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Competing in the Higher Education Market: Empirical Evidence for Economies of Scale and Scope in German Higher Education Institutions

Author

Listed:
  • Maria Olivares

    (University of Zuerich, Department of Business Administration, Switzerland)

  • Heike Wetzel

    (University of Cologne, Institute of Energy Economics, Germany)

Abstract
Since the late 1990s, the European higher education system has had to face deep structural changes. With the public authorities seeking to create an environment of quasi-markets in the higher education sector, the increased competition induced by recent reforms has pushed all publicly financed higher education institutions to use their resources more efficiently. Higher education institutions increasingly now aim at differentiating themselves from their competitors in terms of the range of outputs they produce. Assuming that different market positioning strategies will have different effects on the performance of higher education institutions, this paper explores the existence of economies of scale and scope in the German higher education sector. Using an input-oriented distance function approach, we estimate the economies of scale and scope and the technical efficiency for 154 German higher education institutions from 2001 through 2007. Our results suggest that comprehensive universities should indeed orientate their activities to the concept of a full-university that combines teaching and research activities across a broad range of subjects. In contrast, praxis-oriented small and medium-sized universities of applied sciences should specialise in the teaching and research activities they conduct.

Suggested Citation

  • Maria Olivares & Heike Wetzel, 2011. "Competing in the Higher Education Market: Empirical Evidence for Economies of Scale and Scope in German Higher Education Institutions," Working Paper Series in Economics 223, University of Lüneburg, Institute of Economics.
    • Handle: RePEc:lue:wpaper:223
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    References listed on IDEAS

    as
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    Cited by:

    1. Gralka, Sabine & Wohlrabe, Klaus & Bornmann, Lutz, 2017. "The Completion Shift of German Universities of Applied Sciences," MPRA Paper 82794, University Library of Munich, Germany.
    2. Wohlrabe, Klaus & Bornmann, Lutz & de Moya Anegon, Felix, 2017. "Wie effizient sind Universitäten in Deutschland, deren Zukunftskonzepte im Rahmen der Exzellenzinitiative ausgezeichnet wurden? Ein empirischer Vergleich von Input- und Output-Daten zur Forschung [," MPRA Paper 76218, University Library of Munich, Germany.
    3. Solange Alfinito & Manoel Brod Siqueira & Claudio V. Torres, 2016. "The student’s choice based on consumer psychology: an analysis applied to higher education institutions of Brazil," International Review on Public and Nonprofit Marketing, Springer;International Association of Public and Non-Profit Marketing, vol. 13(2), pages 185-201, July.
    4. Mehdi Rhaiem & Nabil Amara, 2020. "Determinants of research efficiency in Canadian business schools: evidence from scholar-level data," Scientometrics, Springer;Akadémiai Kiadó, vol. 125(1), pages 53-99, October.
    5. Klaus Wohlrabe & Lutz Bornmann & Sabine Gralka & Felix de Moya Anegon, 2018. "Wie effizient forschen Universitäten in Deutschland, deren Zukunftskonzepte im Rahmen der Exzellenzinitiative ausgezeichnet wurden?," ifo Working Paper Series 253, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    6. Sabine Gralka, 2018. "Persistent inefficiency in the higher education sector: evidence from Germany," Education Economics, Taylor & Francis Journals, vol. 26(4), pages 373-392, July.
    7. Vicente Safón, 2013. "What do global university rankings really measure? The search for the X factor and the X entity," Scientometrics, Springer;Akadémiai Kiadó, vol. 97(2), pages 223-244, November.
    8. Eugénia de Matos Pedro & João Leitão & Helena Alves, 2021. "HEI Efficiency and Quality of Life: Seeding the Pro-Sustainability Efficiency," Sustainability, MDPI, vol. 13(2), pages 1-25, January.
    9. Thomas Bolli & Mehdi Farsi, 2015. "The dynamics of productivity in Swiss universities," Journal of Productivity Analysis, Springer, vol. 44(1), pages 21-38, August.
    10. Lutz Bornmann & Klaus Wohlrabe & Sabine Gralka, 2019. "The graduation shift of German universities of applied sciences," PLOS ONE, Public Library of Science, vol. 14(1), pages 1-19, January.
    11. Dorys Y. Rodríguez-Castro & Juan Aparicio, 2021. "Introducing a functional framework for integrating the empirical evidence about higher education institutions’ functions and capabilities: A literature review," Journal of Entrepreneurship, Management and Innovation, Fundacja Upowszechniająca Wiedzę i Naukę "Cognitione", vol. 17(1), pages 231-267.
    12. Maria Olivares & Andrea Schenker-Wicki, 2012. "The Dynamics of Productivity in the Swiss and German University Sector: A Non-Parametric Analysis that Accounts for Heterogeneous Production," Working Papers 309, University of Zurich, Department of Business Administration (IBW).
    13. Thiago Caliari & Márcia Siqueira Rapini & Tulio Chiarini, 2020. "Research infrastructures in less developed countries: the Brazilian case," Scientometrics, Springer;Akadémiai Kiadó, vol. 122(1), pages 451-475, January.
    14. Calogero Guccio & Marco Ferdinando Martorana & Luisa Monaco, 2016. "Evaluating the impact of the Bologna Process on the efficiency convergence of Italian universities: a non-parametric frontier approach," Journal of Productivity Analysis, Springer, vol. 45(3), pages 275-298, June.
    15. Sabine Gralka & Klaus Wohlrabe & Lutz Bornmann, 2018. "How to Measure Research Efficiency in Higher Education? Research Grants vs. Publication Output," CESifo Working Paper Series 7055, CESifo.
    16. Calogero Guccio & Marco Ferdinando Martorana & Isidoro Mazza, 2016. "Efficiency assessment and convergence in teaching and research in Italian public universities," Scientometrics, Springer;Akadémiai Kiadó, vol. 107(3), pages 1063-1094, June.

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    More about this item

    Keywords

    Higher Education Production; Economies of Scale and Scope; Technical Efficiency; Stochastic Frontier Analysis; Input Distance Function;
    All these keywords.

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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