Management University

Springer ****

Higher Education (****) **: *** ***

DOI 10.1007/s10734-005-1168-2

Entrepreneurialism in Japanese and UK universities: Governance,

management, leadership, and funding

KEIKO YOKOYAMA

Research Institute for Higher Education, Hiroshima University, 1-2-2, Kagamiyama, 739-

8512, Higashi-Hiroshima, Japan (e-mail: ******@*********-*.**.**)

Abstract. This paper scrutinises organisational change in Japanese and UK universities

which are engaged in entrepreneurial activities. The study focuses on recent changes in

governance, management, leadership, and funding in these universities. The paper ar-

gues there are convergent trends between Japanese and UK universities in terms of

increasing entrepreneurial activities, a review of institutional strategies, a review of the

organisation, the application of market-oriented institutional policy, links with the

industrial sector, the notion of a public nancial crisis and changing external environ-

ment, strong leadership of the university President or Vice-Chancellor, and the notion of

the accountability of the university to society as a whole. However, the application of

particular institutional strategies, entrepreneurial culture, and the way in which an

institution relates itself to the private sector signi cantly di ers among institutions. The

paper suggests that those di erences are related to di erent institutional history and

characteristics including those between national and private universities in Japan, and

old and new universities in the UK as well as di erent government policies between

Japan and the UK.

The paper rst proposes a theoretical model for the ve types of entrepreneurial

culture of the institutions. It then examines the model by using case studies: Nottingham

Trent University (UK), University of Surrey (UK), University of Tokyo (Japan), and

Waseda University (Japan).

Keywords: entrepreneurial, entrepreneurial universities, governance, management,

neo-liberalism, Japan, UK

Introduction

An entrepreneurial university, on its own, actively seeks to inno-

vate in how it goes about its business. It seeks to work out a sub-

stantial shift in organizational character so as to arrive at a more

promising posture for the future. Entrepreneurial universities seek

to become stand-up universities that are significant actors on

their own terms. Institutional entrepreneurship can be seen as both

process and outcome (Clark 1998, p. 4). Burton Clark s (1998)

524 KEIKO YOKOYAMA

notion of entrepreneurial universities is based upon the claim that

certain universities in di erent countries are convergent towards

more market-oriented, entrepreneurial entities. The idea of entre-

preneurial universities is conceptually adjacent to neo-liberalism,

which emphasises the power of the market. Entrepreneurial uni-

versities emphasise organisational adaptation, institutional discre-

tion, and a process of incremental change. Similarly, Barbara

Sporn (1999) analyses the transformation of the universities, using

the concept of adaptive universities, although her focus is rather

universities adaptability, giving attention to universities response

to the changing environment for higher education such as

constrained resources, market pressures, modern information tech-

nology, and government regulations.

This study explores Clark s and Sporn s empirical studies by giving

new insights into the studies of governance, management, leadership,

and funding whose theme is at the forefront of existing higher edu-

cation research, as Ulrich Teichler (2003) points out and by high-

lighting a comparative perspective on the change in organisational

culture in Japan and the UK. Entrepreneurial elements are observed in

both Japanese and the UK higher education systems. Both the Japanese

and UK governments encourage the universities to increase external

funding at least in their discourses, although the entrepreneurial activ-

ities of national universities in Japan are, to a large extent, limited at the

practical level. The method of engaging in entrepreneurial activities and

of linking the entrepreneurial dimension to academic activities di ers

between Japanese and UK universities. In Japan, entrepreneurial

activities are largely observed in the area of sangaku renkei (partnership

between higher education and the private sector), which includes

research collaboration, technological licensing, and overheads. The

universities income from sangaku renkei is not large, and national and

private universities rely considerably upon public funding and students

tuition fees, respectively. [The corporatisation of the national universi-

ties would enable university corporations (former national universities)

to conduct entrepreneurial activities to some extent; however, according

to a Deputy Minister, their entrepreneurial activities would be con ned

to the areas of technological transferring and licensing on the basis of

partnerships with the private sector (T. Kudoh, personal communica-

tion).] The idea of sangaku renkei is linked more to accountability to

society as a whole (increasing the contribution to the national economy)

rather than pro t-gain. With regard to organisation, sangaku renkei is

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ENTREPRENEURIALISM IN JAPANESE AND UK UNIVERSITIES

related more to the technology and science units, than the humanity and

social science units or the institute as a whole.

In contrast, entrepreneurial activities are observed more extensively in

UK universities than those in Japan. These activities include partner-

ships with the private sector, investment in the stock market and cor-

porate activities. Entrepreneurial activities of UK universities are

directly linked to fund-raising which is derived originally from the

public funding crisis in evidence since the 1980s. This fund-raising,

however, does not always achieve successful pro t-gain. The entrepre-

neurial activities of UK universities are partially related to the regional

economy; the New Labour Government encourages higher education

institutions to contribute to the economic and social needs of a region

[e.g. the Higher Education Reach Out to Business and the Community

(HEROBC) fund through the Regional Development Agencies].

In terms of organisational culture, the particular types of applied

organisational reforms di er between Japanese and UK universities,

which could have di erent implications for the relations between

entrepreneurial and organisational culture. In Japan, governance,

management, leadership, and funding can be understood in the power

relationships between the Centre of the University and the units (e.g.

departments, faculties, and research centres) within an institution, and

the state-university nexus. The internal power relationships between the

University Centre and the units in an institution are based upon

decentralisation under the principle of faculty autonomy (kyojyukai

jichi). In the present university reforms, the strength of the power of the

University Centre is an issue. The state-university nexus could restrict

organisational reform and entrepreneurial activities. The state could

in uence both national and private universities in the areas of funding

and management structure as well as legislation. The national univer-

sities have fully relied upon public funding; private universities have

received state subsidies, which is, according to state legislation, up to

50% of the total institutional income. It could be argued that the state

could become involved in the national university sector through the

appointment of university presidents and the Director General of the

administrative bureau and of senior administration o cers in univer-

sities who also work for the Education Ministry. The direction of or-

ganisational reform in Japan tends to centralise rather than decentralise,

emphasising the power of the university Presidents and University

Centre by de-emphasising the power of the units.

