Does Strong Alumni Participation Make US Universities Stronger?

23 September 2012 at 10:22 pm 7 comments

| Peter Klein |

What explains the dominance of the US in elite higher education? Shailendra Mehta offers a novel explanation: the role of alumni. Graduates of US colleges and universities tend to identify strongly with their institutions and care deeply about their school’s reputation and ranking. Only in the US do alumni play such a strong role, not only in financial support (often connected with athletics), but governance.

[N]o group cares more about a university’s prestige than its alumni, who gain or lose esteem as their alma mater’s ranking rises or falls.

Indeed, alumni have the most incentive to donate generously, and to manage the university effectively. Given their intimate knowledge of the university, alumni are also the most effective leaders. Through alumni networks, board members can acquire information quickly and act upon it without delay.

All great universities are nonprofit organizations, created to administer higher education, which benefits society as a whole. But US universities found a way to integrate competition’s benefits into the European concept of nonprofit, or so-called eleemosynary, corporations. The lack of profit does not diminish an alumni-dominated board’s incentive to compete for prestige by, for example, hiring distinguished faculty, accepting meritorious students, and striving for athletic or artistic achievement.

I asked Scott Masten, O&M’s resident higher-education expert, for a reaction:

Interesting, but incomplete. Although boards have formal authority in most universities, in practice they exercise very little, as the recent brouhaha at the University of Virginia serves to illustrate. In fact, the “American model” traces only to the post-Civil War era, when research universities came into being, and effective authority devolved to varying degrees to an administrative bureaucracy and faculty. It was only following that period that U.S. institutions began their dominance. On that alone, one could argue just as convincingly that it was faculty governance that accounted for the success of American higher education. It seems to me there’s a paper on that out there somewhere.

Entry filed under: - Klein -, Education, Ephemera, Institutions. Tags: .

Arruñada’s Institutional Foundations of Impersonal Exchange Luigi Zingales Blogging on EconLog

7 Comments Add your own

  • 1. mikemarotta  |  24 September 2012 at 9:59 pm

    It certainly begs study. Myself, I chose a school (Eastern Michigan University) that I would not need to worry about. It is a midrange, Midwest, state university, founded in 1849. Most of the previous schools I attended – Case Western Reserve, Cleveland State, New Mexico State – were conveniences. My first school, The College of Charleston (founded 1770) was chosen for its prestige.

    I have to admit to never contributing to any university. I paid my tuition. I would no more contribute to a university than I would donate to Walmart. But I appreciate that other people have different values. And I wonder what those values really are.

    One disturbing fact – and it may come from our having lived in East Lansing, Ann Arbor, and Columbus, before coming to Austin – is that alumni give more when the football team wins. You have to ask what values they picked up while in college.

  • [...] from Anti-Dismal – Original Post Over at the Organisations and Markets blog Peter Klein asks Does Strong Alumni Participation Make US Universities Stronger? He writes, What explains the dominance of the US in elite higher education? Shailendra Mehta offers [...]

  • 3. Rafe Champion  |  27 September 2012 at 3:35 am

    It is not hard to understand alumni who invest in sports, apart from sport being more important for a lot of students. You can hope to see the result of spending on a particular game but who could hope to evaluate the outcome of injecting money into an academic program?

  • 4. mikemarotta  |  27 September 2012 at 4:33 am

    Statistics hide facts. Bruce T. Halle was a student at Eastern Michigan University when he started selling tires. Later he founded Discount Tire. Halle donated $1.5 million to establish an endowment fund at EMU and in return, they named the library after him.

    In four years, I never went to a football game, but I got to know the library well. Even though I now live in Austin and have a UT library card, I still return online to the EMU library for fact checking. It was and remains the singlemost important resource of the university for me.

    Every school has star entrepreneur alumni and they do acknowledge the most important capital funding, knowledge.

  • 5. Rafe Champion  |  27 September 2012 at 8:48 am

    A nice comment. Not being a star entrepreneur I am going to acknowledge an important teacher with a small annual prize prize, the Keith Barley Memorian Prize for the top student in Soil Science I at the University of Adelaide.

    http://www.the-rathouse.com/mem/KeithBarley.html

  • 6. James  |  1 October 2012 at 9:44 pm

    Ego does play a part in getting alumni to donate money, allowing the donor to live vicariously through athletes. “I am better than you because my team beat your team.” Or I will always have a building named after me.
    But really, isn’t the “gift” just a tax write-off?

  • 7. James  |  2 October 2012 at 12:12 am

    Also. are our universities strong? Budget shortfalls every year, terrible graduation rates, staggering student loan debt and those that do graduate find a lack of jobs either because they lack necessary skills or the student majored in Rhetoric which has no real world application.
    I heard a comparison to Germany in the 1930′s, supposedly no other time in history was there as many unemployed persons with advanced degrees.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Trackback this post  |  Subscribe to the comments via RSS Feed


Authors

Nicolai J. Foss | home | posts
Peter G. Klein | home | posts
Richard Langlois | home | posts
Lasse B. Lien | home | posts

Guests

Former Guests | posts

Networking

Recent Posts

Categories

Feeds

Our Recent Books

Nicolai J. Foss and Peter G. Klein, Organizing Entrepreneurial Judgment: A New Approach to the Firm (Cambridge University Press, 2012).
Peter G. Klein and Micheal E. Sykuta, eds., The Elgar Companion to Transaction Cost Economics (Edward Elgar, 2010).
Peter G. Klein, The Capitalist and the Entrepreneur: Essays on Organizations and Markets (Mises Institute, 2010).
Richard N. Langlois, The Dynamics of Industrial Capitalism: Schumpeter, Chandler, and the New Economy (Routledge, 2007).
Nicolai J. Foss, Strategy, Economic Organization, and the Knowledge Economy: The Coordination of Firms and Resources (Oxford University Press, 2005).
Raghu Garud, Arun Kumaraswamy, and Richard N. Langlois, eds., Managing in the Modular Age: Architectures, Networks and Organizations (Blackwell, 2003).
Nicolai J. Foss and Peter G. Klein, eds., Entrepreneurship and the Firm: Austrian Perspectives on Economic Organization (Elgar, 2002).
Nicolai J. Foss and Volker Mahnke, eds., Competence, Governance, and Entrepreneurship: Advances in Economic Strategy Research (Oxford, 2000).
Nicolai J. Foss and Paul L. Robertson, eds., Resources, Technology, and Strategy: Explorations in the Resource-based Perspective (Routledge, 2000).

Follow

Get every new post delivered to your Inbox.

Join 219 other followers