For-Profit Models in Traditional Postsecondary Distance Education: The Possible Gains and Losses

Someone was asking about possible business models to use in academia. I dusted off my 2007 candidacy paper as I feel it still applies.

Yikes to public education!

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Preface

I want to start this paper on a personal note. I picked the examination question as I thought it had current relevancy, and it would prepare me better for leadership in higher education.

What I found was it challenged my fundamental ideas about education. For me, the possible inclusion of a for-profit model in higher education was a troubling concept.

Why?

My first career was as an accountant in the corporate world. I have seen capitalism up close, accounted for it, and supported its goals. In 1993, I began teaching business education and entrepreneurialism at a private business college.

Seven years later, I decided to enter public education once I received my teaching degree. The decision to leave the private education sector was strictly due to what I considered the inhibiting factors of profit-making in education.

In recent years there have been more occurrences of profit-making approaches in traditional higher education.

This deeply concerns me.

I have seen the ruthlessness of corporate thinking in the name of profit. Like weeds, the roots of capitalism would spread into an institution’s foundation making it hard to eradicate.

However, I still think like an accountant and business woman. As I came to consider the notion of profit-making models in higher education as a possibility, I wondered about the benefits and lessons that could be learned from the corporate world.

As such, this examination question has asked me to form and question possible advantages, disadvantages and strategies for considering and embracing a for-profit model in public distance education programs.

This exercise had me exploring new ideas, and facing my assumptions.

This I believe prepares me for leadership in present-day higher education. I thank you for this challenge and opportunity.  And I would like to thank my supervisor and committee for the support they have shown me so far.

Introduction

Trends in Higher Education

Traditional postsecondary institutions in North America have a long history (Calhoun, 2006; Cronin & Bachorz, 2006; Duderstadt, 2005; Morey, 2004). They are considered to have built themselves to be the centres of advanced education, innovation, and research (Duderstadt, 2005).

Yet, the world has changed since their foundation.

For instance, a knowledge-based economy has rapidly evolved, and some find government and society have pressed traditional postsecondary institutions to respond (Calhoun, 2006; Duderstadt, 2005; Howell, Williams & Lindsay, 2003; Mount & Belanger, 2001).

As such, it was found traditional colleges and universities have faced growing demand for education as expanding knowledge-based industries seek hirable people who are computer literate, problem solvers and information workers (Berg, 2005; Cronin & Bachorz, 2006; Duderstadt, 2005; Howell, Williams & Lindsay, 2003; Mount & Belanger, 2001; Rhodes, 2006).

Another change found affecting traditional postsecondary institutions has been funding (Berg, 2005; Howell, Williams & Lindsay, 2003; Hoyle, 2005). Both in Canada and the United States, government financial support have seemingly declined forcing educational administrators to find other sources of capital and operating funds (ASHE, 2006a; Duderstadt, 2005; Marginson, 2006;).

This has been critically viewed as a form of neo-liberalism with governments forcing traditional postsecondary institutions to shift to market mechanisms, and engage more with private partners and industry (Anderson, 2001; Davidson-Harden & Majhanovich, 2004; Marginson, 2006; Mount & Belanger, 2001; Newman, 2000; Pekow, 2006; Rhoades, 2006).

Additionally, with globalization have come expanded networks, and increased flows of information, technology, capital, and goods and services; some find this has been enhanced by emerging communication and information technologies and the Internet, and globalization has encroached on many sectors including education (Duderstadt, 2005; Davidson-Harden & Majhanovich, 2004; Howell, Williams & Lindsay, 2003; Slaughter & Leslie, 1997).

Added to this, it appears North America demographics have changed towards an increased aging and diverse population (Duderstadt, 2005; Howell, Williams & Lindsay, 2003; Rhodes, 2006). Due to expanding economies, more adults seem to have turned to higher education, looking for career enhancement and lifelong learning (Howell, Williams & Lindsay, 2003; Martin & Samels, 2006; Milshtein, 2003; Morey, 2004).

Yet, straddled with work and family responsibilities adults are said to have been looking for alternative ways to learn, placing a premium on their time and money by closely researching educational opportunities (Cronin & Bachorz, 2006; Howell, Williams & Lindsay, 2003; Milshtein, 2003). Thus, numerous external changes seem to have put a range of demands on traditional postsecondary institutions.

In response to increased demand for education, for-profit higher education institutions are said to have proliferated (ASHE, 2006d, 2006e; Berg, 2005; Blumenstyk, 2007; Cronin & Bachorz, 2006; Davidson-Harden & Majhanovich, 2004). These intuitions it seems have tapped into a growing market of students who are looking for education that will give them new career opportunities and upgraded workplace skills, quickly and affordably (ASHE, 2006e; Berg, 2005; Hara, 2005; Moyer, 2004).

Over $2 trillion is estimated to be the annual industry revenue for the untapped education market (Davidson-Harden & Majhanovich, 2004). The main market for most for-profit higher education institutions has been identified as the working adult (Milshtein, 2003; Winston, 1999).

As well, they are thought to have catered to underrepresented populations not currently served by traditional postsecondary institutions by expanding campus branches to reach those markets, such as inner city locations (ASHE, 2006d, 2006e; Berg, 2005; Dillon, 2006).

It was claimed a key player in the for-profit higher education sector has been Wall Street investors, with access to capital and an eye on higher education as a lucrative business venture (Blumenstyk, 2007; Goldstein, 2000; Kinser, 2007b; Pusser & Doane, 2001). These investors it seems have developed large for-profit higher education institutions that have national reputations, degree programs, distance education, and shareholder funding (ASHE, 2006a; 2006d, 2006e; Kinser, 2007a, 2007b).

An example of these types of institutions are University of Phoenix and DeVry, who have claimed to establish name-brand status and a substantial alumni base, with goals to reach international markets (ASHE, 2006d; Berg, 2005).

A more current trend sees investors with private-equity funds as having purchased small college chains in order to upgrade and sell them for profit; as well, there seems to have been an increase in private companies that provide supplemental education services such as admission services and tutoring (ASHE, 2006a; Blumenstyk, 2007; Electronic Education Report, 2006; Kinser, 2007a). With regional and national accreditation being more common for for-profit higher education institutions, the accredited schools are thought to be able to compete more directly with traditional postsecondary institutions (ASHE, 2006f; Kinser, 2007a).

Overall, they have been considered to be able to offer affordably priced education that can compete with subsidized traditional institutions, and they are considered to be able to provide attractive education with a focus on teaching and high-quality student services (ASHE, 2006d; Kinser, 2007a; Winston, 1999).

It was stated the growth of for-profit higher education institutions has been staggering in the last few years, and has raised awareness in traditional institutions. (ASHE, 2006d; Blumenstyk, 2006a; Egol, 2006; Goldstein, 2000; Kinser, 2007a; Martin & Samels, 2006; Milshtein, 2003; Morey, 2004).

Berg (2005) wonders if for-profit institutions like the University of Phoenix have outwitted traditional postsecondary institutions by using a capitalist model to rapidly expand.

Responding to Changes and Demands

Some say changes in economies, markets, technology, government support, student demands, and competition have many traditional universities and colleges questioning how to respond (Carducci, 2006; Harpur, 2006; Morey, 2004; Newman, 2000).

Duderstadt (2005) furthered “we are moving toward a revenue-driven, market-responsive higher education system because there is no way that our current tax systems can support the level [of] higher education required by knowledge-driven economies (2005, p.2).

Yet, some question what traditional postsecondary institutions should do to consider these changes.

For instance, should they mimic the for-profit model in education delivery? Will this help them to compete, meet market demand, and secure more funds? At first glance, it most certainly seems like a viable solution.

Restructuring programs and courses to be delivered like a market-driven business has advantages. For instance, for-profit higher education institutions seem to have responded to student demands, streamlined costs, effectively managed labour, acquired profit and startup capital, and expanded programs and facilities (Goldstein, 2000; Morey, 2004).

Looking at this further, distance education appears to be a solution to answer changes and demands facing higher education institutions (Howell, Williams & Lindsay, 2003). Though not new to the higher education sector, distance education has been seen as a fast expanding method of delivery in both traditional and for-profit higher education institutions (Blumenstyk, 2007; Howell, Williams & Lindsay, 2003; Kinser, 2007a).

More so, distance education seems like a solution to the demands for more access to flexible, current postsecondary education that markets seek as well as having potential for generating revenue (Hanna, 2000).

An expanding component of distance education has been attributed to online learning (Howell, Williams & Lindsay, 2003). For instance, in 2006 the Bush administration lifted the restriction for all higher education institutions to deliver half of their courses on-campus; the U.S. government’s reason for the change was determined as education delivered online might reach more nontraditional students (Dillon, 2006).

As well, in 2006 an educational analyst predicted students taking programs delivered fully online would rise from 7 to 25 percent in ten years (Dillon, 2006). Also, it has been estimated over three million students have taken at least one online course in the United States (Cronin & Bachorz, 2006). What is more, with their access to capital funds for technology purchases, for-profit higher education institutions are seen to have quickly turned to online education to reach more students at minimal cost; that is, online learning has been claimed as the fastest expanding mode of distance education for for-profit higher education providers in North America (ASHE 2006a; Dillon, 2006; Howell, Williams & Lindsay, 2003; Goldstein, 2000; Milshtein, 2003).