In the UK, governance, management, leadership, and funding can be

understood in the changing relationships between the state and the

526 KEIKO YOKOYAMA

universities. The low nancial dependency of the universities on public

funding before 1945, and the function of the UGC (University Grants

Committee) as a bu er between the state and the universities before the

mid-1980s suggest a relatively high degree of university autonomy

(Clark 1998; Neave 1988). It can be assumed that the isolation of the

universities from the government and society as a whole, and limited

nancial di culty before the expansion of the universities in the 1980s,

conditioned a great degree of collegial and non-entrepreneurial culture

at least before the 1980s. According to Clark (1998, p. 14), an anti-

industry attitude was observed in British academics in the 1960s and

70s. The transformation of the higher education system by the increase

of state control since the mid-1980s suggests the signi cant degree of the

government s in uence on the universities, in which government stra-

tegic funding and quality control could in uence institutions organi-

sation and internal funding strategies. The universities emphasising

entrepreneurial dimensions tend to de-centralise their funding and

management systems, and emphasise the power of the executive in the

area of strategic planning.

On the basis of the notion of the di erences in entrepreneurial and

organisational culture between Japan and the UK, this paper addresses

the following question: what are the common and di erent conditions

of Japanese and UK universities engaged in entrepreneurial activities in

particular, in relation to governance, management, leadership, and

funding? The analytical focus is on governance, management, leader-

ship, and funding. The study pays attention to the di erences between

the countries and types of institutions, in particular between pre-1992

and post-1992 universities in the UK, and national and private uni-

versities in Japan.

Theoretical underpinnings: di erences in entrepreneurial culture of the

universities

The entrepreneurial activities observed in the universities are multi-fold.

They include the establishment of business corporations, overheads,

consultancy, service to the community, and even scholarships. Entre-

preneurial activities in the universities, therefore, do not necessarily

bring about substantial pro t-gain. Entrepreneurial activities are not

new trends; the universities have long been involved in publication and

consultant activities.

527

ENTREPRENEURIALISM IN JAPANESE AND UK UNIVERSITIES

Terms such as Centrepreneurial and entrepreneurialism in the

context of the universities are, therefore, not necessarily to be under-

stood with the idea of pro t-gain, risk taking, and even commercial

activities. Rather, this paper signi es the universities attitudes in

attempting to stand up and be self-reliant. Entrepreneurial activi-

ties in this de nition could relate to the promotion of their account-

ability to society as a whole; entrepreneurialism is the process by

which the universities become engaged in more entrepreneurial activities

than they were previously. The introduction and promotion of entre-

preneurial activities in the universities tend to be related to the restric-

tion of public funding the university s crisis notion in terms of funding

and management and its consequence.

It can be observed that the universities engaged in entrepreneurial

activities often review and reform their organisation in order to respond

to external demands e ectively as well as internal demands. This paper,

therefore, identi es the two types of institutional response: (1) com-

mercial and business activities including the establishment of corpora-

tions and the promotion of partnership with the private sector; and (2)

change in academic organisation. Those institutional responses are

based upon self-reliant and autonomous sense.

On the basis of this de nition of entrepreneurialism, this paper o ers

a model showing the ve types of universities in relation to organisa-

tional shifts to respond to changing internal and external demands, and

entrepreneurial activities. This model does not indicate that all univer-

sities are convergent towards entrepreneurial universities. Rather, it

shows the di erent degrees of involvement by the universities in or-

ganisational reform and entrepreneurial activities and culture. The

universities will not necessarily develop from the prototype to the ideal

type, indicating no linear development; university tradition, university

mission, and economic, political and socio-cultural elements are sig-

ni cant elements in formulating their particular organisational and

entrepreneurial culture. Table 1 (below) summarises the key conditions

of the universities engagement in organisational reform and entrepre-

neurial activities in each type. There are no clear correlations between

strength in particular areas of entrepreneurial activity, and research

strengths in particular elds.

A prototype is characterised into three: (i) a signi cant degree of

engagement in entrepreneurial activities; (ii) increasing institutional

discretion; and (iii) reviews on governance, management, leadership,

and internal funding in an institution. First, a prototype is

engaged in a limited degree of entrepreneurial activities, developing an

528 KEIKO YOKOYAMA

Table 1. Five entrepreneurial types of universities

A Prototype (e.g. Tokyo University)

- Increase of institutions discretion

- The introduction of entrepreneurial culture

- Review in governance (e.g. increasing the power of the University Centre

and university President), management, leadership and internal funding

- Set-up of institutional strategic planning

- Emphasis on the signi cance of enhancing accountability.

An Entrepreneurial-oriented University (e.g. Waseda University)

- The extension of entrepreneurial activities

- Market-oriented institutional policy

- Con ict between academic and entrepreneurial values

- Introduction of managerialism.

A Fledgling Entrepreneurial University (e.g. Nottingham Trent University)

- Limitation of public funding dependency

- Self-identity as an entrepreneurial university

- Contribution to regional economy.

An Adaptive Entrepreneurial University (e.g. University of Surrey)

- Institutional self-determination

- Substantial amount of income from external funding

- Market-oriented governance and management structure

- Integration of entrepreneurial and academic culture.

