ACADEMIC DEPARTMENTS ARE INCREASINGLY being treated by college and university central administrators as cost centers and revenue production units (Whalen 1991). For example, science and engineering departments may be characterized, and may characterize themselves, as being “productive” of revenue and as “subsidizing” units that do not generate external monies (Gumport 1993). In this context we might expect departments to increasingly orient themselves towards activities and markets that they hope will generate revenues. The primary questions that frame this chapter are: How and to what extent are academic departments, as the basic providers and producers of education and research, collectively undertaking entrepreneurial initiatives? Has entrepreneurial culture moved from the periphery of institutions, where Clark (1998) located it, into the academic heartland? To what extent are departments engaging in academic capitalism in the new economy?
Theory and Method
In Academic Capitalism Slaughter and Leslie made the case that around 1980 “to maintain and expand resources faculty had to compete increasingly for external dollars that were tied to market-related research, which was referred to variously as applied, commercial, strategic, and targeted research, whether these moneys were in the form of research grants and contracts, service contracts, partnerships with industry and government, technology transfer, or the recruitment of more and higher fee-paying students” (1997, p. 8). Increased competition for external revenues directed institutional expenditures and faculty activity away from instruction.
Although faculty had long engaged in federal research grant and contract activity, Slaughter and Leslie identified the 1980s as a turning point in the pattern of universities’ revenue streams. At research universities, funding from the states diminished dramatically as a share of institutions’ operating budgets, from about 50 to 28 percent. Although federal grant and contract research monies increased throughout this period, from $6.063 million in 1980 to $24.241 million in 2001, as a share of institutions’ operating budgets, these monies declined slightly, and the federal funding share of academic R&D also decreased from 67 percent in 1980 to 59 percent in 2001. By contrast, entrepreneurial or private research markets, though small in absolute terms, grew from 4 percent in 1980 to about 7 percent in 2001 (NSF 2003). The greatest growth in shares of institutions’ operating budgets was student tuition: as these monies are more fungible than restricted monies such as grants and contracts, they were shifted away from instruction and toward the support of research and entrepreneurial activity.
The theory of academic capitalism moves beyond this initial conceptualization to explore the processes through which these behaviors manifest themselves, concentrating on how various segments of institutions of higher education intersect state and market. In this chapter, we look primarily at academic departments. The theory of academic capitalism (see chapter 1) would lead us to expect some department heads and faculty to continue to exploit federal grant and contract markets as well as to develop entrepreneurial initiatives, either pushed by resource constraints or pulled by opportunities offered by the academic capitalist knowledge/learning regime. An embedded assumption of the theory of academic capitalism is that shifting revenue streams, whether contracting or expanding, shape strategic initiatives. Given that student tuition accounts for the greatest increase in shares of operating budgets over the past twenty-five years, we would expect increased educational initiatives, regardless of field. We would expect to find departments involved in reshaping their fields to integrate with the new economy.
This chapter reports data from an NSF-supported study (Leslie, Rhoades, and Oaxaca 1999) of departments at eleven public research universities that were members of the Association of American Universities. The study was focused on five fields of science: engineering, physical sciences, life sciences, mathematics, and social sciences. Departments were the unit of analysis. In each of the fields in each of the eleven universities three departments were randomly drawn. The heads of these departments (135) were interviewed, as were three randomly selected faculty members from each of the sampled departments.
The sample consisted only of departments that generated at least some undergraduate credit hours. Analytically the focus was on whether and the extent to which there were trade-offs in departments between the pursuit of academic capitalism and the production of undergraduate education. Directors of centers or department heads of units that did not teach undergraduate students were not interviewed. That is an important omission. Much of the dynamism of universities in the past twenty years has been attributed to the emergence and proliferation of various centers and institutes (Geiger 1990, 1993). One survey of the top 150 universities found that “nearly all of the fastest growing [in research monies] research universities (82%) stressed the importance of research centers to their research growth during the 1980s” (Stahler and Tasch 1994, p. 547).
The study focused on public research universities, which are thought by many scholars and policymakers to be less responsive than private institutions to external needs, pressures, demands, and markets.1 The study did not include less prestigious universities, liberal arts colleges, and community colleges. Although these limitations reduce generalizability, they can also be seen as strengths. The study explored activities in the academic heartland—in traditional, discipline-based departments. Such a sample represents a best-case test of the questions that underlie this chapter.
Fiscal Pressures
Across the board, department heads talked about the increased pressure from provosts and presidents to enhance productivity and generate new revenues. Throughout the institutions there was a belief that more competitive market processes for allocating state monies to academic departments were being introduced and a view that departments and faculty were being pressured to find external resources to supplement institutional funds. That sense of scarcity and increased pressure was complemented by perceptions of heightened competition for external revenues, particularly with regard to research monies.2
Amid the generalized sense of scarcity there was considerable variation from one institution and field to the next as to the particular levels of fiscal pressure. For example, some units had a richer array of market opportunities available to them internally and externally than did others. Moreover, departments in different universities confronted different resource allocation processes, for the managerial translation of fiscal pressure by the central administration varied by campus. Some universities had set up responsibility center management budgetary systems. Others had established incentive-based budgeting systems that swept a small percentage of departmental budgets to the central administration and then required departments to justify reallocation back to their units. Still others had weak central administrative budgetary incentive systems.
The varied position of departments relative to external and internal economies and opportunities contributed to considerable variation in how departments responded to fiscal pressure. Most importantly, although many departments increased their grant and contract activity, and some were increasingly partnering with corporations in various ways, the most prominent collective entrepreneurial activities were educationally oriented. There were also many departments that showed relatively little evidence of a collective, strategic response. In these cases, department heads and faculty expressed frustration, bemoaning the changed fiscal environment, but admitted they were doing little about it. And in some cases the entrepreneurial efforts of heads were resisted by departmental faculty. Thus, the pursuit of academic capitalism was not only contingent but also debated and both actively and passively resisted.
