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Through an exploratory case study of four Australian universities this article finds that foreign market entry strategies are shaped by prestige-seeking motivations and a culture of risk aversion. From the market selection, entry mode and higher education literature, a conceptual model, embedded with four propositions, is presented. The model sees market selection and entry mode as inter-dependent decisions which are influenced by manager and university motives, risk aversion and host government constraints in a gradual process of internationalisation. Among our key findings are that prestige is the key driver for university internationalisation and, due to a high degree of risk aversion, universities prefer zero-equity modes unless risk can be minimised or accommodated through suitable hedging strategies.
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Prestige-oriented market entry
strategy: the case of Australian
universities
Mark Tayar a & Robert Jack a
a Department of Marketing and Management, Faculty of Business
and Economics , Macquarie University , Macquarie Park , NSW ,
Australia
Published online: 16 May 2013.
To cite this article: Mark Tayar & Robert Jack (2013): Prestige-oriented market entry strategy: the
case of Australian universities, Journal of Higher Education Policy and Management, 35:2, 153-166
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Journal of Higher Education Policy and Management, 2013
Vol. 35, No. 2, 153–166, http://dx.doi.org/10.1080/1360080X.2013.775924
Prestige-oriented market entry strategy: the case of Australian
universities
Mark Tayar and Robert Jack*
Department of Marketing and Management, Faculty of Business and Economics, Macquarie
University, Macquarie Park, NSW, Australia
Through an exploratory case study of four Australian universities this article finds that
foreign market entry strategies are shaped by prestige-seeking motivations and a culture
of risk aversion. From the market selection, entry mode and higher education literature,
a conceptual model, embedded with four propositions, is presented. The model sees
market selection and entry mode as inter-dependent decisions which are influenced by
manager and university motives, risk aversion and host government constraints in a
gradual process of internationalisation. Among our key findings are that prestige is the
key driver for university internationalisation and, due to a high degree of risk aversion,
universities prefer zero-equity modes unless risk can be minimised or accommodated
through suitable hedging strategies.
Keywords: higher education; international campuses; internationalisation;
transnational education
Introduction
International education has taken on major economic importance (Czinkota, Grossman,
Javalgi, & Nugent, 2009; King, 2009). A significant proportion of international students
take courses via online learning platforms in offshore branch campuses, or through partner
institutions abroad (Harman, 2004; Mazzarol, Soutar, & Seng, 2003). Foreign market entry
is labelled by the higher education industry as ‘transnational education’ defined by Jones
(2001, p. 113) as any teaching or learning activity in which students are in a different
country (the host country) from that in which the institution providing the education is
based (the home country).
Decision-making processes required to enter new foreign markets has received a signif-
icant amount of attention from researchers. Selection of appropriate markets for expansion
has been seen as a sequential series of decisions based on a cost-benefit comparison
of potential markets. These decisions can be made systematically and logically. Some
decision-making processes for market selection (see Brewer, 2001) recommend that man-
agers use extensive networks and information sources to identify, evaluate, select and
re-evaluate all feasible markets. Other studies have focused on a mix of external variables,
including the overlapping concepts of psychic, cultural and geographic distance, and host
market similarity.
However, few studies investigate how internal decision-making processes and exter-
nal incentives and constraints interact within the context of the internationalisation of
*Corresponding author. Email: rob.jack@mq.edu.au
© 2013 Association for Tertiary Education Management and the LH Martin Institute for Tertiary Education Leadership and
Management
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154 M. Tayar and R. Jack
higher education. As the fundamental orientation of universities has been found by some
researchers (see Brewer, Gates, & Goldman, 2002; Clark, 2004; Dill, 2003; Garvin, 1980;
Geiger, 2004; van Vught, 2008) as not profit-maximisation but prestige-maximisation,
internationalisation strategies may need to be viewed through a different lens. Education,
it has been argued, has intrinsic value and should focus on passing cultural values from
one generation to the next rather than earning profit (Bantock, 1967; Edwards & Edwards,
2001; Eliot, 1965; Oakeshott, 1972). Reputation and prestige are so crucial to universities
because these factors help attract and retain administrators, faculty, students, and resources
(Clark, 2004).