An Ideal Type

- Autonomous and self-reliant institution

- Clear risk sharing and responsibility among actors involved in the

entrepreneurial activities

- Integration of entrepreneurial and academic culture, and managerial and

collegial culture in an institution with no con ict between them.

entrepreneurial culture. The university s entrepreneurial activities might

include research collaboration and partnership with the private sector,

technological licensing, establishment of publishers, and the running of

medical hospitals. The main aim of promoting entrepreneurial activities

is not always fund-raising or seeking external funding; it could simply be

an attempt to uphold accountability to society as a whole.

Secondly, the university enjoys increasing institutional discretion,

which encourages it to take the initiative for institutional reform, rather

529

ENTREPRENEURIALISM IN JAPANESE AND UK UNIVERSITIES

than state-led reform. The rationale of university reform could be the

public funding crisis, the increasingly competitive environment in higher

education, or the promotion of the university s accountability to society

as a whole.

Thirdly, the university starts to continuously review governance,

management, leadership, and internal funding. The review includes the

improvement of the chief-executives leadership, the inclusion of lay

members in the governing body, the funding incentive in an institution,

and the introduction of an e ective internal funding allocation mech-

anism. There is probably ambiguity in the relationships between the

governing bodies and the units at this stage.

An entrepreneurial-oriented university is categorised as a university

which has been moving towards being more entrepreneurial and market

oriented; however, its entrepreneurial culture is fragmented and partial.

The characteristics are: (i) the extension of entrepreneurial activities; (ii)

the notion of a gap between market-oriented policy and reality; (iii) the

con ict between academic and entrepreneurial values; and (iv) the intro-

duction of managerialism. Firstly, the university emphasises the signi -

cance of entrepreneurial activities, including the establishment of

university business corporations. However, it is not necessarily the case

that the university should identify itself as an entrepreneurial university,

or that the university relies solely upon income from entrepreneurial

activities. Secondly, the university applies a market-oriented policy, giv-

ing attention to rapid changes in consumer demand (e.g. demand for

particular courses), and the increasing gap between demand and supply,

in particular in the context of student recruitment and the graduate labour

market. Thirdly, there could be con ict between entrepreneurial and

traditional collegial culture; however, it is not necessary for the university

to resolve this issue at this stage. Fourthly, the university introduces

management methodology which has been applied in the private sector

in order to achieve e ciency and cost-e ectiveness. The university, for

this purpose, tends to recruit nancial sta from the private sector.

A edgling entrepreneurial university seeks entrepreneurial activities

to substitute for the decline of public funds, and as a solution for the

rapid change in the market. Its features are three-fold: (i) limitation of

public funding dependency; (ii) self-identity as an entrepreneurial uni-

versity; and (iii) contribution to the regional economy. Firstly, a uni-

versity limits public funding dependency by increasing external funding

through entrepreneurial activities. Secondly, the university self-identi es

as an entrepreneurial university, conducting entrepreneurial activities

and organisational reform to adapting to the change in internal and

530 KEIKO YOKOYAMA

external demand. This includes an attempt to develop the sta s

entrepreneurial mindset (e.g. commercial awareness) and management

(e.g. skills to access external funding and the improvement of legal

knowledge) through faculty development. Thirdly, the university tends

to promote the link with the regional economy, attempting to be

accountable to the community.

An adaptive entrepreneurial university seeks to innovate and adapt

to external and internal changes, being market-oriented. The features

are: (i) institutional self-determination; (ii) a substantial amount of in-

come from external funding; (iii) market-oriented governance and

management structure; and (iv) the integration of entrepreneurial and

academic culture. Firstly and secondly, the university enjoys institu-

tional self-determination, with less than half its income coming from

public funding, and a signi cant dependency on external funding

through a wide range of entrepreneurial activities. An entrepreneurial

culture prevails. Thirdly, the university adapts market-oriented gover-

nance and management structure, seeking exibility in its organisation

and management in order to respond to a rapidly changing market. The

university seeks organisational changes, in particular by emphasising

e ective strategic planning bodies, transparency and speed in decision-

making, the elucidation of a clear senior management structure, and

clari cation of the relationships between the governing body and units.

The university tends to improve a governing body s capability for

strategic planning, and apply decentralised funding and management

systems. Fourthly, the university arguably integrates entrepreneurial

and academic culture.

An ideal type is characterised as follows: (i) autonomy and

self-reliance; (ii) clear risk sharing and responsibility among the actors

involved in the entrepreneurial activities; and (iii) integration of

entrepreneurial and academic culture, and managerial and collegial

culture in an institution with no con ict between them. First, the uni-

versity is nancially autonomous, relying 100% income from external

funding, with no dependency on public funding. The universities are

self-reliant institutions which attempt to adapt to changing external

demand positively by setting up a strategic institutional agenda. Sec-

ondly, the university has clear risk sharing and responsibility among the

actors involved in the entrepreneurial activities. Thirdly, the university

integrates its entrepreneurial and academic culture, and its managerial

and collegial culture in an institution without con ict between them.

In order to examine the theoretical model of the above, the following

method was applied in this study.

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ENTREPRENEURIALISM IN JAPANESE AND UK UNIVERSITIES

Method

The empirical research for this study takes two approaches: (1) docu-

mentation and (2) case studies. The choice of these particular methods

was made because they allow systematic yet exible analysis and

interpretation. The application of the case study is based upon the claim

that the case study is, as Robert Yin (1989, pp. 13 26) argues, appro-

priate to answer how or why propositions, and to analyse a con-

temporary phenomenon.

