The Paper was presented at the 5th International Science Conference:
"Problems of Economic Integration of Ukraine into the European Union: European Studies"
13. - 15. September 2000, Yalta/Phoros, Krim Ukraine
Published in The Herald of the Ternopil Academy of National Economy, 2001
and in a revised form in "Zeitschrift für Historisch-Sozialwissenschaftlichen Forschungen", Heft 1/2001 (in Druck) 

Perspectives on the educational market: universities
between a virtual campus and the education brokers

Claudia Bremer
Research Assistant at the Goethe-University Frankfurt/Main (Germany)

Introduction and Context

Everything seems to be shifting. Information and communication technologies have transformed our daily life. Sitting at home we can order products, book flights, transfer money, buy and sell stocks and take online classes of educational institutions at the other end of the world. One day we will be able to pick any graduate business course at any institution we like, go through it and get the credits.

Some of the aspects which this paper adresses:

  • How will the educational market look like in 10 or 20 years?
  • Where will the traditional universities go from now, where will they end?
  • And: what factors influence this shift?


What is happening?

Let me now identify the major changes which are going on in the educational market:

  • Higher Education is not a special phenomena anymore. In developed countries it is open to nearly everyone (Davies 1998). So it turned to become a mass product, demanded by more students than universities could bare. (A typical scenario in German Universities used to be students sitting on the floor to listen to lectures).
  • Universities are not the only players in the field. Corporate universities, educational institutions such as graduate business schools with MBA programs and other institutions offering special programs take parts of the cake.
  • The typical biographical careers we used to known just ten, twenty years ago changed. People have several different professions within their professional life. They acquire new qualifications according to their actual professional needs. And they are willing to invest into their own qualifications, not waiting for companies to pay for their training. With more professionals being self-employed or more flexible the demand will increase for "just-in-time", modular training and education.
  • In developed countries knowledge gets a more and more important factors in the economic production. Davies states: "Knowledge workers have emerged as the crucial players in economic performance and wellbeing" (Davies, 1998). What does that mean for the educational market? Besides training of skills knowledge gets more important. Courses will be less directed towards training simple skills and be more targeted at the acquisition of knowledge and training of capabilities such as problem solving, knowledge structuring, team working and management. Davies also states that the typical "graduate job" will disappear and more and more positions will be filled by people with high level of skills and qualification.
  • The typical educational biography, spread between school, academic study or vocational training and professional life, will disappear. In Germany students often go through a professional training before they study. More and more students work part-time during their graduate studies - although the universities make it difficult to conduct such a life. Here more flexibility is needed on side of the universities. At the same time they have the opportunity to offer courses to part-time students and professionals who want to qualify themselves along the job.

  • Local boundaries, regional concerns, local job positions and economic activities get less important. Knowledge acquisition and the progress of research will have international impact. Information is rotated around the world in much faster speed. Globalization means, we can hire people and buy products is the most distant parts of the world. "A common culture of knowledge will emerge" (Davies, 1998).


What are the effects on universities within the educational market?

The effects can be positive as well as negative. It's up to the universities how they use these above described tendencies. While it can be a chance for those which "behave themselves innovative" and look at the changes and analyze how to react, other will "close their eyes" and try to wait and see until the storm is over. Does that work? Yes and no! It might work for those disciplines which cover their niche, which are specialized in certain areas and which profit from their institutional profile of being advanced in research, applying special methods or practices or well know in the field.

The whole development can be painful for those disciplines and institutions which are positioned in highly competitive and financial rewarding fields such as master programs in business administration, computer sciences, engineering, law and so on. Here new institutions will enter the market - as they already did and do - and try to make profit. Up to now, regional boundaries and immobility of students has saved traditional institutions of loosing their students. Also academic titles such as bachelor, master or PhD acquired at a traditional institution still gain a better recognition. But things will change. Along with international efforts to install transfer systems and proof of equivalence for credits and courses these boundaries will start to fall down.