These changes and trends bring the question of whether traditional universities and colleges should follow the lead of the for-profit sector, and restructure distance programs with a for-profit model to meet demands. Yet, another question could be whether traditional postsecondary institutions should simply continue to expand their existing distance education programs to fulfill demands and address changes? Is changing to a for-profit model in distance education programs a more viable answer? If implemented, what would not work and what would be lost for traditional postsecondary institutions? These questions will be addressed next.

Conceptual Framework: Organizational Tensions

This paper will examine the use of a for-profit model in a traditional postsecondary institution on a conceptual level, rather than from a practical view. Practical implications will be discussed in the last section on leadership strategies for delivering high quality online courses and programs.

Therefore, to develop an argument about for-profit models a broader view is needed that considers market-like activities in traditional institutions, with emphasis on teaching and learning. To gain a clearer picture of a for-profit model will require understanding it within the context of a business operation. Specific to this paper, the business context will on for-profit higher education institutions. Thus, examining the purposes, and academic and economic models of both traditional and for-profit higher education institutions will help delineate who they are, why they exist and how they operate.

Borrowing a for-profit model from the business world to consider how it fits within traditional postsecondary settings will create a discussion about the convergence of distinct structures and cultures (Rodgers, 2005).

Conceptually, it is argued that converging a for-profit model into traditional postsecondary institutions is a matter of mixing divergent organizational structures and cultures, which may create conflict and tension (Rodgers, 2005). For instance, it was stated that over time through shared learning of members, norms and traditions are developed, and organizational behaviours and cultures are formed; it is the culture within organizations that seemingly defends beliefs and traditions (Harman, 2002; Schein, 2005).

More specifically, it has been assumed merging two cultures will denote radical changes with the abandonment of existing forms of systems, norms and procedures (Skodvin, 1999). Considering traditional postsecondary institutions have focused mostly on research and education for the common good, these institutions seem less likely to focus on entrepreneurialism (Hanna, 2000).

Thus, it was furthered to converge a business model deriving from the corporate, capitalistic world with a traditional postsecondary institution would create a clash in organizational structures, cultures, and fundamental philosophies (Rodgers, 2005). Rodgers agreed and stated “there are intrinsic challenges when models and practices are used inter-systematically; especially when a model was intended for a specific situation and distinct purpose” (2005, p.1248).

Some argued traditional and for-profit higher education institutions have different purposes such as “the purpose of higher education is teaching and learning while the purpose of business is to meet customer demands profitably” (Rodgers, 2005, p.1250). Therefore, crossing purposes is assumed to lead to conflict and tensions (Schein, 1993). This paper rests on these arguments.

Literature Review

Institutional Purposes, and Academic and Economic Models

Traditional Postsecondary Institutions

Traditional postsecondary institutions are said to have committed to serving the public (ASHE, 2006a; Calhoun, 2006). They have provided educational access to a growing population, and contributed to national ambitions; they are regarded as central institutions in a modern, democratic society (Calhoun, 2006; Marginson, 2006; Pusser & Doane, 2001; Rhodes, 2006).

More specifically, universities are seen as to have enjoyed autonomy while purposely building academic and scientific capital (Calhoun, 2006; Marginson, 2006). They are identified as having provided societal benefits such as education, social mobility, citizenship preparation, innovations, cultural contributions, and public dialogue (Calhoun, 2006).

Core values of most universities have been defined as student development, critical thinking, knowledge creation, democratic ideals, and societal needs (Duderstadt, 2005; Morey, 2004; Rodgers, 2005). Faculty members are seen to have academic freedom and intrinsically value being a scholar, disseminating their knowledge and research through engagements with students and their field (Rodgers, 2005). Universities are considered unique organizations that have focused on prestige, not profit, maximization (Winston, 1999).

For instance, being a prestigious institution is said to have required building resources and academic research in order to attract quality students, who in turn increase the prestige of the institution (Calhoun, 2006; Laband & Lentz, 2004; Marginson, 2006; Winston, 1999). Winston (1999) furthered selecting quality students has restricted the supply of education which increased its demand. With excellence measured in terms of exclusivity, universities are thought to have engaged in status competition with other traditional institutions to gain resources (Calhoun, 2006; Laband & Lentz, 2004; Marginson, 2006).

Another form of traditional postsecondary institutions is colleges; college have been defined as many forms such as vocational, state/provincial or community (Razzaghi, 2001). Seemingly the most common form, community colleges are claimed to have been the fastest growing segment over the last 50 years in American higher education (Martin & Samels, 2006).

Community colleges are said to have mostly offered shorter term vocational, professional and technical programs (Mellander, 1994); as well, they have traditionally been funded and legislated by the government, and most seem to have informal governance systems which sometimes involves faculty (Carducci, 2006; Mellander, 1994; Razzaghi, 2001).

Foremost, they are seen to have served local communities with programs that reflect community social and economic needs (Carducci, 2006; Mellander, 1994; Razzaghi, 2001). Thus, their primary roles have been defined as educating the workforce as well as promoting the cultural, intellectual and social life of the surrounding region (Hoyle, 2005; Mellander, 1994; Razzaghi, 2001).

Some claim community colleges have tended to offer lower tuition fees, be open to all citizens, and provide part-time studies (Mellander, 1994; Razzaghi, 2001). Other traditional postsecondary institutions have been identified as not-for-profit private institutions, such as bible colleges, creating more access to education (ASHE, 2006a; Pusser & Doane, 2001).

In the United States, private institutions are said to have been mostly universities, colleges and professional schools, and that they vary in size (Ehrenberg, 2000). In Canada, private higher education providers, mostly labeled as not-for-profit, seem to have been rarely funded by governments, and must follow separate legislation (Alberta Learning, 2002). These private institutions have been considered to offer programs in arts, science and education as well as trade programs that cater to current labour markets (Alberta Learning, 2002).

The academic model of traditional postsecondary institutions, for the most part, has been determined as following a traditional teaching and learning model (Watts, 2004).

With this model, students apparently develop declarative conceptual knowledge, are taught to present evidence-based arguments, and learn through text, academic discourse, and written and oral examinations (Watts, 2004). Basically, it was said students are inducted into academic disciplines. However, Howell, Williams and Lindsay, (2003) have seen a shift in academic models to outcome-based competencies, with a focus on employer and learner needs.

Yet, it was still argued the traditional mode of teaching has been lecture and teacher centered; as well, curriculum development has been at the discretion of the instructor (Watts, 2003). The economic model of traditional postsecondary institutions is said to have mostly followed a not-for-profit model, drawing on government funding, student tuition, asset earnings, and private, philanthropic donations (Calhoun, 2006; Winston, 1999).

Deemed more a cash business, the economic model of traditional institutions has costs from operations closely matched to revenue, and managed through budgets (Goldstein, 2000). Calhoun (2006) stated traditional postsecondary institutions have been accorded favourable tax treatment; however, in order to be tax exempt institutions must serve public goods and not operate for the primary benefit of its owners (Calhoun, 2006).

Winston (1999) claims student tuition has mostly been subsidized by traditional postsecondary institutions. The economic model and budgets of traditional postsecondary institutions is said to have been constructed using certain criteria, such as measurements of tuition and government funding, full-time equivalent status of students, and the accumulation of credit hours; their output has been identified as student knowledge and degree acquisition (Hanna, 2000; Olcott & Schmidt, 2000; Rodgers, 2005). This description brings to light some of the key attributes of traditional postsecondary institutions.

For-Profit Higher Education Institutions

It was stated for-profit higher education institutions’ main purpose has been to trade and target markets (Rodgers, 2005). Students are considered to have been their key customers and primary contributor to the sector’s success (ASHE, 2006e; Berg, 2005; Kinser, 2006). Thus, it was claimed the focus of for-profit providers has been on student learning outcomes and competencies, usually aligned with workplace and employer needs; in turn, they have delivered career-oriented programs in areas such as technology, business, trade, and health education, with expansions into professional programs such as, psychology, law and education. (ASHE, 2006c; Bates, 2005; Berg, 2005; Dillon, 2006; Hanna, 2000; Kinser, 2007a; Milshtein, 2003).

It was claimed a number of for-profit schools have offered career placement services for their graduates (Milshtein, 2003). An example of a prosperous for-profit university is given as the University of Phoenix, with an estimated student body of over 250,000 served on campus or online in 37 states (Cronin & Bachorz, 2006).

Their growth has been attributed to responding to the demand for higher education and targeting employed students, offering degrees, providing flexible programs with short academic terms, using efficient admissions systems, employing part-time faculty, leasing facilities, and buying textbook rights (Berg, 2005; Cronin & Bachorz, 2006; Hoyle, 2005; Martin & Samels (2006).

Foremost, students’ retention and persistence are seen as the greatest concern for the University of Phoenix (Cronin & Bachorz, 2006). Yet, the University of Phoenix is not considered the industry standard (ASHE, 2006b; Kinser, 2006, 2007b).

The size of the for-profit higher education sector in the United States is considered small, with an estimated size of being one-fifth of all postsecondary institutions; it was estimated approximately 600 for-profit institutions have granted degrees,

another 1,600 have provided non-degree education, and only 11 campuses are assumed to have enrolled over 5,000 students (ASHE, 2006d; Kinser, 2007a). In Canada, it was stated there are very few for-profit higher education institutions (Birchard, 2006; Davidson-Harden & Majhanovich, 2004). Overall, generalizations about for-profit institutions have been determined to be difficult to make due to the constant change in ownership, status, location, and curriculum (ASHE, 2006b; Kinser, 2007a). Currently, to create some order, categories for for-profit institutions have been defined as location, ownership, and highest degree awarded (ASHE 2006b; Kinser, 2007b).

