Performance Failures of Universities: An Exploratory ...

Performance Failures of Universities: An Exploratory Taxonomy of University Opportunism Paper presented to the 29th ANNUAL EAIR FORUM 26 to 29 August 2007 Innsbruck, Austria

Name of Author Jussi Kivistö Work in progress: Please, do not quote or cite without permission of the author.

Contact Details Assistant Professor, Dr. Jussi Kivistö Higher Education Group, Dept. of Management Studies Kanslerinrinne 1, Pinni A building, room 4029 33014 University of Tampere Finland E-mail: [email protected]

Key words Funding –State higher education, Governance, Management

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Abstract Performance Failures of Universities: An Exploratory Taxonomy of University Opportunism Information concerning performance failures caused by university opportunism has been scarce. As opportunism is presumably a substantial factor explaining low performances of universities, this paper creates a taxonomy of different possible forms of university opportunism and provides a description of the content and the dynamics of the phenomenon. In addition to the description of different forms of university opportunism, issues related to developing performance measurement are also discussed. Although the approach is mainly theoretical, some of the theoretical arguments presented are illustrated with empirical evidence. Introduction Accountability has been at the centre of the higher education policy agenda in many higher education systems (Huisman & Currie 2004). Much of the increased governmental interest appears to result from the doubts about the efficient allocation of resources and effective cost containment as well as from the suspicions about the accuracy and relevance of the performance information provided by universities (cf. Schmidtlein 2004). This could imply that universities are assumed to behave opportunistically if they are not held accountable for the resources they receive. In fact, this is precisely what some scholars have suggested by arguing that “an accountability is a constraint on arbitrary power, and on the corruptions of power, including fraud, manipulation, malfeasance and the like”(Trow 1996, p. 311). Studies focusing particularly performance failures of the universities have been relatively scarce (e.g. Murray & Dollery 2006). Especially the performance failures related to opportunistic behaviour (or ‘ethics failure’)in academia have been addressed explicitly only in handful of studies (e.g. Bruhn et al. 2002; Kivistö 2007). Therefore, deeper theoretical and empirical understanding of the phenomenon is needed. This is important especially for the development of performance measurement systems, since sometimes studying a system’s failures can provide more crucial information about how the system operates than studying a system’s successes (Meier & Bohte 2003). The purpose of this paper is to conceptualise different forms of university opportunism and create a taxonomy which describes the content and the dynamics of the phenomenon. Also, questions related for developing performance measurement and governing the opportunistic behaviour are discussed. Although the paper is mainly theoretical, some of the formulations presented are illustrated with empirical evidence. Types of University Opportunism Various types of opportunistic behaviour of universities can cause performance failures, that is, sub-optimal, sub-standard or poor organisational performances (cf. Meier & Bohte 2003). Performance failures can include reduction of efficiency and effectiveness of universities as well as reduction of the quality of teaching and research outputs. Although there exist a range of internal and external stakeholders (e.g. alumni, students, industry, donors, private research financiers) to whom universities and their staff are accountable for their performance, this paper analyses the performance failures only from the perspective of the governments (local, provincial, federal, or national) which provide resources for the universities (public or non-profit). The concept of opportunism can be defined a range of ways. According to the classical definition of Oliver Williamson (1985, p. 47), “opportunism refers to the incomplete or distorted disclosure of information, especially to calculated efforts to mislead, distort, disguise, obfuscate, or otherwise confuse”. It is “self-interest seeking with guile”which “includes but is scarcely limited to more blatant forms, such as lying, stealing, and cheating”(ibid.). The following sections now make an attempt to explore the possible types of opportunistic behaviour in universities.

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Shirking Shirking is probably one of the most classical types of opportunistic behaviour. By definition, shirking is a conscious low work effort in those situations, where the person possesses high ability to perform the work (Braun 1993, see also Brehm & Gates 1997). The shirking activity is often occasional and uncoordinated activity of individuals. Concrete examples of shirking behaviour are numerous. For instance, one form shirking could be a situation where academics increase their discretionary time largely at the expense of meeting their institutional responsibilities. Putting minimal effort into teaching and research and more effort into either income generating self-serving endeavours, (e.g. consulting) or leisure activities (e.g. golf) are unlikely to serve the interests of either the university or the resource providing government (Gomez-Mejia & Balkin 1992). Administrators may also share a goal of freeing up their time from regular work for other kinds of private utility generating activities. For example, senior administrators could try to free their time by trying to get junior administrators or trainees to do their work (cf. Ortmann & Squire 2000). Since the likelihood of shirking is tied to intrinsic motivations, one of the most important issues is related to incentive structures that either prevent or promote the appearance of shirking activities (Ferris 1991). For instance, essential elements of academic profession like academic freedom and the tenure system can both create incentives for shirking. The concept of academic freedom, which is very deeply rooted in the culture of the academic profession, includes the freedom to set one’s own schedule, to control the content and process of one’s own work, and enjoy liberal provisions for leave (Bruhn et al. 2002). This latitude is based on the assumption that people cannot be forced to think or be creative by having the hours of their work controlled. However, the lack of formality and the discretionary nature of academic work may also tempt academics to shirk, since in the academic world, the distinction between work and leisure is inevitably fuzzy (Bowen & Schuster 1986). From an economic perspective, tenured academics are similar to other economic producer groups that prefer to secure their lifetime income. For them, tenure is also an effective strategy for enhancing and assuring stable income streams, because under usual practices, tenured academics’salaries are relatively well assured until retirement or death. In the worse case, the flexibility of academic work enables academics to run private consulting businesses, to be absent from campus, and to shrink the duration of their regular work day. Through private consulting, side-businesses, and other income earning activities, shirking academics may achieve the secured independence of an entrepreneur without ever risking their university basic salaries (Whicker 1997). Indeed, “[c]asual observation suggests”that goal conflicts between universities and their academics “are not uncommon, particularly for tenured faculty members, who might want to engage in extensive consulting, spend minimal time in the office, and devote their energies to non-academic activities”(Gomez-Mejia & Balkin 1992, p. 948). Further incentives for shirking can be created if all pay schemes are egalitarian. Egalitarian pay schemes are likely to lead to ‘free rider problems’, i.e. situations where some individuals are paid above the true marginal product, and where some individuals are paid under the true marginal product. Prestige maximisation It is reasonable to believe that gaining of and upholding of prestige is the most dominant and important goal of both academics and universities (e.g. Breneman 1970; Garvin 1980; James 1990). Prestige is essentially a reputational measure, a measure of professional reputation - what one’s colleagues and peers think of one’s institution or department. High prestige is basically a high “reputation for excellence”(Garvin 1980, p. 15, see also Melguizo & Strober 2007). Institutions seek to increase their prestige vis a vis other institutions; departments seek to increase their prestige vis a vis other departments; and academics seek to increase their own reputations among colleagues (Melguizo & Strober 2007). The determinants of the overall institutional prestige level are the sum of a number of things. Research achievements of the academics, institutional success in ranking lists and league tables, the number and status of programmes and basic units, the amount of research funding, the quality of students, and the impressiveness and quality of buildings, facilities and equipment, can all be considered as important signals of an institution’s prestige level (cf. Garvin 1980; Brewer et al. 2002, Melguizo & Strober 2007). For many, high prestige

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is more important than high quality because prestige is more directly related to reputation (cf. Gross & Grambsch 1974; Garvin 1980). Even though prestigious institutions can bring great benefits for a nation or region, it is likely that governments do not want to reward prestige itself, especially when it does not gauge or reflect the quality of teaching and research. This is quite possible, since prestigious universities do not necessarily possess high standards of teaching quality (e.g. Brewer et al. 2002). However, interesting exception to this notion is the governments’attitude towards the global ranking lists and league tables of universities, which have somewhat secured mainstream public and policy credibility an which tend to “function as a reputation marker that entrenches competition for prestige as a principal aspect of the sector”(Marginson 2006, p.7). One of the opportunistic ways to obtain greater institutional or individual prestige is cross-subsidisation. Cross-subsidisation may take place at least (a) between the academic functions (from undergraduate to graduate studies / research activities), (b) between the academic and administrative functions (from teaching / research activities to administration), and (c) between academic functions and infrastructure (from teaching / research activities to physical surroundings and equipment). In the first type of opportunistic crosssubsidisation, resources of low-prestige undergraduate education are transferred to subsidise high-prestige graduate studies or research (e.g. James 1990; Mora & Vila 2003). By maximising prestige this way, universities deliberately provide incentives for academics to spend more time and effort on activities that garner personal and institutional prestige (Melguizo & Strober 2007). Although research excellence can improve teaching, it often competes directly with undergraduate instruction for the monetary resources and the time and attention of the academics (Goldman et al. 2001). In fact, in extreme cases undergraduate instruction can be a disutility-making activity preventing academics from concentrating on prestige generating graduate training and research (Hölttä 1995). In the second type of opportunistic cross-subsidisation, university administrators decide to subsidise their own activities at the expense of teaching or research functions. In fact, there is great potential for this type of behaviour to occur, since administrators are often in positions that allow them to collect resources and spent them on their own activities. This can lead to a vicious cycle of bureaucratic expansion: more and more resources are eventually needed to administer the administration itself. This behaviour becomes observable when the sphere of administrative activities and work positions seems to be growing substantially faster than the core instructional and research activities and positions (cf. Leslie & Rhoades 1995; Gornitzka et al. 1998). In the third type of opportunistic cross-subsidisation, administrators or academics decide to transfer the discretionary resources taken from teaching or research activities into equipment or physical surroundings like buildings and landscape. This may happen because one of the prestige building factors for universities is also related to ‘what they look like’.Therefore, universities may be tempted to apply their slack resources to matters of physical appearance rather than the quality of teaching, research and service. Revenue maximisation The pursuit of prestige is closely connected to universities inherent need to revenue maximisation (Bowen 1980). Since the pursuit of prestige is usually very expensive, universities are compelled to raise as much extra revenue as is possible. Many universities are keen to take on new teaching and research functions or to expand existing ones only when new resources are provided and new initiatives emerge. In fact, it is rare for a university to turn down any new revenue generating opportunity. Obtaining as many resources as possible is an attractive option for universities, in particular if there is no obvious cost of doing so (Bowen 1980; Williams 1995; Levin & Koski 1998). In addition, universities seldom admit to having sufficient or too many resources (Bowen 1980). Ever increasing expenditure of individual universities may generate accumulative effects because of the mutual competition of universities. No university has either the option or motivation to estimate how urgent its own monetary requests are in comparison with those of other universities. More likely, there is a natural tendency for each university to exaggerate the importance of its own needs (cf. Downs 1967). Increased revenues are connected to the increase of the size of the university. A high student enrolment number can be preferred because it generates more revenue. Unlike the case of research, for which funding is linked to ‘expensive quality’,the funding of undergraduate education is usually associated with student quan-

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tity (Mora & Vila 2003). In addition, the size of the academic personnel can also be an important determinant of success for the university. In particular, the basic units will view the ability to generate appointments of academics as the key indicator of their standing within the academic community. A larger number of academics enables smaller class sizes and allows basic units to expand into new exciting fields of study. Also, many in the institution’s administration are growth oriented. Since the administration is largely responsible for financial matters and as it exercises authority over academic elements thorough budget control, the size of the university budget is especially important for them. Whatever pecuniary and non-pecuniary benefits are associated with the position of administrators, these benefits are likely to increase with an increase in revenues. Bigger budgets usually mean more responsibilities, more power and more salary (e.g. Garvin 1980; Meiners & Staaf 1995). Excessive spending In addition to prestige and revenue maximisation, universities can exercise excessive spending. The basic reason for this behaviour is that universities do not seem to minimise their costs and they tend not to seek the most efficient production options. If technological possibilities emerge for lowering costs, raising productivity, or realizing economies of scale, these opportunities are more likely to be ignored or at least they are less likely to be exploited fully (cf. Wolf 1988). The lack of profit motive for non-profit or public universities ensures that there are no effective internal residual claimants to provide the monitoring role and no secondary market for ownership or control to constrain cost growth (Brown 2001). At times, cutting costs may create some utility for universities, but never in the manner or breadth that cost savings benefit for-profit firms. Cutting costs for the sake of cutting costs is rarely among the objectives of academics or administrators (Brinkman 1990; Ehrenberg 2002). Further, it would seem to be very difficult for universities to change their spending habits since the establishment of new positions, courses, basic units or programmes is always easier than eliminating them. Usually, any additional income is used to expand existing programmes and to establish new ones, and there is a reluctance to reallocate resources by eliminating programmes that might be perceived to be less needed. In fact, almost every position, programme, or basic unit generate its own constituencies and even organised pressure groups who will use all their power to resist any cost-cutting actions directed at them (e.g. Levin 1991; Vedder 2004). Distortion of monitoring information By definition, distortion of monitoring information takes place when universities as institutions, their subunits, or some of their staff members deliberately provide wrong information about their performance. Distortion can take place by supplying performance information that portrays the university’s efforts, activities and results in either a too positive or a too negative light. Positively distorted information paints the best picture of a university’s activities and results, while it is simultaneously excluding information that would make the university’s behaviour appear less positive. Often positive performances are rewarded with growth in the government funding. On the other hand, providing information which is too negative can also increase the amount of funding. By distorting information negatively, the university may be able to claim that it desperately needs more resources in order to meet its productive and financial responsibilities (cf. Downs 1967; Bohte & Meier 2000). At the institutional level, cheating and distorting the monitoring information requires coordination among those academics and administrators who can make such decisions. In universities, central administrators and academics in administrative positions are usually the key persons responsible for passing on the distorted information. When recognizing or suspecting information distortion on the part of their subordinates or subunits, they will face some serious dilemmas about the value of honesty. Even if they would prefer to be honest, they may also simultaneously believe that it is in the whole university’s interests to retain the distorted information when they eventually forward it to the government (cf. Downs 1967; Bohte & Meier 2000). Academic misconduct and white collar crimes Academic misconduct can include cheating and deception, which may take place through falsification or fab-

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rication of research results, or through plagiarism. Cheating can also include behaviour such as letting exams be passed more easily, or by granting more credits or degrees by lowering the course requirements. Individual academics and administrators can also steal and misuse university property. This behaviour can include taking home university stationery for personal use, printing or making photocopies of personal documents at the office, making personal calls with university phone during the office hours, or requesting and purchasing ‘state of the art’equipment even though the basic equipment would be sufficient. Other possible forms of opportunism can include nepotism and cronyism. Examples of these forms of opportunistic behaviour could include giving certain jobs, positions or projects to friends and relatives, even though there would be more competitive persons and providers available (cf. Tan 2003, see also Green 2006). Discussion Based on the discussion above, Table 1 presents a taxonomy of university opportunism. In this taxonomy, each type of opportunistic behaviour has two major components which help to analyse the origin and the estimated impact in explaining performance failures of universities (cf. Bruhn et al. 2002, pp. 477-478). The ‘Primary origin’component indicates whether the type of opportunism is usually primarily committed by an individual or by an institution. When the origin of the opportunism is in the individual level, the behaviour is often uncoordinated and random behaviour of one or few individual academics or administrators. This behaviour also can be inconsistent with the goals of their own university. When opportunism originates from the institutional level, it is often approved, structured, organised or coordinated by the institution’s decisionmaking authorities. It is therefore more systematic and extensive than the opportunism of individuals. The component ‘Estimated impact on university performance’refers to the impact the opportunistic behaviour has on lower performances. Although the impact of certain type of opportunistic behaviour is mainly case specific, estimates can be constructed on the basis of the expected consequences of each type of the opportunistic behaviour. Table 1. Taxonomy of university opportunism: type, primary origin and estimated impact Type of opportunistic behaviour

Primary origin

Shirking Prestige maximisation Revenue maximisation Excessive spending Distortion of monitoring information Academic misconduct

Individual Institutional Institutional Institutional Institutional Individual

Estimated impact on university performance Minor Severe Severe Severe Minor/Severe Minor

Alternative explanations for university performance failures When assessing the performance failures of universities, opportunistic behaviour is only one possible explanation for lower performances. Also ‘mismanagement’and ‘misfortune’may explain the performance failures (cf. Andrews et al. 2006). Mismanagement can contain poor management or leadership behaviour, bad organizing or ineffective governance structures. In fact, mismanagement is a factor that government often asserts as a primary cause of university performance failures (cf. Andrews et al. 2006). For example, many (public) universities are run by unqualified amateurs who do not possess required expertise or sufficient management and leadership skills (cf. Murray & Dollery 2006). Performance failures can also be related to unclear organisational goals (e.g. Rainey 2003). Goal ambiguity is an essential feature of universities (e.g. Baldridge 1983, Patterson 2001) which often operate on the basis of a variety of inconsistent, mutually conflicting and ill-defined preferences. Universities and individual academics are in the middle of conflicting demands from various internal and external stakeholders (e.g. students, alumni, donors, industry, and research financiers). The existence of numerous can competing stakeholders may in fact lead universities into a situation, where the task fulfilment of other resource provider may lead to opportunistic behaviour against the government and

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other stakeholders respectively (Gornitzka et al. 2004). Mismanagement also includes government’s own governance failures causing dysfunctional behaviour in universities. ‘Goal displacement’phenomenon (Merton 1968) is a typical example of government governance failure. Goal displacement means that the major and more meaningful intangible goals of an organisation are displaced by the lower but tangible goals. For instance, a university may grant more credits or degrees by lowering the study requirements or encourage the academics to substitute high quality but hard-to-publish research for more conventional and homogenous types of research which are easier to publish (Canton & Venniker 2001; Geuna & Martin 2003). Government’s governance tools can also cause other types of dysfunctions. For example, the certain budgeting and monitoring methods used by government can become overly complex, bureaucratic, time-consuming and expensive procedures. Further, it is possible that more efforts to exert control can spawn additional efforts in universities to circumvent control. In the worst-case scenario, the end result could be a vicious cycle of rule-bound and bureaucratic relationships that make universities even less efficient and effective than before monitoring was introduced (e.g. Downs 1967; Bohte & Meier 2000). Also misfortune may explain the performance failures of universities. By definition, misfortune refers to circumstances beyond the control of the failing organisation (Andrews et al. 2006) and it is caused by a range of internal or external factors over which individual academics or universities have little or no control. For instance, there are many aspects of student behaviour over which individual academics or universities have little control. These include e.g. student motivation, intellectual ability, parental support, family life, and students’ mental maturity (Poch & Wolverton 2006). But also the research activities are constrained by a range of uncertainties. Creating new knowledge is a rather unpredictable and uncertain as a process, even for the researchers themselves. Although some types of research outputs can be guaranteed (e.g. a research report reflecting the research findings), the relative meaning and impact of this output is usually not well known in advance. It should be noticed that universities cannot manage the academics in the same manner as mass production factories can manage their routine work employees. Also the career mobility and the movement of academics from one university to another can cause uncertainties outside the university’s control, since prospective and completed research outputs tend move with their creators (Geuna 1999). Different uncontrollable environmental factors also affect the university performance. In particular, the differences between different geographical and economical environments can have crucial effects on universities’ outputs. For instance, the universities located close to central urban growth centres usually have significantly better opportunities to get research income, better graduate students, and more capable academics than the universities that are located in economically declining peripheral areas. In addition, the turbulent demand structures due to the shifting needs of students, research financiers and society, and existing competition of universities and other rival education and research providers can impact significantly the performance of universities (cf. Mellahi & Wilkinson 2004). Empirical illustration Empirical illustration of the created taxonomy is conducted by examining the poor graduation results of the Finnish ‘professional upgrading programmes’which where part of the larger ‘Programme for Increasing Education in Information Industry Fields’(later ‘Information Industry Programme’or ‘Programme’). Information Industry Programme was started because of a shortage of skilled labour in the ICT-fields which was caused by the rapid growth of the ICT-sector in 1990s. The objective of the Programme was to satisfy the labour shortage by increasing the amount of master’s and doctoral degrees in ICT-fields. The analysis here is based on larger body of data which includes interviews of the representatives of the MoE, official documents, and evaluation reports and reviews of the Information Industry Program (for more detailed information, see Kivistö 2007). Professional upgrading programmes were two-year master’s programmes, which were aimed at degree-holding students who wanted to upgrade their earlier degree either from a lower level degree (bachelor’s degree) to higher level degree (master’s degree) or from another subject specialisation to an ICT -related subject. The specific aim of the professional upgrading programmes was to increase rapidly the number of undergraduate