The rst method, documentation, includes scrutiny of o cial and

university publications in order to establish: changes in funding (e.g.

public expenditure on higher education; the introduction of private

funding; and the changing balance of public and private funding);

institutional pro le (institutional type; purpose; goals; mission; funding

basis; and organisational culture); and changes in institutional strategies

(e.g. funding; governance, management, and leadership). Documenta-

tion and documentary analysis are, furthermore, used for coding par-

ticular concepts for analysis on interviews.

The second method, the case study, is based upon two universities

in each country: the University of Surrey (a pre-1992 university) and

Nottingham Trent University [NTU] (a post-1992 university) in the

UK; and the University of Tokyo (a national university) and Waseda

University (a private university) in Japan. The principle behind the

selection of these universities is based upon: (1) the logic derived from

research questions of this study; (2) commonality between the four

cases; and (3) an assumption. Firstly, the logic derived from

the research question leads to the selection of universities whose

organisation, internal strategies and funding allocation methods have

recently changed. Secondly, the four institutions are commonly inno-

vative, initiative forerunners in each sector pre- and post-1992 uni-

versity sector and national and private university sector in terms of

the successful results of the 2001 RAE (Research Assessment Exercise)

of two UK universities, the history of two Japanese universities, and

the amount of technology licensing in two Japanese universities and

the University of Surrey. Thirdly, the assumption is that there are

signi cantly di erent patterns of change in governance, management

and leadership between pre- and post-1992 universities in the UK, and

national and private universities in Japan. Therefore, it is useful to

compare four universities. The reason for selection of pre- and post-

1992 universities in the UK and national and private universities in

Japan is based upon the assumption that research-oriented universities

532 KEIKO YOKOYAMA

post-1992 universities in the UK and national universities in Japan

emphasise entrepreneurial activities (including collaboration with the

private sector) by using their strengths in the particular areas in re-

search. Teaching-oriented universities post-1992 universities in the

UK and private universities in Japan could focus upon the issue of

access in relation to the contract with a funding council on the number

of students in the UK, and the income from tuition fees in Japan.

The University of Surrey and the University of Tokyo are selected as

counterpart institutions because they are located near and in business

cities London and Tokyo, which has an implication for entrepre-

neurial activities. Waseda University is chosen as a counterpart insti-

tution of the NTU because both universities are engaged in

entrepreneurial activities in the eld of social science, although a sub-

stantial number of the universities in both countries emphasise entre-

preneurial activities in the eld of engineering.

Data collection in this case study research is based upon semi-

structured, in-depth interviews with university sta as well as documents

published by individual universities. The reason for the employment of

semi-structured interviews is that they merit both induction and

deduction from the propositions, avoiding empirical disorder and

assertions derived from the pre-determination of conclusions.

The sampling of participants for the interviews includes university

Presidents, members of the strategic planning committee, leading

administrators, and senior level faculty members from each institution

(or their delegated representatives). This choice is guided by the need to

establish data relating to the research questions as well as the timescale

of this study.

The interview schedule included both open and closed questions to

allow exibility in the research. Closed questions were formulated to

examine the logic linking the data to the propositions. The interviews

cover ve areas: institutional type, purpose, goals, mission, and funding

basis; institutional strategies in the areas of governance, management,

leadership and funding (including organisational behaviour and culture;

and the role of leadership, administration, and faculty), and the iden-

ti cation of decision-making bodies which made decisions for strategic

changes; areas resistant to change; identi cation of the changing envi-

ronment (e.g. economy and technology) by individual institutions; and

identi cation of entrepreneurial elements in an institution. Regarding

analysis and interpretation, signi cant concepts were identi ed in doc-

ument investigations based upon a constant comparison of the data.

533

ENTREPRENEURIALISM IN JAPANESE AND UK UNIVERSITIES

Some open-coding was done once interviews were transcribed and as

documents were amassed.

Result of analysis: case studies in Japan and the UK

The following case studies identify the di erent types of entrepreneurial

culture in four universities in the UK and Japan. Di erences in entre-

preneurial culture are related to the following: (i) di erent interpretation

and e ect of governments neo-liberal policies; and (ii) di erent rela-

tionships between government and the universities.

Firstly, both governments commonly set up higher education policy

which is subordinated to national economic policy, and incorporate

neo-liberal doctrine into higher education policy. Governments inter-

pretation and e ect of neo-liberal policies, however, di er between the

two, shaping di erent entrepreneurial cultures. UK governments have

subscribed to neo-liberal policies since 1979, as observed in the New

Right agenda of Conservative Governments (1979 1996) and the con-

troversial Third Way agenda of the New Labour Government (1996

onward). The UK governments neo-liberal policies are characterised by

compatibility between the state and market forces. Gareth Williams

(1992) argues that the state can involve the market in the areas of places

and costs in the UK. Compatibility between central authorities and

market forces, as well as between accountability and university auton-

omy, are common values shared by stakeholders in higher education

(Yokoyama 2003).

In Japan, there is a gap between the LDP (Liberal Democratic Party)

government s neo-liberal discourse and its policy implementation. LDP

Governments have, since the mid-1990s, applied radical neo-liberal

discourses such as privatisation and small government, as seen in 1995

New Party Platform and Program for the Change and Construction of

Economic Structure (Liberal Democratic Party 1995). However, their

neo-liberal policy implementation has been limited in the context of

higher education, observed partially in the area of curriculum and the

2004 corporatisation of the national universities in which Ministerial

power continues in the area of nancial allocation and strengthens in

evaluation. It can be interpreted that the gap between government

discourse and policy implementation relies upon con ict and compro-

mise between higher education stakeholders (Yokoyama 2003). Sup-

posing that entrepreneurialism at individual institutions, which could

drive market forces, re ect from the practice of the government

534 KEIKO YOKOYAMA

neo-liberal policy, entrepreneurialism in Japanese institutions is less

explicit than that in English institutions, because of the ambiguity in the

practice of Japanese government s neo-liberal policy.