Fiscal pressure was also linked to declining support, shifting priorities, and/or increased competition for research monies from certain federal agencies and in certain fields of work. As one astronomy head stated: “We rely on federal money. Department of Energy, NASA, they’re down. And NSF has gone down the toilet. The evil empire is dead so we bite the big one.” And he was not alone. A math department head noted the significance of the end of the cold war: “We are 65 percent dependent on NSF. They have cut back, not in grants, but in the amounts of money per grant. So we get the same number of grants but we get less support.” The substantial majority of department heads experienced significant fiscal pressure. Nearly two-thirds of the department heads had found it necessary to substitute self-generated revenues for state monies in some category of expenditure (28% had done so for instructional funds, 45% for graduate student support, and 53% for operating funds [Leslie, Rhoades, and Oaxaca 1999]).
Research Entrepreneurism
The universities in our sample had competed successfully in federal research markets for decades, substantially augmenting annual operating budgets with external revenues from grants and contracts. Presidents and vice-presidents for research pressed faculty to maintain and expand their federal grant and contract work. From 1980 to the present, the sampled institutions substantially increased federal grants and contracts.
The research activities of scientists and engineers are profoundly influenced by external markets. Over the last fifteen years, that landscape has changed significantly. The federal government is still, by a ratio of approximately ten to one, the principal source of external support for academic research. Yet the orientation of federal funding agencies has increasingly turned toward commercially relevant research. Industry representatives now sit on many review panels for allocating grants. Federal agencies have funded a variety of organizational structures such as centers that are grounded in partnerships between the state, corporate business, and universities. The strategic planning efforts of federal agencies have focused monies on fields of work that have potential commercial and economic development payoffs (Branscomb et al. 1997a, 1997b; Etzkowitz and Gulbrandsen 1999; Feldman et al. 2002b).
It is not clear whether professors understand the degree to which the federal funding agencies have directed priorities toward economic competitiveness. Evidence from chapter 4 and from the NSF study on which this chapter is based suggests that many do not, perhaps because they prefer to believe in a system of research funding that is not tied to imperatives other than those of science. However, regardless of scientists and engineers’ understanding of the changing goals of mission agencies and the funding priorities of the federal government, they see federal grant and contract funding as the key to the research prestige system and value it above all other types of external funding.
University administrators, especially presidents and vice-presidents for research, understand that such funding is the bread and butter of external revenue streams. They also understand that federal grant funding plays an important role in research prestige systems and exhort their faculty to increase competition in federal grant and contract markets. They watch the NSF R&D charts as closely as provosts watch U.S. News and World Report ratings.
Our 1999 study provided evidence across universities of an increased central administrative emphasis on entrepreneurial research markets. These markets involve direct work with corporations or corporate partners, although the state is sometimes a silent partner, contributing funds directly (as in the case of engineering centers) or indirectly (because relationships between corporations and departments are built around intellectual property based on federally funded research grants). This emphasis took various forms and was typically broadcast through mechanisms controlled by vice-presidents of research. The message to connect more with industry was also articulated by presidents, carried out in the creation of research parks, and promoted within institutions by managerial professionals. Yet there did not appear to be great collective enthusiasm for such activity in the basic units of the academic heartland. As one faculty member in geology stated, “I think there is a campus wide push. . . But it is not explicit at the department level. . . We get all this—encouragement to do more research, and more research that is supported by industrial monies—from the University Research Dean. It also comes from the research park, and the research institutes such as the Advanced Research Technology Institute, which is a group of units focused on technology transfer. We get a lot of that from the university. They even send people out to talk with departments.”
In absolute terms, a substantial minority of the departments were involved in entrepreneurial research markets. One geology head referred to the department’s strategic plan, which involved “developing closer ties with industry”. Part of that strategy included targeting interdisciplinary areas important to industry. In the head’s words, “We want to forge more interdisciplinary, inter-institutional, inter-college ties”. This statement calls attention to an important part of entrepreneurial research initiatives: a shift to participating in the private market often means the emergence of new organizational forms in universities, layered on top of existing departmental structures.
A widening range of entrepreneurial research opportunities are available in the private sector. There are already well-established mechanisms for interaction between individual academics and these businesses, in the form of consulting relationships. The newer forms include various university-industry partnerships, patenting, and universities taking equity in faculty firms (all of which were discussed in chapters 3 and 4). Although entrepreneurial research markets have grown, relatively few faculty were involved with them. In fact, many heads and faculty spoke almost fatalistically of two reasons for such lack of entrepreneurial activity—industry is not really interested in the research we do, and we are not in a geographical location with a lot of business. Interestingly, they were referring to large, corporate enterprises, which were the focus of much central administrative attention.
The exception is biotechnology. In the 1999 NSF study, several departments in the life sciences were engaged in private, entrepreneurial biotechnology markets. This was a strategic choice, given that approximately half of biotechnology funding is private (U.S. Congress 1991). However, few departments were undertaking collective initiatives. This finding fits with earlier research that showed that in the mid-1990s about 5 percent of all U.S. life scientists were engaged in entrepreneurial research in biotechnology (Louis et al. 1989, but see also Krimsky 2003).
Despite the central administrative push for faculty and units to engage in entrepreneurial activity, there was no evidence of a systematic push across units to, for example, recruit new faculty who would connect with industry. No consistent evidence emerged of departments and department heads making hiring decisions with potential entrepreneurial activity as even one of the criteria. As a chemistry department head said, responding to a query about whether the department was recruiting in areas that would connect well with entrepreneurial funding opportunities, “We should be flexible and consider such matters. But. . . recently we got a person and sort of stumbled into a fit. But that’s not why we hired him. We hired him and then we realized, hey, this guy is good in this [entrepreneurial] area. That’s great. He can work on that. But that’s not why we hired him.” Occasionally, some faculty indicated their units were moving toward hiring to strategically intersect private research markets. As one physics professor said, “We are hiring more applied, interdisciplinary faculty who do research with application to industry.” For the most part, however, we did not get a sense of such strategic hiring. When there was some movement toward applied or entrepreneurial research markets, it seemed to be change on the margins. For example, a physics head noted that his department and a few others had gotten new positions (in his case, in high energy physics) because of the contribution of these fields to the state economy. He then stated: “Yes, we are doing more applied research; but it is only 2–3 out of 31 faculty. There is an optics person with a few patents. Another person wanted to start a company.”
