Redefining Competition Constructively: The Challenges of Privatisation, Competition and Market-based State Policy in the United States

In the United States, the relationship between state governments and public colleges and universities is being redefined with new notions of autonomy and accountability, and with funding policies that are highly market-driven (often referred to as “privatisation”) as the centrepieces. Situations and institutional strategies unthinkable only a few years ago are becoming increasingly commonplace. For instance, a few business and law schools at public institutions are moving toward privatisation, distancing themselves from both the states and their parent universities. While American higher education has traditionally been competitive and market driven, emerging state market-based policies, which will clearly benefit some types of institutions over others, are further intensifying the competition with a variety of effects at the institutional and sector levels. Entrepreneurial or commercial activities may provide the additional resources individual institutions need to fulfil their public purpose. However, when all institutions pursue the same set of competitive strategies, no one gains an advantage. Institutions run harder to stay in place. The cumulative effect of competition may also work against important social objectives such as affordability and access. This paper explores the challenges that the current competitive environment creates for institutional leaders in the United States. It acknowledges that the competitive environment will not abate and suggests that by competing in different ways, over different objectives, with different purposes, US higher education might better meet its social objectives of increased access, lower cost and enhanced quality.