going global - education 3 models

8/6/2019 Going Global - Education 3 Models

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Observatory on Borderless Higher Education, 2006

The International Branch Campus Models and Trends, Line Verbik, Deputy Director,the Observatory on Borderless Higher Education presented at the session: InternationalBranch Campuses: does reality fit the models?, Going Global, December 2006.

This presentation is based on a report published by the Observatory on Borderless Higher

Education (2006) The International Branch Campus: Models and Trends, URL:http://www.obhe.ac.uk/products/reports/.

IntroductionThe number of international branch campuses has increased significantly over the pastdecade. Since undertaking its first study of offshore campuses in 2002, the Observatory hasfollowed developments in this area closely and recently published a major report, identifying

just over 80 offshore campuses. The definition of a branch campus is still less thanstraightforward and lacks global consensus. It is used in this article to designate an off-shoreoperation of a higher education institution which is operated by the institution or through a

joint-venture in which the institution is a partner and in the name of the foreign institution.Upon successful completion of the study programme, students are awarded a degree fromthe foreign institution.

Most branch campus establishments offer degree level provision, however, only a relativelysmall number has pure research based courses, such as PhDs, amongst their offerings. Two-thirds of the establishments included in the study offer more than one subject area. Thoseinstitutions, which offer only one discipline are most likely to provide business or IT courses(similar to the situation found in other types of transnational education).

The study shows that the majority of branch campus provision is from North to South. WhilstAmerican institutions continue to dominate this type of overseas delivery, institutions frommore and more countries (e.g. Australia and the UK) are engaging in branch campusdevelopment. Driving rationales for sending institutions include full control over delivery, thedesire to stand out in an increasingly competitive transnational education market, moreopportunities for external funding and changing regulations in some host countries. The sites

for branch campus operations are becoming equally diverse, although findings point to ahigher level of activity in countries where financial incentives are provided.

Models for the establishment of offshore campusesThis presentation will focus mainly on the models for establishment. Whereas earliercampuses were funded primarily through internal resources, many operations initiated overthe past decade have received support from governments or other public or privateorganisations. The Observatory study identified three main approaches to establishingoffshore campuses: self-funded, in receipt of external funding and through provided facilities.The operations included in the report are more or less equally divided between the threemodels, however the latter two are more commonly found amongst newer establishments.

Model A: Wholly funded by the institution

Of the 68 branch campuses, for which a funding model was identified, 37% have beenestablished solely through funding from the home institution. However, evidence suggeststhat this approach to offshore operations might become less common as institutions seekmore collaborative approaches. The size of the investment required to establish a fullyfledged branch campus and the fact that the institution would be solely accountable for anylosses serve to discourage many from operating through this model. Advantages connectedto this type of approach include the absence of requirements from partners in terms of what isexpected in return from investments, repayment, when the operation should break even andspecification for subjects which should be provided.

Of the 16 branch campuses in Model A where a date of opening could be ascertained, 6 wereopened after 2000. However, many of the projects are amongst the first branch campusesestablished (e.g. US Webster Universitys operations in Austria and the Netherlands 1981

and 1983 respectively and US Alliant International Universtitys campus in Mexico from 1970)or were established by a for-profit institution (e.g. University of Phoenixs and DeVrys


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operations in Canada and the Netherlands). Both of the latter institutions operate frommultiple campuses in their home countries and have raised capital for their continuedexpansion through stock offerings.

There are also a number of what could be characterised as smaller scale operations (limitedprogramme offerings and facilities). These include the Chicago School of Business

campuses in London and Singapore, which offer Executive MBA programmes from existingfacilities in the cities business districts and Boston Universitys facilities in Belgium, whichfocus on business related diploma and degree programmes. The concentration on potentiallyprofitable subject areas such as business and the limited outlay of capital on campus facilities(e.g. leasing or renovating existing buildings) may represent attempts to more quickly realisereturns on the institutions investment.

Model B: External funding35% of the branch campuses for which a funding model was identified, fall under this model,which can be divided into two main sub-categories: In receipt of host (central or regional)government funds/support and in receipt of external support from private companies or otherorganisations in the host or home country. In some cases funding comes from more than oneexternal source, for example a financial contribution from the host government and support

from the home government through state approved loans. Institutions wishing to establish apresence abroad seem to be increasingly opting for funding through Model B. With theexception of three operations, all branch campuses included in this category have beenestablished in the last decade and 70% in 2000 or later.