Secondly, di erent relationships between central authorities and the

universities between the UK and Japan, which is mainly derived from

history and academic culture, could shape a di erent entrepreneurial

culture. In the UK, state legislation framework and the nancial

mechanism hardly limit institutional entrepreneurial activities

(Yokoyama 2003). The contractual relationship between the Higher

Education Funding Council and the universities which is based upon

Financial Memoranda, an annual nancial agreement between them

rather than the vertical relationship based upon legislation, reinforces

institutional latitude in the area of governance and management. In

Japan, Ministerial control through ordinance, circular, instruction,

information, and guidance and the nancial mechanism for national

universities, which limits nancial incentive, could prevent the univer-

sities engaging in entrepreneurial activities in terms of national uni-

versities and, to some extent, private universities. A couple of

interviewees in this study refer to the fact that Japanese academic cul-

ture per se, regardless of the types of institutions, has not been com-

patible with entrepreneurial ideas until recently, when the state

emphasised the idea of co-operation between the universities and the

private sector.

The conditions at each stage of entrepreneurialism in the university

(see Table 1) are, to a large extent, applied to four case studies.

Concomitantly, the empirical analysis and interpretation in this study

suggest four versions of universities showing entrepreneurialism, which

are not directly related to the developmental stage, but rather to

the di erent characteristics of these universities. For example, the

entrepreneurial activities and culture at the University of Surrey are

profoundly associated with its strength in research in particular disci-

plines. In contrast, in the NTU and Waseda Universities, the correla-

tions between research activities and entrepreneurial activities and

culture are low. Rather, the entrepreneurial activities at the NTU and

Waseda University are related to teaching and training. This di erent

trend between the University of Surrey, and the NTU and Waseda

University accords with the di erent characteristics between old and

new universities in the UK and national and private universities in

Japan (Old and national universities have emphasised research, while

new and private universities have focused upon teaching). Furthermore,

the di erent characteristics between Japanese and UK universities in

535

ENTREPRENEURIALISM IN JAPANESE AND UK UNIVERSITIES

terms of governance and management in particular, in respect of the

signi cant power of faculty autonomy in Japan, and the University

Centres in the UK result in di erent processes for developing entre-

preneurialism. For example, power devolution in the University of

Surrey and the NTU was a signi cant factor behind the development of

entrepreneurialism. In contrast, the empowerment of the university

president in the University of Tokyo and the reinforcement of decision-

making by the Centres in Tokyo and Waseda Universities are signi cant

in relation to entrepreneurialism.

University of Surrey: innovative research-oriented university which

emphasises the integration of academic and commercial activities

The University of Surrey is categorised as a university with highly

developed entrepreneurialism and entrepreneurial culture in respect

of the substantial amount of external funding, and extensive

entrepreneurial activities, as well as the strong sense of entrepreneurial

identi cation. The University s income from Funding Council Grants

was only 25.3% of the total income in 2000/2001 the second lowest

dependency on public funding among higher education institutions in

the UK, next to the London Business School.

The signi cant features in the pro le of the University of Surrey are

ve-fold: (1) the strong link with business and commerce; (2) engage-

ment to the regional economy; (3) extensive entrepreneurial activities;

(4) emphasis on employability, and practically oriented subjects and

courses; and (5) integration between academic and entrepreneurial

activities. Firstly, the link with business and commerce sectors is related

to its institutional history, which is the upgrading from a College of

Advanced Technology emphasising the subjects of science and tech-

nology and the link with commerce and industry to a university in the

1960s. The University has, since then, collaborated with the industrial

sector in the areas of health, medicine, space science, the environment,

communications, defence and social policy. The entrepreneurial activi-

ties and culture of the University correspond to the current Labour

Government s policy on the promotion of partnerships between higher

education and industry. The University won a 10 million grant from

the Higher Education Innovative Fund (University of Surrey 2000a).

Financially, income from entrepreneurial activities is high. For

example, other operating income was nearly 17% of the University s

total income in 2000/2001. This included the following: residences,

536 KEIKO YOKOYAMA

catering and conferences; other services rendered; donations from

subsidiary companies, departmental income; income released from de-

ferred capital grants; use of university facilities and rental income; VAT

recovered; and other income.

The University s entrepreneurial activities are embedded in the

strength of its research and its strength in particular subjects. The

University s 2001 RAE was indicative of the success of its research

performance. The University had three 5*A s in Electronic Engineer-

ing, Other Studies Allied to Medicine, and Sociology . It also

attained seven 5s in the following units: psychology; physics; applied

mathematics; European Studies; Russian, Slavonic and East European

languages; statistics and operational research; and chemical engineering.

The link between the emphasis on particular subjects and entrepre-

neurial activities is explicit in its mission statement.

Secondly, the University of Surrey has links with the economic

development of the South East of England through the Surrey

Research Park (a centre in technology, science and engineering), the

Surrey Economic Partnership (regional research collaboration), and

the newly established South East Economic Development Agency

(SEEDA), and Higher Education South East (HESA). The advantage

of its location large space, good water supply, and more impor-

tantly, accessibility to a well-quali ed work force because of its

commutable distance from London has strengthened the Univer-

sity s regional activities.