Similarly, no consistent evidence emerged of department heads mentoring faculty, particularly junior faculty, in the direction of doing entrepreneurial work. There is a potential in this interaction for heads to suggest to new faculty fruitful avenues of research that might yield private monies and relations with industry for the department. However, we found no evidence of any such pattern of encouragement. In fact, quite the contrary was true. In those few cases when department heads mentioned entrepreneurial research markets to new hires, they cautioned young faculty against becoming too involved with industry and private sources of research support and activity. The rationale of department heads had to do partly with the unreliability of such funding and the adverse impact its loss could have on the young person’s career. As one chemistry head stated: “A lot of the people we hired, the biotechs are after them. We’ve hired people who are being pursued by business. The faculty don’t even have to ask. I tell them, ‘Be careful. Make sure that you have as your base, federal monies.’ With private support, one day you think you’re on easy street, the next day they pull their funding and you’re stuck. I’ve seen it happen before”. The heads we interviewed focused on the individual faculty member’s academic needs and interests rather than on some collective departmental market orientation or plan to generate revenue.
Generally, department heads and faculty in science, mathematics, and engineering (SME) preferred federal grant and contract markets operated by the mission agencies above all others. This was a strategic choice. Federal grant and contract funds far exceeded private, entrepreneurial research markets and were central to the research prestige system. Individually and collectively, faculty and departments’ reputations depended on their ability to compete successfully in these markets. Federal grant and contract markets were also crucial to success in entrepreneurial or private markets. Most entrepreneurial ventures were built on federally funded research made alienable by Bayh-Dole (1980). As the faculty member quoted in chapter 4 said, “Patents are the icing on the cake. You’ve got to have the cake first.” The department heads in our sample did not talk much about their strategies for success in federal grant and contract markets, probably because such behaviors are ubiquitous, given that most SME faculty worked on federal grants and contracts during their training, and peer pressure as well as merit review at the department level maintains pressure for success in these markets.
Educational Entrepreneurism
What was most unexpected about the sample was the considerable extent of collective effort to generate new revenue streams in the realm of education. The literature would lead us to believe that entrepreneurial educational efforts would be found in departments not positioned close to federal grant and contract research markets; it has not addressed any such activity in SME departments. Such a finding points to the value of the theory of academic capitalism in the new economy, which holds that departments and faculty undertake strategic initiatives partly in response to the push of resource constraints and the pull of various market opportunities beyond those in technology transfer. In the case of educational entrepreneurial activity, departments were responding to new economy pulls to develop programs for information/knowledge society employment, in which many positions are highly technical and located in large corporate enterprises, often involving the upgrading of existing personnel. Tuition dollars, the most rapidly increasing share of institutional budgets were targeted by departments as well.
Departmental competition for new students whose tuition would increase external revenue streams is closely related to competition for internal resources. Many departments were confronting increasingly competitive markets for the internal allocation of state monies. In many cases, central administrators linked student credit-hour productivity more explicitly and powerfully to internal resource allocations than they had in the past. Departments developed strategies to compete more effectively in this undergraduate marketplace, with a particular focus on lower division, general education classes that would generate significant increases in credit-hour production (Volk, Slaughter, and Thomas 2002). To some extent, departments have always competed internally to capture student credit hours. However, as universities increasingly emphasize credit-hour productivity, this competition has increased. Thus, we have concentrated on new program developments and new educational activities because they bring in external resources, which we see as a key component of academic capitalism.
Educational activity geared toward securing new streams of external resources fell into various categories. First, some units sought to increase undergraduate credit-hour production by reorganizing their curricula or developing new programs to attract more majors in their fields. Not uncommonly, such programmatic efforts were connected to conceptions of external employment markets for new economy careers, many of which had technical components that SME departments could provide. A second sort of initiative focused on expanding summer programs with an eye toward generating revenues for the department. A third type of educational entrepreneurial activity involved developing “professional” master’s programs that targeted potential student populations and employment markets in corporations. Such programs were inexpensive to deliver because the labor-intensive thesis option for students was generally eliminated. They could be taught partly or largely by adjuncts and even doctoral students, and they generated more revenue because master’s students generally did not require research support and sometimes paid higher tuition. In some cases the tuition bill was paid by the corporation for which the master’s student worked. Fourth, some units participated in fund-raising activities that often targeted industry and that involved raising the money for educational purposes, such as supporting students and enhancing undergraduate classrooms and labs. Fifth, a few units sought to generate revenue by placing students in industry. The fourth and fifth forms of educational entrepreneurism are significant in that they are not directly “instructional” in the sense of Anderson’s (2001) “instructional capitalism”; nevertheless, they were focused on educational services and activities.
Some educational entrepreneurial activity at the undergraduate level involved developing new programs designed to be more closely connected to emerging or existing employment markets. As one geology department head indicated, his unit was developing a program in environmental geology. “It’s all marketing. The whole thing is marketing. The whole thing is how many bodies do you process. Administrators actually use these terms. The whole revision of the curriculum is to attract more majors. To attract the students of the [19]90s.” Again, the curricular changes and new developments were being driven not so much by educational considerations as by a sense of potential opportunity structures in new economy employment markets. Another head noted the development of environmental chemistry degrees at the undergraduate level. A psychology head pointed to a new undergraduate track between psychology and biology, designed to appeal to the expanded career opportunities in biotechnology. In referring to the development of a BA (to complement the BS) in physics, the head indicated that the aim was to increase student numbers because “not all students want to go on to graduate school in physics; and physics can be a good major for getting into med school.” Like biotechnology, medical substances and devices are a key growth area in the new economy and are often developed by persons with medical training. Similarly, a math head noted the development of an undergraduate program in “actuarial science as a way of recruiting students.” Department heads saw the creation of new economy programs as a promising way to increase their numbers of majors.
Another entrepreneurial strategy for generating revenues from courses was increasing the offering of summer school classes and programs. The advantage of summer school as an entrepreneurial venture is that it pays immediate and direct monies to departments, independent of allocations of state monies. As one science head stated, “Summer can be quite lucrative. Chemistry 101 is like a fast dentist. It can generate lots of revenue.” Of course, as in any marketplace, some units were more favorably positioned than others to succeed. Revenue-generating summer programs were more common in psychology and economics (and business schools generally), where costs are not great, and less common in departments such as geology that run expensive summer camps.
