Integrated or insulated: The governance of for-profit subsidiaries of nonprofit universities

The organizational structure of higher education is changing. This is particularly evident as nonprofit colleges and universities create for-profit subsidiaries to deliver distance education. However, these subsidiaries have sparked controversy, with some faculty claiming that the culture of the academic is being irreparably altered as traditional values are being replaced by a corporate style of management, or by some hybrid.; This dissertation investigated why these subsidiaries were created, how they were governed and managed, and the nature of their relationship with their nonprofit parent. This research used qualitative inquiry to examine the governance and operation of four for-profit subsidiaries created by nonprofit universities to deliver distance education. Data were collected through interviews with personnel from both the subsidiary and parent institution and through analysis of internal and external documents. The four companies studied were Babson Interactive, Duke Corporate Education, Fathom, and NYUonline.; Findings indicate that the subsidiaries were created to solve a series of complex financial, organizational, and competitive problems. Ultimately, however, these problems remained unsolved. The quantity and quality of attempts by administrators to explain and align the work of the subsidiary with the mission and values of the parent were important indicators of cultural congruity between parent and subsidiary.; The subsidiaries were governance hybrids, revealing characteristics of both academic and corporate governance. However, the governance and operation of these subsidiaries revealed the power of organizational culture. In essence, culture mediated governance. The greater the disparity in culture between the parent and the subsidiary, the more separate and distinct was governance. Where cultural incongruity was most pronounced, the subsidiary was insulated from the parent institution, and especially its faculty. This was meant to lessen the danger of contagion or cultural contamination between the two institutions. Conversely, where cultures aligned, the subsidiary was integrated with the parent institution.; Despite advice to the contrary, it may be unadvisable to attempt to separate a subsidiary created to deliver education because faculty are still at the core of these companies. Rather, careful integration of parent and subsidiary will facilitate relationships with faculty and ultimately benefit the company over the long term.