tribute to the quality and reputation of their re-
with ICT developments. Such developments have spective HE institutions through teaching and
reduced and even eliminated barriers to the entry research–—which will remain the key components
of new education providers–—such as the need for a of their roles–—they will also be asked to show deep-
physical campus. Thus, traditional universities er commitment to the management of their insti-
must now compete with full-fledged private online tutions. The latter entails participating in the
universities, small private online courses, and decision-making process and actively marketing
MOOCs, which are gaining market share. University themselves and their projects to attract resources
managers should take this competitive aspect into and strengthen links with other academic and non-
account when considering the objectives and po- academic institutions and with industry partners
tential returns of digitization, and when planning and alumni.
the implementation of the digitization process, The ability of HE managers to adopt an entrepre-
including development of faculty competencies, neurial mindset is strengthened by the increasing
curricula and pedagogies, and infrastructures and autonomy of HE institutions, a product of the grad-
processes. Notably, failure to stay up to date on ual deregulation and privatization of the sector, in
such ICT developments represents a serious threat addition to contemporary governments strongly en-
of obsolescence for HE organizations. Continuous couraging universities to adopt self-organizing,
professional education of professors and staff is an decision-making models (Sam & van der Sijde,
urgent issue to be addressed, on a par with the 2014; Schofield et al., 2013). This autonomy goes
modernization of the overall institutional infra- hand in hand with increased accountability on the
structure and key processes. Recommendations part of heads of HE institutions regarding their use of
on how to modernize HE in terms of the sector’s public funds. On the one hand, such accountability
digital agenda have been issued by the European may provide benefits, such as greater control over
Commission as part of its Europe 2020 initiative resources, and freedom to choose investment strat-
(European Commission, 2013). Some institutions egies. On the other hand, such accountability may
are leveraging ICT in their knowledge production be a hindrance, particularly as HE institutional man-
to a substantial degree (e.g., online databases and agers must make larger numbers of decisions of
virtual video conferences), but much remains to be increasing complexity, including decisions regarding
done in this regard, including deepening the inte- the ICT infrastructure and level of digitization.
gration of Web 2.0 and usage of social media (e.g., HE boards should ask themselves to which extent
forums and groups in dedicated platforms) and professors (and staff) should undergo professionali-
social networks. zation to enhance their capacity to act as
BUSHOR-1278; No. of Pages 10
Competition and strategy in higher education: Managing complexity and uncertainty 9
academic-managers who launch and facilitate orga- educational processes (e.g., see EPRS, 2014). Man-
nizational reforms in educational systems (Deem & agers of HE institutions will have to determine which
Brehony, 2005). Furthermore, heads of institutions initiatives and mechanisms should be put in place
and institutional leaders should further think about for facilitating this major shift, starting with inves-
supporting mechanisms that can contribute to en- ting in supporting academics as they learn to navi-
acting desired managerial initiatives. For example, gate today’s digital environment.
to enhance the quality of teaching and learning, Ultimately, the shift to increase interactions and
universities might choose to recognize and reward value co-creation with multiple stakeholders will
(e.g., through fellowships or awards) teachers who lead to a revolution at the marketing level in line
make significant contributions toward achieving this with the worldwide shift away from one-way com-
objective, either through their teaching or through munication between organizations and consumers–—
their research. in our case, universities and students–—toward dia-
logue and participative communication. Currently,
3.3. Core challenge 3: Expand links and universities can and should further leverage their
interactions, and value co-creation Internet and social media presences as a means of
reaching tech-savvy candidates during the individu-
Addressing the third core challenge (i.e., expanding al’s university selection process, and also as a basis
links and interactions, and valuing co-creation with for interaction and dialogue among students, alum-
key stakeholders with a specific focus on alumni) ni, managers, and university faculty in the educa-
implies complete renewal and reshaping of relation- tional and knowledge-sharing processes.
ships with various partners and expansion of the
number of touch points in these relationships. In-
deed, the European Commission (2013) recommends
4. The future of HE to be shaped by
that HE institutions should strengthen network rela-
market mechanisms in a globalized
tionships as a means of increasing universities’ access
to resources and fostering the linkage between uni- world
versities and industry entities and their ability to co-
create knowledge or to offer joint programs and The acknowledgement of being part of a crowded
opportunities for interdisciplinary research. and global marketplace and the incredible speed of
We suggest that the capacity of an HE institution change over the past two decades have pushed HE
to address this challenge is highly dependent on the into a debate on the future sustainability of the
extent to which it incorporates current information sector as we know it today, similar to several other
technologies into its relationships with various nonprofit and for-profit industries. As in the business
stakeholders. Web 2.0 and social media platforms world, there is no clear answer as to how HE in-
(Kaplan, 2012; Kaplan & Haenlein, 2010) have been stitutions should react to increasing complexity and
widely adopted by the public. These technologies uncertainty; there are only processes to be put in
have become highly influential in the selection pro- place as potential coping mechanisms. Herein we
cesses of prospective students seeking universities have attempted to identify some of these processes,
and of corporations looking for strategic partners. drawing from insights based in academic literature.
Moreover, students expect the university experi- HE decision makers and key stakeholders attempting
ence to reflect the environment to which they are to formulate strategies should discuss, examine,
accustomed–—an environment that is currently char- and validate the guidelines we propose to obtain
acterized by a high degree of participative collabo- a detailed roadmap that will enable their specific
ration. Accordingly, as public service organizations, institutions to maneuver through the challenges of
st
HE institutions should adopt a student-centric per- 21 century HE. In particular, HE managers should
spective and ensure that they respond to these define to what extent their institutions are able to
expectations, not only by adding technologies to incorporate business practices and digital solutions
current pedagogies and practice (indeed, some pro- as a means of adapting to the changing nature of
fessors have begun to timidly incorporate video and education while preserving the university’s societal
other media in their lectures) but also by completely role. Public authorities, in turn, should understand
reshaping current practices to incorporate interac- their roles in the changing HE sector as regulators,
tion and co-learning. investors, facilitators, or a mix thereof, to promote
To achieve these objectives, both HE managers the public good and encourage institutional ac-
and academics must be willing to embrace countability, responsiveness, and innovation.
new digital solutions and ensure adequate use of In some rather rare cases, it might be possible and
technology and new emerging platforms in daily sensible to perform a radical culture change by
BUSHOR-1278; No. of Pages 10
10 F. Pucciarelli, A. Kaplan
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