Abstract:

Nowadays, the higher education (HE) sector in Spain is immersed in the context of globalization, new technologies, the Bologna Process and the European Higher Education Area. Those circumstances have made education a tradable service, involving higher mobility of students together with a competition in the HE industry internationally. Recently, the global crisis has also had an effect in both the public and private funds that universities receive. Thus, this situation is calling for an efficient management of the increasingly scarce resources in the higher education institutions (HEIs).

The management of the Spanish public HEIs follows a highly decentralized pattern, which delegate decision making in an attempt to improve efficiency and effectiveness of service delivery. Most incomes are public funds, but the Statutes of Autonomy provides universities with financial autonomy to allocate their resources internally. The fact that efficient management would bring numerous benefits to the organization is uncontested; however, the extent to which the efficiency in managing the expenditures affects an important outcome such as academic results still remains unknown.

The main aim of this study is to explore the effects of the university expenses and material resources in the academic results in the Spanish HE sector. The data used are financial indicators for the forty-seven public HEIs available from the publication La Universidad Española en Cifras (The Spanish University Statistics), published by The Conference of Spanish Universities’ Chancellors (CRUE). The variance-based Partial Least Square (PLS) modeling has been applied to these data due to its robustness working with small sample size and its appropriateness in exploratory studies, where the measures are new and the relationships have not been previously tested.

The main results derived from this study show that in the structural model, all latent variables are highly explained by their observed variables, plus a measurement model holding a reasonably high relationship between the latent variables expenditure and results, both directly and indirectly through the variable material resources. Hence, expenditure has a significant effect on the academic outcomes of public HEI’s, specifically the rate of academic performance and the rate of graduation. These findings highlight the importance of an efficient management in HEI’s paying special attention to expenses, for being the factor with a higher influence on academic results.

According to the management and marketing literature in HE, those better academic outcomes will in turn increase service quality perceptions, students’ satisfaction, positive word of mouth and therefore institutional image and reputation. The former will attract more students increasing the university resources to be managed effectively again, closing the whole cycle.

This study has important implications for both managers in HEI’s and policy makers suggesting that successful public universities must require a solid, multi functional and multidisciplinary management team able to make appropriate financial decisions always bearing in mind their consequences over academic outcomes.

Keywords:

Higher Education, Management, Spain.