Thirdly, the University of Surrey is engaged extensively in entre-

preneurial activities, in both academic and non-academic areas. These

activities in academic or academic-related areas are: undergraduate

curriculum (e.g. encouragement to take modules which are valued by

employers such as leadership, IT, foreign languages, management, and

communications); post-graduate courses (e.g. MBA); professional

training and seminars for professionals (leadership and managerial

skills); partnerships with business, commerce, and government sectors;

business consultancy and support services; the provision of conference

and sports-leisure facilities; the provision of social and market research;

technology transfer to the industrial sector; accommodation and careers

services for students; and a university bookshop. The University s

entrepreneurial activities in non-academic areas which are operated by

the Corporate Service whose director is a member of the Executive

Board, an ultimate governing body in the University include oper-

ation of the University s subsidies. The indicators which show clear risk

537

ENTREPRENEURIALISM IN JAPANESE AND UK UNIVERSITIES

sharing and responsibility among actors involved in the non-academic

entrepreneurial activities are not available.

Fourthly, the University of Surrey emphasises practical and

vocational-oriented subjects and courses (e.g. engineering and man-

agement studies), in order to enhance the employability of University

graduates. That the university had the lowest unemployment rate

among UK universities for former students 6 months after graduating,

indicates the e ect of the University s policy on enhancing employ-

ability in 1999, showing only 0.7% of the graduates from the University

of Surrey (BBC News 1999).

Fifthly, the University of Surrey has attempted to integrate its aca-

demic and entrepreneurial activities. The University, in its discourse,

asserts the compatibility between academic and vocational dimensions:

We are unashamed to be a university that understands the worlds of

industry and commerce, of government, the law, the arts and many

others besides. Nor do we see any con ict between the vocational ap-

proach and achieving the highest standards of teaching and research

(University of Surrey 2001a, p. 2). The University, at the operational

level, has attempted to integrate academic and entrepreneurial activities

by creating the post of Director of Planning, who is to ensure that

academic and non-academic aspects of the University s planning pro-

cesses are co-ordinated.

A university s strength in the entrepreneurial dimension could be

related to strengths in its organisation. As Clark (1998) identi es, the

most signi cant pathways to transform a university towards the entre-

preneurial could be a strengthened administrative core in addition to

a close university industry relationship. The introduction of an entre-

preneurial culture in the University of Surrey, according to an inter-

viewee, took place in the early 1980s, when universities were forced to

seek external funding because of higher education funding cuts by the

government. The University has, since then, continuously reviewed and

reformed the areas of governance, management, leadership, and the

methodology of internal funding allocation. One interviewee observed

that change has been incremental towards being more market- and the

consumer-oriented. Another interviewee observed that the University s

strategy plans have been synthesised with the RAE period. The inter-

viewee pointed out a concrete example of change in the University,

which was the gradually increasing number of administrative sta from

companies, including the post of Director.

The recent changes in the University of Surrey in the areas of gov-

ernance, management, funding, and leadership have implications for the

538 KEIKO YOKOYAMA

development of its entrepreneurial activities and culture. The review

started in 1996, when a focus group was established to elucidate stra-

tegic views, which resulted in the launch of its vision statement in 1998.

The University s strategic plan, according to an interviewee, relies upon

internal rather than external reasons, which is based upon institutional,

not national, incentive, attempting to improve the University s com-

petitiveness.

Two signi cant phases of recent reform in governance, manage-

ment, leadership, and funding took place in 1997 and 2002. These

changes are based upon the principle of power devolution in funding

and management, which implies a signi cant degree of funding

and management autonomy of schools. The decentralisation in the

University, however, does not necessarily diminish the power of

the Vice-Chancellor; on the contrary, the University emphasises the

Vice-Chancellor s strong leadership, and an e ective strategic planning

governing body.

The University s main changes in governance, management, leader-

ship, and funding in 1997 are three-fold: (i) the introduction of trans-

parent funding methodology, Resource Allocation Methodology

(RAM); (ii) the decline of the number of units, whose logic was based

upon a claim that a smaller number of units brought about e ciency

and cost-e ectiveness; (iii) power devolution from the University Centre

to the Schools in the areas of funding and management, which was

based upon the belief that decentralisation can bring about more ex-

ibility to a changing market niche than a centralised structure, and can

increase resource accountability to the HEFCE and society as a whole.1

In relation to (iii), the University Centre continues to have responsibility

for quality control, the creation of new academic full-time established

posts and courses, student nancial support, and overseas planning

process and debts treatment.

The 2002 Reform of the University of Surrey (University of Surrey

2002) stems from the Port Report and the Kelly Report (Kelly 2002;

Port 2002). Recommendations made by the Port Report which is a

report to the Vice-Chancellor, Chief Executive and the Chairman of

Council about how the senior management of the University should

support the Vice-Chancellor more e ectively and e ciently to secure

academic excellence with nancial robustness for the University of

Surrey were accepted and are in the process of being implemented.

(Port 2002). The theme of the Port Report includes the decision-making

process and senior management; it gives great attention to the Centre

Schools relationships within the devolved framework. The basic values

539

ENTREPRENEURIALISM IN JAPANESE AND UK UNIVERSITIES

of the Report are e ciency, cost-e ectiveness, shared responsibility,

devolution, central planning, the inclusion of the representatives of all

Schools in the decision-making process, the link between the Centre and

Schools, and equality between Schools. The main problems identi ed in

the Port Report are the heavy workload of the Vice-Chancellor, the

exclusion of some heads of Schools in strategic decision-making,

problems in the line of management and management performance, and

the unclear role of Pro-Vice-Chancellors. The main recommendations

made by the Report include: the restructuring of the academic frame-

work, the governing body, and senior management. The Kelly Report

was accepted and has been implemented (Kelly 2002). The basic values

of the Kelly Report are e ciency and cost-e ectiveness.