One of the most common examples of educational entrepreneurism was the development of new master’s degree programs. Many departments were consciously developing graduate curricula and programs that articulated more closely with the needs of the new economy. For example, a math department head indicated that, “There is a move across the country to develop an MS in industrial mathematics. And new courses are designed to make graduates more suitable to industrial employment. It’s in the works here.” Public research university departments have long emphasized doctoral programs because they are central to competition in prestige markets, both nationally/internationally and within the institution. Master’s degrees have not generally been treated as terminal degrees in the disciplines, except for those in which a doctorate is not available. The development of new master’s degrees is a dramatic break from the past and reflects a significant reorientation at the graduate level to the external employment market and to revenue generation. Part of the strategy is to forge closer ties with business—for instance, through advisory boards that would give suggestions to departments about curricula as well as donate monies. Yet another strategy is to leverage federal money, reflecting a shift in the external market for such research funding, a shift that involved emphasizing relevance and connections to business, built, as a math head stated, into the NSF’s grant competitions.
The idea underlying the new master’s programs was not to prepare people for new employment but to target people already employed in business for a new kind of degree program. Called “professional master’s degree” programs, these were particularly evident in engineering departments and colleges. Unlike the traditional master’s degree, they did not require a thesis. The programs were market rather than educationally driven. As one engineering head said, “We have toyed with a non-thesis MA option. The professional MA in engineering might take care of that for us. It has some distance learning, some business courses, some science and engineering advanced courses. Due to the large number of mining companies in [the state] this should work. And the thesis option often kills us with people in business. There will also be more offerings in the evenings.” The idea is to generate additional revenues for departments through increased graduate credit hours and tuition. A head of civil engineering noted the significance of these degrees for his department’s budget. “The college has installed a professional engineering master’s degree. It’s a separate program. I get a check every fall for $10,000-20,000. In the next three to four years, maybe $50,000. Civil engineering is a big participant. It’s continuing education. All classes are 3:30-10 PM, and most students are employed.” Although he claimed that “there’s nothing different about the classes” in the professional masters’ degree program, his description of the department’s strategy revealed a clear effort to capitalize financially on a different and lower quality student market. “We are trying to get graduate applicants who won’t get a PhD accepted ...to push them to the professional masters program. That gets them out of the statistics for our rankings in US News & World Report.” The new degree structure enabled the unit to tap into a new student market for continuing education without compromising its quality. As departments continue to play in the prestige market, they are developing strategies for competing in what is essentially a continuing education marketplace of institutions like the University of Phoenix.
Many of the new masters’ degrees create the possibility of differential tuition, another mechanism for generating revenues from new student markets. As one economics head stated, “Business has tried to expand its MBA programs and then sought to gain a share of the increased revenues.” Unlike traditional master’s programs, departments get a direct economic payoff from enrollment in the new programs, gaining a share of their tuition. On the campus of the economics head quoted above, there are a few such programs—one being a new professional master’s in telecommunications, bringing together engineering, computer science, business, and public policy. Very often the programs that bring external revenues to departments offer employment skills for new economy jobs.
Such programs were found not only in engineering but also, as noted above, in math and science departments. For example, one physics head indicated that his department was developing a professional master’s program in industrial and applied physics because “we want to broaden our graduate student base, not just create clones of ourselves” and because such a program would strengthen connections with industry. At another institution, a physics head was more explicit about such a program’s purposes. “We are trying to broaden our curriculum. The curriculum here is the traditional one. We want to go into more applied master’s degrees. One is about to be approved. The idea is to have an additional fifteen students a year, who will graduate in one–two years. They will not have any support [in contrast to other students]. These students will pay their fees.” These programs are cash cows, generating revenue because they cost less and the students pay more. The programs connect students and departments with the new economy and reveal the reorientation to the market embedded in educational entrepreneurial activity. However, the units noted above were not changing their doctoral programs; they were continuing to compete in the prestige market even as they developed new programmatic structures to tap into new student markets in the new economy.
Some departments also sought to connect with industry and generate revenue through courses that did not fit within graduate or undergraduate programs. For example, one head in engineering noted that there were some faculty who taught workshops and short courses to generate monies, sometimes up to $80,000 a year. Although the department had not really coordinated that activity in the past, this head stated, “We’re going to do more of that as we try to do more teaming up with industry; we haven’t done enough of that, and we’re trying to do more.”
Educational entrepreneurism extends beyond curricular change. In some cases, units went directly to the private sector, with their proverbial hats in hand, for equipment and monies. As one chemistry head said, “Occasionally we go to Dow or Lilly to get money for equipment. This is an intermittent matter, to get dollars for undergraduate classes.” Similarly, an engineering head indicated that “we get significant amounts of money from mining companies in [the state] and in the U.S., and also from alumni and private citizens. But the bulk of the money comes from companies. Annually, it’s about $60,000–80,000. We just send out letters and ask for direct operations support. We also get a lot of scholarship support. . . And we use it for computer facilities and running the department.” This collective entrepreneurial activity was not geared primarily to research support but rather was focused on supporting students and undergraduate instruction.
Along similar lines, some units were entrepreneurial fund-raisers. Some funds raised were related to research, but in most cases they stemmed more from education (e.g., donors were alumni) and/or they involved supporting educational activities. Such fund raising was often based on relations with businesses and industries (though not always; one of the units most successful in raising monies was an anthropology department). For example, a geology department head had organized an aggressive fund-raising plan focused on alumni, many of whom worked in the oil and gas industry.
In some cases, the fund raising was grounded in an advisory board composed of well-connected individuals who helped identify and cultivate potential donors. Some particularly entrepreneurial departments had developed their own advisory boards. More typically, boards were set up by academic colleges. Departments have also hired fund-raising officers. Whereas fund raising was once primarily the province of central development officers, now the commitment to fund raising has extended into the academic heartland, academic colleges, and, in some cases, departments.
Some departments raised revenues by serving as employment agents. One example of tapping into employers’ need for students in order to generate revenues is provided by a head of space sciences. “The dean, at our suggestion, started a corporate scholars program. Lots of companies are not interested in our research, because our horizon is too long term. Our research is oriented to the long term. They are oriented to two to five years at the most. But they are interested in our students. Three companies a day are calling me to interview students. They ask things like, “Do you have a good student in [a particular area]?” So we charge them now. We charge them a fee. There is also an internship program. The dean matches students and companies.” This head captured a key point that helps clarify the greater extent of department-level collective entrepreneurial activity in the educational versus the research realm. In the arena of research, there are established mechanisms, such as consulting, by which companies can tap into the knowledge base of universities through individual faculty. Yet businesses are most interested in universities as a source of employees. That creates an opportunity for collective entrepreneurial initiatives in the educational arena.