In the United States, the Higher Education Act recognized for-profit institutions as part of the higher education sector (ASHE, 2006a, 2006f); it was thought this along with national, regional and professional agencies accrediting them, for-profit institutions have been increasing in presence (ASHE, 2006f; Kinser, 2007a, 2007b).

Getting accredited is thought to have allowed these institutions to access federal financial aid programs for students in order to help them afford for-profit tuition fees (ASHE, 2006a; Berg, 2005; Blumenstyk, 2006a).

Yet, these institutions are seen to have had to comply with distinct regulations that the public education sector does not, such as more restrictions on federal aid or degree granting (ASHE, 2006a; Blumenstyk, 2006c; Kinser, 2007a). As well, for-profit organizations are seen to have dealt with other regulatory bodies that monitor public trading transactions, business conduct, and consumer protection (ASHE, 2006f; Berg, 2005).

It was argued due to this monitoring past alleged accusations for this sector have been about low completion rates, high loan default rates, aggressive recruiting, misleading financial statements, and accreditation shopping  (ASHE, 2006a; Berg, 2005; Blumenstyk, 2006b; Kinser, 2006, 2007a).

Yet, it was claimed little is known about the academic model of for-profits; a basic understanding has been they usually are geared towards adult learning, small classes, self-directed learning, practical applications, current information, team work, and continuous calendar schedules (ASHE, 2006c; Berg, 2005; Kinser, 2007a; Milshtein, 2003). Contrary to popular belief, it was estimated most for-profit institutions have established comparable student-faculty ratios to those in traditional institutions (Kinser, 2007a).

As well, it was assumed for-profit schools have tended to produce narrow, standardized and centrally designed curriculum, striving for economies of scale by replicating programs to a mass population (ASHE, 2006c; Kinser, 2007a; Milshtein, 2003). A growing number of for-profit schools are thought to becoming open admission, and accepting underrepresented populations (ASHE 2006c; Berg, 2005).

The economic model of for-profit institutions is believed to be focused on trade, market demand, controlled costs, pricing, competition, and making profit (Anderson, 2001; Pusser & Doane, 2001; Rodgers, 2005).

It was thought usually a portion of the profit must be returned to investors or shareholders (Hanna, 2000). The output of for-profit institutions is determined as being to deliver a quality product or service for profit-making reasons (Rodgers, 2005). This has been a brief description of for-profit higher education institutions.

Convergence of Models

It was argued there are advantages and disadvantages to converging a for-profit model into a traditional postsecondary institution. Rodgers (2005) stated though public higher education institutions are not businesses, they could benefit from the use of business principles for efficiency purposes.

Bates (2005) agreed and suggested educational leaders could plan for success by using business methods such as financial planning and market research. As well, he did not see the concern for traditional institutions creating some level of profit.

Goldstein (2000) explored the possibility of converging for-profit models into traditional postsecondary institutions. One way might be to develop a separate wholly owned for-profit entity that manages the business and funding;

whereas, core academic functions, such as curriculum development, teaching and accreditation, could remain with the public institution. He furthered, the separate entity could be a for-profit venture, or remain owned by the public institution with shared governance and rewards for those involved, such as faculty, instructional designers, and technical staff.

This example shows the potential of traditional postsecondary institutions engaging in business-oriented activities.

On the other hand, resistance to the notion of converging with a for-profit model has been based on an argument that traditional colleges and universities are formed as a “natural product of social needs and pressures”; whereas, businesses are rational organizations that mobilize resources towards particular aims (Selznick, 1957. p.5).

It was further argued that the history and theory of nonprofit organizations are distinct from the for-profit sector, with dissimilar basic values and assumptions (Morey, 2004; Pusser & Doane, 2001). Criticized as academic capitalism, which is defined as decision-making driven by market forces, the for-profit approach is said to threaten the core values of traditional institutions (Anderson, 2001; Rhoades, 2003; Slaughter & Leslie, 1997). Anderson (2001) and Winston (1999) stated for-profit models will likely shift benefits to investors and not the public, and tend to focus on the wrong places when making decisions and policies.

Furthermore, it was assumed to embrace a corporate model would mean to dismantle higher education organizational elements in order to create products that align with markets; however, it was argued traditional institutions are not reducible to product development (Harpur, 2006).

Following the lines of this paper, Rodgers (2005) appreciated there will be challenges when models and practices of distinct purpose are converged; yet considering such an approach may give the opportunity to contemplate challenges and benefits. Thus, using the context of distance education and a for-profit model drawn from the for-profit higher education sector, gains and loses will be discussed when traditional postsecondary institutions begin to consider and embrace for-profit models of teaching and learning.

Potential Gains and Losses

Potential Gains

Increases in Economic Benefits

Reviewing the gains for-profit institutions have acquired through their business dealings might give some insights for traditional postsecondary institutions hoping to improve their financial situation. For instance, regarding delivering distance education programs, it was found that Western countries using distance methods to deliver formal, professional or workplace training saw an increase in enrolment of 10 per cent per year since 1996. This was compared to traditional education whose enrolment increases were estimated at 2 to 5 per cent (Bates, 2005). Furthermore, for-profit higher education providers seemed to readily invest in technology and computer facilities to meet the market demands (Cronin & Bachorz, 2006). As well, they claimed to have found technology prices declining, and by working with technologies fewer physical facilities are needed alleviating costly purchases and high maintenance expenses (Cronin & Bachorz, 2006). To date, many for-profit higher education institutions have found online learning as a method to deliver education to many students at a minimal cost (Dillon, 2006; Goldstein, 2000; Milshtein, 2003). Following this, it was anticipated that through lowered technology costs, capital investments and increased enrolment in distance education programs larger for-profit institutions have been able to charge approximately 12,000 USD in annual tuition fees; whereas, some traditional universities have been accused of charging up to two or three times that price (Cronin & Bachorz, 2006).

For-profit higher education institutions, structured as businesses, have relied on the principle that competition improves productivity and efficiency (Pusser & Doane, 2001). For-profits institutions are seen as having offered competitively priced education that can compete with subsidized higher education; also, they are seen as having provided attractive education with a central focus on teaching and high-quality student services (ASHE, 2006d; Kinser, 2007a; Winston, 1999). It was said for-profit educational providers have not persuaded employers or students to attend their institutions, but rather have designed programs and services to fulfill customer needs (Pusser & Doane, 2001). Following these strategies, Hanna (2000) claims traditional postsecondary institutions could possibly obtain more students if they expanded to meet the high demand for lifelong education and training, whether delivered locally, nationally or globally. Furthering this, it was predicted by following a for-profit business model traditional postsecondary institutions could restructure their operations assumedly giving them the flexibility to respond quickly (Dillon, 2006). This is already happening in some cases. For instance, professional master’s degrees are claimed as having become good sources of income for traditional institutions, but for-profit institutions are argued as doing the same (Rhoades, 2006). It was further argued, in Canada medical schools are said to charge a heavy tuition as they enjoy the luxury of being typically the ones who offer those professional programs (Mount & Belanger, 2001). Yet, with the apparent threat of some states and provinces deregulating tuition, students might find programs and courses delivered at for-profit institutions more attractive (Mount & Belanger, 2001). Traditional institutions are also criticized for rising costs due to inefficiently adding new amenities, such as technology, to existing facilities to meet student demands (Cronin & Bachorz, 2006). Thus, by restructuring traditional postsecondary institutions towards a for-profit model, it was considered they might be able to compete with for-profit educational organizations, especially targeting students not currently being served by traditional postsecondary institutions (Bates, 2005; Hanna, 2000).

Furthermore, Bates (2005) claimed delivering distance ducation has required substantial capital funds for startup initiatives, continual development and maintenance, especially with online learning (Bates, 2005). Converting to a for-profit model might open opportunities for traditional institutions to acquire private investments, other than usual incomes such as government funding, student tuition and philanthropic support (Calhoun, 2006; Goldstein, 2000). Pekow (2006) stated there has been plenty of private capital available at reasonable prices. In fact, in 2006 the Commission on the Future of Higher Education in the United States stated it may review how private capital can flow into traditional institutions in collaborative and competitive ways (Pekow, 2006). Additionally, structured as a private business, traditional postsecondary institutions could obtain capital monies through selling part of their operation as shares (Goldstein, 2000). However, this is stated as not allowable due to traditional postsecondary institutions being publicly run (Goldstein, 2000; Government of Alberta, 2007). Interestingly, in the United States some state governments have allowed traditional postsecondary institutions to invest in spin-off companies, increasing their ability to work with business models (Rhoades, 2006). The argument becomes traditional postsecondary intuitions might be able to cater to new markets, acquire capital investments, and increase revenue if they were released from the heavy burdens of a bureaucratic structure with government regulations, and restructure themselves to a tightened business model.