The factors behind the changes in organisation in 1997 and 2002 are

multi-fold. The Port and Kelly Reports identify the following factors:

increasing competitiveness in the higher education system; a rapidly

changing education environment such as information technology, the

widening participation agenda, and the increasing importance of the

contribution of the university to the regional economy; the implemen-

tation of the Council s target in relation to the development of a

Federal University; the signi cance of collaboration with other

research-oriented universities; a mismatch between demand and supply;

out-dated course programmes or the signi cance of exibility in course

structure; the preparation for the next RAE (2006); the retirement of

senior members; the lack of the sta s sense of responsibility; slow and

unclear decision-making processes; limited public funding; and the lack

of transparency and accountability (Kelly 2002; Port 2002). The inter-

viewees have di erent views on the rationales behind the reform. One

emphasised internal rather than external reasons, pointing out that the

University of Surrey has sought greater competition in the higher

education system. Another mentioned cost-e ectiveness and e ciency.

Yet another identi ed the following: the retirement of a substantial

number of senior sta ; outdated course programmes in the areas of

engineering and languages; the review of academic structure; the notion

of the increasing gap between demand and supply and of rapid changes

in consumer needs; preparation for the 2006 RAE; practical problems

in management (in particular, the heavy workload of the Vice-Chan-

cellor); and the retirement of the current Senior Pro-Vice-Chancellor

and the University Secretary & Registrar.

Finally, the analysis and interpretation of interviews and university

documents suggest the conditions associated with entrepreneurialism at

the University of Surrey, indicating what makes it entrepreneurial. The

540 KEIKO YOKOYAMA

conditions identi ed are as follows: (1) emphasis on science and tech-

nology rather than human science; (2) emphasis on research; (3) strong

links with industry / business / professional organisations; (4) emphasis

on employability; (5) the notion of a higher education funding crisis; (6)

a strong sense of entrepreneurial identi cation; and (7) a liberal ethos

throughout campus.

The University s policy on the fusion of academic and entrepre-

neurial activities does not, in practice, bring about a harmonious fusion

of collegial and entrepreneurial culture, and collegialism and manage-

rialism. One interviewee implied there was con ict between management

and collegiality. Another interviewee pointed out the problem of col-

legiality in the University of Surrey.

The University of Surrey is a symbolic institution in terms of the

wide range of entrepreneurial activities, and continuous reforms in

organisation and the internal funding system to respond to the changing

external environment. The University s entrepreneurialism is embedded

in the strength of its research, which is a feature of the pre-1992 uni-

versities. The new universities, on the other hand, tend not to have a

strong research basis, which suggests that the entrepreneurial culture of

post-1992 universities di ers from pre-1992 universities. The next sec-

tion analyses a post-1992 university, the Nottingham Trent University.

The Nottingham Trent University: its entrepreneurial activities based

upon teaching

The Nottingham Trent University (NTU), which is a new university

upgraded from a polytechnic in 1992, identi es itself as an

entrepreneurial university, energetically engaged in entrepreneurial

activities, through which it attempts to increase external funding. The

NTU s funding dependency on the HEFCE is lower than the average

public funding dependency of all UK higher education institutions.

The University s income from Funding Council Grants was only

52.84% ( 60,320,000) of its total income in 2000/2001 (NTU 2001b,

p. 13).

The signi cant features in the pro le of the NTU are ve-fold: (1)

entrepreneurial activities based upon teaching activities rather than re-

search; (2) emphasis on the contribution to the regional economy; (3)

entrepreneurial activities not only at the institutional level but also at

the school/faculty level; (4) attention to the changing market niche; and

(5) emphasis on graduates employability. Firstly, the NTU s entre-

541

ENTREPRENEURIALISM IN JAPANESE AND UK UNIVERSITIES

preneurial activities are, as one interviewee observed, embedded in its

teaching of vocational-oriented subjects and courses, rather than being

thoroughly embedded in its research activities, although the NTU has

started to emphasise research since 1996. The mismatch between the

areas of its entrepreneurial activities and the subjects in which it showed

strength in research in the 2001 RAE exercises mainly humanities and

science is testimony to this argument. The NTU obtained four grade

5s: Biomedical Science; English; Communications, Media and Cultural

Studies; and Dance. The NTU s academic-related entrepreneurial

activities include the Law School (which provides practical training and

professional courses, entirely relying upon external funding), and the

School of Drama and Performing Arts (whose graduates have hitherto

recorded high employability).

Secondly, the NTU emphasises the signi cance of its contribution to

the regional economy, co-operating with the East Midlands Develop-

ment Agency and Nottingham City Council. The University successfully

obtained 8 million in three joint bids from the government s new

science jackpot fund in 2001 (NTU 2001a, pp. 7 8). Thirdly, the

NTU is engaged in entrepreneurial activities at both institution and unit

levels.

Fourthly, the NTU, to a large extent, pays attention to the imbalance

between the sta student ratio, and the gap between supply and

demand in some courses, which result from changing student demand.

The signi cant degree of income from tuition fees, and of expenditure

on sta costs, indicates that the NTU s market strategy on this issue is

signi cant in terms of the University s nancial management. The

income from tuition fees and education contracts at the NTU was

25.42% ( 29,029,000) of its total income in 2001. The expenditure on

sta costs was 58.60% of the total expenditure in the same year.

According to an interviewee, how to be accountable and exible to the

rapid change of consumer (student) demand has been a continuously

signi cant issue. One interviewee observed that it is di cult to ll the

gap between demand and supply because of the in exibility of sta

mobility between courses and subjects (e.g. the di culty in reducing the

number of sta on unpopular courses).

Fifthly, the NTU emphasises the employability of its graduates by

providing vocational-oriented courses. The low numbers of graduates

unemployed 6 months after leaving the NTU indicates the success of the

NTU s employability policy. Only 2.3% of its graduates which was the

6th lowest gure among the UK universities, after Surrey, St. Andrews,

Bristol, Birkbeck, and Hull were unemployed 6 months after leaving

542 KEIKO YOKOYAMA

the University in 1999, according to the BBC News on 12 January, 1999

(BBC).

