Abstract
AbstractNew institutional economics (NIE) studies institutions and how they emerge, operate, and evolve. They also include organizational arrangements, intended as modes of governing economic transactions. Universities offer an exciting ground for testing the role of different institutional arrangements (governance forms) in coordinating (academic) transactions. In a context of contractual incompleteness where production is characterized by a highly specialized nature and requires the cooperation among co-essential figures, we argue that shared governance models (versus models with more concentrated authority) foster idiosyncratic investments in human capital and promotes performance. From the evolutionary viewpoint, we explain why institutions based on shared governance have developed within universities. The normative question of how universities should be governed is a debated issue in the literature. Since the 1980s, the new public management paradigm provides a theoretical framework that suggests analyzing university like firms. It is based on the firm's archetypical conception as top-down hierarchical organizations and as a descending sequence of principal–agent problems. We advance a different interpretation of the university–firm analogy leveraging on the NIE and its developments. To empirically analyze our hypothesis, we collected original data from Italian universities in 2015. We find that more shared decision-making processes are correlated with better research performance.
Highlights
New institutional economics (NIE) studies institutions and how they emerge, operate, and evolve (Menard and Shirley, 2005)
We present the results from multiple regression analysis, in which we regress the performance variable on dummy variables for each of the governance categories and control variables (Table 2)
All the variance inflation factors (VIFs) estimated for both the regressions considered in the analysis are less than 10.23 We exclude that multicollinearity is a problem in our analysis (Mela and Kopalle, 2002)
Summary
New institutional economics (NIE) studies institutions and how they emerge, operate, and evolve (Menard and Shirley, 2005). We ground our theoretical perspective on university governance in the theory of the firm as a unified governance solution to the problem of contractual incompleteness and opportunism in the presence of specific investments We extend it to account for the issue of coordinating transactions characterized by multiple investments, highly specialized decision-relevant knowledge, and co-essential resources. The allocation of authority affects the incentives to undertake specific investments, the efficiency of the allocation of resources devoted to research production, and the interaction among individuals who hold human cognitive resources, affecting academic activities’ performance in terms of research results In this context, shared governance – versus more autocratic models – becomes a coordination device to sustain the mutually beneficial opportunities of cooperation that may exceed the benefits of unilateral allocation of authority..
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