Stockholder/stakeholder models to improve decision-making in universities

ABSTRACT

Business schools teach stockholder and stakeholder perspectives for ethical decision-making, but what are the implications of those perspectives for the management of business schools themselves? From the stockholder perspective, faculty are agents in an organization financed by two types of principals—private donors and governments—with goals based on education’s social and economic benefits. The essay addresses the stockholder perspective’s issues of open and free competition, deception and fraud, and the role of required or desirable objectives. Some business school competition is open and free yet some is not. Deception and fraud do not appear significant. Objectives not specified by the principal may be required or desirable in pursuing educational objectives. Next, the stakeholder perspective suggests further parallels between business and academia. Three market failures—externalities, moral hazards, and monopoly power—are readily found in academia. Decisions do not incorporate all costs, there are numerous moral hazards, and monopoly power may arise.