Resource allocation in private research universities

In recent years, resource allocation has emerged as one of the most critical public policy issues facing institutions of higher learning. University costs have risen significantly over the last two decades, and while many factors have been cited as underlying causes, part of the problem may lie in the inefficient internal resource allocation processes found in academic organizations. Despite considerable interest among both practitioners and scholars of higher education and repeated calls for more research, resource allocation has received surprising little empirical investigation.; This exploratory study examines the major organizational-economic models for allocating resources in private research universities. The research was conducted primarily through intensive case study analysis. In-depth interviews and document analysis were conducted at six Carnegie Research I universities. Together, the six universities represent various levels of institutional budget authority and central administrative incentives for allocating resources and regulating the economic behavior of major academic units.; Six case studies comprise the major findings of this research. Though each case study represents a self-contained and complete analysis, several important insights emerged following a cross-case analysis of the data: (1) Difficult financial conditions may lead an institution to redevelop its resource allocation approach. In this sample, institutions responded by implementing a more centralized or more decentralized resource allocation system. The choice of model is influenced by the attitudes of the executive leadership and the community's readiness for change. (2) The free flow of reliable information is a key ingredient in a successful resource allocation system. (3) Institutional leaders express a growing need to raise central resources for university-wide academic priorities. (4) Resource allocation systems vary in the incentives they create for academic unit heads to act in accordance with central goals. The incentives are a function of the assumptions underlying the resource allocation system and its intended outcomes. (5) Once a resource allocation is in place, it is difficult to change the "rules of the game"--in minor or major ways that impact university-wide resource allocation. (6) Value-outcomes principles are attractive to university central executives. Their full implementation is more difficult.