Gestión y especialización en las universidades
Junio 2, 2023


MAY 31, 2023 | ALEX USHER

Economies of Scale and the Unmanageability of Universities

I’ve recently had reason to ponder some of the mysteries of university management. I’ve concluded that it’s much harder to run a university in a moderately efficient fashion than it is to run pretty much any other type of organization. And I say this not because of the multiple veto- (or at least go-slow) points that get set up through the process of academic governance, but rather simply because disciplinary structures stand in the way of most useful economies of scale.

There are a few ways in which universities can achieve economies of scale. More students mean it’s possible to invest in more sophisticated registrarial processes and tools and lower average costs. Same with things like health and student services: size allows greater investment in human resources which in turn drives the ability to make gains through specialization. Same with IT, food services, you name it. Size allows big universities to do things that small ones can’t dream of doing.

But turn to the academic side and instead of gains through specialization, what you get is increasing unwieldiness.

Within some – but by no means all – departments, size can imply economies of scale. In most science disciplines, for example, the main undergraduate courses can be taught by pretty much anyone with tenure. Regardless of whether a physicist specializes in astronomy, materials sciences, nuclear physics or quantum photonics, they can probably teach most first and second year courses. This is good, because it means a department can hire specifically to build up strength in certain research fields without having to worry too much about who is going to teach the half-dozen big intro classes.

Try something similar in humanities or social sciences and you’d get your head cracked open by rioting academics. In these fields, research specialization and teaching specialization absolutely go hand in hand. You want an ASIAN history specialist to teach CANADIAN HISTORY 100?? A Comparativist to teach Intro Political Theory? Have you gone absolutely BARKING mad?

The point I want to make here is twofold. Obviously, the inability of academics to switch between one field on another makes economies of scale incredibly difficult. In effect, the scaling only works at the disciplinary level, and not even across all disciplines – substantial chunks of humanities and social science make it difficult to create economies of scale even really at the departmental level. In other words, the production function of a university of 20,000 students spread across 20 disciplines is probably quite different – and much less disastrous – than a university of similar size with 60 disciplines.

Now that’s all just economics. Think about it from a management point of view. It’s clear that running a university is more like running a conglomerate than running a unified corporate entity. The university resembles a holding company than anything else: one that contains dozens of corporate entities with no necessary mission overlap or even basic similarities in production functions. In an ideal world, you would try to wring a few efficiencies out of the overlaps that exist. In practice, the people running the individual businesses/departments are so hostile to the idea of having to share with other businesses/departments that such efficiencies are almost never more than notional.

All of which is to say that universities are incredibly complicated entities, with an instinct to always increase in the degree of complication in the system (more centres and institutes! more joint Master’s programs!), and where every complication can be guaranteed to raise costs by working against economies of scale.

It’s not so much that “faculty are obstreperous and a barrier to efficient university management”, though that is how the problem of university management is sometimes framed. No, it’s much more fundamental than this.  Universities only made it into the 19th century by doing a Faustian deal with scientific disciplines. Essentially, universities ate the disciplines, thus acquiring the prestige that came along with their greater rigour, but in return they had to accept each discipline’s cost structure logic and foreswear the possibility that new disciplines would arise to kill the existing ones.

When it’s this hard to use economies of scale to increase efficiency, you can see why so many university leaders choose the simpler path of trying to balance books by raising revenues. So much simpler to get a few more international students than to face he unremitting horror of trying to wring efficiencies out of dozens of different business units, each with its own impeccably thought-out but mutually-non-reconcilable boutique production functions.

Would you want to manage such an entity?

Thought not.

So maybe, just maybe, spare a generous thought for all the folks who try to keep this tottering behemoth on the rails. No doubt they individually can make some howling errors at time. But when you really stop to think how complicated universities are as business entities, it’s a freaking wonder they manage to stay afloat at all.


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