The departments in our sample, most of which were SME, were active in traditional federal research markets through which they generated external revenues for their departments and universities. However, the bulk of their new entrepreneurial activities did not focus on research with corporate partners. They sought to bring in new revenue streams through education-oriented activities. Departments developed curricula related to new economy employment opportunities to attract new students. They expanded summer programs when they could capture the revenues. Professional master’s programs geared to continuing education for the new economy often brought revenues directly to departments. Departments received funding for linking students up with employers, and departments raised their own funds for education by connecting with industry via solicitations, advisory boards, and fund-raising officers. Given that the new economy is a knowledge/information economy and that tuition revenues are the most rapidly expanding share of annual operating budgets, we should not be surprised that many departments are offering educational services aimed at generating external revenues.
Strategic Resistances
Given the seriousness of many departments’ fiscal situations, we were surprised by what we saw as a relatively uneven level of strategic response. When departments perceive external challenges and threats, they do not always know what to do, or they are not willing to do something, or they are saved from having to strategically reposition themselves by virtue of a special commitment from central administration.
Moreover, departmental incorporation into the academic capitalist knowledge/learning regime is incomplete. There is substantial resistance to entrepreneurial activity other than competing for federal grants and contracts. Although department heads give a variety of reasons for not seeking to compete in entrepreneurial research markets or in instructional capitalism, a great deal of resistance is tied to commitment to the research prestige system associated with the public good knowledge regime (see chapter 1) in which basic science is highly valued.
Department heads often gave their geographical area as a reason for not being able to undertake entrepreneurial initiatives in relation to business. This was particularly true in regard to private research markets oriented to business entrepreneurism. In the words of one department head, “It’s hard to see how astronomy can do anything about connections with industry. We are users, not builders and developers, and that’s what they want.” Or, as a computer science head said, “One of the reasons for the lack of a connection is that there is not an industrial environment. [The geographical region of this university] is not the Silicon Valley. There is not the same symbiotic environment as when you have industry around you.” We repeatedly heard stories invoking the liability of location as a reason for not seeking out entrepreneurial research opportunities with business.
In other cases, department heads saw their fields as not competitive in private research markets. As a biology head stated, “There is a slight increase in faculty activity in this area [connections with industry], but it’s only a couple of faculty. The rest of us don’t work in areas that connect to business.”
Pleading inability to engage in private research markets based on location or type of field legitimates resistance. The astronomy department head, accustomed to federal funding through NASA, was unable to see the opportunities presented by the commercialization of space. The computer science head, who dealt in information technology infrastructure, conveniently ignored the ways in which information technology collapses distances that limit geographical liabilities. Similarly, the biology head paid little heed to the exceptional opportunities for biotechnology in private research markets.
In many cases, department heads were openly frustrated and/or angry about pressure to find new sources of federal grants and contracts or entrepreneurial research opportunities. They wished for the good old days. One math head pointed to the end of the cold war and to changes in NSF policies as sources of increasing fiscal pressure on his faculty and department. “Grants and contracts are way down. When the evil empire died we came upon hard times. Weapons are down. The DOD and DOE are way down. The NSF has changed its policies. It used to support two summer months; now it’s only one and generally it’s younger people. Older people are locked out, despite their qualifications”. This head was aware of a fiscal problem and of some of its sources. “The focus of the NSF, at least in math, is not hard math anymore. It is on education and on interdisciplinary studies”. Later in the interview he stated bitterly, “And they turn down proposals that don’t mention training and human resources. It drives me nuts. And I’m not alone in the nuthouse.” His explanation as to why the NSF was changing was: “It’s who’s running the NSF, and I know them. Education types are running the place. It used to be basic research was really the central focus of the NSF. No more. They are going on an education bent, undergraduate education, interdisciplinary education.” Yet, he had no strategic sense of the connection to the NSF’s educational emphasis on workforce development, and no strategy for adapting the department to this changing opportunity structure. There was no effort, for example, to partner with math educators in education on grants. “Basic research suffers, and that’s what most of us do. So where do we go? I’m not sure many of us want to go that way [to more education-focused or applied research]. The stuff that we do may not have relevance. If it does, it’s twenty years down the road. Mathematicians are not willing to work in applied. They are not likely to adapt.” There was little sense of willingness to shift the focus of the department’s research activities, even on the margins. Instead, the response was contempt for the new direction of funding agencies, contempt based on a prestige structure of basic versus applied research, and of science versus education-focused work.
In some cases, heads did not respond to fiscal pressure because they did not feel it, perhaps because of their success in federal grant and contract markets, or because the central administration was bailing them out. Central administrators, like the heads themselves, were somewhat committed to the research prestige system rooted in the federal grant and contract system, and, even if they lacked such a commitment, they apparently felt they could not afford to dispense with the external revenues brought in through federal research markets. On several campuses it was clear that some units, generally in the sciences, were seen as central to the future of the institutions; therefore, even when they had not been particularly productive in generating student credit hours, graduates, entrepreneurial research monies, and even federal grant monies, they were still being strongly supported by the central administration as potential generators of revenue and sources of prestige. Sometimes such investments in units that had not been particularly strong or productive were driven by a commitment to success in key prestige markets of higher education. As an anthropology head indicated, “We have the biggest physics department in the country. If we don’t have a first rate physics department, where is our monument? The National Science Rankings are essential; that’s where the investment in this institution is. On this campus, 40 percent of the faculty are in departments which will become permanent minority status.” Ironically, as he noted of his own unit, “We generate tremendous revenues for the institution [through instruction].” However, such a commitment applied overwhelmingly to science and engineering fields that were seen as able to access federal grant and contract markets.
