W.L. Dougan

1
CRAFTING INTERNATIONAL EXCHANGE RELATIONSHIPS IN
MANAGEMENT EDUCATION AN ENTREPRENEURIAL
CONTRACTING PERSPECTIVE

• W.L. Dougan
• University of Wisconsin-Whitewater
• Linda A. Reid
• University of Wisconsin-Whitewater

EFMD Conference on Undergraduate
Education Dublin, IRELAND October 14, 2006
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THE ENTREPRENEURIAL UNIVERSITY

• OLD LOGIC ?
• Mertonian norms ?
• Producing certified ? knowledge

• NEW LOGIC
• Entrepreneurial norms
• Producing economic success

• AGENDA FOR MANAGEMENT SCHOOLS
• Economic development
• Develop intellectual property from scientific
  discovery
• Services/development delivery
• Protecting and augmenting reputation

3
Three Strategies for Program Development

• STRATEGY
• External Contracting
• (TCE Perspective)
• Internal Contracting
• (Agency Perspective)
• Combination

• ACTIVITIES
• Operate program through
• ?Exchange agreement with outside party each
  side provides instruction and logistic services
  and charges own students
• Operate program through
• ?Employment of faculty and/or staff who
  provide instruction and by
• ?Contracting for logistic services or
• Buying facilities and performing
• services
• Operate program using mix of internal and
  external activities

4
ELEMENTS OF A PROGRAM

• Logistic Elements
• Travel
• Accommodations
• Food
• Health Care
• Immigration

• Curricular Elements
• Instruction schedule
• Contact time
• Personnel
• Credit
• Classroom
• Research facilities

• Participants
• Students
• Support staff
• Faculty
• Academic staff
• Third party providers

• Administrative policies
• Ownership of assets
• Division of responsibilities
• Balance
• Dynamics

5
EXTERNAL CONTRACTING (TCE)

• EXCHANGE CONDITIONS
• Potential partners
• More partners ? more external
• Asset specificity/ intensity
• Human capital
• More intensity ? more external
• Physical capital
• More intensity ? more internal
• Transaction frequency
• More frequent ? less external

• EXACERBATING CONDITIONS
• Uncertainty
• Contested venue
• Undeveloped legal institutions
• Distance
• Culture
• Bounded Rationality
• Practices are not established
• Opportunism
• Exploiting partner reputation
• Unequal exchange - services
• Unequal exchange - numbers
• Unprepared/inferior students
• Unprepared/inferior faculty or staff
• Substandard logistic services

6
INTERNAL CONTRACTING (AGENCY)
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THE CONTRACTING PROCESS

• TCE Perspective
• Uppsala Model - Staged commitment alternating
  with execution and information gathering
• Needs of programs change with time
• Terms of agreements should be reevaluated
• Agency Perspective
• Faculty member experiences create interest
• Faculty member proposes program to defray
  logistic costs
• Shortage of faculty to participate so approval is
  likely
• Necessary to consider career stages of faculty
  members

8
SOCIAL INSTITUTIONS AND CONTRACTING COSTS

• Social institutions within a region have a strong
  effect on transactions costs
• Clarity, reliability and consistency lower costs
  and raise incentives for foreign partners
• Bologna Process creates network externalities
• Increases motivation among non-EHEA partners to
  form partnerships with EHEA partners
• Increases motivation EHEA institutions to adopt
  standards

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GUIDELINES FROM TCE THEORY

• Consider make or buy
• Consider criteria affecting strategy
• Consider the functions of contracts
• Capture appropriate rents on human capital
• Consortia yield efficiency in transactions

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GUIDELINES FROM AGENCY THEORY

• Make resources contingent on compatibility with
  institutional aims
• Hire with international strategy in mind
• Consider the relative cost of misbehavior versus
  the cost of monitoring
• Cultivate redundancy in agents
• Seek to secure human capital

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GUIDELINES FROM AGENCY THEORY (cont.)

• The threshold for control is determined by
  materiality
• Actual and apparent authority should be paired
• Beware of agent ability to influence the agency
  process
• Agency relations are dynamic
• Institutional reputations cannot be controlled by
  fiat