The Vertical Dis-Integration of Higher Education

20 December 2006 at 12:28 pm 2 comments

| Peter Klein |

In 1975, 56.8 percent of the teaching faculty at US colleges and universities were tenured or on the tenure track, with 30.2 percent classified as part-time employees. By 2003, tenured and tenure-track faculty comprised only 35.1 percent of the teaching staff, with part-timers making up 46.3 of the total. These data are from the latest AAUP report on faculty employment, sounding an alarm over the rise of what it calls “contingent faculty.” (Thanks to Richard Vedder for the pointer.)

This trend may have important implications for academic freedom, faculty governance, political correctness, and the nature of higher education more generally. From an economic efficiency perspective, it looks like vertical dis-integration, a shift from long-term employment contracts to shorter-term, more flexible arrangements. If the higher-education sector is simply following the private sector’s lead, should we be surprised? And what factors would be driving the changes — a decrease in relationship-specific human capital, an increase in modular methods of production, changes in environmental uncertainty, etc.?

Of course, the peculiarities of higher education must be kept in mind. Higher education — even at nominally “private” universities — is largely a state-run activity, even in the US, so we would not expect efficiency considerations to be paramount. Moreover, it is not clear that non-tenure-track faculty are short-term employees in the usual transaction cost sense. Many universities employ untenured faculty on a long-term basis (my university calls them “professional track” faculty). While not protected by academic tenure, many such faculty are nonetheless in long-term relationships with their employers, meaning that the AAUP’s statistics may overstate the trend as a change in vertical integration.

Comments? What are the best academic studies of vertical contractual relationships in higher education?

Entry filed under: - Klein -, Institutions, Teaching, Theory of the Firm.

I Am the Walras CCSM Pictures

2 Comments Add your own

  • 1. Hakan  |  20 December 2006 at 2:35 pm

    I haven’t read the mentioned report, but I think the key drivers of the trend are the relatively low supply of PhDs graduating in many fields compared to the demand for them, thus requiring resort to practitioners for teaching. Also, lowering the tenured rank population seems to be effective for ensuring continued high performance in teaching at least.

  • 2. Chihmao Hsieh  |  20 December 2006 at 8:00 pm

    World-class researchers that develop useful, well-structured, easily understandable concepts undermine the job security of teachers due to less need for student-specific teaching-related investments. When the researcher is the teacher, conflicts of interest arise. In the extreme case, the researcher and teacher will be separated.

    As far as I’ve observed, arguably the only force currently opposing this trend of disintegration in higher education is the emergence of ‘interdisciplinary degree programs.’

Leave a Reply

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

You are commenting using your 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 )

Connecting to %s

Trackback this post  |  Subscribe to the comments via RSS Feed


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


Former Guests | posts


Recent Posts



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).

%d bloggers like this: