Privatization of auxiliary services at public universities: Advantages and disadvantages.

Abstract

The study looked at the trends toward the privatization or contract management of auxiliary services such as college bookstores at four year public universities to determine the degree that self-operated or leased bookstores support the campus based on the level of service quality being provided to students, financial support to the institution, academic support to the campus and other factors. The use of the SERVQUAL (1991) instrument was effective in evaluating levels of consumer satisfaction in the bookstore industry. Student satisfaction with newly leased bookstores was significantly higher than with institutional bookstores. The change from one delivery method to another appeared to be the cause of the higher levels of satisfaction and not the lease operator. Staffing levels are lower with lease bookstores. There was no data, however, to support a decrease in service as a result of the staff reduction. Auxiliary service directors strongly believe that their institutional operations could be as competitive as the leased bookstore. Yet, leasing is occurring at a dramatic rate which suggests that there is a need to set clear goals and objectives and communicate the role of auxiliary services. Prices and product selection increased as a result of the bookstore being leased. This study shows that the retail prices in the bookstore increased significantly when the campus store leased its operation. Review of the data suggests that higher retail prices correlate to higher percentages of gross revenue given to the institution by the lease operator. Leased bookstores financially contribute more to the institution than self-operated bookstores. This study, however, found no evidence to support the belief that leasing is more beneficial than self-operation because the philosophy of senior level administration does not expect the institutional bookstore to generate a profit but rather "just break even." Academic involvement is low among all college bookstores. There was a loss of management control and less monitoring as a result of leasing. Complaints of unfair competition were reported to have occurred 15 percent more frequently at the institutional bookstore than the lease bookstore.