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degree holders in the ICT-sector (Hara et al. 2000). In a period of 1998-2005, the Finnish Ministry of Education (MoE) allocated approximately 70.4 million euros to seventeen Finnish universities holding ICT-related professional upgrading programmes. Funding the increases in the professional upgrading programs was based on enrolment numbers (input-based funding). Although the funding was first and foremost intended to cover the costs of increasing the number of enrolments, the funding was not earmarked in any way, leaving universities free to allocate internally the funding as they saw appropriate. The cost on which the MoE based its funding was 7500 euros a year per student for two years. In the beginning of 2005, the total graduation rate of professional upgrading programmes was only 23.4%, which can be considered as a clear performance failure. Although some universities were able to achieve good or satisfactory graduation rates, the overall performance can be considered poor. Nine out of seventeen universities had achieved a graduation rate of less than 15%. It is possible that the final number of graduates will rise in the years which follow. But even if the number of graduates doubled, which is very unlikely, the graduation rate could still be considered relatively low. What caused this poor performance? Evidence of excessive shirking behaviour of academics or administrators was not available. Nevertheless, in general, Finnish university system contains incentive structures that may promote the appearance of shirking activities. The protection of academic freedom and the support of tenure system have traditionally been very strong in Finland, where humboldtian ideals have been highly esteemed. During the implementation of the Information Industry Programme, pay schemes of the university personnel were to a large extent egalitarian. There were, however, some indications of cross-subsidisation activity, since it was found that the resources universities received from the MoE were not always channelled to the ‘factory floor’, that is, to the teaching departments and to the professional upgrading programmes. It was unknown what was cross-subsidised and by how much. For this reason, is not clear whether the cross-subsidisation include opportunistic prestige maximisation. However, it is likely that many universities used the MoE funding to pay for overheads (e.g. around 5-15%) (Hosia 2001). These overheads may have eventually served the interests of the MoE, for example, in the form of equipping teaching facilities with new and better equipment. Or, on the other hand, overheads could have been spent opportunistically, say, by hiring more unnecessary administrative staff. What seems to be clear is that there were no opportunistic attempts to distort the performance information by presenting degree results in too positive a light, not the least on the part of those universities which did not perform well (worst reported graduate percent was 1.9%). There are indications of revenue maximisation behaviour. Five universities enrolled fewer students in their programmes than they received funding for. There were also clear quality problems in student selection processes. Some universities enrolled students in their professional upgrading programmes when those students’ basic training did not meet the eligibility requirements of professional upgrading programmes. The unofficial target in the credit transfer process was to allow approximately 100 credit points for the earlier degree. However, some universities enrolled students who were able to get only 70-80 credits from their earlier degree, and some enrolled students were granted as little as 10 credit points for their earlier studies/degree (Kivistö & Aarrevaara 2005). In theory, it was possible that some universities could have attempted to increase their revenue by getting as high enrolment numbers as possible into their professional upgrading programmes, and then hope that those students would quit their studies. Because of the enrolment-based funding without outputbased funding incentives, active students represented a cost, whereas passive and ’drop-out’students represented a cost saving. This kind of opportunism was not likely, since in the long run this could also backfire by causing a decline in public reputation. Also, the MoE did not find evidence to support this type of opportunistic pursuit of revenue, although the additional funds offered by the MoE might sometimes have attracted this type of behaviour by universities. This conclusion is also backed by student opinions that argued that some universities attempted to increase student progress by lowering the course requirements (Leppimäki et al. 2001). Of course, this type of behaviour lowers the quality of the education offered, and as such it includes the possibility of another type of opportunism, namely academic misconduct. The rationale for this behaviour could be achieving a higher graduation rate and shorter graduation time, perhaps in order to secure the university’s public reputation. It has to be taken into account that also many non-opportunistic explanations for the poor performance can be

