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E. Han Kim
  E. Han Kim

Are Elite Universities Losing Their Competitive Edge?

6/30/2006 --

New study shows significant increase in research collaboration between scholars at top-ranked and other universities.

ANN ARBOR, Mich.—When it comes to research, elite universities may not be so elite, says a University of Michigan business professor.

In a new study of research productivity of faculty at top 25-ranked U.S. universities, E. Han Kim of U-M's Stephen M. Ross School of Business found that highly rated institutions no longer enjoy a distinct competitive advantage like they did 30 years ago.

"In the 1970s, faculty who worked with better colleagues were more productive," said Kim, a professor of finance at the Ross School. "This effect weakened in the 1980s and disappeared in the 1990s."

The culprit? Developments in information technology and the emergence of the Internet.

"These advances diminish the importance of cooperation within physical boundaries and greatly facilitate collaboration from distance," Kim said. "As a result, there has been a substantial increase in co-authorship between scholars at elite and other universities."

Kim's study, conducted with Adair Morse of U-M's Ross School and Luigi Zingales of the University of Chicago, examined the research productivity of all economics and finance faculty—more than 3,200—who had ever been affiliated with top 25 universities from 1970 to 2001 (the researchers averaged university research rankings from 11 previous studies to determine the top 25 list).

They found that among all articles published in 36 economics journals and the top five finance journals written by scholars at a top 25 school, the percentage of co-authored papers with colleagues from non-elite schools has nearly doubled—from 32 percent in 1970 to 61 percent in 2004.

To measure research productivity, Kim and colleagues counted the number of articles published, pages written and citations in other published research articles. They also used an impact-weighted count of pages where impact was gauged by citations to the journal in which the publication occurred.

Of the top 25 economics departments studied, 17 had a significantly positive impact on productivity in the 1970s, but by the 1990s, this number had dwindled to two. For finance departments, the number fell from 16 to four during that time.

According to the study, cultural norms have a persistent effect on research productivity—albeit negative. The presence of unproductive faculty members—a proxy for a low motivational work environment—has a strong negative impact on the productivity of other faculty members.

"The disappearance of positive university effects suggests that, as far as research productivity is concerned, elite universities are indeed losing their competitive edge," Kim said. "Because of the reduced importance of personal interactions, one traditional advantage of elite universities—to act as a focal point attracting the smartest faculty—is at risk."

Moreover, the researchers found a negative correlation between changes in university effects on faculty productivity and salary changes, suggesting that elite universities are no longer able to retain star faculty on the strength of their reputation alone. In other words, elite universities must pay more to keep their top professors.

"Upcoming universities now compete on a more level playing field to attract productive faculty," Kim said.

In all, the researchers say their findings have important implications for knowledge-based industries outside of academia.

"What we have documented for universities has also been happening in other industries," Kim said. "Back-office operations are increasingly outsourced overseas. Industries that can provide service over the Internet are breaking out of traditional modes of operation.

"Our results suggest that these breakdowns are only the tip of the iceberg. In the not-so-distant future, many industries may find little need for locational anchors at all."

Read E. Han Kim's Profile.

For more information, contact:
Bernie DeGroat
Phone: (734) 936-1015 or 647-1847