The Prospects for Reform in Academic Governance

Panelists Sharply Critical of University Management

The organizational operations group of the subdivision on universities, Central Council for Education (an advisory body to the minister of education, culture, sports, science, and technology), met seven times beginning in June 2013 to discuss governance reform in Japanese universities, particularly national universities. On December 24 of the same year, the panel reported the results of its deliberations.

In this group, headed by Kawata Teiichi, president of the Promotion and Mutual Aid Corporation for Private Schools of Japan and former president of Kansai University, panelists from academia and business circles engaged in a lively debate on how to break the organizational rigidity of Japanese universities. Most notably, harsh criticism was voiced regarding the outdated system of university administration, which has remained unchanged for decades. Panelists from the business world offered the harsh assessment that Japanese universities not only fail to deliver on their social mission but also lack the systems of governance that any sound organization should have.

Faced as they are with the pressure to stay afloat in a global market, corporations in Japan’s advanced knowledge-based society demand the development of top-quality human resources equipped with highly specialized knowledge and creative capabilities. As Japanese universities are not living up to these demands, the argument went, they need a fundamental revision of their operating system.

Some university-affiliated members countered that businesspeople did not even begin to understand the organizational nature of universities and that unlike corporations, whose sole purpose is to maximize profits, universities are multipurpose entities that have diverse stakeholders and must respond to a wide variety of social needs. In the face of the tide of criticism, however, these objections held little sway.

Ultimately, the following recommendations were included in the final report: First, the perspective of academic governance should be introduced to enhance the self-governing capacity of universities. To achieve this, a system should be established to allow the president’s office to exercise more robust leadership, and a position similar to the American provost, who oversees research and education at the university, should be set up. (Provosts in the United States are academic administrators ranking second to the president who act as a bridge between the president and faculty.)

Rigidity of University Governance in Japan

For many years, I have felt that Japanese national universities lack the capacity to envision their own future and have maintained the need to urgently reform university governance and management. In that respect, I believe that the recent report is a step in the right direction.

That said, I must wonder why Japanese universities are constantly being called on to change from the outside. Is it because they are not endowed with the authority and ability to govern their organization with their own hands? When we reflect on the reason, it becomes evident that discrepancies between law and reality are at play.

Article 92 of the School Education Act stipulates that the president of a university “shall comprehensively administer school affairs and direct the staff.” The wording of this article suggests that the president wields the same sort of power over a university that a government minister or agency head does over a ministry or agency. In short, the law gives presidents of national universities powerful authority over personnel matters and organizational governance—authority equal to or greater than that of the heads of private enterprises and government offices. Given a firm will, then, presidents of Japanese universities should be able to carry through with organizational change or any other reform.

In reality, however, the president’s office does not have sufficient power to take the initiative within the university. On the contrary, under the banners of faculty autonomy and academic freedom, decision making at universities is left almost entirely to individual departments led by faculty councils, making it virtually impossible to formulate a future vision for the university as a whole. Any proposed vision is sure to face strong opposition if it conflicts with individual departments’ interests. The term of office of a university president, who is elected by faculty and staff, is shorter than in the United States, and internal opposition would quickly lead to the president’s replacement. In the light of this state of affairs, many corporate members of the above-mentioned panel within the Central Council for Education advocated revising the wording of the School Education Act to alter the status quo, in which faculty councils have grown beyond their intended purpose as deliberative organs to become de facto decision-making bodies.

In my opinion, though, the real reason why the president’s office has been unable to exercise strong leadership is because it has limited authority over the university’s finances. In the United States the financial resources of the president’s office—comprising tuition revenue, donations, funds to cover indirect costs, and investment returns on the university endowment, among other sources—make up a large portion of the university’s general funds and are utilized as a pillar underpinning the future plans of the university.

In Japanese universities, by contrast, the largest source of funding is the management expenses grants that the Ministry of Education, Culture, Sports, Science, and Technology gives out each year. Moreover, much of that money is allocated to individual departments for personnel and other expenses, leaving a much smaller amount compared to that of US universities at the disposal of the president’s office. This weakness of their financial base is what has rendered Japanese universities incapable of taking up their own unique style of management.

Bold Managerial Reforms at US Universities

The majority of elite universities in the United States are private schools and so cannot be compared directly to Japanese national universities, which were created to meet the demand for national efforts in human resources development. Still, research funds from federal agencies, such as the National Institutes of Health, National Science Foundation, and Department of Defense, cover over 70% of research expenses at US research universities. Looking back on the past several decades, it was from the mid-1970s, when these public funds began to sharply decrease, that US research universities were compelled to promote industry-academia partnerships and patent the products of research as ways of coping with this change. Universities have also undertaken bold managerial reforms, such as investing their endowments globally in pursuit of increased revenues.