Our study, therefore aims to investigate how the behaviour and perspective of decision-
makers interact with external constraints and incentives to shape entry into a foreign
market. A conceptual framework developed around four propositions is developed for
empirical testing. To understand ‘how’ and ‘why’ entry decisions are made and justified,
a qualitative analysis of four Australian universities is presented. The first area of analy-
sis specifically aims to discover how the decisions of university managers are impacted by
their own perspectives and the culture of their organisations. Our paper then seeks to inves-
tigate whether there are clear phases of internationalisation patterns where managers adopt
gradually higher risk modes. Finally, the study looks at the external forces of government
regulations and incentives which help determine entry mode choice. We conclude our paper
with some suggestions for future research.
Conceptual development and overview of the literature
Universities have been viewed as simultaneously profit-maximising and ‘prestige-
maximising’ organisations (Garvin, 1980; Marginson & Considine, 2000; Slaughter &
Leslie, 1997). Understanding how these orientations influence the internationalisation
strategies and actions will be a useful starting point for explaining how and why univer-
sities select specific entry modes and markets. Specific studies on market entry in higher
education have mainly focused on ‘pull factors’ that attract international students or ‘push
factors’ that encourage students to leave their home markets to study (Mazzarol et al.,
2003). Roberts (1999) labels this type of entry mode as domestically located exporting.
Indeed, Czinkota et al. (2009) explained that when physically entering new markets, higher
education institutions consider the same entry modes, timing and market selection decisions
as other service industries.
A common reason for university internationalisation is to integrate international or
inter-cultural dimensions into teaching, research and service functions (Harman, 2004).
Building on this, Knight and De Wit (1995) detail four categories of motives considered
distinctive to the industry: (1) academic grounds related to prestige; (2) economic and
financial motives; (3) cultural, social, political, and diplomatic considerations; and (4) fear
of appearing outmoded or being outperformed by a competitor. Subsequent research has
developed around these unique motivations. Universities are seen to be moving away from
a public service model towards a profit-motivated model (see Barnett, 2005; Carlson &
Fleisher, 2002; Giroux, 2001; Stilwell, 2003) supporting Knight’s (1999) view that eco-
nomic motives and market orientation is becoming more prevalent. Universities may ‘mask’
this profit focus by using ‘surplus’, ‘profits’ and ‘earnings’ interchangeably (Bolsmann &
Miller, 2008).
Some researchers acknowledge the importance of profitability but also recognise other
motives. McBurnie and Pollock (2000) saw new profits as an important motive but also
added ‘national prestige’ as a possible motive. As well as national prestige, the actions
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Journal of Higher Education Policy and Management 155
of universities appear to be intensely driven by the need to uphold a reputation and gain
academic prestige (Brewer et al., 2002; Garvin, 1980; Geiger, 2004; van Vught, 2008).
Marginson and Considine (2000) propose that research is the primary source of both pres-
tige and income. Logically, for research-based prestige to be an important driver for the
establishment of an offshore campus or partnership there must be significant research
aspects to that offshore operation.
