A quantitative analysis of strategic and financial changes in small private higher education institutions
This quantitative, longitudinal study sought to provide empirical evidence of relationships between specific changes in strategies and external factors and changes in financial performance of small private colleges and universities in the Midwest with enrollments between 200 and 2,999 students between 1998 and 2005. The study used the conceptual framework of Bower and Gilbert's (2005) revised resource allocation process model and Christensen's theory of disruptive innovation as context. The research design included analyzing financial data collected from the Integrated Postsecondary Data System (IPEDS) and the Internal Revenue Service for 161 small higher education institutions in Illinois, Indiana, Iowa, Michigan, Minnesota, Missouri, Ohio, and Wisconsin to calculate institutional composite financial index scores as a basis of measurement of financial performance (the dependent variable). Responses to a 37-item Likert-style survey entitled the Small Institution Strategy Inventory (SISI) from 69 institutions provided data on the extent to which the institutions changed strategies and were influenced by external factors over eight years (the independent variable). The results of the descriptive analysis indicated one third of population of 161 small institutions operated at or below the threshold of financial viability and two thirds exhibited an overall decline in financial performance. Descriptive analysis of the SISI responses showed many small institutions changed strategies to a substantial extent but influenced by external factors to a limited extent. Correlation and regression analysis failed to support rejection of the null hypotheses of no relationships between changes in seven categories of strategies, seven external factors, and changing financial performance. The conclusions reached are that small private, non-profit institutions in the Midwest deployed sustaining strategies that acted as insufficient barriers to turbulence in the higher education industry. Small institutions in the Midwest are losing the competitive battle. It is uncertain if diligent monitoring of strategic and financial performance from a future-based perspective that leverages the unique attributes of each institution will make a difference in ability of small institutions to survive the future. Institutions are encouraged to investigate new governance and leadership structures and processes but there is no guarantee of success without additional support mechanisms. Recommendations for further research include similar analysis for other regions of the United States, refinement of strategies listed in the SISI and further analysis of outliers. Recommendations also include urging policy makers to investigate recent research and higher education data to determine meaningful and relevant strategies that strengthen small colleges and universities and to determine to what extent the nation should allow the market to control the shape, the nature, and the availability of higher education.
0745: Higher education