Traditional institutions will have to take decisions as where to position themselves between the new market players which are coming up due to...

  • the increasing competition
  • the increasing demand for higher education
  • the distribution of courses through information and communication technology

Here is where the internet comes into the picture! Let's have a look at these effects:


The effects of information and communication technologies in education

Some of the above described changes such as the entry of corporate universities into the educational market do and would happen anyway - even without the usage of information and communication technologies. But some developments can directly be linked to the distribution of courses and course material though the internet.

First we should analyze how the internet can be used within education: (The listed aspects are drawn from several articles, i.e. Hesse/Mandl 2000 and Bremer 1998)

  • The internet can be used to improve efficiency in the delivery of course material from lectures to students. It can help to provide scripts, additional information to offline courses and the whole material of an online course to a remote students.
  • The internet can help to facilitate student administration. Students can register and apply for online and offline courses through the net. They can get actual information about courses, facilities, registration conditions and so on. Information can be updated just in time and send to the students via the net in an email.
  • Access to information can by administered via password check and be made available to certain groups and individuals. Access can be tracked and the usage of certain pages or even information packages can be analyzed by using log files.
  • Students can access information, online courses, discussion boards and emails according to their own time preference. In the perception of many educators online studying is often correlated with total flexibility - but there is a limit to that! Total flexibility can reduce students' motivation to get engaged in interactive and communicative processes. If courses material is accessible at any time the students want, little interaction is possible among student groups and student and teacher. Here a certain degree of pacing has been proved to be appropriate.
  • Material can be processed according to the students' own needs. Along with approaches of students centered learning and teaching, software tools are actually developed which help students to structure, organized and process online material on their own desktop computer according to their own preferences. But now they can even share the material and work cooperatively on the same material with other students. Shared application tools and data management systems allow students to share material in a common environment with other.
  • But also on the teachers' side the internet has major effects on the organization of the workflows within institutions. Since online courses are not delivered within one room, with students and teachers being presented at the same time at the same location, new workflows will emerge for the provision of courses and material. Teachers can support students form their home, access their computer in order to check for new mails, statements in discussions boards, give feedback to exercises, or provide new material onto the web. The provision of courses and course material can be spread between information providers who prepare the content of the course, those who support the students and "give" the course, and those who provide the technical platform. Even the task of supporting the students can be divided among tutors, teachers, other students and even external experts. The role of teachers changes totally. He/she will have to select the appropriate material which will be used in the course and will select the supporting staff who is involved in supporting the course. The tasks will be spread among a team of professionals who take their role according to their specific qualification. Sir John Daniel claims that courses will be taught by teams instead of individuals and that these courses will be superior to the ones taught by one person (Daniel 1996).

  • This effect can also be transferred onto an institutional level: universities will teach those courses which they are best in. They will provide those tasks which belong to their "core business". Other tasks will be outsourced and be provided by external companies, other educational institutions or by companies which the university founded themselves. It is imaginable, that universities found businesses out of their computer center in order to attract other customers and to build upon their competence as well as to develop and push their own capacities on the market. Virtual universities or traditional universities with some online courses will have to learn from the organizational structure of virtual enterprises and create their own structure accordingly. In order to survive in the competitive market, they have to focus on their own strengths and look for appropriate partners for the rest.


The effects of these technologies on the educational market

Let's now have a look at the effect of these information and communication technologies onto the whole educational market, not just at on single institution:

  • The whole range of online course and institutions which them courses will be more transparent than ever before. Along with credit systems and accreditation methods courses and institutions will be clearly positioned within the market. Universities will not only offer courses on their own webpage but enter into platforms which combine the function of information brokers and accreditation centers. New Promise which Ulrich Ritter presents in his paper is one example. One single students can choose among several courses covering one topic and select the one appropriate for his or her needs according to cost, time, and credits involved. Institutions will have to market their profile in order to attract students and will specialize in certain fields or try to be excellent in a certain area.