The academic capitalist knowledge/learning regime coexists with the public good knowledge regime. Some heads and many faculty who came into the institution under an “old regime” with a different set of values attached to academic work coexist with newly arrived faculty and heads, some of whom are committed to a more entrepreneurial conception of academe. Two computer science heads exemplify this situation, illustrating different attitudes toward entrepreneurial research and educational markets. The old head was still in the department and openly questioned the entrepreneurial efforts being undertaken. He was critical of the new head’s initiatives. The idea of a separate school of computer science which would expand the student market and faculty/student productivity ratios had no appeal for him. When asked about splitting up the arts and sciences college into separate colleges, which created the opportunity for a separate school, he said, “I would not like a split. I like very much the relationship with other units, and not just sciences. It encourages us to be less engineering oriented in our programs. We should consider other departments. I like being at a university. What’s the point of being here? I like the fact that students take courses across different fields ... As one college we’re more attuned to the needs of students, to training the general population in computers. We would as a separate group not attend to that”. The subtext of the old department head’s discourse is oriented to liberal educational mission and purposes. Productivity and revenue generation do not feature at all. The old head was also openly disdainful of private, entrepreneurial research markets.
Several faculty within this computer science department were openly or passively resistant to the new head’s initiatives. Their resistance undermined the new head’s charge from central administration to become more entrepreneurial. Most faculty members did not pursue the private-sector-oriented entrepreneurial connections that the new head was promoting. Other heads on this campus indicated that the new computer science head was experiencing considerable difficulty in implementing his programs, and that he was beginning to fall out of favor with central administration.
A math department head offered another example of resistance to the redirection of a department’s research focus. Noting a 10 percent decline in his unit’s grants and contracts monies, he indicated that there was going to be an emphasis on recruiting faculty in computational math.
We are very well placed in the balance between pure and applied math. We have quite a strong faculty in both. That helps in recruiting and in moving research agendas to take advantage of opportunities ... We’re flexible. We’re actually going to move more towards computational math. The dean has pushed that. There was an external review committee of the math department that strongly recommended this. . . There has been a reasonable amount of resistance to this move in non-computational people. That new emphasis plays out in recruitment, course development, and in the development of a new program in computational science, to be done in conjunction with other departments.
Faculty in subspecialties within departments could resist new directions. In large departments, that can make substantial change very challenging.
Sometimes the source of faculty resistance was the core clash of entrepreneurial activities and values with those of academe. For example, a psychology head in another institution pointed to an initiative he was promoting in his department to connect with industry. “We just had a retreat. One working group was outreach and entrepreneurial activity. We have made that committee permanent, to try to develop some opportunities. Faculty reaction was predictable, with research scientists and scholars. If this helps me fund my research, I’m for it. If it’s to sell products, I’m against it. My angle is to bring in resources for students and postdocs.” If faculty thought getting private monies would support their research, they were willing to support entrepreneurial endeavors. However they were less enthusiastic about selling products. The head hoped an educational strategy, generating support for students, would lessen opposition.
We interviewed many faculty who expressed varying levels of disdain for and hostility to research that was in their eyes more applied or that followed a logic of entrepreneurial opportunism rather than a logic of discovery. Sometimes the sentiment was expressed as a personal view about entrepreneurial activity, as in the case of the biochemistry professor who stated, “I personally think it’s a disaster for faculty to ally themselves with industry and their problems. They are not basic problems. Faculty should do fundamental research, ivory tower research.” In other cases, the sentiment was expressed in a simple observation about what was valued in the department. A faculty member in physics indicated that federal grant and contract research that brought prestige along with dollars should precede entrepreneurial work in private markets.
Of all my colleagues [thirty-one] maybe one has made the transition from pretty basic to very market-oriented research. There is no example of the opposite. . . But there is no overt pressure to do that. The way we collectively view this issue, I would guess if we sampled the department you would probably get a consensus that if it happens—market direction—that’s fine, but it’s not our main mission. It’s not something we try to do or feel bad about if we don’t do it. We are a research department. . . Of course, it depends on how well you are doing. If you feel you are falling behind, then it makes sense to reconsider your direction. In our department, we don’t have that feeling.
Another example speaks to a general bias against applied work. A faculty member in biology said, “I think there’s a bias [in this department] against applied research. I happen not to share that bias. I think applied is fine. To me, basic and applied aren’t that distinguishable.” Another biology professor said, “About five to six years ago they built a research park. There was a lot of talk about how companies would come in and we would establish ties with them. It never really developed. There was sort of a revolt by faculty. We were being urged to orient our research to working with companies. As faculty explored this it seemed like it was completely unscientific. It’s like we were providing a service to private companies to help them make money for their stockholders”. A chemistry professor told a story of an internal departmental dispute centered on entrepreneurism. “It’s up to the individual. Some individuals have chosen to do more patents. It caused a flap a few years ago. Some faculty were concerned that a faculty member wasn’t publishing in open journals. He was acting like a businessman, getting the patent first. But he got tenure. He left abruptly this year. He went to industry.” Each of these examples speaks to the existence of a university push and some movement on an individual level toward more entrepreneurial research activities. At the same time, they point to how and why it is problematic for departments to collectively pursue entrepreneurial initiatives in research.
In some cases, department heads were ambivalent about entrepreneurial work. One computer science department head talked about revising an “industrial board” of companies that would provide input regarding the education and training of students. Although he was pursuing this entrepreneurial initiative to enhance connections with the private sector, and hopefully to generate some revenues, he was a reluctant entrepreneur, as the following language suggests. “In a few weeks I’ll have the first meeting with a steering group from the advisory board. We want to be open, but we don’t want to bow to them. . . It’s mostly related to education. But we know what’s good in computer science education, not them. We want to address their needs, but we know what’s best.”
Departments in SME frequently engage in academic capitalism or the generation of external revenues. With regard to research, they prefer the federal grant and contract market above all others and do not demonstrate awareness that this research is more and more frequently aligned with the market. Their resistance is often articulated around adherence to values captured by the concepts of “basic” or “pure” research associated with the public good knowledge regime (see chapter 1). Basic or pure research gives professors the illusion of controlling research agendas and following research where it leads. Regardless of whether “curiosity-driven” research was tied into the long-term goals of mission agencies, professors were clear that they enjoyed the long time lines, generous funding, and indirect monitoring associated with (often DOD-funded) federal grants and contracts that characterized the period from 1945 to the 1980s.