Therefore, our first proposition is as follows:
Proposition 1. Prestige is the dominant driver for market entry
Research has revealed that it is not actual risks that impact on decision-makers but
rather perceived risks (see Czinkota et al., 2009; McNaughton, 1999). In these studies,
actual risk is treated as immeasurable or of lesser importance whereas perceived risk is val-
ued as a determinant of entry mode. Organisations with little international exposure tend
to be risk-averse (Erramilli, 1991; Johanson & Vahlne, 1990). Naidoo (2009) argues this
is true for many universities. Chipman (2002) further emphasises this point by stating that
public universities are risk-averse by culture not legality. The key risks of transnational
education are financial, reputational, legal, sovereign or physical/personal (McBurnie &
Pollock, 2000). Harman (2004, p. 117) claims that ‘it is well known that a number of uni-
versities have experienced some financial failures in their international efforts’. In extreme
cases, the financial difficulties of an offshore campus could endanger the viability of the
‘home institution’ (McBurnie & Pollock, 2000). Past failures have led home governments to
mandate that universities closely monitor and manage risk (Harman, 2004). The knowledge
of past failures, and discouragement of higher risk strategies through greater compli-
ance requirements, may weigh heavily on the minds of decision-makers. With risk-averse
decision-makers, organisations are more likely to pursue zero or low-equity entry modes
(Agarwal & Ramaswami, 1992; Decker & Zhao, 2004). Therefore, our second proposition
is as follows:
Proposition 2. Public universities prefer low risk entry modes with a zero equity stake due
to a culture of risk-aversion
The significant role of government restrictions on choice of entry mode is well cov-
ered by the literature (see Contractor, 1985; Fagre & Wells, 1982; Gomes-Casseres, 1990;
Lecraw, 1984). Government regulations are important as obstacles and opportunities for
market entry and include matters such as recognition of qualifications, quality assurance,
accreditation and visas (King, 2009). Host governments also regulate to protect local insti-
tutions, to advance national goals and for consumer protection (McBurnie & Ziguras,
2001). Beyond tax incentives, ‘the cost of establishing a high-quality offshore campus
may necessitate funding from a range of sources, including the parent university, host gov-
ernment and international development agencies’ (McBurnie & Ziguras, 2007, p. 154).
Universities often enter countries with government support, which encourages the decision
to enter and decreases risk (Czinkota et al., 2009).
Koch (2001) has recommended that market selection and market entry mode selection
be looked upon as two aspects of one decision process. This is important when considering
host government constraints because choice of market may constrain the choice of mode.
Sanchez-Peinado, Pla-Barber, and Hébert (2007) found that host government regulations
may force organisations to choose certain entry modes. For higher education, governments
such as in Singapore have prevented universities from entering or have limited choices of
entry mode for universities (Mok, 2008; Ziguras, 2003). Therefore, our third proposition is
as follows:
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156 M. Tayar and R. Jack
Proposition 3. Host country government constraints and incentives specific to foreign
universities impact market selection and limit the choice of entry mode.
Mazzarol et al. (2003) identified three ‘waves’ of internationalisation for Australian
universities: domestically-located exporting, then alliances or coalitions, then offshore
campuses and online delivery. Mazzarol et al.’s analysis points to an evolutionary or incre-
mental process of internationalisation. McNaughton (1999) found that as experience is
gained, more market alternatives will be considered, and operations will gradually expand
into countries perceived as riskier or ‘distant’. As well as international experience, the size
of a university has been shown to impact levels of involvement and risks taken. In separate
Australian case studies Mazzarol and Soutar (2008) and Poole (2001) found that smaller
institutions tended to be reactive and opportunistic with ad hoc internationalisation strate-
gies. One prominent model of internationalisation, the Uppsala model (see Johanson &
Vahlne, 1990), has been questioned because it assumes risk aversion and sees the achieve-
ment of knowledge and experience as a ‘seek and learn process’ (Cumberland, 2006). Even
so, if the condition of risk aversion is met by the universities in this study, the Uppsala
model may prove relevant and useful. Incremental international involvement is also chal-
lenged by the contingency view which recommends that entry mode be tailored to the
specific characteristics of the ‘product’ and the traits of the market selected (Kwon &
Konopa, 1993). University offshore campuses, however, do require substantial financial
and human resource commitments (Mazzarol et al., 2003). Thus, incremental models may
still be relevant to traditional universities. Therefore, our fourth proposition is as follows:
Proposition 4. Internationalisation of universities is an incremental experience and learning
process with separate phases
Based on an overview of the extant literature, our proposed conceptual framework is
detailed below in Figure 1.