The competitive edge that US universities enjoy today should be seen as the fruit of these reforms. In the global university rankings that various European organizations and China’s Shanghai Jiao Tong University began publishing in the 2000s, US universities account for two-thirds of the top 20 universities in every index.

The Gap between Government Policy and University Professionals’ Mind-sets

How did the Japanese government respond to the challenge of global competition facing Japan’s elite universities? In legislative terms, in 1998 it secured passage of the Act on the Promotion of Technology Transfer from Universities to Private Business Operators, also known as the TLO Law, where TLO stands for “technology licensing organization,” on the basis of which accredited TLOs were set up across Japan. In 1999 a number of US-style industrial development laws were enacted, including the Act on Special Measures Concerning Revitalization of Industry and Innovation in Industrial Activities (the “Japanese Bayh-Dole Act”). And with the passage of a bill in July 2003 to incorporate national universities and their subsequent incorporation in 2004, universities embarked in earnest on the path of privatization.

Nonetheless, as the recent report notes, Japanese universities have not been very successful in adjusting to these measures. The main reason, I believe, is that the knowledge-based university model born in the US academia in the late 1970s and 1980s was applied wholesale to Japanese national universities without regard to the differences in their historical and cultural contexts, and university professionals, who had no choice but to submit to these policies, could not keep up with the change.

A further misfortune for Japanese universities was that the drastic remedy of incorporating national universities came at about the same time as policies demanding a shift in the industrial structure to a knowledge-based society. It must be said that there were problems on both the government and university sides. On the one hand, the government authorities made the folly of trying to instantly effect the same change in academia that even the United States took roughly two decades, from the 1970s through the 1980s, to achieve with the passage of just a few laws. On the other hand, university professionals failed to take seriously the intent behind these policy moves.

It thus remains open to question whether the report will have the power to change Japan’s ossified university system from its foundations. The problem with university administration in Japan is that it has a strong tendency to imitate the superficial shape of systems that have worked in other countries. Unless the substance of the report gets through to the minds of university professionals, the recommendations are liable to end up being no more than pie in the sky.

The Prospects for University Start-up Support Funds

The policy of revising the provisions regarding investment under the National University Corporation Act, put together in meetings of the public-private innovation program group of the education ministry’s National University Corporation Evaluation Committee from the spring of 2013 through the end of the year, may well face a similar fate.

According to media reports, the proposed revisions would enable the government to inject large sums into national universities to further promote joint research and development by industry and academia, and they would allow national universities to invest in funds for supporting university start-ups. The purpose of these revisions is to shift the main loci of research and development from big businesses and other private enterprises to universities as the foundations of knowledge, thereby opening the way for the creation of new industries. Already in fiscal 2012 (April 2012–March 2013), the supplementary budget approved in February 2013 included ¥100 billion in government funding for this purpose. Four research universities were named as the recipients: the University of Tokyo, Kyoto University, Osaka University, and Tōhoku University.

The aim of this policy is not mistaken. It is a fact that brand-new revolutionary (destructive) innovations often grow out of basic research at universities. University start-ups based on such innovations are gaining momentum in the West, particularly the United States. Japanese universities need to enhance their organizational capacity to manage such undertakings.

But do today’s university professionals have the ability or mettle to realize this vision? Most universities probably only have in mind conventional joint studies with big businesses when they think of industry-academia partnerships, and university start-ups are seen only as activities to fill social niches based on trivial technologies rather than as the manifestation of groundbreaking innovations. This is a far cry from the image of start-up companies that has taken hold in the United States since the 1980s. It is doubtful that the sweeping reforms envisioned under the new policy can be realized when the university professionals on the front lines are stuck in such a mind-set.

The proposal stipulates that each of the universities is to set up a joint research and commercialization committee made up of trustees of the university corporation and outside experts. Via these committees the tens of billions of yen provided by the government are to be put into investment funds, and this money is to be invested in start-ups applying the results of university research. The proposal further stipulates that these activities are expected to produce profits; the funds are meant to be returned to the university and back to the national treasury.

Given the current state of management and governance at Japanese national universities, however, I am skeptical that their presidents’ offices will be able to come up with the know-how for establishing start-ups capable of surviving cutthroat competition or investing successfully in business undertakings outside the university.

The process of adopting a new a government policy should start by assessing the incentives for the actors involved and developing an organizational environment that will encourage them to take positive action. Ideals are well and good, but to achieve reform in academic governance at universities, what is needed first and foremost is to build the apparatus for getting to that ideal.

▼Further reading

Higher Education and the Japanese Disease

University Reform and the New Basic Act on Education