Improved Education and Services

It is thought “technology can provide an opportunity to teach differently, in a way that can meet the fundamental needs of a new and rapidly changing society” (Bates, 2005, p.225). Considering the argument that the shift to a knowledge-based society has required more people to be educated throughout their working lives, it was assumed adults and employers are calling for flexible education and access to lifelong learning (Hanna, 2000). As a result, it was assumed more people will need education.  This has been argued as the rise of for-profit institutions (ASHE, 2006e; Berg, 2005; Hara, 2005; Moyer, 2004). Yet, a single mass market of students is no longer seen, but instead arguably has become a collection of learners with a variety of needs calling for smaller, customizable courses and programs (Bates, 2005). It was wondered if this might become a concern for institutions still delivering traditional academic models where classes are teacher- and lecture-centered, and less career focused (Haggis, 2007; Watts, 2004). However, if an organization were working within a market demand system, it is predicted to have to cater to the learning and support needs of diverse students. Deemed choosy consumers, it was believed students wish for programs when, where and how they want them (Martin & Samels, 2006). As a possible solution, it was determined online distance programs could be designed to deliver up-to-date continuing, professional, and work-based programs to meet these demands (Bates, 2005; Cronin & Bachorz, 2006). As well, for-profit models of higher education were thought to support quick, innovate changes (Davidson-Harden & Majhanovich, 2004). Cronin and Bachorz (2006) added online courses offered by various providers would give students more choice and ability to quickly finish their programs. Additionally, Dillon (2006) saw distance education delivered over the Internet as a way to reduce access barriers for low-income, first-generation, and nontraditional students.

Furthermore, it was believed distance learners have needed courses designed and developed differently, requiring special support while learning online (Bates, 2005).  This implies a call for new forms of pedagogy that best serves distance students. For instance, it was suggested communication technologies could be used to increase the opportunities for instructors and students to interact and network with each other (Bates, 2005; Hanna, 2000). For instance, interaction and constructivist-based learning is said to develop skills needed for a knowledge-based society, such as information management and analysis, problem solving and knowledge construction (Bates, 2005). As well, it was predicted successful academic programs in the future would help students develop diverse perspectives as well as critical thinking, technological, and team skills (Bates, 2005; Hanna, 2000). Furthermore, the focus in education has been seen as shifting from teaching to learning with student achievement as the main measurement; with advances in technology this shift has been used by some to offer new forms for students to display their progress (Morey, 2004). To their advantage, many for-profit providers have implemented a team effort when constructing distance education courses and programs (Cronin & Bachorz, 2006). These teams have included subject matter experts, course designers, and multimedia specialists. With most distance courses seen as typically designed by independent faculty in traditional postsecondary institutions, it was thought team-based development might be a better way of increasing the quality of education (Cronin & Bachorz, 2006).

Moreover, Bates (2005) considered the expansion of new learning organizations, such as for-profits institutions, might be forcing traditional institutions to review the quality of their education and learner support. As an instance of this, in some past corporate-academic partnerships, curriculum designed by traditional institutions was apparently criticized as too boring, long winded, and poorly designed for online programs (Guri-Rosenbilt, 2005). Therefore, considering these claims perhaps by following for-profit institutions’ ability to have programs custom tailored, designed in teams, and focused on essential skills and knowledge, traditional postsecondary institutions might be able to redesign distance education programs for the better.

Updated Organizational Structure

The Internet and for-profit institutions are said to have been transforming higher education (Cronin & Bachorz, 2006; Kinser, 2007a, 2007b). For instance, changes in higher education markets, increased competition, and new learning, information and communication technologies along with globalization have been seen as having affected traditional postsecondary institutions and possibly creating new models of higher education (Guri-Rosenbilt, 2005; Hanna, 2000; Pekow, 2006; Morey, 2004). Poley (2000) added with changed demographics and increased demand for lifelong learning, traditional organizations might have to change their organizational models by putting less emphasis on authority and more on responsibility. Furthermore, it was argued that with rapid changes seen in knowledge-based societies and workplaces it might become important to respond quickly to market and student needs. However, traditional institutions were critiqued as having been governed closely by rules and policies established long before current technologies evolved (Goldstein, 2000). As well, traditional postsecondary institutions were said to enjoy preserving old ways and norms, and some found change painful (Cronin & Bachorz, 2006). Newman (2000) pointed out what he considered antiquated structures were still existing in traditional postsecondary institutions and supported by perceptions of scarce and skilled faculty, set locations, selected students, learning materials and face-to-face instruction; whereas, he considered more evolved institutions did not resemble any of these concepts. For-profit providers were thought to have designed their distance program to serve student needs through tailored education, quality student services, affordable tuition, and financial aid (ASHE, 2006a, 2006e; Berg, 2005; Blumenstyk, 2006a; Cronin & Bachorz, 2006; Kinser, 2006). In the for-profit world of higher education, students were seen as first priority. Shifting to a for-profit model may help shed cumbersome administrative practices that limit the activities and transactions of distance programs, whereas using a for-profit model might increase the ability to quickly respond to markets and better compete (Goldstein, 2000).

In summary, the potential gains for converting to a for-profit operation might be developing niche markets, increasing revenue, acquiring capital, and running cost-effective operations; as well using a for-profit operations might enable traditional institutions to redesign organizational structures to respond more effectively to student needs, increase educational choices, and improve education quality and student services (Bates, 2005; Hanna, 2000).

Potential Losses

Loss of Traditional Values

A concern was aired “if market forces are allowed to dominate and reshape the higher education enterprise without constraint, some of the most important values and traditions of the university will likely fall by the wayside, including its public purpose” (Duderstadt, 2005, p.2). It was assumed embracing a for-profit model like e-learning businesses might require restructuring, part if not all, of traditional postsecondary organizations (Bates, 2005). As well, moving to a for-profit model of operation might endanger traditional institutions to become more corporate businesses than public institutions (Newman, 2000). In turn, Pusser and Doane (2001) stated institutions might produce more private than public goods. Yet, arguably traditional postsecondary institutions have been given a special status to focus on the needs of society rather than self-gain (Newman, 2000).  They have been expected to educate citizens, promote social justice, develop economies, advance knowledge, and facilitate public dialogue (Calhoun, 2006; Morey, 2004). Structural changes such as converting to a business model might alter the roles and values of traditional postsecondary institutions, perhaps causing less focus on public service and benefits, and diverting attention away from moral and political responsibilities (Harpur, 2006). Moreover, it was thought as profit becomes more important in traditional institutions, core values such as research and academic freedom could possibly decline (Calhoun, 2006; Cronin & Bachorz, 2006). In essence, there were concerns by some for the preservation of institutional purity, and its norms, beliefs and purposes (Anderson, 2001; Goldstein, 2000). Newman (2000) suggested values, norms and purposes should be preserved, and asks if not, who will provide for them? Another concern was if markets continued to encroach on traditional postsecondary institutions self-governance structures and the retention of autonomy may possibly weaken further, and become more vulnerable to capitalism (Calhoun, 2006; Marginson, 2006).

Others argued if traditional institutions built profit-making distance education programs student access might become an issue (Davidson-Harden & Majhandovich, 2004). For example, Bates (2005) argued it might have seemed accessibility and equal opportunity were the main reasons online learning was developed in higher education, but unfortunately he thought the main drivers have been commercialization and profit (Bates, 2005). Thus, a concern might be the possible exclusion of students who cannot afford market bearing prices for education, or afford to own the advanced technologies required for online access (Hanna, 2000; Hawkins & Oblinger, 2006). Additionally, Rhoades (2006) claimed probably fewer resources would be put towards underrepresented populations of students. Poley was concerned that “some peoples’ greed may spell disaster for many others” (2000, p.255). Then, there was a concern that focusing on the bottom line may cause traditional institutions to overlook effective teaching and learning strategies (Hanna, 2000; Harpur, 2006). There has been much criticism about the onslaught of online programs and the risk of commodifying education into saleable packages for a market, raising questions about quality and credibility (Blair & Monske, 2003; Freeman & Thomas, 2005; Milshtein, 2003). Furthermore, for-profit institutions have been criticized for creating replicated programs with standardized curriculum to maximize financial growth (Hanna, 2000). It was believed standardization did not address multicultural and varying needs of learners (Hanna, 2000). As well, commodifying education might cause a shift from inquiry and intellectual pursuits to mere transmission of knowledge (Cronin & Bachorz, 2006). Using business models may mean curriculum would have corporate agendas, and programs may be reorganized or eliminated if they were not revenue producers. (Anderson, 2001; Harpur, 2006; Mount & Belanger, 2001). For example, it was predicted certain subject areas may not become available if they could not compete with current trends in business, health and technology education; overlooked programs may be those in the general studies and liberal arts areas (Cronin & Bachorz, 2006). For example, for-profit providers have been criticized for focusing their students on job preparation, and directing attention away from civic education (ASHE, 2006e). The shift to a for-profit model seems to create criticism about overlooked values, less public benefits, student access problems, and the quality of education.

Diminishing Faculty Roles

Faculty members are said to have a different role within for-profits institutions than traditional ones. For instance, at for-profit schools faculty have tended to be part-time, industry experts, and focus only on teaching (ASHE, 2006c; Kinser, 2007a, 2007b; Milshtein, 2003). Furthermore, for-profit education are said to have created new employment relationships by using more non-tenured faculty who have less input into curriculum, tend to work long hours for minimal pay, and do not engage in the long-term interest or the governance of the organization; basically, they have been deemed to be treated as employees (Cronin and Bachorz, 2006; Goldstein, 2000; Rodgers, 2006; Winston, 1999). With a for-profit model, college and university faculty might be at the risk of losing their traditional roles, such as control over the curriculum and sharing the governance of their institutions (Carducci, 2006). Tenure has rarely been given in for-profit institutions, overlooking a traditional reward system thought to ensure academic freedom and the quality of education (Rodgers, 2005). Furthermore, the disconnection of faculty from course development might diminish the valued expert content, scholarship quality, and the transmission of new knowledge (Morey, 2004).  Rodgers (2006) discussed how faculty members might be more equipped to understand what is to be learned to create better minds. Also, not sharing in the governance of institutions might hinder the shaping of education in democratic ways, perhaps leaving academic managers to tend to the affairs of institutions and pursue short-term financial interests only (Rhoades, 2003). More concerning, it was stated employment agreements at for-profit institutions are assumedly claiming more share in the intellectual property proceeds and the copyrights of faculty work (Goldstein, 2000; Rhoades, 2006). Yet, faculty were considered the heart of traditional institutions – their role has been designing education, pursuing research and innovation, and upholding the academic culture essential to sustaining the values and purpose of traditional higher education (Gappa, Austin & Trice, 2005). Thus, maintaining traditional roles of faculty in higher education is considered important to ensure democratic governance, expert-based curriculum, and upholding the academic culture.

Competitive Strains

It was stated that traditional postsecondary institutions have vied for a position in their field by competing with other public institutions for prestige through means of quality students and innovative research (Calhoun, 2006; Winston, 1999). However, the adult learning market has been seen as becoming more competitive with promises of opportunities for new players (Hanna, 2000). It was claimed there has been a “greater variety of educational choices to match the greater variety of educational needs and interests” (Winston, 1999, p.10). As such, it was assumed for-profit institutions are becoming more attractive as society becomes disenchanted with traditional institutions, and more infatuated with privatization and the marketplace (Rodgers, 2005; Winston, 1999). Though traditional postsecondary institutions most likely still offer the majority of formal postsecondary education, the choice of educational venues are seen as increasing, especially in the advent of technological advancements (Bates, 2005; Olcott & Schmidt, 2000). As such, for-profit organizations are said to be finding ways to compete with the subsidized education of traditional institutions (Morey, 2004; Winston, 1999).

With increased competition, traditional postsecondary institutions might be at risk of losing potential students and income unless they compete more aggressively (Hanna, 2000). It was predicted ‘time to market’ will become the new competitive edge (Hanna, 2000). Yet, assumedly competing more aggressively might change how traditional organizations operate, causing new strains. For instance, there may have to be a trade off between institutional reputation and short term gains, returning to the dilemma of losing values and purpose (Pusser & Doane, 2001). As well, engaging in the assumed competition over curriculum might pose more problems (Anderson, 2001). For instance, streamlining costs and maximizing profit in traditional instructional areas might be difficult as some programs and courses have been heavily subsidized in order to offer them. Winston furthered that decisions to change programs might be political, which he considers has not been the case for for-profit ventures who apparently can quickly change curriculum in response to market demands. As well, it was wondered if traditional institutions have struggled with rising costs by ineffectively adding new amenities, such as technology, to existing facilities to meet student demands (Cronin & Bachorz, 2006). Then, there appeared to be the concern of program accreditation. The process of accreditation at traditional postsecondary institutions has been traditionally established through government boards (Olcott & Schmidt, 2000). Most programs delivered at a distance have become part of the traditional institutions’ regular accreditation process (Hanna, 2000). Difficulties may arise if programs delivered through for-profit models need to be quickly changed to compete in the adult marketplace; it was questioned if new programs would get accredited through the multi-level approval process, or if they could be accredited in time as most program approval processes tended to take a year or more to complete (Guri-Rosenbilt, 2005; Wood, 2006).  In essence, with their established bureaucratic and administrative structures, traditional postsecondary institutions are said to be hard pressed to compete like businesses (Selznick, 1957). Issues of pursuing short-term gains, working with over-subsidized programs, ineffectively building new amenities, and dealing with cumbersome accreditation processes might add to the strain for traditional institutions to compete.

Risk of Failure

The risk of failure was thought to be a concern for traditional postsecondary institutions that developed distance education programs based on a for-profit model. For instance, it was claimed not every for-profit distance education initiative had been fruitful; for instance, a number of institutions folded after building virtual schools while trying to find new markets (Bates, 2005; Cronin & Bachorz, 2006). Criticized as cashing in on the e-learning upsweep, claims have been made that partnerships between public universities and private companies lost millions of dollars after closing their virtual doors only months later (Bates, 2005; Guri-Rosenbilt, 2005). Rhoades (2006) stated most entrepreneurial educational organizations probably did not realize the revenue they wanted from student enrolment or from the sale of educational materials. As well, Bates (2005) shared he thought consortiums between universities, colleges, and private companies did not fair well due to the cumbersome work, low student enrolments, and weak forms of collaboration. Guri-Rosenbilt (2005) blamed these mishaps on the organizational differences between the academic and corporate worlds. Another concern claimed new educational ventures, such as online programs, would need to be offset immediately by market demand. That is, investing substantial amounts of funding with hopes to recover from revenue within a short time might become a risk. The concern becomes if traditional institutions could attract enough students, and offer programs that the market sought (Hanna, 2000). Yet, past failures of e-learning initiatives have been criticized for using “business models for on-line programs [that] were predicated on booming employer demand, without establishing end-user demand” (Guri-Rosenbilt, 2005, p.22). It was thought these risks were not something institutions were willing to endure, as they have the duty to protect the integrity of investments, especially those derived from public money and private donations (Goldstein, 2000).

Martin and Samels (2006) considered failures in traditional institutions were due educational leaders lacking entrepreneurial skills. For instance, it was thought academic staff promoted to leadership and administrative roles might not have the skills to deal with competition, managing finances, or effectively working with resources and faculty (Wolverton, Ackerman & Holt, 2005). This might have direct implications for working within for-profit models. Martin and Samel (2006) echoed this by stating the high turn over of traditional institutional presidents has revealed a lack of experience and skill for creating significant vision and focus. If these claims are true, how will educational leaders cope with new ventures such as for-profit online learning initiatives? Risks for establishing online programs could entail poor market demand, unsuccessful return on investments, failed programs, and lack of entrepreneurial leadership.

In summary, it was assumed the losses from embracing a for-profit model in traditional postsecondary institutions might be the erosion of values, purpose, and faculty strengths in the name of profitable aims. As well, the possible strain and risk from competing and venturing into uncertain areas, such as distance and online programs designed for market demand, might be difficult considering the way traditional institutional are structured and leaders are prepared.

 Discussion

This paper has examined the convergence of a for-profit model into a traditional postsecondary institution. More specific, consideration of embracing a for-profit model through distance education programs was used as an answer to external changes and pressures felt by traditional postsecondary institutions. Consequently, possible gains and losses from this convergence were explored by drawing on models of for-profit and traditional postsecondary intuitions. However, diverse views within the literature and limited research on for-profit educational providers made it difficult to grasp explicitly how for-profit institutions operate; in turn, this made determining the effect of for-profit models on traditional postsecondary institutions difficult, as well (ASHE, 2006c, 2006d; Morey, 2004; Newman, 2000). The literature mostly focused on large for-profit universities, such as the University of Phoenix, and seldom addressed the rest of the for-profit education sector. However, from what was given, a general description of for-profits institutions showed them as growing, changeable, and controversial at the same time. Moreover, the Association of Studies in Higher Education [ASHE] (2006a, 2006c, 2006d) has recently called for more studies on the for-profit educational sector in order to understand its history, academic and economic models, student experiences, learning outcomes, competition, and the impact on the higher education field. Studying this further may reveal the impact of their models on traditional postsecondary institutions.

Before engaging in a discussion about using for-profit models in traditional institutions, it must be said that universities and colleges have been considered as engaging in marketization and profit-making arrangements with the private sector for some time. However, it was claimed this has been done more subtly and without changing the ownership structure (Anderson, 2001). Termed academic-industry relations, traditional postsecondary institutes and the private sector are claimed to have been exchanging ideas and research for many years (Anderson, 2001). Such activities have been technology transfers, research patents, technology licenses, food services, and commercial bookstores (Anderson, 2001; Calhoun, 2006; Cronin & Bachorz, 2006; Goldstein, 2000). Services were seen as delivered through a number of arrangements such as industry partnerships, research parks, for-profit subsidiaries, and outsourcing (Anderson, 2001; Goldstein, 2000; Pusser & Doane, 2001). It was thought these arrangements have reached into the service of teaching, as well. For instance, traditional institutions have partnered with private educational suppliers of textbooks, content, software, and services to develop and deliver learning online more effectively. Alternatively, public universities have created spin-off private companies to deliver their programs online. Moreover, a number of traditional postsecondary institutions and private service companies have created national and worldwide consortiums to reach untapped students bodies (Bates, 2005; Hanna, 2000).