The model aims to investigate the degree to which risk aversion and government con-
straints impact patterns of internationalisation and to determine how these conditions affect
the internationalisation process. To start the model, an impetus for internationalisation must
exist (P1). With compelling motives to internationalise, the model then seeks to investigate
the key influencers in the decision making process. The pace and nature of this process
is seen to be moderated by perceived risk (P2) and by host government constraints and
incentives (P3). The outcomes of this model are two-fold. First, the drivers of interna-
tionalisation and influencers shape the interdependent entry decisions made by managers
in terms of market selection, timing and entry mode. Second, the entry decisions lead to
a new phase of internationalisation actions that is distinct from the previous phase and
has been shaped by an incremental process (P4). The internationalisation process is not
seen as organically leading to logical sequences of entry modes or expansions to new
Actions: new phase of internationalisation (P4)
Drivers
(P1)
Influencers
(P2 & P3) Decisions
• Profitability • Risk aversity
• Entry mode
• Timing
• Market selection
• Host government
conditions
• Prestige
Figure 1. Conceptual framework.
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Journal of Higher Education Policy and Management 157
markets but rather a process that is shaped internally by management’s tolerance of risk
and externally by the host and home governments that promote or prohibit specific entry
modes.
Research method
When the aim of a study is to gain insights to provide a better understanding of specific fac-
tors, as well as to describe a phenomenon, the qualitative approach is deemed appropriate
(Yin, 2009). In order to conduct an exploratory, inductive investigation, we employ a mul-
tiple case study methodology of four Australian public universities. This approach allows
data from several cases to be examined in a process which constantly compares theory and
case data to seek a close fit between the two. In addition, comparison of similarities and
differences across cases allows the researcher to suggest explanations for possible patterns,
trends or linkages. The case study method in this study is adapted from Eisenhardt (1989),
Miles and Huberman (1994), and Yin (2009). Generalisation is not sought by this study,
but is reserved for future theory-testing research (Flint & Mentzer, 1997).
Case selection is an important aspect of building theory from case studies. Eisenhardt
(1989, p. 545) states that ‘there is no ideal number of cases [and] a number between four
and ten cases often works well’. The criterion used to short-list potential case studies was
as follows. The Australian list of institutions and courses around the world (AusLIST) was
used as a starting point for identifying universities with transnational operations. Given
that registration to AusLIST is optional rather than mandated by compliance requirements,
university managers were contacted and asked if their university met the research criteria.
Among a short-list of 24 universities four agreed to participate in the study. The entry
modes and geographic market focus of the four case studies are tabulated in Table 1.
To ensure the confidentially of the participants, each university is labelled, respectively,
University 1, University 2, University 3 and University 4.
In each case study two classes of respondents were consulted: senior institutional man-
agers recognised as part of the Chancellery of each university and transnational managers
who are responsible for offshore campuses, programmes and international partnerships.
The researcher spent over 90 minutes with each respondent and used interview guidelines
to direct semi-structured in-depth interviews at the respondents’ place of employment.
The methods used to improve data validity and reliability was as follows. Development
of propositions prior to conducting the interviews provided direction and focus to the
research. These propositions also created a benchmark from which to analyse information
obtained from each case university (internal validity) and to evaluate the usefulness of the
case findings to other universities (external validity). To further enhance validity, interviews
were transcribed and sent to the interviewees for review (Flick, 2007). This type of ‘mem-
ber check’ increases validity and reliability of the data by avoiding possible interpretation
errors.
Table 1. Case study universities.
Entry modes Geographic region
University 1 Branches through non-equity partnerships Asia-Pacific
University 2 Branches through non-equity partnerships Multiple regions
University 3 Wholly-owned branches and some non-equity branches Multiple regions
University 4 Alliances and agreements Asia-Pacific
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158 M. Tayar and R. Jack
Computer assisted qualitative data analysis software was used to organise and struc-
ture the interview transcripts and to aid coding efforts. The existing propositions were
developed and refined into 49 free nodes and tree nodes in NVivo 9 (QSR International,
Melbourne, VIC, Australia) and potential new propositions were explored and coded based
on recurring themes in the data. Once data had been coded and categorised, findings for
each context were summarised in conceptually clustered conceptual maps or ‘mind maps’.
These maps were employed as an analytical tool to organise, analyse and display data. This
technique allowed for pattern matching and visualisation of potential linkages and associa-
tions between themes. The emergent findings were then tied to the relevant entry mode and
international education literature, to enhance internal validity and generalisability.
