Academic journal article Canadian Journal of Sociology

Does Market Competition Encourage Strategic Action in the Private Education Sector?

Academic journal article Canadian Journal of Sociology

Does Market Competition Encourage Strategic Action in the Private Education Sector?

Article excerpt

If we first implement choice, true choice among public schools, we unlock the values of competition in the educational marketplace. Schools that compete for students, teachers, and dollars will, by virtue of the environment, make those changes that allow them to succeed.

National Governors 'Association (1991:84)


For decades academics and policy makers have debated the merits of competitive and noncompetitive environments with respect to organizational performance. In theory, organizations in the marketplace must accurately devise strategies to combat competition in ways that mutually benefit their clients and their bottom line. To survive, organizations must be highly attuned and responsive to not only customer demands but also to the goods and services of their competitors. Market advocates claim that the imperative to attract clients and navigate through uncertain market conditions encourages higher quality goods and services, and weeds out inefficient organizations. Accordingly, organizations will theoretically gather information about their competitors, and respond by creating high quality, innovative products and effective customer service protocols. The "market hypothesis" has been used to justify the privatization of formally state run sectors such as energy, sanitation, communication, and transportation (Maranto et al. 2001; Megginson and Netter 2001).

The market hypothesis has been extended to education organizations and assumes that public schools' noncompetitive and monopoly status lacks the "requisites of effective performance" (Chubb and Moe 1990:67). An intricate web of unions, teachers, and administrators are seen to wrap schools in a protective blanket of bureaucracy. In theory, if schools are treated as individual, autonomous agents that compete for resources, enrolments, and reputations, they should cater to their local communities in ways that directly benefit students. In a process we dub "strategic action" these calculated responses include raising academic achievement, creating innovative pedagogical approaches, improving teaching and learning, and responding to student or parental demands. Over time, market environments are theorized to improve the education system by driving out inefficient and unresponsive schooling organizations (for a review see Belfield and Levin, 2009; see also Chubb and Moe 1990; Lieberman 1993; Friedman 1962; Maranto et al. 2001; Peterson and Campbell 2001; Ouchi 2003; Wilson 2006; see also Davies et al. 2006; Davies and Quirke 2005). The introduction of charter schools, magnet schools, vouchers, and the full or partial funding of private schools in parts of the United States and Canada have been introduced in part to generate competition between schooling organizations and expand school choice options for parents (e.g., Holmes, 2008; Witte, 2000).

Does competition encourage strategic action in the way that the market hypothesis predicts? Despite the popularity of the market hypothesis among academics (for a discussion of Canadian examples see Bosetti 1998, Bosetti and Pyryt 2007; Dooley and Payne 2007; Holmes 2008; Robson and Hepburn 2010) and policy makers (for Canadian examples see C.D. Howe Institute; Fraser Institute), few studies concretely examine the connection between schooling organizations and competitive forces at the micro level. Instead, the prime strategy has been to infer the benefits of competitive processes based on large-scale quantitative data. While this valuable literature has examined student achievement, program innovations and teacher or parent satisfaction in quasi-market environments (see Belfield and Levin 2002; 2009), we have been unable to find research that directly examines how entrepreneurs interpret and respond to market competition or whether competition is the lever that drives best practices at the micro level.

Our paper adds to this literature by examining whether market competition informs how private education entrepreneurs understand their role in the wider schooling environment. …

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