Primarily host government funded/supportedMost branch campuses in receipt of financial or other assistance from the host governmenthave established a presence following an invitation from central or regional authorities. Whilstthere are obvious advantages in gaining host government support and funding, an institutionwill have to carefully evaluate whether the project is in line with its overall mission and its owninstitutional goals. In addition, it will have to consider whether it is willing to cover the costsbeyond that which the host country contributes. Examples of projects in this category includesome of the operations established under Singapores World Class Universities initiative,

including the new University of New South Wales campus due to open next year, the USCarnegie Mellon Universitys branch campus currently under establishment in the Australianstate of South Australia, the UKs University of Nottingham in Ningbo, China and AustraliasSwinburne University of Technologys campus in Sarawak in Malaysia.

External support from private companies or other organisations in the host or home countryA range of branch campus establishments have been created with contributions from externalprivate and public organisations. The opportunities and challenges are almost exactly theopposite of those stated in Model A, with the advantages being the financial contribution andshared risks, and the disadvantages including expectations of the investors in terms of returnon investment and influence on the operation.

Examples of campuses in receipt of investment from public or private organisations include

the UKs University of Nottinghams operation in Malaysia, US Temple University in Japanand George Mason University in Ras Al Khaimah in the United Arab Emirates.

Model C: Facilities providedModel C is perhaps the latest development within branch campus funding models, but acategory which already accounts for 28% of the establishments for which a funding modelwas identified. With the exception of one institution, all developments in this category havebeen established within the last six years.

Campuses established through Model C make use of facilities provided by a company or anational government often as an enticement to draw foreign providers to the host country.Examples include the Knowledge Village in Dubai, the United Arab Emirates and EducationCity in Qatar. In both cases, a designated zone with purpose built academic and student

facilities is provided for institutions, which, depending on individual arrangements, either leaseor take over the facilities. The main advantage for institutions operating through this model is


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the reduction in the size of the start-up funds required. The potential drawbacks include theregulatory environment for the operation (e.g. Knowledge Village operates outside UnitedArab Emirates jurisdiction and under the guidelines of the company which owns the site) andpotential changes in costs outside the institutions control, such as rent increases.

Model C operations are currently found in the economically advanced states of the Gulf. The

reasons for this concentration are likely to include available public and private funding forsuch initiatives, lack of capacity and maturity of the domestic higher education system anddeveloped strategies to change the main foundation for the economy (i.e. become lessdependent on oil). Other countries (e.g. South Korea and seemingly Japan) are in the processof establishing special zones for foreign investment, including in education, however none ofthem seem to have local investment on the scale of the two examples cited above.

Examples include: five US institutions (including Texas A&M University and Carnegie Mellon)operating in Qatars University City and more than 15 institutions (including UK Middlesex,Heriot-Watt universities, Indias Manipal Academy of Higher Education and CanadasUniversity of New Brunswick) in Knowledge Village.

The main findings and observations

The study undertaken by the Observatory points to several trends and emerging patterns. Interms of sheer numbers, branch campus activity has increased significantly over the pastdecade (albeit from a very low baseline) and substantially since the last Observatory studywas undertaken just over four years ago.

Institutions appear to be increasingly reluctant or unable to carry the entire costs and risksassociated with establishing a campus, leading to a larger number of recent operations beingestablished under Model B and C. Whilst the institutions included in this study are more orless spread evenly across the three models, it is suggested that with time, Model B and C willbecome more prominent. That being said, further reports of uncertain operating environments(for example concerning licenses and rent) similar to those which appeared last year from oneof the zones included in model C, could potentially lead to institutions being less willing tooperate through a model which affords them limited control over certain aspects of the

operation.

There is little to suggest that branch campus development has peaked. Whilst the market fortransnational education in places such as Singapore and Hong Kong might be reachingsaturation point, demand for this type of provision still seems to be increasing in manycountries. Branch campus operations will be able to draw on this demand and in places withstronger competition for students, such institutions might have a competitive edge over othertypes of transnational provision. With opportunities for external funding, increased competitionin the international education market and an enhanced focus on regulation of transnationaleducation, institutions might find offshore operations in the form of campuses amore and more appealing option. From an importing countrys point of view, foreign branchcampuses can bring investment to the region, research and development contributions andcollaboration, prospects of long-term presence and contribution to capacity in subject areas

such as science and engineering, to a greater extent than other types of transnationaleducation. This is not to suggest, however, that fully-fledged branch campuses will becomethe dominant type of transnational education in the near future. These are still resourceintensive operations, which carry significant financial and reputational risks regardless of theincreased opportunities for funding.

going global - education 3 models

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