Findings
Table 2 provides an overview of the data and the propositions developed for the study.
These findings are discussed in detail below.
P1 – Prestige as the dominant driver
The perspectives offered by all of the university managers downplayed the importance of
profitability as a core driver of internationalisation. All of the universities agreed, if you
are setting up campuses solely for the purposes of profitability, you are going to be sorely
disappointed:
Most transnational partnerships are break-even at best. So, while they do bring revenue into
the university, if you accounted for every moment of time that’s spent on each of those, you
would find they are probably just break-even. (Chancellery, University 3)
The real investment for the university is time and intellectual property in the form of course
materials and reputation. The potential financial return on this investment is not seen by
Table 2. Case study support for propositions.
Prestige as the
dominant driver
Zero-equity
modes
Host governments
influence decisions
Incremental
internationalisation
University 1 Supported: Focus on
prestige within
region
Supported: All
zero equity
Supported:
Incentives in one
market constraints
in others
Supported: Clear
phases
increasing
involvement
University 2 Supported: Focus on
prestige
Supported: All
zero equity
Supported:
Incentives in one
market constraints
in others
Supported: Clear
phases
increasing
involvement
University 3 Supported: Focus on
international
reputation
Not supported:
Most zero
equity but
some
wholly-owned
Supported: Host
government
limited entry
mode
Supported: Clear
phases
increasing
involvement
University 4 Supported: Profit
downplayed and
prestige
mentioned
Supported: All
zero equity
Supported: Host
government
limited entry
mode
Not supported: No
clear phases
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Journal of Higher Education Policy and Management 159
the interviewees as a sufficient justification for internationalisation. Instead, the return on
investment for Universities 3 and 4 was measured by prestige in the form of reputational
impact. Universities 1 and 2 seemed more concerned about the risk that offshore partners
could harm their reputation. Thus, reputational impact can be a driver and a deterrent:
The most valuable thing that [University 2] has is our reputation. So we’re not going to go with
a partner that is going to damage our reputation. (Chancellery, University 2)
Three of the four case study universities were found to have internationalised using only
non-equity modes. Only University 3 pursued an equity entry mode in the form of a wholly-
owned subsidiary. This subsidiary was structured in a way that if it did fail, the financial
harm to the university could be minimised.
University 1 sought to repatriate some profits to the ‘mother’ campus but also empha-
sised between-campus mobility, and research goals as drivers. University 2 avoided
situations where it could not repatriate profits, emphasised mobility and reputation and was
partly motivated by the fear of being relegated to ‘suburban university’ status. University 3
sought to create sustainable offshore campuses on every continent and University 4 cre-
ated international partnerships to prove they are not a provincial university and to achieve
mobility, teaching, humanitarian and reputational goals. Thus, the only drivers identified
across all the universities were prestige and international mobility.
Proposition 1 is supported by the results of this study because profitability was a consid-
eration in market entry decision-making but was not seen by any of the university managers
as the main driver of internationalisation. Prestige-oriented drivers were more widely found
and highly valued by respondents than other motives.
P2 – Zero-equity modes
In three out of the four current cases though, wholly or even partly-owned subsidiaries
were considered impractical due to perceived risks. The perceived risks identified were
reputational risk specifically related to extending the university brand to a partner, risk of
intellectual property theft, financial risk including investment risk and currency fluctua-
tions. Universities 1, 2 and 4 actively avoided holding equity in transnational operations.
Only University 3 pursued wholly-owned offshore campuses.