Instructional Leverage amid Multiple Pressures
How can we understand the increase in collective departmental initiative and entrepreneurial effort in regard to instruction? Drawing on our interviews, we make the case that faculty develop entrepreneurial instructional ventures that intersect with recent strategic planning and budgeting processes adopted by public research university provosts and presidents in response to external political and fiscal pressures. Department heads attend to these processes but also hear contradictory, internal messages from university officials.
Provosts and deans are implementing mechanisms that make the internal allocation of state monies more competitive. Public research university central administrators now find themselves in a competitive marketplace for state monies and in a political environment that can be relatively hostile towards these institutions’ research emphasis. Consequently, the target of many incentive-based budgeting mechanisms is student credit-hour production, particularly at the undergraduate level. Many department heads in our sample commented on this orientation to educational markets and productivity. At some campuses heads overwhelmingly identified the focus of provosts as being on issues related to instruction generally and undergraduate education in particular. “There is tremendous pressure from the provost to increase student credit hours. The pressure from the dean is to maintain or increase student credit hours. The main emphasis is, not to turn away students. Don’t turn away students who want classes. . . The idea was that faculty numbers would stay about the same, but we would have increased numbers of students and thereby increase productivity. The formula was based on an incentive to grow” (physics head). In this case, however, enrollments at the institution did not grow, and the formula became a basis for reducing resources to departments. The head went on to say, “In internal resource allocation the deans don’t look at research anymore. They look at student credit hours. We [department heads] have to keep reminding them of the purpose of a research university.”
There were variations from one campus to the next in the specific mechanisms managers employed to allocate resources. There were also variations in the extent of emphasis on undergraduate education in comparison to federal grant–focused and entrepreneurial, private-sector-focused research. At most institutions, however, the issues of undergraduate education, instructional productivity, and faculty teaching loads were the focus of provosts’ and presidents’ budgeting processes and activities. Across institutions, nearly one-third of department heads reported an increase in the overall faculty teaching load (41% reported an increase in undergraduate teaching load). Only 7.5 percent reported decreased teaching loads. These figures suggest that provosts (and deans) had some success in the 1990s in leveraging increased faculty instructional activity, particularly at the undergraduate level.
Although in their annual budget allocation processes academic managers focused on instructional productivity, it is clear that these same managers, in addition to other administrators, were sending other messages as well. Such messages related not to student markets and educational productivity but to research and private-sector markets and the pursuit of entrepreneurial research ventures. These messages came not only from established administrative offices but from recently established offices and officials, for example, from managerial professionals such as technology transfer and research park directors. Department heads and faculty were clear that they were receiving multiple pressures and messages. As one head in space sciences related,
There is no one in the institution that has a sense of the priorities in the university. It must be very hard to be a faculty member now, to have to do all these things. I asked the dean of the graduate school ...which one of the tasks was most important. He can’t tell me. He had no answer. I don’t think there is one pressure. One of my colleagues in the math department, he gives the best description of our situation. Formerly our role was to produce top quality research and graduate education, and to do a reasonable job of teaching. Now he’s told us to return undergraduates at a certain rate, to be diverse, to use technology in teaching to be innovative, to do outreach in the community, and to keep doing the research and graduate education. All with no new resources.
Similarly, a head in life sciences commented, “It’s a schizophrenic situation because of higher administration. Central administration want you to be an excellent teacher. But the higher administration knows that if we stop writing grants, they’ll fold up. And there’s not enough merit money around to do much to reward people for teaching, or for research for that matter.” In essence, these heads were saying that the university’s academic managers wanted more for less. They wanted more productivity in a range of markets, with no increase or a reduction in faculty and other resources. Despite the discourse of academic managers about tough choices, many heads saw little evidence of prioritization. They were being leveraged to increase productivity in old (prestige and federal research) and new (student, educational, and entrepreneurial research) markets.
Conclusions
SME academic departments are very involved in academic capitalism. Most generate external revenues by competing for federal grant and contract funding. A relatively small number are active in private, entrepreneurial research markets. More and more departments are becoming active in educational initiatives designed to generate external revenues through new programs that articulate with the new economy.
As was the case historically, federal grant and contract work is central to SME departments. Private, entrepreneurial research markets are less so, perhaps because these markets are intersected by centers and institutes outside the departments. Entrepreneurial educational culture, however, seems to be blossoming in the academic heartland.
Departments develop various strategies to articulate with opportunities presented by the academic capitalist knowledge/learning regime. We did not locate precipitating causes but instead found general patterns. Department heads seemed to recognize two research systems, one based on grants and contracts, the other on the amount of revenues brought in. The two were not the same, although they overlapped at certain points. Federal grants and contracts were closely related to the research prestige system rooted in the public good regime. A number of heads believed that departments had to have a strong federal grant and contract base before engaging other research markets. Private, entrepreneurial research markets did not carry the same prestige with department heads as did federal grant and contract markets. According to the department head interviews, presidents and vice-presidents for research were perceived as valuing private, entrepreneurial research markets more than faculty did. However, department heads knew that these administrators had to attend to maintaining and expanding federal grant and contracts because they contributed reliably to annual operating budgets, while private research markets, although holding out the promise of very high returns, were less predictable.
Although a number of department heads tried to develop strategies for intersecting federal and private, entrepreneurial research markets, many resisted involvement with the latter. They preferred to try to maintain or expand federal grant and contract revenues rather than embark on ventures with corporations. Frequently, their preference was tied to commitment to the values of the public good knowledge regime. Even when department heads pursued a strategy that focused on both types of research markets, faculty within their departments or subspecialties resisted. The public good and academic capitalist knowledge/learning regimes coexisted.
The bulk of educational entrepreneurial activity of department heads was aimed at tuition and external monies (such as gifts) to support students and education; tuition constituted the most rapidly increasing share of annual operating budgets. The programs they crafted were aimed at linking SME fields to the new economy, capturing tuition revenues for departments. The technical components of much new economy employment made these programs relatively easy to “sell,” and department heads seemed to be willing to reshape their fields to integrate with the new economy.
In short, then, academic capitalism has penetrated into basic academic departments. It has become part of the core educational activity of that academic heartland in the form of various types of educational entrepreneurism. However, the transition to an entrepreneurial culture is very much incomplete, uneven, and even contested, which is evident in some units more than others. In contrast to what the literature might lead us to believe, it is perhaps most contested in regard to an ongoing commitment to traditional conceptions of academe’s role in conducting fundamental research, in the heartland of SME units that are deeply invested in federally funded research activities.
