Merger lectures are best ignored

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The biggest universities in the world are clearly not the best. So why do some British universities think that mergers will make them world class?

Sir Richard Sykes, rector of Imperial College, asserted that a merger with University College, London, “would lead to the creation of a truly world-class research-based institution with the resources necessary to compete with the best in the world”. The deal would have created a large university. With almost 30,000 students, it would have come close to the universities of Palermo and West Virginia, both with more than 50,000 students – but would still have been far behind the mega-universities in Rome (190,000 students) and Mexico City (270,000).

It requires little research to establish that the world’s biggest universities are not the best, nor the best the biggest. The world’s leading universities are probably Chicago (13,000 students), Harvard (18,000) and Stanford (14,000).

In the commercial world the best company attracts most customers and often becomes the biggest. That is why Wal-Mart is the world’s largest retailer. If Harvard accepted anyone who wanted to go there it would probably be the world’s largest university – but would cease to be the best, which is why it does not pursue this strategy.

There is a correlation between market share and competitive position in business but not in higher education – because universities, unlike companies, limit the number of customers they accept. In management jargon, elite universities are not scalable businesses. That is why Rome and Mexico City, which barely limit access at all, are dismal places in which to teach or study.

There are some economies of scale in higher education. They are found mostly at the level of the department: you need faculties of sufficient size to cover areas of specialist knowledge and enough students to ensure that options are adequately subscribed.

The colleges of Oxford and Cambridge, with only a few hundred students each, were once large enough to be viable educational institutions in their own right. But this is no longer true and central organisation of teaching and research has become essential. The minimum efficient size of department varies by discipline and level of teaching. But few subjects need a faculty of more than 40 or 50 and a much lower number will often be enough. In this way even small universities can compete effectively.

There are scale economies in producing course materials. US commercial publishers produce not only textbooks but also complete packages of support for teachers and students. In other countries, particularly Britain, lecturers devise their own idiosyncratic courses – sometimes successfully, often not. If universities are to become more efficient, the outsourcing model is the way ahead. Universities should buy more of the services they need. They could then reduce costs and improve services through greater professionalism, specialisation and competition among providers.

But the merger in question does not seem to be about this restructuring. Indeed, it does not seem to be about anything at all. There is no explanation of how greater size would enable British universities to compete more effectively with US ones. Nor could there be: the decline of British universities has nothing to do with their size and everything to do with inadequate salaries, low morale, insufficient resources per student and amateurish management.

The same empty phrases that were used in the 1990s to justify corporate mergers are today used to justify university mergers – the aspiration to be a “global player”, the need to achieve “critical mass”.

But greater size is always the aspiration of those with no better strategic vision. Sir Richard Sykes – having engineered acquisitions for Glaxo that made the pharmaceuticals company bigger but not obviously better – launched an opportunistic bid when University College’s “stock price” was depressed by the resignation of its chief executive.

British universities really need the help of business people and business skills – but not the jargon and obsessive dealmaking that go with them. These merger proposals have set back the cause of better university management by confirming the suspicion of many academics that outsiders do not understand the nature of these institutions. People in higher education have many things to learn from the commercial world but merger and acquisition fever is not one of them.

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