For University 1, the risk that an offshore campus may lose money was too high in view
of the source of funds:
It costs a lot of money to set up campuses and we’re a government organisation and we don’t
risk government funds. (Transnational Manager, University 1)
A respondent at University 1 concluded that universities prefer partnerships because they
are the most risk-averse strategies. Respondents at Universities 3 and 4 suggested that there
is a shared knowledge of mediocre offshore campus financial performance and even mar-
ket withdrawals. A University 4 respondent illustrated this shared knowledge of ‘unhappy
stories’:
The history of people like Monash in South Africa and University of New South Wales in
Singapore ...it’s mostly a kind of unhappy story where you take investment and invest in
buildings and large, it’s a large scale investment. (Chancellery, University 4)
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160 M. Tayar and R. Jack
For University 3, the managers only pursued wholly-owned subsidiaries if the risks were
low. They also established small-scale research centres to reduce the extent of investment
at risk or hedged risks by purchasing saleable assets such as a commercial land bank sur-
rounding one branch. A relevant factor is that the international activities of University 3 are
managed through a wholly-owned company providing services on a contractual basis. This
structure created a more entrepreneurial approach to university internationalisation. This
may explain why University 3 is the outlier with regard to entry mode choice.
Proposition 2 is supported by the observed risk aversion of three of four cases. A revised
proposition may be useful to address cases like University 3’s wholly-owned offshore
campus and centres.
Revised Proposition 2. Public universities prefer low risk entry modes with a zero-
or low-equity stake but may select full-equity modes if accompanied with risk-reducing
strategies
P3 – Host governments influence decisions
Although support for proposition three was found across all four cases, the impact on mar-
ket selection was more a question of whether a market has the optimal regulations and
incentives for foreign universities. In some markets, such as in China, legislative barri-
ers inhibit market entry despite the desire of all the case institutions to establish offshore
campuses in this market:
It’s been, for a long time, particularly hard to set-up operations in places like China because the
government is wanting to grow its own universities and its own education industry, so there’s
a lot of barriers to entry. (Transnational Manager, University 1)
In each of the four cases the respondents acknowledged host government constraints and
incentives as important for shaping entry decisions. Given unfavourable host government
conditions, the case universities would avoid a market. These conditions were also seen to
shape entry mode and ownership structures:
How the model can actually roll out in the country, always depends on government regulations.
(Transnational Manager, University 2)
Universities 1, 2 and 4 all operate in Singapore – therefore, this is a useful market for
comparing the impact of government incentives and constraints on each institution. In this
market, the host government is seen to limit or prohibit full control entry modes. These
universities work with local partners because of difficulties gaining accreditation from the
Singapore Government. The legislation created a dependence on local partners and was
seen by managers at Universities 3 and 4 as the host government’s reaction to the mar-
ket withdrawal made by the University of New South Wales (UNSW). University 3 had
the opportunity to establish a wholly-owned offshore campus in Singapore before this
legislation was conceived, but considered the case for this entry mode unconvincing:
We were deeply involved with the economic development board over about eighteen months
looking at whether we could establish a branch there but it was never going to work on the
basis of what Singapore was expecting and prepared to give. (Chancellery, University 3)
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Journal of Higher Education Policy and Management 161
P4 – Incremental internationalisation
Each university commenced internationalising by attracting international students to
courses in Australia. For University 3 entering a large Asian market with a partner was
a logical next step in the process of internationalisation because it was the largest source
of international students for their home campus. Universities 1 and 2 looked towards
Singapore and Malaysia for offshore campuses because they were traditional sources
for foreign students. Both these markets were attractive from the prospective of their
Commonwealth connection and the dominance of English as a spoken and written lan-
guage. Building on the international experience gained from operating in these markets,
University 2 later expanded to a more psychically and geographically-distant market.
At Universities 1–3 the experience with early offshore campuses directly informed and
shaped the development of subsequent campuses. There were also instances where an entry
mode was incrementally modified and built upon,
We were with a partner... [and] started off with twenty students. We probably after about two
years said we’ve got to change the way we do this to build and grow, build the profile. They
agreed and signed a new contract. (Chancellery, University 2)
Respondents from Universities 2 and 4 highlighted a process-oriented approach which they
described as ‘evolving’:
The models that emerge typically are a reflection of the historic evolution of where you are
in terms of some knowledge and long-term history and internationalisation of your programs.