The link between the NTU s entrepreneurial and organisational

culture is not as straightforward as at the University of Surrey. The rst

organisational change was related more to changes in government

policy. The signi cant reforms of the NTU in the areas of governance,

management, leadership and entrepreneurial activities include the 1989

and 2002 reforms. The reforms are understood in relation to govern-

ment policy and institutional strategies to respond to changes in the

internal and external environment. The change before the mid-1990s

was related more to changes of government policy, such as the 1988

Education Reform Act (e.g. opt-out from the control of the Local

Educational Authority) and the 1992 Further and Higher Education

Act (e.g. the upgrading of polytechnics to universities). The reform after

the mid-1990s could be related to institutional strategies in response to

regionalism, globalisation, knowledge society, increasing competition in

the HE system, and the preparation for the RAE.

Firstly, the main changes in 1989, which were in accordance with the

enactment of the 1988 Education Reform Act [see Section 125 Articles

of Government], modi ed in the 1992 Further and Higher Education

Act, included: the opt-out from the Local Education Authority; power

devolution in management and funding from the Centre of the Uni-

versity to units; the creation of a new governing body, the board of

governors, clear separation of academic and management issues by

establishing di erent governing bodies for di erent issues between the

academic and resource; the review of the internal funding allocation

model; and the change in academic structure. The change in 1988 was

signi cant in terms of institutional autonomy and collegiality. It can be

interpreted that the opt-out of the NTU from the LEA s control has

increased institutional autonomy and arguably collegiality. There is

some implication of this change for the University s entrepreneurial

activities, in which the application of the entrepreneurial strategies, to a

large extent, relies upon the University s discretion.

The changes in management, governance, and leadership from 1989

onwards according to one interviewee, have not been dynamic; rather,

they have been incremental within the framework of decentralisation.

The changes after 1989 include: changes in academic structure; the

introduction of Resource Allocation Mode; and sta training aiming to

improve management.

Secondly, the current main issues in 2002 include a search for a

resolution to meet rapid changes in demand, the introduction of

543

ENTREPRENEURIALISM IN JAPANESE AND UK UNIVERSITIES

nancial incentives for paid-sta (under discussion), a re-pro ling

attempt to reduce the number of sta (under discussion), the continuity

of interdisciplinary study, and the introduction of nancial incentives to

di erent disciplines by removing resources from Schools and Faculties

which failed to recruit su cient students and transferring those

resources to Schools and Faculties which have been successful in stu-

dent recruitment (in process). Transparency in governance, speedy

decision-making, and clear relationships between the University Centre

and the units are not issues.

Finally, the analysis and interpretation of interviews and documents

published by the NTU and the HEFCE suggest the conditions associ-

ated with the entrepreneurialism of the NTU, indicating what makes the

NTU an entrepreneurial university. The conditions identi ed are as

follows: (1) strong partnership and collaboration with the regional

economy (including reach-out contact); (2) emphasis on employ-

ability; (3) the notion of a funding crisis derived from the restriction in

public funding (HEFCE funding); (4) strength of the particular subjects

on o er (e.g. art and design and law) which could link to the private

sector (business, commerce, and industry); (5) a strong sense of entre-

preneurial identi cation; (6) a strong awareness of rapid changes in

consumers demand (e.g. demand for particular courses); and (7) a crisis

notion regarding the gap between rapidly changing demand and less

exibility of supply, which has been caused by sta immobility. In

relation to (5), the NTU s mission statement a rms entrepreneurial

activities in the University, by stating the Nottingham Trent University

is a learning organisation which develops and nurtures, through part-

nerships and enterprise, learning and research excellence for the lifelong

bene t of students, employers and the community .

The University of Tokyo: a centralising national university

The University of Tokyo is the oldest national university (a national

university corporation from 2004 onwards) in Japan (established in

1877). It is fully public-funded and its academic and administration sta

are civil servants (before April, 2004). The legal status of the University

in relation to funding, type of institution (e.g. non-pro t institution and

national institution) and sta status has, to a great extent, restricted the

University s entrepreneurial activities, and exibility in funding, gov-

ernance, management and leadership.

544 KEIKO YOKOYAMA

The identi cation of the pro le of the University of Tokyo could be

useful to clarify to what extent the University has engaged in entre-

preneurial activities. The University s pro le includes the following

three points: (1) public-based funding; (2) state regulation on entre-

preneurial activities in relation to National Civil Servant Law (before

2004), nancial mechanism, and Ministerial ordinance; and (3) research-

oriented oldest national university.

The strengthening link between the University of Tokyo and industry

promotes the University s entrepreneurial activities in the areas of

research collaboration, contract research and endowed chairs. The

external income of the University of Tokyo has increased mainly in the

areas of collaboration with the private sector, as one interviewee

observed. The increase in external income re ects the University s pol-

icy, which seeks to attract income notably from overheads, alumni, and

joint ventures with the private sector (University of Tokyo 1999). The

statistics indicate that the amount of research co-operation between the

University of Tokyo and the industrial sector increased from 115 to 302

between 1996 and 2001 (University of Tokyo, 2001, p. 34; University of

Tokyo, 2003, p. 44). The number of contract research projects also

showed an increase from 544 to 707 over the same period. Endowed

chairs2 were, however, relatively stable, showing an increase of only two

chairs between 1996 and 2001. The decline in the number of contract

researchers3 and the increase in funded research departments suggest a

change in the types of contract between the University and the industrial

sector from individual researcher-based to department (or group)-

based.

The Centre of the University encour

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