Smart Leadership for Higher Education in Difficult Times

Smart Leadership for Higher Education in Difficult Times

Edited by David W. Breneman and Paul J. Yakoboski

As the US economy emerges from the severest recession in a generation, large questions regarding its long-term ramifications for higher education remain unanswered. In fact, the harshest effects of the economic downturn are likely ahead as campus leadership focuses on enrollment, affordability and fundraising. This volume of essays examines the challenges and opportunities for advancing higher education’s core missions of education, research and service in a resource-constrained environment.

Chapter 1: Is the Business Model of Higher Education Broken?

David W. Breneman

Subjects: business and management, management and universities, economics and finance, economics of education, public sector economics, education, economics of education, management and universities

Extract

David W. Breneman In recent years, several industries in the United States have struggled with failing business models. The examples are numerous: automobile manufacturers, newspapers, electronics manufacturing, textiles, clothing, shoes, and airlines, to name but a few. Recently, the business model concept has been applied to non-profit organizations as well, including colleges and universities. In that framework it’s legitimate to ask whether, and to what extent, the business model of higher education is broken, or unsustainable, in its current form. This chapter, originally prepared for The Miller Center of Public Affairs at the University of Virginia as background for their National Debate and Discussion Series, provides a context for the chapters that follow. When the business model concept is applied to for-profit industries, the focus is primarily on the survival of firms in the industry. In most cases, there is limited public interest in preventing firms from failing, as new suppliers, often with lower production costs or new technologies, enter the marketplace, displacing older industries and providing consumers with newer, often better, products.1 Non-profit higher education differs from the case of for-profit firms, however, in that a public interest exists in the education of our citizens, not only for careers but for civic and community leadership. Both public and non-profit private institutions of higher education, and their students, receive billions of dollars in public subsidies to ensure adequate investment in the nation’s human capital.2 For institutions charged with broad public purposes, many would argue that the concept of a broken...

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