  • More and more courses will be targeted at professionals or part-time students which qualify themselves along their professional careers. Since their have financial income, student tuition for this group will not be such a hot topic as it is in Germany right now. At least this target group will have to pay for their courses. Traditional universities will have to make a decision whether they want to enter this market segment. They will either offer special courses for professional part time students or will open existing courses for certain rates to this target group.

  • Experts, teachers and tutors might work as independent freelancer in the educational sector and get involved in certain courses according to their specific qualification. They will also try to develop a certain profile or find permanent contracts. Besides the traditional professional careers in universities, new job positions become available around the provision of online courses.

  • Technical companies will specialize on the provision and support of online education. They will be booked by educational institutions in order to provide the technical platform for online courses. They might even rent out certain services such as the provision of webboards, chats and videoconferences and apply or provide tools for the construction of online text books, tests, questionnaires, etc..


What are the key players in this field?

If universities are not the only ones which take part of the cake - who are the others?

I have mentioned above, that new educational institutions will enter the market. Along with the existing players, new institutions could be categorize in following structure:

  • Education broker

  • International consortium
  • Corporate universities
  • University networks
  • Virtual universities
  • Traditional Universities with online courses

This structure is used by Encarnaçäo/Leidhold/Reuter (2000). In his paper Ritter uses a similar structure. He calls the 'university network' 'associations of universities'. 'Virtual universities' is something we could compare with his term 'online universities'. He also adds commercial education enterprises and distant universities to his list. Additionally he often mentions the 'internet university'. This is a construct which was used by 'New Promise* for a while. Now it is moving towards an education broker. Daniel adds so-called mega-universities to the whole picture. They are distant universities which serve a very large number of students (over 100.000). He identifies only 11 institutions worldwide that meet the necessary criteria of a certain size, of distant teaching and several degree-level courses in higher education. (Daniel 1998).

A short look at each category will help us to understand the features and differences:

Education brokers are often companies which do not offer any online course themselves but provide a platform where other institutions place their courses. Some brokers apply accreditation measures in order to allow only courses or institutions which meet certain criteria to put their offers into the platform. Other are more open and allow any course provider to place their curriculum into their catalogue. Some brokers are limited to certain institutions such as universities. Just recently a German platform has opened its online portal, listing online courses offered by universities only. How do they survive? Public platform as the German example are financed by public funding. Other take fees from the students who look for courses or institutions which want to offer their them. Nearly all commercial education brokers make additional money with banners. In future, education brokers might extent their services into student consultation, helping them to find the courses for their needs and to assess their capabilities.

International consortiums are joint ventures or other forms of corporation between telecommunication companies, publishing houses, TV and radio stations, and other "media companies" which will try to place - along with big companies -profitable courses onto the educational online market. They will go for the most profitable areas such as business courses and professional training for corporate customers. Additionally they might cooperate with well-known, traditional universities which provide the necessary reputation needed for a good profile. These consortiums should be watched carefully since they have extreme economic power and might have hidden agendas besides serving the educational market. Gaining market power in certain areas might as well be an objective. But they should not be perceived as threatening only. They might as well serve their target group and offer courses for the self-organized, highly motivated, professional adult who wants just-in-time training in certain areas.

Corporate universities are nothing just the new technologies will bring upon earth. They are already in place all over the world. Corporate universities are institutions run by big companies who want to train their employees and especially the young trainees in their own course framework. Besides studying in conjunction with a full time or part time job with their company, the students are involved within the company's own value system and culture and are trained according to the company's specific needs. (Encarnaçäo/Leidhold/Reuter 2000)

