GLOBALIZATION OF KOREAN UNIVERSITIES: MARKETS, STRATEGIES AND PERFORMANCES.

Author:Bae, Seong O.
Position:Report - Statistical data
 
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INTRODUCTION

The link between economic competitiveness and educational excellence is an article of faith among political leaders, elite bureaucrats, and university administrators. Indeed, no one seems to be able to deny that outstanding universities, with their world-class education and innovative research, contribute immensely to national economic growth and competitiveness. These days, the university is not a closed research institution but where it is working in an open innovation system and interacting with industries and governments (Chesbrough, 2004; Etzkowitz, 2004). It is, therefore, not surprising that, whether we turn to Europe, to the United States, or to Asia, significant public and private funds find their way into the coffers of leading universities. Korea is a compelling case in point. The faith in the power of higher education is attested by the highest participation rate for higher education (69% in 2015) among OECD countries (OECD, 2016). Certainly, no national politicians or business leaders can question the central importance of universities in Korea's future.

Nevertheless, Korean universities face massive and critical challenges in the early 21st century. Given the legacy of strong state intervention in the management of universities, Korean universities have exhibited a surprising level of uniformity. Regardless of size or market, most Korean tertiary institutions offered MA and PhD programs, and in many scholarly fields as well. At the same time, that uniform state support for higher education is declining; there is a projected decline in the student population (largely due to low fertility). In short, what may seem like a Garden of Eden for university administrators is, in fact, a field replete with brambles and bushes. This paper seeks to make sense of how Korean universities are attempting to meet the myriad challenges of the day. Drawing on numerous interviews and documentary research, we illuminate the various strategies that Korean university leaders and administrators are pursuing. Furthermore, we provide a classification of the leading universities and explicate the growing differentiation of Korean university structures and strategies. Finally, we propose a framework to analyze how market situations affect university strategies, which, in turn, affect their performances.

DEVELOPING UNIVERSITY STRATEGY

Higher education has expanded dramatically in the past half century. Paradoxically, the rapid expansion in the numbers of universities and of students-far from vitiating competition among universities-has instead intensified it (Thorne & Cuthbert, 1996; Johnes, 1999). The enhanced competitive environment has made it urgent that each university develop a more or less coherent strategy to protect its market niche.

Needless to say, there are generic features to all university strategies, exhibited in pronouncements by university leaders and their marketing representatives. Every institution strives for quality and excellence and duly stresses the importance of the faculty, the student body, and the staff. The past is celebrated even though the future is perforce brighter. Beyond these generic and probably necessary features of strategic visions and statements, some critical variables differentiate universities, such as the ideal balance between research and teaching, consultancy, and public service, or the choice of which academic fields and disciplines to cover and to promote (Throne & Cuthbert, 1996). These researchers consider that, although this situation can satisfy the needs of an economically developed society, it is yet unstable; traditional universities tend to move toward technological study and research programs, gradually abandoning classic teaching lines, while young universities drift toward a traditional academic status to acquire prestige. The external environment acts differently for different universities, each of which has its own structure, financing systems, and hierarchy (Bratianu & Stanciu, 2010). In general, (Rolfe, 2003) found that older, more established universities tend to stress research and academic excellence more strongly than their newer counterparts, whom tend to stress vocational training and contributions to regional businesses and local governments.

Research is, not surprisingly, a major factor in a university's identification of itself. Although research generates a great deal of revenue, it is also inevitable that associated costs escalate rapidly. Yet, research's critical role in enhancing a university's reputation, whether in university ranking or general reputation, renders it a critical factor. Therefore, all universities seek to recruit research 'stars' (Henkel, 1997), who not only generate grants and revenues, but also enhance the reputation and renown of the university. Similarly, all universities seem to nurture and develop their own research talent. However, the escalating cost of recruiting and retaining 'star' researchers and the general costs associated with research make the relative emphasis on research a key variable for university strategy (Cuthbert, 1996).

Similarly, recruiting the most able and accomplished students is a primary concern for all institutions. Therefore, each institution faces a choice of which market it should cultivate: local, regional, or national (Rolfe, 2003). Although objective data is available to prospective students on many ostensibly relevant topics such as, drop-out rates or average initial salary, previous research findings suggest that prospective students make very little use of the available data whereby it does not have a major impact on students' decision-making as to which university to enroll in (Pearson, 2000). Therefore, a university's strategy expends a great deal of effort in course provision due to the fact that prospective students base their decisions on which courses of study are available at a particular institution. That is, each university deliberates on its course provision to ensure that it can provide the best possible supply of students (Rolfe, 2003). Universities, therefore, not only closely track what other institutions are offering in terms of courses, but they also seek feedback from their students ("customers") (Murlis & Hartle, 1996).

Finally, since the early 1990s, higher education institutions have seen the greatest growth in revenues from external sources. Until then, nearly all their funding came from two core activities, teaching and research, or from state support (Coate, 2000). Consulting or cooperating with industries, including public partners, has now become the third focal point of strategic decision and differentiation. Since the 1990s, there has been rapid growth in funding from related industries. Universities shifted their emphasis to activities that included not only teaching and research, but also consultancy and other provision for local industries and business partners, including the private and public sectors.

As noted, a key factor in the rise of university strategy decision-making is the intensifying competition in the higher education sector. However, there are also other factors such as, the increasing costs of excellence (such as supporting research), the general decline in state subsidies, and the professionalization of university administration (St. John & Parsons, 2005; McGettigan, 2013). In this changing and challenging environment, the need for a strategic view becomes ever more important (Johnes, 1999), and universities that may once have rejected the idea of a strategic approach have begun to seek it (McNay, 1995). In this sense, universities follow the general organizational tendency to regard strategy as initially unnecessary, then as mere promotion, then as positioning, and finally as strategic planning (Sanders, 1999).

Thus, university strategy had now become not only a norm but also a way to articulate its identity and market niche, as well as a statement about its aspirations. The increased attention given by universities to identity and marketing confirms Kotler and Fox's argument (1995) regarding four basic principles: consumer orientation (target market), long-term maximization of profitability (another measure of long-term success), total organization effort, and social responsibility. We will now turn to the situation facing Korean universities.

THE CONTEXT OF KOREAN UNIVERSITIES IN THE EARLY 21st CENTURY

As of 2015 (Korean Ministry of Education 2016), there are 432 higher education institutes, including 189 four-year universities, 138 two-year colleges and 105 other institutions, in Korea. The size of the student population was 3.64 million students, including 2.03 million for four-year universities, 0.76 million for two-year colleges, and 0.85 million for other institutions. Revenues were estimated to be about 24.1 billion US dollars: 18.8 billion for four-year universities, 4.4 billion for two-year colleges, and 0.8 billion for others. There were 374 private institutions (students: 2.70 million, revenue: 21.7 billion) and 58 public ones (students: 0.82 million, revenue: 2.5 billion). That is, private institutions accounted for more than 80% of resources in higher education in Korea (Korean Ministry of Education 2016) is shown in Table 1.

Trends in Revenue Markets for Korean Universities

The major components of universities revenue include student tuition, research funds, government support, and private gifts.

Student Tuition

Korean universities' tuition revenue shown in Table 2 grew dramatically between 2000 and 2014, registering an increase of US$6.6 billion. The main source of this increase is the rise in tuition fees s given in Table 3. Yet, if we consider the expected decline in the number of high school graduates and the political pressure to rein in tuition fees, it is very likely that Korean universities will not benefit from increased revenue in the near future is shown in Table 4.

Research Funds

Between...

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