Business models and higher education

The researcher believes that the wide ranging use of the term business model in academic and practitioner arenas suggests that the clarification of its use rhetorically, strategically or managerially or lack of use would be of interest to both academics and management practitioners. Universities face increasingly challenging economic conditions and the identification of the use within higher education of business models using interview data, cross-referenced to institutional success, measured by a variety of metrics, may allow inferences to be drawn about the relationship of the relative success of institutions and the role, if any, of business models which may then inform future decision making. The researcher suggests that a business model approach, whilst not introducing new concepts is a useful descriptive and analytical tool for both practitioners and academics. In a discursive sense the term can act as a useful short hand whilst as a framework for value propositions it can aid the identification and development of the underlying economic reality of business activity. Furthermore, business models when viewed in the context of competing value propositions and business model innovation provide a link to and an aid in, the development of strategy. The researcher found that the term business model was frequently described in interview as inappropriate and no evidence of significant explicit usage of the term business model was found in university strategic plans. Further evidence from interview and the analysis of strategic plan documentation highlights the use of business-like language and practices suggesting that implicit, rather than explicit, business model approaches are being adopted in universities for decision making purposes. No evidence of a correlation between the use of business models, business like terms or reference to Hefce strategic aims and financial or league table success was noted. Whilst relative institutional income levels remained largely static over the period 1994-95 – 2006-07, the income patterns of institutions interviewed indicated that as the level of success as measured by researcher increased, as a proportion of total income grant and fee income reduced and research and other income increased. In addition the top twenty-five universities measured by average surplus over the period 1994-5 to 2003-04 tended to have a higher than average proportion of their total income represented by research and other income. To aid the realisation of potential benefits to be gained by universities from the adoption of a more explicit business model approach the research findings suggest the consideration of three factors. Firstly the clarification of the location of business models in relation to the more traditional management tools of strategy development and resource planning. Secondly, the lack of appetite for the explicit adoption of a business model approach, in at least some parts of the sector, suggests that the language of business models needs adapting to a higher education context. The researcher suggests the language of social enterprise which would explicitly recognise the societal dimension of university activity. Finally, but related to the second point is that the constrained economy of higher education needs to be recognised in the development of a business model approach with complex stakeholder relations recognised in value propositions and outcomes and financial sustainability as a necessary facilitator rather than primary driver.