Therefore, drawing on the literature on for-profit higher education institutions and the historical privatization activities of traditional postsecondary institutions, it appeared moving towards a for-profit model in distance education programs has come with mixed reaction. Conceptually, it was argued converging two distinct organizational structures such as traditional and for-profit higher education institutions might create conflict and tension (Rodgers, 2005). As well, it was predicted the convergence may not transform well, or might result in an ineffective higher education institution (Harpur, 2006). Though no conclusions were made about possibly using for-profit academic models in traditional postsecondary institutions in the literature, it has been suggested the most apparent gain might be creating flexible educational programs and services that cater to the needs of a rapidly changing society and new economy (Bates, 2005; Cronin & Bachorz, 2006; Davidson-Harden & Majhanovich, 2004; Dillon, 2006; Duderstadt, 2005; Pusser & Doane, 2001). Additionally, it was assumed the most prevalent loss may be the declining values and purpose of traditional postsecondary institutions as they moved towards a business model that focused on competitive markets and profit-making (Calhoun, 2006; Cronin & Bachorz, 2006; Harpur, 2006; Newman, 2000; Pusser & Doane, 2001). However, scholars and academic leaders who considered the possibility of engaging with for-profit models offered advice on how traditional postsecondary institutions might manage themselves. The strongest piece of advice was for traditional institutions to protect and preserve their key values and roles (Duderstadt, 2005). These values were assumed to be institutional autonomy, academic freedom, control over research, shared governance, and tenured faculty; also claimed as important was the continual openness to new ideas, quest for truth, preservation of cultures, and education of citizens (Calhoun, 2006; Duderstadt, 2005; Mount & Belanger, 2001). As well, Pusser and Doane (2001) stated universities should continue to be political institutions questioning and contesting policies, and Marginson (2006) suggested for traditional postsecondary institutions to continue focusing on community, dialogue, and social awareness.

As a result, it might be more beneficial for traditional postsecondary institutions to respond to external pressures without changing to a for-profit structure, yet draw on appropriate business principles and models (Gore, 2005). However, this would require some changes. For instance, changes may require answering to apparent new demands for providing career programs, and programs more focused on the cornerstones of the new economy such as science, technology, environment, health and management; also, it may mean competing more globally (Mount & Belanger, 2001; Rhoades, 2006). As well, it was thought shifting to the new economy may mean seeking financial investments and allocating resources differently towards potential markets (Rhoades, 2003). Continuing stronger in the higher education sector may mean creating partnerships to develop programs, which might then lessen the risk and improve the economies of scale (Martin & Samels, 2006).  Foremost, Duderstadt (2005) suggested traditional institutions should try to remove seemingly restrictive barriers to respond to a rapid changing society. In short, it was guessed being responsive and competitive yet remaining true to ideals might entail moving to a ‘socially-oriented entrepreneurial’ approach that views enhancement of society, not revenue, as the bottom line (Rhoades, 2003). More so, Duderstadt (2005) recommended that the need to transform institutions should be seen as an opportunity, not a threat.

It was furthered that traditional postsecondary institutions might also consider reviewing how they could improve on areas of strength, which were assumed as their diversity and educating students, addressing social issues, and facilitating scholarship and debate (Marginson, 2006; Mount & Belanger, 2001; Newman, 2000). Yet, Harpur recommended traditional institutions might consider “accommodating the values of the traditional disciplines without necessarily accommodating all traditional practices” (206, p.148). As well, it was thought improving strengths may mean ensuring faculty do not become managed professionals, but continued to share governance and held a broader sense of expertise and social responsibility (Rhoades, 2003). Furthermore, Anderson (2001) encouraged continuing private relations with industry and other partners if it ensured a bi-directional flow of knowledge, and shared cultures, languages and practical applications. Yet, good advice was to ensure a balance between corporate relations and traditional conventions, seen as academic freedom and the quest for truth (Mount & Belanger, 2001). As well, other advice was for institutions to communicate about their values and missions to the broader community, and to promote their aims for public economic and social benefits and the freedom of ideas (Morey, 2004; Pekow, 2006).

However, Morey (2004) saw the lines blurring between for-profit and traditional higher educational institutes as they competed for each others students and resources. As such, it was suggested traditional institutions might want to regard the for-profit institutions as competing partners in higher education, and learn from them (Newman, 2000; Pekow, 2006). For instance, traditional postsecondary institutions might learn from the for-profit providers’ focus on teaching as curriculum assumedly becomes the real focus of competition (ASHE, 2006c; Winston, 1999). As well, lessons might be on how to attract private investors and partners to share risks and better compete (Pekow, 2006). Yet, it was also thought traditional institutions may want to consider that the profitability of past e-learning initiatives has been questionable and perhaps avoid having to narrow a focus on technology (ASHE, 2006c; Duderstadt, 2005; Guri- Rosenblit, 2005; Newman, 2000). However, it was wondered if competition may not be as troublesome as some think. For instance, for-profit higher education institutions are thought to represent a small portion of the higher education sector (Kinser, 2007a). As well, for-profits are claimed to have distinct goals from traditional schools, and did not focus on social benefits or knowledge creation (ASHE, 2006c, 2006e; Milshtein, 2003). Also, it was stated some for-profit institutions struggled with business failures, and may have troubles sustaining their current growth (ASHE, 2006e). Morey (2004) and Winston (1999) predicted the traditional postsecondary institutions that are most threatened by the increase of for-profit ventures were the less subsidized schools, whereas, large, elite institutions would feel less of the effect. However, they suggested large traditional institutions must continue to reassess who they are and what they do to determine their role in the new economy. More important, it was projected the traditional postsecondary sector was still strong with substantial increases in enrolment, and staff hires (June, 2006; Martin & Samels, 2006). Duderstadt (2005) put readers at ease by claiming traditional postsecondary institutes would probably flourish in the knowledge era by addressing individual and societal needs for advanced education and knowledge. He also recognized the traditional higher education sector has had many changes over the years, and will continue to change.

Yet, some were still concerned traditional postsecondary institutions might become affected by changing markets and reduced funding (Berg, 2005; Calhoun, 2006; Cronin & Bachorz, 2006; Duderstadt, 2005; Howell, Williams & Lindsay, 2003; Hoyle, 2005; Milshtein, 2003; Morey, 2004; Mount & Belanger, 2001; Rhodes, 2006; Slaughter & Leslie, 1997), and may not continue to focus on public contributions, but turn to entrepreneurialism and engage in academic capitalism (Anderson, 2001; Calhoun, 2006; Slaughter & Leslie, 1997). As argued above, perhaps traditional postsecondary institutions might consider the strengths and weaknesses of both choices, and devise new structures and practices. As a closing thought, Al Gore (2005), a former Vice President of the United States, once wrote that governments could be better run if they followed practices from the business world. Thus, he thought the public sector could improve if they ran operations more effectively, had less bureaucratic structures, improved services, focused on results, reduced redundancies and overhead costs, empowered employees, and listened to the needs of the public. This may be one solution for traditional postsecondary institutions to respond to changes and external pressures. Following this thinking, the next section draws on such a solution when considering how leaders might deliver high quality online courses and programs.

Practical Implications:
Leadership Considerations for Quality Online Education

It was claimed the biggest challenges for delivering learning online has been to have vision and strategy (Bates, 2005). Leadership, distinct from management functions, has been defined as the ability to create conditions of change through shared vision while contributing ideas to management and operations (Beaudoin, 2003; Stockley, 2004). Therefore, assumptions were made that strategic planning for online learning programs would be essential and should consider macro and micro levels; a macro view would place program planning within the wider institution (for vision), and a micro view would allow for local context (for strategies) (Beaudoin, 2003). Some thought planning could stem from certain questions about online learning, such as its influence on an institution’s future, the needs of student and faculty, its impact on learning environments, required resources and infrastructures, and the response to competition (Beaudoin, 2003; Dirr, 2003). More so, strategic planning for online programs was thought best to include reviewing the technological infrastructure and its adoption into the teaching and learning environment (Stockley, 2004). Furthermore, it is suggested leadership decisions when planning online learning should include organizational, economic, and human factors (Bates, 2005). Following this, each of these three factors will be addressed with key leadership strategies for delivering quality online education, while drawing on the previous discussions about potential gains and losses from for-profit structures.

Organizational Factors

Organizational Structures

Bates (2005) advised:

Web-based learning … allows institutions to deliver education globally, to reach out to the continuing professional education market, and to use technology to change in fundamental ways the organization and delivery of teaching. This will not happen though without major reorganization and cultural change within educational institutions. (p.173)

Technology and the Internet were found to have profoundly influenced changes in traditional postsecondary institutions’ organizational structures and pedagogical methods (Bates, 2005; Beaudoin, 2003). Yet, it was determined a main challenge to delivering education online has been having the appropriate organizational model (Bates, 2005; Hanna, 2000). Emerging organizational models are thought to be more fluid and entrepreneurial, and the move from a stable and complex environment to one that is dynamic and more responsive to student and market needs was considered to require fundamental changes (Hanna, 2000).  Thus, it was argued traditional postsecondary institutions have restrictive structures, bureaucracies and budgets lessening their ability to change (Bates, 2005; Guri-Rosenblit, 2005; Hanna, 2000). Beaudoin (2003) suggested one approach educational leaders might take was to change structures through transformative leadership, with the notion that organizational practices need reshaping in order to adapt to environmental changes, and to respond to student demands and increased competition. Poley (2000), and Olcott and Schmidt (2000) echoed with it may mean re-engineering, re-inventing, and re-evaluating all that was done, and eliminating unproductive practices. Watkins and Kaufman (2003) added to this and suggested leaders take a proactive role and create change as opposed to managing it. They considered this might build better planning that was value-based and future-focused. However, Poley (2000) claimed a better technology system or new leadership style will not buy instant cooperation. Poley suggested it would take trust and openness to build a followership, and a sense of belonging amongst members. It might help if leaders were good communicators and networkers (Poley, 2000). Beaudoin (2003) furthered with the new roles for distance education leaders as conceptualizer, implementer and evaluator, along with the former roles of advocator, reformer, and technician. Foremost, they must always be educators.