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put forward. There were many indications of misfortune. For example, universities did not have a legal means to force students to progress more rapidly through their studies or force them to graduate. Contrary to expectations, many of the students were studying part time while simultaneously working full-time. In addition, the average age of professional upgrading students was higher than those in undergraduate programmes and for some students, finding efficient way of progressing their way through their studies was difficult. Other misfortunes were caused by the changes in labour market situation. Especially in early years, many professional upgrading programmes found it hard to find competent teachers to teach courses. The salaries and other terms of employment could not compete with those offered by ICT-companies, which were also suffering from a shortage of labour. Therefore, some professional upgrading programmes were forced to use doctoral students or even advanced master’s students as teachers and instructors (Kivistö & Aarrevaara 2005). Clearly, this was not a deliberate and opportunistic act of opportunistic cross-subsidisation, although the salaries paid to the students were likely to be lower than those which would have been to professors. Besides these misfortunes, some universities were also suffering from a lack of facilities and equipment due the speed and the size of enrolment increases. For instance, one university complained that because of its location, the average costs of erecting new facilities were higher than in other regions in Finland. Therefore, from the perspective of the university, enrolment-based funding was not enough to cover the higher-than-average costs of establishing new facilities. Due to the lack of facilities, the complaining university reported that it had been forced to reduce laboratory teaching in some professional upgrading programmes (Kivistö & Aarrevaara 2005). An interesting question is, therefore, how much genuine effort universities put in to anticipating these problems at the time they were negotiating the expansion in enrolments with the MoE? Presumably at least some the uncertainties described could have been foreseen. Discussion The occurrence of opportunistic behaviour in human beings, whether it takes place individually or collectively, is very difficult to prove empirically. The amounts and types of opportunistic behaviour are usually unknown because they are hidden, often in direct proportion of their seriousness. Opportunism not only is sensitive topic, but it is difficult to find informants for investigating it. Due to the socially unacceptable nature of opportunistic behaviour, members of the university can be ashamed of it and unwilling to talk about it. Therefore, the occurrence of opportunistic behaviour needs often to be investigated indirectly by making deductions and interpretations of secondary evidence. Unfortunately, this procedure can be unreliable and subject to error. It also can cause severe damage to those who are honest and hard working and whose professional pride and sense of duty is high. The empirical illustration above does not claim to say anything absolutely certain about universities’behaviour. Rather, the illustration should be considered as an attempt to analyse and problematise the range of forms of opportunistic behaviour that might have been involved in operations of professional upgrading programmes. Therefore, deriving conclusions which are too far reaching from the results of these problematisations, towards either opportunistic or non-opportunistic behaviour, should be avoided. Governance of Opportunistic Behaviour If university opportunism is accepted as one possible explanatory factor leading to lower performances, this should lead to the development of the government’s governance tools and performance measurement accordingly. However, given the powerful incentives for the academics and universities to avoid disclosing the relevant information regarding their opportunistic behaviour, its governing can be very difficult for government. Further, every governance method and performance indicator will have its own drawbacks and shortcomings. Monitoring (e.g. bureaucratic procedures, evaluation and assessment) and incentives (e.g. output-based funding arrangements, quasi-markets) can clearly affect the behaviour of individuals and institutions, but they all have their costs. These costs include the direct costs associated with the governing procedures, but also the indirect costs that are incurred because of the dysfunctional effects they cause. For instance, output-based salary schemes may be able to reduce shirking of academics, but lead to different forms of goal displacement (e.g. ‘salami publishing’). Similarly, choosing more intensive monitoring as a governance method for preven-

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tion of prestige maximisation and excessive spending could result in the opposite outcome than the one aimed for. An increase in monitoring by the government would be likely to increase levels of administrative work both inside the university and the government. Heavy-handed control might also provide a signal to universities that they are generally untrustworthy. The ramifications of such signals for morale and productivity can be very negative (cf. Bohte & Meier 2000, Valentinov 2007). Given the governance problems of the government, often it is suggested that strong collegial self-control of academic disciplines and institutions would be able to overcome the misconduct of individual academics and universities (Bruhn et al. 2002). However, there are reasons to believe that only self-policing of individual academics and universities is not sufficient to eliminate the opportunistic behaviour from universities. First, given the standard assumption that academics and university administrators as individuals are not considered more or less efficient, honest, hard working, public spirited than the members of any other profession or position, it reasonable to believe that some of them may find it within their self-interest to behave opportunistically. Second, academics and administrators may find themselves under heavy cross-pressures not to police the observed opportunistic behaviour. Speaking with a colleague about true or alleged misconduct is neither personally nor professionally an easy thing to do and may earn the enmity of the colleague (Knight & Auster 1999). Concluding comments Considering opportunism as possible cause for university performance failures might generate a more open and useful discussion and investigation about the behaviour and performances of universities. By offering theoretical understandings for the phenomena like inefficiency and cost growth, discussion of opportunistic behaviour is able to underline some of the most topical questions asked by the higher education community. The taxonomy presented in this paper is not definitive. Rather, it represents only an initial attempt to categorise different forms of university opportunism. In the future, more theoretical and empirical work is needed for achieving deeper understanding the content and impact of university opportunism. Also the governance of the opportunism should be further examined. Given the hidden and unpleasant nature of opportunism, various methodological, technical, and research ethical difficulties are likely to surround the empirical examination of the phenomenon. However, as long as these problems remain unchallenged by serious research efforts, it is impossible to say to what extent the empirical examination could actually take place. Acknowledgements The paper is linked to the project “Public Sector Efficiency as an Ambiguous Problem”funded by the Academy of Finland (project leader prof. Jarmo Vakkuri, University of Tampere). Much of the content of the paper draws on the doctoral dissertation of the author, “Agency Theory as a Framework for the GovernmentUniversity Relationship” (2007). Electronic version of the dissertation can be downloaded from http://acta.uta.fi/pdf/978-951-44-6969-5.pdf.

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