University networks are a phenomena we can often observe in Germany right now and which are mainly caused by the upcoming of online training and course delivery. Since it is often too expensive for one single university to conduct all the tasks and processes needed to offer online courses, universities cooperate in order to fulfill this objective. University networks are heavily encourage by the German government right now by putting corresponding criteria into proposals for public funding of multimedia projects. Universities react. Many projects are pursued in conglomerates of state or regional university networks. While regional aspects can play one role, disciplines play another. Most often a combination can be observed: several departments for engineering or computer science or business try to offer cooperatively several courses or even an online study program within their discipline. Typical examples are the "Virtual University Bavaria" and the "Virtual Fachhochschule (Polytechnic) Lübeck". In Bavaria full time students can pick online courses to complement the traditionally offered curricula. One advantage of university networks in the internal agreement upon transfer of credits and accreditation. Student assessment is often still held in the traditional way in face-to-face setting. With more experience university networks will start to offer courses in other areas of the educational market and might target courses towards full time professionals.

Virtual universities is the pure sense of the word can rarely be found. In a very radical meaning of the word they would not have any institutionalized, "physical" body such as an university campus or an permanent administrative department. In the pure meaning of the word they should resemble virtual organizations which consist of a network of companies and freelancers, all contributing their core business competencies. Virtual universities which meet this extreme definition do not exist. What exists are universities which have mainly focussed themselves on offering online classes. But online course delivery is only one portion of the whole scale of services provided. Virtual universities try to cover the whole scope of activities and services possible at a traditional campus. But online! So they have virtual cafeteria, online student admission and registration, virtual library, bookshops and other services such as students consultation, etc.. Instead of just offering courses in one or two disciplines they try to supply a whole range of programs, even online degrees such as masters and bachelors. Students are supported by online tutors and interact in group sessions or tasks. Besides teachers and content providers the tutors play a major role is these programs and are especially skilled and trained for online tutoring and support.

Traditional Universities already start to offer online courses to their full time students and for the apply new media technologies to support students who study on-campus. Here we have to differentiate two developments: multimedia support of traditional on-campus teaching and the application of multimedia to delivery courses off-campus. In the first case, multimedia is either used to enhance lectures and seminars with traditional teaching techniques or students can access additional material on the web which is accompanying face-to-face courses. In the second case, universities start to make use of the technologies in order to offer more flexibility to their students. Seminars are held in the net so students can access them from the home computer and courses are opened to new target groups. In international online seminars students are brought together from all part of the world or across different disciplines. Students study mainly online or attend courses which mix face-to-face and online phases. As long as traditional universities stay with their target group of the on-campus full time student, they will not intervene with the other key players in their areas. But once they start to address new types of students such as the full time professional, they will compete with them. Now they need to find their specific and competitive advantage to position themselves (Porter 1995; Davis 1999).

Distant universities and mega-universities are described together since in most cases the latter are distant education institutions with very large number of students. One major characteristics and advantage of institutions in this category is their experience with distant course delivery and very advanced division of labor in the administration, production and delivery of distant courses (Daniel 1998). The new challenge they have to face is the application of multimedia. While on one hand we expect them to be pioneers in the provision of online courses and think they should be advanced in the use of technology, it is often overseen that they also need to go through a major organizational shift. The production of online courses and course material is more expensive and time consuming than the production of printed text book. Additionally teaching with multimedia can fundamentally change the way we teach at distant. While traditionally little student - teacher interaction was quite normal and students rarely founded study groups, now the net changes the whole setting. Students can contact their teachers via email, they can discuss with other students and learn in groups. What has changed dramatically for distant education is the formula applied for the cost calculation of one single course. While in the past, more students in one class lowered the cost per students, the formula does not work that well when students want interactive support, online tutoring, personal feedback and so on. Within a more competitive market the institutions will need to find ways to be attractive to students. Cost effectiveness is one way, "customer" orientation another. Distant education institution need to find a way between these poles.


How and where will institutions compete?