(Chancellery, University 4)
This involves a process of increasing accumulation of experiential knowledge about busi-
ness partners (Blomstermo, Sharma, & Sallis, 2006). University 1 gradually increased their
involvement with a private sector partner, Universities 2 and 3 turned alliances into branch
partnerships and University 4 experienced success in Singapore and then worked actively
to replicate the model in Hong Kong. Thus, the experience of the case institutions suggest
that it is pertinent to study market entry of universities historically and longitudinally rather
than treating each stage in isolation. University 4 was the only case institution not to pursue
offshore campuses, although they have promoted online courses abroad. Some strategies
have evolved with each wave out of the same networks and within the same markets.
Therefore, Proposition 4 is supported in that there are noticeable phases of interna-
tionalisation for universities over a long period of time. These stages may not involve
incremental increases in scale of international involvement or risk but do resemble an
experience and learning process with past phases influencing future phases.
Discussion
Although the case institutions all exhibited market-seeking motives the rationale for
these motives varied. Utilising Knight and De Witt’s (1995) aforementioned categories
of motives, these are summarised in Table 3.
The case study institutions did not illustrate a shift from a public service to a profit-
centric model highlighted by researchers such as by Barnett (2005), Giroux (2001) and
Stilwell (2003). In terms of academic prestige, all case studies expressed international
research goals usually tied to reputational impact. Even so, the offshore campuses and
partnerships were not necessarily productive at strengthening university reputation through
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162 M. Tayar and R. Jack
Table 3. Cases applied to Knight and De Wit (1995) motive categories.
Academic grounds
related to prestige
Economic and
financial motives
Cultural, social,
political, and
diplomatic
Fear of appearing
outmoded by a
competitor
University 1 Aim for
research-active
offshore
campuses
Desire to repatriate
profits
Mobility
University 2 Concern for
reputation
Desire to repatriate
profits
Mobility Fear of ‘Suburban
University’
label
University 3 Desire to create
own ne twork
Concerns for
profitability
Mobility and
humanitarian
University 4 Concern for
reputation
Concerns for
‘surplus’
Teaching, mobility
and humanitarian
Fear of
‘Provincial
University’
label
research and only one interviewee viewed their offshore operations as research-active. This
finding is consistent with Sidhu (2009) conclusion that the major offshore operations of
Australian universities are viewed as teaching, not research, oriented.
Economic and financial motives were evident but were downplayed. Humanitarian
goals and mobility were common and fit in the broad category of ‘cultural, social, polit-
ical and diplomatic’ motives. This category may also include University 4’s goal of aiming
to reflect the patterns of internationalisation that students will experience in the workplace.
The political and diplomatic dimensions described by the literature as national prestige did
not surface in the interviews. For the final category of motives – fear of appearing out-
moded or being outperformed by a competitor – both Universities 2 and 4 described a fear
of being relegated to a less prestigious tier of universities.
Chipman (2002) describes public universities as risk-averse by culture rather than by
legality. The respondents did not attribute risk aversion to state government concerns about
financial risk (Harman, 2004), or Commonwealth/Federal legislation that prohibits invest-
ment in offshore commercial activities (Chipman, 2002). Instead, a culture of risk-aversion
was evident. In each case, there were significant risks perceived by managers related to
partnerships. In each offshore campus involving partnerships, the local partner was contrac-
tually obliged to conform to strict teaching and marketing standards. Universities 1–3 were
all concerned that partners may harm the University’s brand and reputation. University
3 also expressed concern that partners may reverse-engineer teaching, assessment and
quality systems and then abandon the partnership. Thus, offshore partnerships are not with-
out risks but these were perceived by respondents to be less problematic than the risks
associated with equity entry modes.
Host governments have impacted on each case institution through incentives and con-
straints. The host government controls educational, taxation, accreditation and cultural
requirements for the university (Adams, 1998). The potential benefits of higher education
to host governments and their constituents include enhancement of the national economy
and promotion of non-market social benefits (McBurnie & Ziguras, 2001). It is these eco-
nomic and social benefits that lead to the creation of ‘education hubs’ that offer favourable
regulatory conditions and incentives for foreign universities (see Alberts, 2007; Asteris,
2006; Harman, 2004; Mazzarol et al., 2003; Verbik & Lasanowski, 2007). These shaped
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Journal of Higher Education Policy and Management 163
Table 4. ‘Waves’ of internationalisation.