Furthermore, Davis (2004) and Hanna (2000) stated educational leaders must come to understand the internal and external resisting forces affecting their organizations, and offer solutions, strategies and a framework to address change that will make organizations more responsive and positioned for the future. Foremost, it was thought leadership decisions should support the vision and values of the whole institution, and worked towards bringing traditional and online learning into one governing entity (Beaudoin, 2003; Davis, 2004; Sherry, 2003). Hanna (2000) predicted it would take an innovative, risk-taking and collaborative organization to respond to these changes. Thus, educational leaders were recommended to alter practices in order to be a more responsive institution, but to consider the importance of followership, institutional vision, and unity in governance.

Distance Education Management Models

Bates (2005) stated the most common management model for online course and program development has been through innovative faculty members, who enthusiastically have created Web-based materials. Other management models were deemed as faculty having worked with learning support units drawing on technical and instructional advice, and colleagues having developed collaboratively, exchanging feedback on produced pieces. A more complex model comprised of a team of experts with various skills managed through a project that had defined processes, deadlines, resources and budget. This model was considered the most advantageous to control costs, gather expertise, develop standards of work, and ensure quality education. Whereas, the learning support units may be unsustainable if demand increased, and individual faculty and collaborative colleagues might produce amateur work, and their work may not be cost effectiveness, or result in system wide adoption (Bates, 2005; Frydenberg, 2002).

Yet, a debate remained if support for online learning should be centralized or decentralized to academic departments (Bates, 2005; Beaudoin, 2003). Assumedly, the advantage of a central professional unit would be the collection of experts, an economy of scale for support services, and redirecting the responsibility from academic departments, who may not have the sufficient resources or expertise (Bates, 2005). It was wondered if the downfall might be academic departments would lose control over distance education direction, development, and potential revenues. Frydenberg (2002) added, to be responsive to market demands courses and programs might need to be developed quicker. He suggested changing how curriculum was developed from a linear fashion to a simultaneous one, perhaps outsourcing some components. Thus, it was assumed better designed curriculum might mean establishing strategic alliances with the corporate sector or other institutions (Dirr, 2003; Hanna, 2000). Added to this, moving to online learning may require institution-wide support in marketing, purchasing, student services, admissions, and teaching and learning standards (Bates, 2005; Stockley, 2004). In the end, Hanna (2000) suggested each traditional institution must determine how they would engage in online learning by focusing on their institution’s values and purposes, while drawing on their competitive advantages. Regardless, suggestions have been made to consider developing curriculum in more sophisticated ways with teams, outsourcing and institution-wide strategies.

Policies

Furthermore, policies were considered as important to support online learning initiatives and should focus on quality issues, faculty support, and student needs (Ensminger, Surry & Miller, 2002; Guri-Rosenbilt, 2005; Levernier, 2005; Sherry, 2003; Yick, Patrick & Costin, 2005). Following this, Dirr (2003), De Castro (1999) and Kovala (2000) found that to overcome online learning being treated as secondary, it would be important to develop a metapolicy. It was thought such a policy could address quality course development and support as well as technology implementation, use and security issues (Davis, 2004; DeCastro, 1999; Dirr, 2003; Kovala, 2000). It could also respond to faculty contractual needs, workloads, material ownership, intellectual property, and merit evaluation (Davis, 2004; DeCastro, 1999; Dirr, 2003; Frydenberg, 2002; Kovala, 2000; Stockley, 2004). As well, student issues should be addressed and were assumed to be security and privacy, access and support, student disabilities, and tuition. Dirr (2003) added commercialization arrangements could be addressed in policies such as private agreements, consortia collaborations, royalties and licenses. It was considered that all policies should be in accordance to laws and requirements for teaching institutions, such as those outlined by government bodies and copyright laws (Frydenberg, 2002; Sherry, 2003).

Evaluation and Assessment

Guri-Rosenbilt (2005) and Sherry (2003) saw a need for research on the quality of online education. It was claimed performing needs assessments and program evaluations could partly address this (Frydenberg, 2002; Sherry, 2003). First, needs assessments could possibly identify and prioritize societal, institutional and individual needs (Walter & Kaufman, 2003). Information from the assessment could then be used to determine measurable performance and evaluation criteria for online programs.  Second, evaluations of online programs were thought to possibly monitor criteria such as accessibility, retention problems, learning outcomes, student satisfaction, differences among students, learning styles, faculty satisfaction, resource and technology use, and cost effectiveness (Frydenberg, 2002; Sherry, 2003). As well, evaluations could investigate the return on investments, and any “unanticipated or unseen costs of implementation on back-end systems, staff attitudes, and infrastructures” (Davis, 2004, p.107). It was stated evaluative information could then aid decisions about improvements or changes to the online programs and technological systems. Moreover, implementing a continual and rigorous evaluation process was thought to lead to current feedback, potential improvements, and increased quality education (Guri-Rosenbilt, 2005; Sherry, 2003). As well, standards for quality education and technology use could stem from needs assessments and evaluations (Frydenberg, 2002).

In summary, educational leaders working with organizational factors might reassess current structures, practices, and management models for online learning with advice to transform some in order to produce quality online programs. As well, creating policies, standards, needs assessments, and evaluations could address issues unique to online programs, and enhance programs.

Economic Factors

Costing Online Delivery

The costs, development, and commitment for delivering education online were considered substantial (Guri-Rosenbilt, 2005). It was determined most virtual institutions that failed in the past did not understand the business of e-learning; neither did they understand the cost to deliver quality learning online, or the costs of testing, implementing and upgrading technical systems (Bates, 2005; Sherry, 2003). As well, these institutions erroneously focused on developing online content, and lost focus of instructor and student needs, appropriate support services, and the costs associated with them. Bates (2005) determined it was important to calculate the fixed, variable and, indirect costs of each technology type and compare them. For example, he calculated that online learning delivered to a moderate amount of students (30-100) can be cost-competitive with print-based distance education, and more cost-effective than broadcasting technologies. Dirr (2003) claimed online learning had higher fixed costs than on-campus courses and programs, but costs would be offset by lower variable costs once courses were delivered online.

For online programs, it was thought best leadership would ensure quality education while controlling costs. Thus, using a business model to run an online programs would ensure leaders considered short-term and long-term costs such as planning costs, market research, risk and needs assessments, student enrolment projections, development and training costs, instructional resources, operating and overhead costs, break-even analysis, and evaluation studies (Bates, 2005; Sherry, 2003). Furthermore, it was thought preparing business plans for online learning should consider economies of scale and long-term budgets (Bates, 2005; Stockley, 2004). As well, plans should include economies of scope which considered the quality of learning. For example, though labour intensive, the time instructors and students have together in synchronous conferencing was considered valuable (Bates, 2005). Overall, planning online programs is thought to require thorough business planning that accounts for all costs, including the cost of quality education.

Choosing Technology

Davis (2004) determined important considerations for selecting technology were the intended audience, learning outcomes, and usability of online learning systems. For instance, the appropriate selection of technologies would depend on the student group, their location, technical skills, and available technology (Bates, 2005; Davis, 2004; Guri-Rosenblit, 2005). More challenging, Bates (2005) and Davis (2004) stated technology selection should consider instructors’ perception of how students learn as reflected in learning outcomes, and the nature of the subject matters being taught. If Web-based learning management systems were to be used, such as Blackboard, it was claimed students should be able to access resources, such as student information systems, digital repositories, and the library, through a single portal and login (Davis, 2004; Stockley, 2004). Davis (2004) and Stockley (2004) stated it was essential that existing student services and resources be converted and enhanced for online use. As well, it was determined faculty and students would need technical help, which could include contacting staff, training, supportive documentation, and learning communities (Davis, 2004; Guri-Rosenbilt, 2005).

However, Bates (2005) cautioned,

new technologies such as the World Wide Web are not necessarily better (or worse) for teaching or learning than older technologies, such as print and video-conferencing. New technologies are just different, and we need to understand the differences and the appropriate circumstance for applying various technologies for effective distance teaching and learning. (p.2)

It was warned that there was a risk when obtaining and integrating technology without considering the effects on administration staff, faculty, and students who needed to use it (Bates, 2005). More so, it was thought learning from past experience with older technologies was important to determine how or if newer technologies were appropriate for online course and program (Bates, 2005; Guri-Rosenblit, 2005). Moreover, advice was given that quick decisions about implementing online learning might be wrongly based on overly assumed student enrollment, and the inflated future value of online creations (Frydenberg, 2002).

Overall, it was advised values should direct choices and decisions about technology, and should include all those involved at any stage of the implementation (Bates, 2005; Davis, 2004; Frydenberg, 2002; Poley, 2005). More specific, it was advised a governing body should be developed to review and discuss the online systems and any important issues, evaluation results, vision updates and new ideas (Davis, 2004). As well, Cronin and Bachorz (2006) stated it might be important to continually review and critique new technologies. Davis (2004) concluded online learning technologies might change and evolve quickly, and the ability to manage change would be important to stay current (Davis, 2004). As such, choosing the appropriate technology might require knowing the audience, the intended curriculum, and the values of those affected. Thus, educational leaders considering economic factors when planning online programs might determine the actual costs through detailed business planning as well as consider the perceptions, values and perceptions of colleagues and the larger institution.

