In Pursuit of Revenue and Prestige: the Adoption and Production of Master's Degrees by U.S. Colleges and Universities.

Abstract

I propose a research program on the pursuit of enrollments from desired student populations. Non-prestigious institutions grow enrollments because excess enrollment capacity undermines organizational survival. Prestigious institutions maintain selective enrollments because prestige depends on the academic profile of undergraduate enrollments. Both types of institutions have an incentive to expand master’s degree programs. For non-prestigious institutions, master’s degree programs increase total enrollments while diversifying customer base. For prestigious institutions, revenues from master’s degrees subsidize the pursuit of prestige in undergraduate education.

Chapter 3 analyzes the adoption and production of master’s degrees. I derive hypotheses from human capital theory, resource dependence theory, and literature on the pursuit of prestige. I test hypotheses on a panel of institutions from 1975 to 2009. I find that the production of master’s degrees increases in response to declines in alternative revenues (e.g., endowment). Liberal arts colleges respond to declines in their core constituency of freshmen enrollments by adopting interdisciplinary, professional master’s degrees (e.g., business) but not technical degree programs requiring significant prerequisites (e.g., engineering).

Chapter 4 investigates “mission drift” in liberal arts colleges. I define mission drift as the abandonment of the liberal arts college “template” in favor of the comprehensive university template. I argue that liberal arts colleges become universities to increase enrollments and diversify their customer base. Becoming a university is defined as deleting the word “college” and adding “university” to the organizational name. I develop a framework to study the causes of becoming a university by drawing on market, institutional, and social network factors. I test hypotheses on a panel of all liberal arts colleges from 1975 to 2009.

I find that the probability of becoming a university increases when socially proximate institutions have previously become universities. Strong non-tuition revenues and strong market position decrease the probability of becoming a university, while declines in freshmen enrollments and prior adoption of professional master’s degrees increase the probability. The results for Chapters 3 and 4 complement one another: liberal arts colleges adopt master’s degrees to grow enrollments and diversify customer base (Chapter 3); liberal arts colleges become universities to expand master’s degree production (Chapter 4).