Innovation in Educational Markets: An Organizational Analysis of Private Schools in Toronto

Davies, Scott, Quirke, Linda, Catholic Education

This study examines whether new private schools are innovative, drawing on theories of markets and institutions. Choice advocates claim that markets spark innovation, while institutional theory suggests that isomorphic forces will limit novel school forms. Using qualitative data from third sector private schools in Toronto, three hypotheses about the impact of markets on educational organizations are examined: (a) they reverse tendencies toward isomorphism as schools develop client niches; (b) they allow schools to weaken their formal structures; and (c) they force schools to more closely monitor their effectiveness. Substantial evidence exists for the first hypothesis, partial evidence for the second hypothesis, but little evidence for the third. Overall, new private schools are characterized by: small classes, unique pedagogical themes, personalized treatment of clients, and some pragmatic responses to limited resources. Their operators sometimes feel restricted by parental demand, but are able to retain a loosely coupled structure by embracing consumerist understandings of accountability. This essay concludes with a discussion of implications for market theory.

INTRODUCTION: THIRD SECTOR PRIVATE SCHOOLS

This study offers an organizational analysis of third sector private schools in Toronto, Ontario, Canada. Third sector schools are private schools that are neither religious nor elite. Private schools have long served religious and elite communities in Canada, but they are becoming increasingly differentiated. One in five Ontario private school students attends third sector schools. These schools are typically small, with enrollments of less than 50, and are located in humble locales, such as office buildings, old houses, or shopping plazas. They distinguish themselves with specialized pedagogy that attracts clients who do not seek prestigious name-brand education or religious orientations.

Do markets encourage schools to be innovative? Today, many market advocates decry the paucity of invention in public schools and celebrate the entrepreneurial dynamism of the private sector. Yet, such claims are rarely empirically grounded and often ignore the diversity of private schools. Established elite schools, as an example, embrace longstanding school forms and derive their prestige on the basis of tradition, not innovation. Likewise, religious private schools have historically mimicked mainstream public schools in order to secure legitimacy (Baker, 1992). Private schools are most likely to be innovative in relatively new markets. In the United States, charter schools would meet this requirement. However, in Ontario, where there is no charter school legislation, third sector private schools best exemplify such a market.

This sector offers a strategic vantage point for studying educational markets. While elite schools conform to historic images of patrician education, and while religious schools mix standard school forms with the doctrines of their respective communities, third sector schools are free to build their own identity and mandate. Lacking an established legacy, they are arguably the most likely to embrace innovations. Attracting parents who seek neither religion nor entree into elite networks, these schools may be motivated to embrace novel pedagogies. Moreover, they are closer to the market than are charter schools or magnet schools, since they are not organized through a public bureaucracy. Needing to comply only with bare-boned health and safety and curricular guidelines and the most minimal of inspections, these schools can innovate as they choose. Bound by few regulations, they represent a purer expression of market forces than do charter, voucher, or magnet schools.

STATING THE PROBLEM: EDUCATIONAL MARKETS AND ORGANIZATIONAL INNOVATION

Advocates of educational markets claim that private schools are more innovative and responsive than are public schools (Chubb & Moe, 1990; Clinchy, 2000; Hepburn, 2001; Lawton, 1995). They trace these traits to private schools' freedom from central controls. Relying on public funding pushes schools to conform to legal conventions rather than provide effective service. Unions demand the hiring of certified teachers, boards force compliance to curricular guidelines, and governments leverage teaching with standardized tests. These bureaucratic shackles make public schools unresponsive to their clients, according to private school advocates, who cite choice, small size, and self-governance as magic traits for successful schools (Meier, 2000). Since private schools evade most hierarchical regulations, they are said to "bust bureaucracy" and devise ingenious forms of pedagogy. Further, markets are seen to encourage schools to adopt a different organizational character. Since private schools charge fees to survive, they must be more responsive to their clients; otherwise those dollars will go elsewhere. Markets thus reward pedagogical success and punish failure, and thereby motivate schools to have well-defined missions, to demonstrate their effectiveness, and to satisfy customers. These hypothesized effects beg a question, however: In organizational terms, how do schools adapt to market forces? Institutional theory is applied to this question in order to better understand the relation between school organizations and their environments.

THEORETICAL FRAMEWORK: UPDATING THE NEW INSTITUTIONALISM

The new institutionalism developed by John Meyer and colleagues over 25 years ago (Meyer, 1977; Meyer & Rowan, 1977, 1978) sets the tone for organizational analyses of modern school systems. They described two pervasive trends. First was the institutionalization of the schooling rule, the ever-widening use of certified teachers, standardized curricular topics, registered students, and other accreditation procedures. They noted how this school form has become increasingly legitimate in modern society, due to the use of educational credentials in labor markets, and to the spread of norms of individual rights, citizenship, and economic goals. According to the institutionalists, isomorphism across different types of schools is a stark fact, and one of the most noteworthy aspects of educational organizations. Subsequent work in this tradition has documented the diffusion of this standard school form throughout the world (Meyer & Ramirez, 2000).

