Abstract:

The changing business environment and powerful market forces in the 21st century are challenging leaders at open universities to develop strategies to safeguard their core mission of teaching, research and service. Strategies to address change will be accompanied by risks facing various functions in the institution. The nature of business and operation of open universities encompass a variety of risks that if managed integratedly would contribute to deliver sustainable competitive advantage. While the corporate sector has evolved a common language for enterprise risk management (ERM), institutions of higher education and particularly open universities are no longer insulated from the realities of constant change. It is observed that early adopters who embraced a vision for institutional-wide risk management have realized numerous benefits and anticipate even greater gains. The scope of ERM, i.e. enterprise-wide and cross-functional, is broader than the traditional risk management in silos. The application of ERM is targeted to enhancing as well as protecting the unique combination of tangible and intangible assets comprising the institution’s business and operation mode – applied across the institution and in its strategy-setting.

In this paper, the authors first identify diverse drivers that are increasing pressure to transform the industry and outline a model of ERM towards the creation and preservation of sustainable competitive advantage for open universities in Malaysia based on qualitative study conducted. The model addresses comprehensive business risks, namely strategic, financial, operational, compliance and reputational risks, and explains the elements involved in managing institutional risks holistically. Drawing together resource-based view theory developed by industrial economics and synthesizing literature on ERM, the authors discuss knowledge as the rare, in-substitutable resource with attribute of barrier to imitation that contributes in creating and maintaining sustainable competitive advantage for ODL institutions. Knowledge is embedded and carried through multiple entities including culture, identity, policies, systems, documents and employees. ERM can be used to synthesize, enhance, and expedite large-scale intra- institutional and inter-institutional knowledge management. ERM infrastructure has been viewed as a valuable resource related to the dimensions of capabilities differentials as the ideal source of sustainable competitive advantage. The existence and utilization of this strategically significant resource will ultimately create value and enhance the competitiveness of open universities, which is adaptable to conventional higher education institutions as well.

Keywords:

Enterprise risk management, open universities, higher education institutions.