The dynamics of university behaviour in Chile
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Universities are complex social organizations whose long term structure, strategy and ´core´ capabilities are determined both by ´mission´ and resource availability. They employ highly qualified workers – professors, laboratory technicians, graduate students – and physical capital - buildings and laboratories, pilot plants, prototypes, reactors and so forth – in the production of : 1. teaching services, 2. new scientific and technological knowledge and, 3. a vast array of goods and services, both for private as well as for collective consumption, in fields such as health care, culture, environmental protection, urban development, energy production, water and land utilization, climate, desertification and more. Not all universities engage in the production of all three of the above mentioned categories of goods and services, nor do they exhibit close similarities as far as ´mission´ and ´core capabilities´ is concerned. They come in all sizes and styles of organization: private and public, non profit and profit oriented, involved in teaching exclusively, or engaged both in teaching, research and in the production of public goods, ´generic´ and discipline-specific, licensed, (and subject to different forms of accreditation routines), or un-licensed (and scarcely monitored at all by educational authorities), and so forth. Such variance in the ´nature´ of the firm suggests that large differences in university behaviour are a priori to be expected. Universities are normally organized in Faculties imparting undergraduate and graduate teaching in different scientific and technological disciplines, i.e. the social sciences, engineering, medicine, physical sciences and so forth. Faculties then subdivide in Departments and these in Institutes, Centres and laboratories. Professors – of different levels of seniority – are normally attached to Departments for which they impart undergraduate teaching. Besides being affiliated to specific Faculties and Departments for teaching purposes, professors frequently also undertake research activities in institutes and labs. Some of them also perform administrative and managerial tasks, acting as Directors of Departments and members of academic boards, managing the day-to-day functioning of their academic units. Technicians and graduate students normally work at the institute or lab level, but it is not uncommon for some of them to teach undergraduate students under Departmental responsibility. Department and Institutes also employ clerical and administrative personnel, accountants, lawyers, and others. Some individuals – professors, administrators - work on a full time basis, others do it part time, combining their appointment at the university with other external activities, as private consultants to business firms, government advisors, and so forth. As a result of the above it is somewhat difficult accurately to assess how individuals allocate their time, especially so in relation as to how they divide their daily activities in teaching time, research and development time and administration and consultancy. Reliable data is hard to obtain. Contracts between professors and universities are normally specified in a rather vague language. They involve a complex principal-agent relationship in which questions of mutual obligation are treated in a very opaque way. Particularly difficult are issues related to quality aspects of teaching or research, where criteria for judgement and monitoring are specially frail. Professors and graduate students use simple pieces of equipment and infrastructure for teaching purposes – classrooms, computers, and the like - and more sophisticated ones, such as pilot plants, prototypes, reactors, and a variety of complex experimental machines, in their search for new knowledge in the scientific and technological frontiers of different disciplines. These exploratory activities are carried out in Institutes, research centres and Labs. It is not unusual, however, for these centres or labs also to provide technical services to private firms in areas such as quality control, metrology, raw material testing and so forth. These services often constitute an important source of revenue both for the centre as well as for the university at large, as the later normally charges an overhead for the use of its name, prestige and R&D facilities. Some of the services offered by Centres and research labs to firms involve routine testing activities which do not demand new knowledge generation. Others, on the contrary, could be more complex, demanding ad hoc incremental knowledge generation, the use of pilot plants and experimental equipment. The border line between routine and non routine activities is often blurred and some efforts which should probably be measured as R&D activities following standard international definitions are not frequently accounted as such. This probably induces a country-wide underestimation of R&D expenditure. Faculty members divide their teaching time between undergraduate and graduate teaching. Professors (and graduate students) show typical work days of nearly ten to eleven hours, including weekends, which makes for a rather long work week of around 55 to 57 hours. Available data for the US indicates that “an average academic work day entails 4.2 hours spent on instruction, 3.2 hours on research and a balance of 2.5 hours spent on miscellaneous activities” (L. Leslie et.al. 2000). Received literature shows that departmental returns to teaching tend to exceed returns to research activities (D´Sylva, 1998), and that the difference between them tends to be larger for the social and the physical sciences vis a vis the life sciences. Thus, departments could increase their revenue by doing more teaching than research. The extent to which this is so seems to vary across disciplines. The above introductory paragraphs serve to identify some of the complex issues demanding examination if we are to understand how universities, departments and individuals behave in the world of teaching and research. In actual fact, universities all over the world are going through a long term decline in the provision of fiscal block grants covering their various activities, and this is inducing them to search for alternative sources of income to maintain their ´mission´ as far as teaching activities, research and public goods production is concerned. Among the sources of funds becoming more important over the past two or three decades fees to undergraduate and graduate students appear prominently, but also contract research, competitive funding for R&D activities, gifts and donations, have increased in importance as well. As sources of funds change so do also university strategies, organization and ´core capabilities´. Even if ´mission´ constitutes an important conditioning factor affecting long term university behaviour, sources of funds play a significant role as well. Many of these questions have not so far been explored in detail in relation to Chilean Universities. Chile has at present 60 universities catering for over 600.000 students. 25 of these universities are ´public´ in the sense that they belong to the Council of Rectors of Chilean Universities (CRUCH). The remaining 35 universities are private, all of them created after the process of market de-regulation enforced by the military authorities in 1981. The de-regulation of tertiary education markets allowed private universities to enter the market and a large number of them were erected during the 1980´s and 1990´s. The 25 CRUCH ´public´ universities further subdivide in 16 which are truly public in the sense that they have to report to the Contraloria General de la Republica and be accountable for the use of their resources, and 6 which in spite of belonging to CRUCH are not public sector organizations in the above sense. Some Chilean universities – public or private - are quite large (catering for 20 to 30 thousand students each) – other much smaller, dealing with a student population of a few thousand people. Some cover 50 or 60 disciplines, others specialize in just a few academic fields. A number of Chilean universities have not so far received accreditation in many of the 6 areas that demand being evaluated for ´full accreditation´. The accreditation can be granted for 2 to 7 years. Only a small group of highly prestigious universities have so far received accreditation in all 6 categories, and for a full 7 year period. Public information on the accreditation status of different universities – both public and private – is highly opaque affecting market outcome.This suggests that the disciplinary role market forces are expected to have impeding monopolistic practices from the part of service providing organizations does not adequately obtain in this field of economic activity. In other words, as far as university markets is concerned consumer protection is not adequately taken care of by the ´invisible hand´ of markets. As students can not freely move from one university to another carrying with them their academic credits there is a major element of market rigidity which allows firms to capture above ´normal´ profits in a highly segmented market for educational services. The above description identifies an interesting set of ´stylized facts´ suggesting the need for a detail exploration of the structure and behaviour of Chilean university markets. The results of such exploration are presented in the sections that follow.