Limitations on the Role of Stakeholders and the Diverse Effects of Market Conditions: College and University Finances, 1980-2010

Abstract

In this dissertation I analyze the financial behaviors of public and private nonprofit higher education organizations in the U.S. from 1980 to 2010. The three analyses examine organizational change in the financial behaviors of these institutions and the effects of two sources of organizational interdependencies, stakeholder influence and competition, on college and university spending. I use a variety of quantitative methodological approaches to present evidence that highlights the need to integrate internal aspects of organizations including mission, internal decision making structures, and cross-subsidization practices into existing open system explanations of organizational behavior and change. Furthermore, empirical investigations of competition in two markets reveals the importance of understanding the market and resource context when evaluating the effects of market conditions, like competition, on organizational behaviors. The results from the analysis of organizational change demonstrate discontinuities in how two dimensions of financial behaviors--revenue and spending profiles--change over time, highlighting the loose coupling between these two dimensions and a discontinuity in how they change over time. The analysis of the economic influence of stakeholder groups reveals that their influence, while significant, weakens substantially between 1986 and 2010. The results also point out limitations of resource dependency and stakeholder theories of organizational behavior. These theories have limited explanatory power in the context of multi-revenue and multiproduct organizations, like colleges and universities, where cross-subsidization is utilized; unless a stakeholder is able to constrain how the funds are used within the higher education organizations. Results from Chapter 4 support my argument that competition alters the incentive structures that guide resource allocation decisions within higher education organizations. This analysis also showcases how the effects of competition and market conditions vary across sectors and markets, indicating a need for additional research on competition in multi-revenue and multiproduct organizations like colleges and universities.