Academic journal article Journal of Economics and Economic Education Research

The Scope of Professional Administrators in Academia and Its Implications

Academic journal article Journal of Economics and Economic Education Research

The Scope of Professional Administrators in Academia and Its Implications

Article excerpt


Universities have always employed administrators. However, where the administrators are drawn as well as how they function is very different today as comparing to a few decades ago. In the 1970s and earlier periods, top administrators as well as midlevel managerial tasks were generally drawn and directed by the faculty. They typically occupied the administrative slots on a part-time basis and planned (and certainly did) in due course to return to full-time teaching and research (Ginsberg, 2011). Given this very special system of managerial tasks assignment and rotation, the stakeholders (largely the faculty) and the management of universities greatly overlap resulting in a reasonably aligned interest of both groups. By the language of the Principal-agent Theory, the agency problems/costs are not as serious or substantial as they are in a corporate firm.

Yet, the managerial structure of a typical university has evolved very significantly since then and is not as it seemed before. Todays' universities adopt more and more practices from the business world. Consider, for example, universities fill their top administration positions mostly by professional administrators recruited externally. Although some middle-level managerial tasks are still drawn and directed by the faculty, those administrators tend to view management as an end in and of itself. Most hope to make management their life's work and have no plan of returning to faculty.

As a result, the managerial structure of universities shares many similarities with a typical corporate firm. However, we contend that they also incorporate many drawbacks as well. Particularly, while the management level largely views the tasks as their very final end, it inevitably intensifies the separation of ownership and control. Consequently, the majority of the stakeholders are no longer involved in the managerial tasks, at least not as it used to be. Agency problems are natural outcomes.

Some solutions have been proposed and experimented to solve the difficulties derived from the separation of ownership and management in the context of corporate firms. However, we believe those solutions are not readily applicable in the academic world because of its very natural. In turn, the drawbacks universities inherited from the practices leaning toward business firms are further intensified. For instance, universities seem to allocate much more budget toward administrative tasks although their purpose is doubtfully on the academic side. Also, today's professional administrators tend to pay much attention to some short-term priorities. Yet there are barely any mechanisms discouraging such a behavior. We further believe that the increasingly separation of ownership and control brings out the agency problems which are related to many issues such as rising tuition rates, mounting student loans, and some irrational racing for ranking as well as accreditations.

In the current effort, we study the management structural shifts of a typical university. We believe that today's universities management share many similarities with corporate firms resulting in more pronounced agency problems than commonly believed. The paper is organized as following. Section II includes a literature review. The empirical evidences are in Section III. Section IV concludes.


The managerial structural shift in higher education institutions occurred since the 1970s and its implications can be understood in the context of the Principal-agent Theory (or Agency Model). Similar to a corporate firm, in a typical university, there are principals as well as agents. The principals are the stakeholders including (but not limited to) the board of regents, faculty, students, parents, and alumnus. On the other hand, the agents would largely include administrators and professional staff. An agency relationship exists in any situation that involves the delegation of duties to an agent (i. …

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