We seek to redress somewhat the limitations of the department head study by briefly considering a broader range of studies as they relate to academic capitalism in U.S. higher education. First, we note findings on centers and institutes in research universities. Second, we note studies that go beyond science and engineering and beyond public research universities, addressing the extent to which academic capitalism can be found throughout the U.S. higher education system.
The prevailing story told in the literature on higher education is that the dynamism and creativity of research universities lies more in the development of new academic units than it does in the traditional, discipline-based departments that continue to structure and produce most undergraduate education. For some time there has been a policy emphasis, at various levels, to promote the growth of centers and institutes, which link academics to external constituencies, particularly to government and business. In addition, there has been an increased policy emphasis on interdisciplinary programs. Centers, institutes, and interdisciplinary programs feature prominently in explanations for the dynamic rise of some institutions into the ranks of the nation’s top research universities (Geiger 1990, 1993). Over time, the number of these units has risen significantly. Interdisciplinary structures often involve partnerships between universities and private enterprise; they are an important source of higher education’s responsiveness to external corporate markets. Indeed, federal agencies have funded various types of centers (e.g., engineering research centers, and science and technology centers) that have as their explicit purposes and structures direct connections with and funding by private companies (Government-University-Industry Research Roundtable 1992; NSF 1989). As just one example, nearly 60 percent of 1,056 government-funded university-industry research centers (UIRCs), which have the explicit function of connecting universities and companies, were established in the 1980s (Cohen, Florida, and Coe 1994). The entrepreneurial significance of these centers is evident in the fact that almost 70 percent of industrial support for academic R&D is channeled through them (and a little less than one-third of UIRC budgets, on average, come from industrial sources).
In other words, much entrepreneurial initiative occurs outside basic academic departments. Organizational structures such as centers and institutes have been developed alongside discipline-based academic departments. This new mode of producing research has not replaced the old (research production continues in academic departments), but it coexists with the old, which remains the principal site for the production of undergraduate and graduate education.
A second point is that academic capitalism extends beyond science and engineering, and beyond research universities. Some years ago, we sat as participant observers on our university’s technology transfer committee, which had nineteen members. All but two came from science and engineering. (The exceptions were a business school professor who studied technology transfer and a library science professor who was active in campus politics.) This committee played a key role in shaping the university’s intellectual property policy, generating draft policies not only for patents but also for software and copyright. Almost without exception, committee members strongly supported the idea that material incentives were necessary to encourage professors to work toward transferring knowledge from the university to the private sector (Rhoades and Slaughter 1991a, 1991b). Committee members believed that knowledge gained value only when it reached the marketplace and that it remained worthless if it stayed in the lab and the public domain. They were involved in “renorming” science, redefining acceptable and desirable scientific practices and social relations (Slaughter and Rhoades 1990). Over two years we never heard any member suggest that a wider representation of faculty would be desirable on the committee. Indeed, the legitimacy of the current membership lay in the fact that most had engaged in patenting and technology transfer practices. There was no indication that members believed other faculty had a right to shape these early drafts, nor was there a sense that perhaps faculty outside the sciences and engineering also had engaged in technology transfer, or that faculty in other academic units created intellectual products of potential commercial value.
Such presumptions vastly underestimate the range of intellectual products developed by faculty in a variety of fields. Software is an obvious example; it is produced not only by computer scientists (and other scientists and engineers) but also by faculty in the social sciences, arts, and humanities. Similarly, in the course of their work professors in various fields produce instruments that have commercial value. For example, generally overlooked in the literature is nursing faculty’s production of instruments used in clinical practice or education and psychology professors’ production of measurement instruments applied to students and to populations of clients and patients. Furthermore, as shown in chapter 5, an extraordinary range of copyrighted educational materials, programs, and courses is being produced for external markets. These products and services are generated by diverse academics and units (and by managerial professionals in support units) that extend far beyond science and engineering.
Restructuring of academic units for the marketplace also occurs outside the sciences and engineering. For example, one of our graduate students has explored restructuring of the studio arts in fine arts colleges, revealing how the move to the market has led to greater investment in fields (e.g., graphic arts) perceived as close to external corporate markets, and disinvestment in units (such as the traditional studio arts of painting and sculpture) perceived as relatively distant from such markets (Lund, in progress). Similarly, one of the largest undergraduate majors nationwide has become communications, a field that did not really exist two decades ago and that is perceived by students and institutions as being connected to private-sector employment markets.
The pursuit of academic capitalism also extends beyond research universities. Even within small, private, liberal arts colleges in the United States, there is evidence of a programmatic push toward the private marketplace, particularly in less prestigious colleges. In these institutions, which advertise an emphasis on liberal arts, the national pattern in the last two decades has been of growth in degree programs connected to employment in general and business in particular (Delucchi 1997; Kraatz and Zajac 1996).
The scholarly literature on higher education tends to reflect the presumption within research universities that it is only faculty in these sorts of institutions who produce intellectual property of any value. Yet the intellectual labors of academics in less prestigious settings are sufficient to warrant entrepreneurial activity on the part of community colleges and doctoral and master’s granting universities. Less prestigious universities have expanded curricular delivery through the use of high technology and, not uncommonly, through contracts with private-sector entities (Rhoades 2002b). Struggles over intellectual property are a key issue in most unionized institutions, few of which are research universities (Rhoades 1998a). Institutions have been even more aggressive in the two-year sector, where there has been an extraordinary expansion of contract education and certificates geared to employment needs and particular businesses and industries (Brint and Karabel 1989; Dougherty 1994; Levin 2001).
In sum, research universities are not the only site of the academic capitalist knowledge/learning regime. The activity we identified in the academic heartland is also evident in centers and institutes, beyond discipline-based departments. It is evident beyond science and engineering units, in unexpected fields of academic work. And it exists in institutions other than research universities. Indeed, as we expand our understanding of the phenomenon to include activities in the realm of curriculum and instruction, we come to understand the broad-ranging extent of academic capitalism in the new economy. We may also come to understand that academic capitalism is redefining the academic heartland not only in terms of what work is done in basic academic departments but also in terms of redefining whether those units are regarded as the center of the academy and the principal target of its new investments.