Second, Meyer and associates highlighted the peculiar nature of this school form. Distinguishing between organizations operating in institutional (i.e., governmental and nonprofit) sectors versus for-profit sectors, they traced schools' legitimacy to their compliance with accepted rules and structures, not to their efficiency. The result, according to the new institutionalists, is loose coupling, the hallmark trait of school organization. Public schools adapt to their environments by elaborating their formal structures (categories of students, grades, courses, credentials, and certification), while leaving their technical core (actual classroom instruction and learning) relatively unmonitored. Instead of continually ensuring that they maximize instruction by inspecting teaching or measuring learning, schools expend more energy conforming to the evolving school form. This practice is justified by schools' logic of confidence that delegates instruction to the professional prerogatives of teachers in secluded classrooms. Instruction is guided only by broad theories that resemble vaguely specified platitudes more than detailed rules, and is not backed by tight inspection, agreed-upon measures of performance, or consequent sanctions. The irony is that this loose coupling is actually adaptive for schools, simultaneously bringing legitimacy while avoiding exposure of problems.

Since the advent of this theory, some important trends have emerged in North American education. The major reform initiatives in education since 1980--standardized curricula, measurable goals, and testing--have placed schools under more centralized control in the name of quality and accountability. These initiatives serve to recouple schools' formal and technical structures by indirectly controlling classroom content and holding schools accountable for minimal outcomes (Rowan, 2002). Further, more control of public schools is accompanied by a movement for school choice. This choice movement is creating a market environment for different types of schools. School choice in varying guises--charter schools, vouchers, home schooling, magnet schools, and tax credits for private schools--is being touted as a lever to challenge the one best way model of organizing schools and to create grounds for innovation.

These changed conditions have at least two implications for institutional theory. Whereas that theory presumed schools governed by public bodies and stressed their need to comply with rationalized myths, schools of choice are freer of regulations. Relying on paying customers rather than government funds, they ought to be concerned less with conforming to legalistic categories than with pleasing clients. Moreover, the bottom line emphasis of the private sector ought to make those schools more tightly coupled like technical organizations, presuming parents choose schools based on their performance. In the language of institutional theory, since private schools need not comply with a regulatory environment but are instead subject to market imperatives, they should exhibit less collective isomorphism, have thinner formal structures, and be more tightly coupled than public schools.

CONTEXT: TRENDS IN ONTARIO EDUCATION

Ontario has recently witnessed both of these educational trends toward more centralized control and standardization of public schools alongside a flourishing private school sector. Since taking power in 1995, its Conservative government has introduced a series of regulations that have brought much turmoil. To boost quality, accountability, and public trust, the province has established standardized tests in several grades, forced reaccreditation for teachers every 5 years, reported school test scores in league tables, tightened budgets, and toughened curricula. These initiatives have strengthened provincial control of public schools, centralizing much power in the process. However, the government has simultaneously left private schools largely unregulated, and does not require that they comply with these initiatives.

During this time, private schools have enjoyed a growing popularity. Over the past decade, the number of Ontario students in private schools has grown by 40%, while the number of private schools rose by 44% (Davies, Aurini, & Quirke, 2002). Currently, about 5% of Ontario school children are in private schools. Catholic schools are fully funded by the province and are not deemed to be private. Even though only few have direct contact with private schools, most parents appear to hold them in esteem. In a 1997 survey, 46% of Canadian parents said they would "prefer to send their child to a private school if they could afford it," an increase from 39% only 4 years earlier (Environics, 1997). In 1999, 61% of Canadians agreed that "Private school students receive much better education than public school students," while in 2000, 66% of Ontarians agreed with the same statement (Angus Reid, 1999, 2000). Clearly, private schools do not suffer from an image problem. Perhaps capitalizing on this popularity, the provincial government recently introduced a small tax credit to assist the burgeoning number of families who desire but cannot afford private school tuition.

This situation has created a key paradox (Aurini, 2002). Ontario private schools are gaining popularity even though they can evade the very initiatives (i.e., standardized tests, curricular standards, teacher accreditation) that have been imposed on public schools in the name of public confidence. Further, the province is allowing public funds to go to private schools without any corresponding accountability measures, a move that critics have seized upon. Ontario's private schools are thus largely unregulated, and have an opportunity to become an even starker alternative to public schools. As such, they offer a strategic setting for examining processes in educational markets.

RESEARCH QUESTIONS

This paper tests claims about educational markets, using new institutional theory to identify key features of school organization. The literature suggests three possible effects of markets on school organization.

The first research question is whether markets reverse pressures for isomorphism. Market advocates see parental wants for more personalized treatment and higher quality as fueling the demand for private schools, and thus would expect new private schools to offer smaller scale instruction, and to diversify their curricula into special themes, creating a series of market niches. Hence, market theorists would envision the third sector …

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Publication information: Article title: Innovation in Educational Markets: An Organizational Analysis of Private Schools in Toronto. Contributors: Davies, Scott - Author, Quirke, Linda - Author. Journal title: Catholic Education. Volume: 8. Issue: 3 Publication date: March 2005. Page number: 274+. © 2008 University of Notre Dame. COPYRIGHT 2005 Gale Group.

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