An Academic Question: on the Role and Consequences of University Governance

Abstract: Critics of American universities disparage the prevailing system of shared governance, in which boards, administrators, and faculty participate in institutional decision making, as a primary obstacle to solving — if not the ultimate cause of — the many problems confronting higher education. The extent to which bad governance is to blame for poor performance raises the question of how we ended up with our current system and why it has persisted: If superior arrangements exist, why were they not adopted? This paper associates the emergence and persistence of shared governance in universities with commitment problems created by the introduction and diffusion of research as major academic activity, thereby adding a temporal dimension to what were previously relatively discrete transactions. The paper uses a panel of 528 American colleges and universities to characterize the equilibrium relationship between research and decision-making authority and examine the performance implications of deviations from the equilibrium pattern.