Why is it so Hard to Govern Higher Education? The University as a Public Corporation

Abstract

In order to function, higher education has to rely on the sectarian individualism of academics who seek wider intellectual and social reputation as a substitute for the private distribution of residuals. This frames governance as a positive sum game, and makes collective action possible. Since there are no veritable standards of operating performance, the governance process is contingent more on generalized trust and less on administrative fiat. Collegial governance is also required by the nature of the critical assets, represented by human capital. The separation between ownership and control, which represents the hallmark of the public corporation, is untenable in higher education, unless academics are denied the right to self-ownership. The main agency costs of academic autonomy is posturing and intellectual patronage. The managerial impetus has produced debatable results so far. While focus, operating performance, and student satisfaction appear to have improved, the scope for opportunism and expropriation of taxpayers might have also increased.

Keywords: Governance, unconfined public goods, higher education, social capital, human capital, property rights, agency costs, positive sum games, economic surplus

JEL Classification: A2, D23, D73, G34, H41, I23, L31