Human Factors

Student Needs

Studies showed there were differences in the learning styles, qualities and challenges of online learners, with these learners viewing classroom environments differently than on-campus students; this indicated online learners could not be viewed the same as traditional students (Coleman, 2005; Garland, 2003; Mullen & Tallnet-Runnels, 2006; Song, Singleton, Hill & Koh, 2004). Therefore, it was stated planning best instructional designs and teaching methods for online learning might come from knowing the learner and their preferences (Bocchi, Eastman & Swift, 2004; Butler, 2004; Coleman, 2005; Corbeil, 2003; Frydenberg, 2002; Hodge-Thompson, 2004; Loeffler, 2005; Lovik-Powers, 2004; Mansouri, 2003; Payne & Johnson, 2005; Rodriguez, Omms, Montanez & Yan, 2005; Vafa, 2002; Zobdeh-Asadi, 2004). Also, Davis (2004) suggested understanding the technological ability of students as well as their online expectations, available resources, Web access, and any information that may enhance or restrict their online learning experience. Guri-Rosenbilt (2005) warned students pursuing graduate or professional education may be more prepared and able to learn online than undergraduate or weaker students. In turn, it was thought that traditional institutions who offered online programs could encounter high-quality students with diverse, professional backgrounds. These students may not be returning, unemployed adults, but successful working adults. Leaders and faculty members who might work with such a diverse range of students were advised to be flexible and possibly change the curriculum without detracting from the quality (Bocchi, Eastman & Swift, 2004). As well, it was shared educational leaders might assume the most appealing program structures were those granting academic distinction, with professional values and work-based courses being less appealing; yet some students seemed to have valued these differently posing a pedagogical challenge (Schubert, 2004). This brought to mind the possible ideological tensions between higher education and the marketplace (Rodgers, 2005). As well, it was assumed students who paid more for online programs were apt to research and select education based on market testing strategies (Frydenberg, 2002).

Additionally, it was thought online learners required different support than on-campus learners, such as distinct services for advising, credit transferring, prior learning assessment, learning supports, and technology orientations (Bates, 2005; Frydenberg, 2002; Guri-Rosenbilt, 2005; Sherry, 2003; Stockley, 2004). One important support might be to offer pre-enrollment services allowing students to survey their readiness to learn online, assess their financial resources, and determine their literacy skills with technology and virtual resources (Sherry, 2003). Also, Frydenberg (2002) thought it important to provide clear information on course requirements, equipment needed, and technical training and support.  Overall, Corbeil (2003) assumed poorly designed courses and a lack of technological and academic support could be key concerns for online learners, who may have distinct preferences and characteristics.

Faculty Support

For the most part, it was found faculty members in traditional postsecondary institutions typically controlled the curriculum and upheld academic freedom; with this in mind, some faculty members were seen to have criticized the purpose and quality of online learning, preferring more conventional strategies (Hanna, 2000; Howell, Williams & Lindsay, 2003; Parchoma, 2006). Grimes (2005) and Lucas (2002) found a significant factor for faculty’s attitude towards online learning was their experience, where those with online experience were more positive and had a personal preference to teach in that venue. However, it was considered that online teaching may not be suitable for every faculty member, and it would be difficult to otherwise persuade those who were satisfied with their present teaching strategies (Ensminger, Surry & Miller, 2002; Yick, Patrick & Costin, 2005). Yet, it was thought educational leaders should continually promote the value of online learning to encourage those around them to construct new ways to administer and deliver education (Beaudoin, 2003; Frydenberg, 2002). Promoting online learning might include highlighting the increase in student access, the potential design of new learning environments, the abundance of information and resources, and the creation of spaces for scholarly communities (ASHE, 2006c; Duderstadt, 2005; Guri-Rosenbilt, 2005; Newman, 2000). With faculty considered part of the dominant culture in traditional postsecondary institutions, it was advised educational leaders work closely and transparently with faculty when delivering programs online (Poley, 2000). For instance, faculty members were assumed to need incentives and encouragement, not penalties, to become innovative with new technologies in teaching, development, and research (Davis, 2004; Ensminger, Surry and Miller, 2002; Olcott & Schmidt, 2000; Sherry, 2003; Stockley, 2004; Tabor, 2004). As such, tenure policies were determined important to be reworked to encourage the pursuit of scholarly activity and innovative developments in online learning, and for the protection of faculty’s intellectual property (Edmonds, 2006; Olcott & Schmidt, 2000; Yick, Patrick & Costin, 2005). More so, it was thought faculty should have final control over course content and teaching methods, and should participate in the decision-making about online programs (Bates, 2005; Dirr, 2003; Ensminger, Surry and Miller, 2002; Olcott & Schmidt, 2000).

Yet, who developed online courses and programs was considered problematic. For instance, the most common method of developing online education in traditional postsecondary institutions was thought to be through individual faculty (Bates, 2005). Academics assumedly preferred to design their own courses, and rather directly be given funds and support than work with experts or a management team. Yet, Bates commented courses designed by individual faculty tended to be heavy in content, overlooked technical features such as interaction or multimedia, and appeared more amateurish than professional. Furthermore, Bates (2005) wondered if faculty might struggle with limited instructional design and technology skills needed for developing quality online courses; as well, he wondered if the maintenance of online courses may be too technical and burdensome for instructors leaving problem areas unaddressed, such as broken links or missing text. It was assumed these issues could be problematic considering online learners needed special learning supports requiring unique curriculum design and delivery, as described above.

Therefore, support was considered important for faculty members before, during and after they developed or taught online courses (Bates, 2005; Frydenberg, 2002; Guri-Rosenbilt, 2005; Sherry, 2003; Stockley, 2004). As discussed previously, support systems might include learning support units, colleagues, or project teams of Web designers, multimedia specialists, and instructional designers. More particularly, Guri-Rosenbilt (2005) stated faculty needed information on how to help students construct meaning in technological environments. However, it was argued that it was unreasonable to expect faculty to be experts in instructional and online design as well as implementing multimedia (Bates, 2005). Yet, at most postsecondary institutions it was claimed there were no requirements for teaching staff to receive training, calling on the need to have expert help available and opportunities for professional development (Bates, 2005; Sherry, 2003). As well, part of planning for distance education should ensure faculty were not overloaded with curriculum development implying it can be time consuming if they were designing and developing their own online courses (Bates, 2005). In summary, it was advised to increase the credibility of online learning among teaching staff and to possibly softening negative attitudes might be accomplished by respecting faculty’s pedagogical beliefs as well as providing training, support resources and incentives (Grimes, 2005; Herman, 2005; Yick, Patrick & Costin, 2005). The human factor has shown to be challenging as diverse needs of students and faculty emerge when considering online education and development.

Conclusion

This paper addressed possible demands and pressures facing traditional postsecondary institutions, such as changing economies and markets, emerging technologies, declining government support, increasing student demands, and new competitive players, such as for-profit higher education institutions. Furthermore, for-profit institutions seem to be showing great promise in addressing these same demands, and assumedly flourishing through effective business operations. This brings the question of whether traditional universities and colleges should follow the lead of the for-profit sector, and restructure themselves in order to use a for-profit model to meet demands. Yet, if implemented, what would not work and what would be lost for traditional institutions.

The examination of using a for-profit model was framed within organizational theory arguing that converging distinct organizational structures and cultures may create conflict and tension. It was thought both traditional postsecondary institutions and for-profit higher education institutions had distinct structures, purposes, and academic and economic models. Yet, it was further argued though there would be challenges when models of distinct purposes were converged such an approach may also provide benefits. Thus, using the context of distance education and a for-profit model drawn from the for-profit higher education sector, possible gains and loses from such a convergence were discussed. For instance, gains for traditional institutions were assumed to be the potential of increased economic benefits, updated organizational structures, and more flexible educational programs and services that could cater to the needs of a rapidly changing society and new economy; the latter was the most desirable gain. On the other hand, it was assumed the most prevalent loss when using a for-profit model was the possible decline of values and purpose of traditional postsecondary institutions along with diminishing faculty roles, competitive strain, and risk of failure.

Weighing these factors along with consideration of the purpose and structure of each institution, it was suggested it might be more beneficial for traditional postsecondary institutions to respond to external pressures without changing to a for-profit model, yet draw on appropriate business principles and practices.  To further this, implications for practice followed this suggestion and presented recommendations for educational leaders in traditional institutions delivering quality online courses and programs. It was recommended for leaders to reconsider and transform hindering academic structures and practices, and develop a best distance education management model backed by policies, evaluative studies, and design and governance teams as assumedly performed in the for-profit sector. As well, leaders were recommended to choose technology carefully considering the appropriate needs and every cost; closely affecting this choice were human factors, such as unique student needs and the power of faculty, suggesting knowing your audience and their needs was an essential business strategy.

As Duderstadt (2005) stated, traditional postsecondary institutions will continue to be strong and will continue to change. By retaining the unique assets of traditional institutions, and having the courage to implement better practices drawn from the business world, universities and colleges can continue serving the public well, and become rival competitors addressing contemporary demands.

 

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