Many aspects of competition have been mentioned above. Some of the overlapping interests should be looked at in detail. In the area of mass study programs which are interesting for professionals as well as for full time students most providers will meet. But at the same time the main demand will be in this field. With a growing demand for life long learning, professional training, and academic education, potential students will enter the field as well as new institutions. Traditional universities will have to find the appropriate strategic partners in order to enter the online educational sector. They will not be able to offer traditional study programs as well as a full range of online courses. A major influence might lie in the hands of the education brokers. If they become powerful and own a certain market share (in the business of online course catalogues), they might (ab)use their accreditation power in order to influence course design and content. Here traditional and public universities should react early enough and do not give educational policy out of the hands. National and international accreditation agencies, where several interest groups are members of the boards, should ensure a development which serves the public, the tax payers and the potential students. Commercial consortiums and corporate universities will find their place in the whole spectrum of possible courses, contents and target groups. They will follow market trends and allocate themselves in the most profitable areas. Public universities will keep the task to offer courses and conduct research in areas which are less profitable to commercial organizations. They also have to ensure that higher education stays open to everybody and serve all these students how are not willing to be involved in online learning and distant communication. One aspect should not be overseen: online and distant learning demands a high degree of self organization and motivation of the students and not everybody is ready for the net. At the same time, campus universities are still a place of social interaction and academic communities which can not be substituted one-to-one into the virtual world. But what will definitely change: teaching and learning will move towards more learner centered, less teacher-centered methods. Even in traditional face-to-face courses actual pedagogical research, driven by the application of multimedia in learning, will not be overseen anymore. Through the back door of online learning traditional teaching will be reformed. Problem solving, action learning, situated learning and new insights about cognitive modeling and constructivist approaches will be applied. This leaves one question open: which institutions will adapt and use the new approaches?


What makes the difference? Or: Who will join the club and who won't?

This aspect will only be covered shortly since not enough research is done to understand the way how organizations such as universities change and develop. Bremer/Ritter/Buraschi (1999) have tried to identify some factors through international comparison. We identified several potential factors such as openness to innovation and individual incentives for teachers and tutors. Schädler (1998) discussed in her doctoral thesis the process of how and why universities implement innovations in teaching. The results of both analysis and personal experience are as follows: people need personal incentives in order to push innovation in institutions. The innovation must not be too complex and must be handle by the people implementing it. The cost linked to it must be either covered by public funding or by future perspectives on rewarding gains. Incentives and gains can either be financial in nature or - as in the academic community often common - reputation. Reputation pays in further funding and better career opportunities. On the institutional level, innovations must either improve the position of the institution (better profile, better marketing, etc.) or pay off by more efficient processes. If delivery of courses can be made more cost effective by the application of the internet, it is interesting for distant education institutions as well as for commercial providers. Last not least two major factors influence the transmission of an innovation into the "daily business": The newness must diminish and the innovation must spread across the institution, not being related to on single pioneer or stakeholder. The outcomes of the innovation must be communicated to a larger community and accepted by the key players. The continuity must be ensured if the person inventing it is leaving the organization. It must be establish and supported as a process on several levels of the organization. Policy makers have recognized these problems and started explicitly to promote projects, which deal with the transfer of temporary into permanent processes. The general acknowledgement of the problem expresses itself by a number of presentations on the major conferences in the field of online learning and teaching.


Closing remarks

Let me close with a notion that always strives my mind when reflecting upon these developments: Along with all the modularization of education, packed in small single units which can be shipped through the internet and delivered to students, we shall not forget what university studying is about. It is also about learning in the academic community, taking side steps, looking at other courses without paying for them right away, personal development and being exposed to a variety of courses and academic disciplines which might let us take an unpredictable way at some point. In universities, personal development takes place and the transmission of value (Mingle 1995). We should not forget that not all learners are capable of self organization and can select at any time the courses which are appropriate for them, can properly assess their own capabilities and motivate themselves continuously during an online course. As much as I am in favor of the new potential waiting for us in the net, I want to remind us, that online courses and total virtualization should not be the only way!



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Bremer, Claudia (2000)
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