The relationship between competition and programmatic diversification

Abstract

In this study, we analyse the relationship between competition and programmatic diversification in 75 Italian universities from the academic years of 2003/2004 to 2011/2012. Results show that local competition, rather than national competition, influences programmatic diversification. The relationship between local competition and programmatic diversification is found to be quadratic such that when competition increases, diversification decreases and specialisation increases, and both relationships are reversed after a certain threshold. We argue that under moderate levels of competition, universities tend to respond to local competition for students by differentiating their programmatic offerings from their competitors. However, when the level of competition is minimum or extreme, universities tend to follow an isomorphic strategy. After the reduction in student demand and the reform of the higher education system in 2008/2009, the relationship was no longer curvilinear because universities operating in extremely competitive environments began to adopt more risk-taking behaviour by engaging in diversification strategies.