First wave:
domestically-located
exporting
Second wave:
alliances or coalitions
Third wave:
branches and
online delivery
University 1 Agent-centred student
recruitment to
Australia
Twinning programs
and institutional
alliances
Branches through
partnerships
University 2 Agent-centred student
recruitment to
Australia
Institutional alliances Branches through
partnerships
University 3 Agent-centred student
recruitment to
Australia
Twinning programs
and institutional
alliances
Wholly-owned
branches and
branch
partnerships
University 4 Agent-centred student
recruitment to
Australia
Institutional alliances Transnational
online delivery
but no branches
entry decisions in terms of both entry mode and international market selection. Some gov-
ernments prohibited these educational institutions from using full control modes. In the
example of Singapore, the active role of the government has impacted the entry mode and
market selection decisions of every case institution. Through ‘education hubs’, universities
are encouraged to gravitate towards those countries with the best incentives – conse-
quently, government incentives have a positive impact on market selection and influence
the judgement of university decision makers.
Our conceptual model proposes that the risk aversion of the case institutions is a pre-
condition for incremental internationalisation. This resulting market selection and entry
mode decisions were seen as a product of both intra-organisational factors shaped by this
gradual learning process and external market conditions (Alexander, Rhodes, & Myers,
2007). In this learning process, market entry for our case study institutions has been
reactive.
As can be seen in Table 4, there is a sequence of entry modes in these cases that con-
forms to Mazzarol et al. (2003) ‘three waves’ model from domestically-located exporting,
to alliances or coalitions, then branches or online delivery.
This theme of gradual internationalisation is perhaps too broad to adequately predict
stages of university internationalisation and no consistent catalysts for transitions between
stages were apparent. Even so, the cases suggest that the experiences gained and mistakes
made in past market entry projects inform and shape university decision-making processes
and resulting in a new phase of interdependent market selection and entry mode decisions.
Conclusion, limitations and future research
The case institutions have been found to be risk-averse by a matter of culture. The motives
that are compelling enough to overcome this risk-aversion are primarily related to prestige,
reputation and international mobility of the university community. The case institutions
conform to Marginson and Considine’s findings (2000, p. 5) that ‘money is a key objective,
but it is also the means to a more fundamental mission: to advance the prestige and
competitiveness of the university as an end in itself’. These motivations are rarely com-
pelling enough to warrant any form of ownership in a foreign subsidiary except if the risks
Downloaded by [Macquarie University] at 16:59 16 May 2013
164 M. Tayar and R. Jack
are carefully hedged. The internationalisation goals of each university may favour a partic-
ular market or entry mode but if the host government is not supportive of this orientation,
market entry may not occur or may lead to later entry mode changes.
The value of our approach is the enrichment of academic knowledge and international-
isation literature and also for practitioners and policy-makers. University managers, partic-
ularly those developing offshore campus campuses, can benefit from an understanding of
factors influencing entry decision-making. Through awareness and understanding of these
influences, university managers will be better prepared to enter new markets.
As a qualitative study of four Australian institutions, this study cannot be safely gen-
eralised to other universities in Australia or abroad. It will benefit both practitioners and
researchers to empirically test the proposed conceptual model on a larger and more rep-
resentative sample of universities so the findings can be generalised. Interviews with a
broader cross-section of university management and offshore campus staff will be useful in
future studies to highlight alternate perspectives on motivations for internationalisation and
market entry decision-making. Though the current model briefly discussed performance of
offshore campuses from the perspectives of the managers interviewed, a more compre-
hensive empirical study should be conducted to establish causal relationships between the
factors portrayed in the model and offshore campus performance in terms of financial and
reputational goals. It may also be beneficial for future studies to better define the stages
of internationalisation and to explain when, why and how institutions transition from one
stage to the next. Finally, studies that further explore the comparative benefits and risks of
each type of entry mode will benefit the higher education industry and should help validate
and improve entry decision models.
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