In order to describe and explain the changes occurring in science and technology at universities, a concept was needed that was both dynamic in nature and explanatory in practice. The economics literature on competitive advantage plays an important part by providing an understanding of the dynamic nature of change and how strategies, niches, and trends develop (M. Porter, 1990; Tsipouri, 2001). A team led by Michael Porter conducted a study of 111 narrowly defined industries within ten nations. Looking for underlying themes across widely varying countries and environments, the theory of competitive advantage evolved based on the critical concept of “clusters.” Porter defines clusters as
industries related by links of various kinds…That is, successful industries or companies are often geographically close, they build upon technological innovation, and they operate in a system of vertical activities that includes relationships with upstream suppliers and downstream distributors… They also provide a framework for understanding why national industries wither and die. (M. Porter, 1990, p 131).
This dissertation takes the theory of competitive advantage and applies it to the university (depicted in the higher education literature) and the system in which it operates (depicted in the system of innovation literature) to understand the current context of universities and their ability/capacity to change; i.e., to develop a strategy.
3.3.1 Porter’s theory
Porter’s theory transformed general economic thought on development from a belief in comparative advantage (a country/industry can be assessed based on its available assets/resources) to an understanding of competitive advantage. An industry can enhance its competitiveness by manipulating certain factors (e.g., its assets, resources, capabilities and strategies), thereby, affecting demand and economic growth. A model of these factors is embodied in the “diamond” concept. See Figure 3.1.
(copied from http://www.wiram.de/toolkit/index.html?/toolkit/tools/tools-diamond.htm) Figure 3.1 Concept of Economic Factors Model
Universities can be viewed in this same manner using definitions applied to industry. The factors in the diamond for universities can be manifested as follows:
Factor Conditions for universities would include the state/regional/city economic environment, general education environment, funding, and other factors that are part of the local spatial and social environment.
Related and Supporting Institutions would be not only those institutions that provide input to universities (government agencies and secondary schools), but also institutions to which universities provide their output (industry and government).
Strategy, Structure and Rivalry would behave as does industry. Universities exhibit an array of structures (private, public, landgrant) and levels (doctoral granting universities, associate colleges, professional degree granting, and so forth) that result in a competitive rivalry for students, faculty, resources, funding, publications, research and so forth. Strategies used to compete would include the theories presented – leadership, policy, proximity and linkages.
Demand Conditions refers to the nature, composition, growth, size and quality of the domestic market’s needs and pressures for research and trained personnel.
3.3.1 Application to Industry
In order to understand how competitive advantage theory applies to universities, it is appropriate to very briefly explain how the theory works with firms. Porter takes several case studies to explain the chain of events that causes the rise of an industry. One of the strongest empirical findings to emerge from the research was an “association between vigorous domestic rivalry and the creation and persistence of competitive advantage in an industry” [Porter, 1990 #107]. Using case studies of the printing industry in Germany, the ceramic tile industry in Italy, the robotic industry in Japan and several others, Porter
reveals that the linkage between a number of actors (suppliers, distributors, consumers, and competing firms) is crucial to obtaining competitive advantage. The process of growth generally starts with one firm or individual that innovates or significantly improves upon a product. The improvement or innovation enables the company or individual to obtain an “edge” over its competitors. As the product is diffused into the market, other companies desiring to maintain their share of the market adopt or adapt to the new technology. Suppliers are important actors in this diffusion of information and the adoption of new technology or innovation. They interact with various companies in the same product line and become a frontline force for knowing what is new and the source of innovation. Companies often choose to locate closer to the “first mover” in order to better understand the new technology and how it works. As additional companies adapt to the new technology, they are able to offer similar products or
services. Feedback from consumers is provided by distributors who are liaisons between firms and users. They relate information on the level of demand and the comments, problems and suggestions from end users. This information is used to modify and improve the product which in turn, is used by the company to maintain or obtain a competitive edge. A vigorous rivalry emerges between the various companies aided by the exchange of information that occurs in close settings as a result of the linkages between suppliers, distributors, retail outlets, consumers, and manufacturers. In order to retain market share corporations stimulate demand, work with suppliers and distributors, and manipulate strategies to become more efficient. The rivalry contributes to an
increasingly more efficient and improved performance, which ultimately results in a competitive advantage.
3.3.2 Application to Universities
Universities are not profit-oriented institutions yet they mimic firms in using strategy to improve their status. Universities compete with one another for better faculty and students, more grants and contracts, more production of research, and higher
rankings. The transformation of inputs such as students, faculty, facilities, equipment, and applications of funding into outputs such as graduates, research, publications, and government and industry funding occurs through networks and clustering (linkages) between universities, government and industry.
It is in the area of strategy that the competitive advantage theory can be applied to universities because they are dynamic institutions. Although it is unclear how much entrepreneurship can be attributed to the Bayh-Dole Act of 1980, it is clear that entrepreneurial activity at universities has increased. “Among the 84 universities that have responded consistently to AUTM’s surveys over the period 1991-200, disclosures of new inventions by academic investigators shot up an impressive 84%, new patent
applications rose 238%, license agreements 161%, and royalties more than 520%” (Washburn, 2005).
As one of many examples, Rosenberg describes how Stanford introduced computer science as a curriculum in the 1960s by bringing in private-sector electrical engineers to teach integrated circuitry (Rosenberg, 2003). Other American universities followed Stanford’s lead and began to introduce computer science curriculum at a time
when no other foreign universities were considering it. American universities obtained a similar advantage with their support of bio-medical research. Support for bio-medical research has catapulted the life sciences (biology, medicine, agriculture) over the physical sciences (physics, chemistry, astronomy) as the dominant research concern. In 2000, “the latter received less than 10% of total academic R&D spending in the U.S. (total was $30.2 billion in 2000), while engineering disciplines (including computer science) received less than 20%, and the life sciences received well over half of the total” (Rosenberg, 2003). American universities have responded to the commercial
opportunities available in both computer science and bio-medical research quicker than their European or foreign university counterparts (Rosenberg, 2003).
As stated above, American universities are not profit-oriented and, therefore, do not mimic firms in every component of the diamond. However, American universities are flexible. They enact strategies to improve their standing. Linkages, a central component of clusters, play a part in universities’ ability to make those changes. The collaborations/linkages between universities, industry, and government provided the means to introduce new curriculum, obtain support to shift to new fields like life sciences, and so forth.
This study addresses the question of what strategies HBCUs should adopt to adapt to an increasingly science and technology oriented society. Linkages are highlighted in the competitive advantage literature particularly through the concept of clusters.
Proximity and economic benefit work together leading to localization economies. Social capital gets built through the networks and relationships that evolve from proximity. The
value added benefits accrue to firms causing them to experience benefits greater than what would result from its own efforts. How does this work for universities?
Linkages in the form of Networking or Clustering are defined as at least three institutions working together formally or informally to gain some form of benefits. Thus, an input like students can be transformed into graduates by the networking or clustering of an HBCU. The efforts of an HBCU, a government agency and another university may result in a dual-degree program which results in highly trained graduates. Or the
collaboration between industry, government and an HBCU that results in support of a research program or an Institute may turn the inputs of faculty, laboratories, and funding applications into outputs such as research, publications, and additional funding.
Other strategies universities can adopt are presented later in this paper. Based upon the advantages presented by Porter and the benefits presented in other literature bases, linkages appear to be a successful strategy for universities and HBCUs to adopt to enhance science and technology development.