Peder Saether Symposium (March 9-10, 2000)
Professor Lars Engwall Presentation
Prof. Lars Engwall, Business Studies, Uppsala University, Sweden
Mastering Minerva's Multinationals: National Educational Policies and Globalisation
The title of my talk is ‘Mastering Minerva's Multinationals: National Educational Policies and Globalization.’ It could also be called ‘Thoughts from the Graveyard.’ Per Nyborg, the first day, made a comparison between universities and graveyards. And as a citizen of the graveyard, I can report that it’s very lively in here, and there are a lot of things happening. So if this is what is awaiting us after death, we will have a lot of fun in the future.
This is from an 18th century building in Stockholm. It’s part of the floor. You can see two figures: here is Mercury, and here is Minerva. And the text up here is, ‘De Harmonie die ver zeien brink lamp und loyd daz whal der gaien.’ So if business and university people are working together, we will have a happy life. We could also think that they have some relationship to Zeus, the god of gods. My message here will be that Zeus is losing out.
I'm trying, here, to put our discussion of information technology into a wider context. It's not just that we’re getting this new technology; we're also seeing changes in the global environment. I'd like to start out by providing you with a scheme of control mechanism in economic or political systems. Where the state traditionally has control over entry, they permit whether organizations can be founded or not. And where they’re being founded and entered, they can have a control over performance. And this leaves us, of course, the basic tool of the social scientist, the two-by-two matrix.
Here are the four cases. In the low entry, low performance cell, we have the private company, the entrepreneur we’re talking so much about. If they later want to be a public company, quoted on the New York Stock Exchange, for instance, then there are rules on their performance. In terms of the high entry barriers and low performance, that’s a self-regulating profession; they want to decide by themselves what’s happening. And then there's the case I call the government guild. That’s a case where government is guaranteeing both entry and performance. And the best example here is the bank. It’s not possible for just anybody to create a bank; it must be chartered.
We can also apply this to the university system. I will argue that the medieval universities were in this kind of situation. The same thing with the private U.S. universities, whereas the public U.S. universities have a larger control mechanism on their performance. As for traditional European universities, the governments have control over the entries, but other decisions they make themselves. Today, we have more control over performance in the European universities; the most spectacular example is the British system, where they’ve been very strong on controlling the performance. We are now moving back to the medieval stage, in that there are so many new actors coming in; and it’s difficult for government to control both entry and performance. And I would also argue that these two variables, entry and performance control, are basic for universities.
These are the key issues in terms of what we are doing. The selection of faculty: it is ery important that we select a good faculty. We should select students, and we should have the quality control of production. Each of these three things can be said to be threatened today, because we have another type of competition in terms of faculty, in terms of students, and there are also arguments about what is really quality in terms of the new technology.
Why are these things happening? I will argue that there are three important things happening here. Information technology—we’ve talked a lot about information technology, but that’s only one thing. There are two other things. During the post-war period, there have been three steps in deregulation: first, deregulation of the exchange of goods; then the exchange of physical service; and finally, financial services. And this final step has implied an enormous pressure on all actors to behave in a more economical way. The key word today is ‘corporate governance and shareholder value.’ A closely related development are global mergers; particularly in industries like the pharmaceutical industry and in telecommunications, entertainment, and so forth, we’re getting very, very large players. Some of them are becoming much larger, in terms of turnover, than many countries.
I will talk about three important types of actors here. First, what I call practice, including the multinationals, the big global companies, and their relationship to universities. The "corporate university" has been mentioned here a couple of times. Companies are today setting up their own things, which are designed to serve their own purposes. We also see a lot of corporate research, where research departments are growing, and, particularly in these large pharmaceutical companies, the research budgets are larger than in most of the universities. The third thing is that not only do they have these resources, they also work with outsourcing. That is the link to the universities, so that, in both respects, they connect to universities in training and research. This relates to the discussion we had before lunch, that universities cannot really decide for themselves what they can do. Well, they can, but that also creates problems.
It’s a very similar situation with the consultancies. In the consultancy business today, we see a concentration process. There are large consultancies being created--MacKenzie, Arthur Anderson, etc. They’re starting training programs; instead of sending people to business schools, they’re doing it by themselves. They can also conduct research. Things which would take a research department a couple of years, they can do in a couple of months because they have people all over the world. And in the same way that the multinationals have relationships with universities, we are starting to see partnerships, in which some of the big consultancies are relating to particular universities in order to develop some sort of trust and to exchange ideas.
The third factor is media, where we also see a lot of mergers and concentration. We’ve been talking about the Internet universities which have been created, but we can also see, or fear, that these very large companies may exert a domination over all sorts of students, so that it will be impossible to do things another way because they would dominate the views of the right way to run things. Also, many of these things with the ITC industry will require a lot of resources.
So what are the implications, at least for universities? Well, the first thing, I think, is the importance of realizing that we are part of the development of a knowledge industry, and that we are not alone anymore. There are so many other actors around. The second thing is that we could see a decrease in government control; looking back at my matrix there, you can see that they are losing out in the control of entry and performance. We can expect increasing control by market and media, and particularly, I stress again, the media companies. This means, in my mind, that we have an increased need for recruitment flexibility. Some of the European universities have very long traditions in terms of their ways of recruiting people. It can take years to decide whether or not someone can be hired. That will be very difficult to do in this new environment. Finally, I think it’s very important that we stress more universal governance, that we create rules for what can and can't be done. That’s something, I think, that European universities could learn from the American universities, particularly in relationships with industry, where standards are set for the nature of those relationships.
In relation to this, we should think about what could happen to universities in terms of resources. I’m pointing here to four providers of resources: donors, businesses, students, and the state. In many European countries, the state has been a very important provider of resources to universities. I'm sorry to say it, but I suspect that the role of the state is likely to decrease, and for two reasons. The first reason is that raising taxes is not an easy business for the future. In this globalized world, we will have a competition between countries, so that will put a pressure on taxes. The other reason is that we will have strong pressures from the business community, which I have been describing. That will lead to the commission of education and research. I also think that we will see fees for students in countries that haven’t had them before.
What, then, are the government implications of this? I think that there are these six things -- a need to think about the concentration of resources, how to handle the resources we have; the focus on basic education and research; the stimulation of creativity, and this has to do with what could be done and could not be done and the relationship to business. The same thing goes for the support of external relationships, and here the new communication technology can be very important. I also think that we need more university relationships, which actually relates to the concentration of resources; here again, modern technology can be very important. Probably, we will not see a lot of mergers in this knowledge industry. But, at least in the first stage, we will have more of what we see in the airline business, the creation of alliances that bring together different actors. There will be a need for cooperation between governments in different countries, as well; apparently this is becoming an issue in international trade. So in the last meeting of the WTO, the one which was not very successful, the issue of education came up.
So what is the conclusion, then, in relation to my title? Probably, or hopefully, we could come back to this painting and look at it in the future, and there would be a lasting marriage between Mercury and Minerva. But I’m not sure that Mercury will always treat Minerva well; he sometimes may be a bit of male chauvinist, and might not live up to the standards of what would be wished by our Minister of Equality in Sweden.
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