Abstract
If a rising tide lifts all boats, what should one do when the tide is falling and potentially may never rise again? Often when we read about the current crisis in higher education, the focus is on the curriculum. It is essentially a critique of current teaching practices and the growing disconnect between the requirements of the real world and current learning objectives. We tend not to think of higher education as a business, but rather as an institution that is exempt from the challenges faced by most other businesses. However, universities are not immune from the same market forces that guide other industries and an understanding of how businesses have evolved over time can provide us with key insights about why the game industry might provide higher education with the best path to a prosperous future.
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Notes
See Chandler, Alfred D. 1977. The Visible Hand: The Managerial Revolution in American Business. Cambridge: Belknap Press.
Smith, Adam. 1976. An Inquiry into the Nature and Causes of the Wealth of Nations. Chicago: University of Chicago Press.
The transactions cost approach was pioneered by Oliver Williamson. See for example, Williamson, Oliver E. 1981. “The Modern Corporation: Origins, Evolution, Attributes.” Journal of Economic Literature 19 (4): 1537–1568.
The make/buy decision depends on whether it is cheaper to produce something internally or can be purchased at a lower price through the market. Often this decision is influenced by the magnitude of transaction costs. An interesting discussion of the decision is found in Glimstedt, Henrik, Donald Bratt, and Magnus P. Karlsson. 2010. “The Decision to Make Or Buy a Critical Technology: Semiconductors at Ericsson, 1980–2010.” Industrial and Corporate Change 19 (2): 431–464.
The definitive work on Human Capital has been done by Gary Becker. See, for example, Becker, Gary. 1993. Human Capital: A Theoretical and Empirical Analysis, with Special Reference to Education. 3rd ed. Chicago: University of Chicago Press.
An interesting historical study on how standards emerged in the wire industry can be found in Velkar, Aashish. 2009. “Transactions, Standardisation and Competition: Establishing Uniform Sizes in the British Wire Industry C. 1880.” Business History 51 (2): 222–247.
For a discussion of standards-based competitive strategies, see Besen, Stanley M. and Joseph Farrell. 1994. “Choosing How to Compete: Strategies and Tactics in Standardization.” Journal of Economic Perspectives 8 (2): 117–131.
Tuttle, Brad. 2013. “Auto Navigation Systems: Too Complicated, Too Pricey, Just Plain Unnecessary?” Time, January 25. Accessed December 10, 2013, http://business.time.com/2013/01/25/auto-navigation-systems-too-complicated-too-pricey-just-plain-unnecessary/
An introduction to the economics of licensing can be found in Gallini, Nancy T. and Ralph A. Winter. 1985. “Licensing in the Theory of Innovation.” The Rand Journal of Economics 16 (2): 237–252.
See, for example, Keil, Thomas (2002) for how Bluetooth became open source. “De-Facto Standardization through Alliances–Lessons from Bluetooth.” Telecommunications Policy 26 (3–4): 205–213.
An early discussion of the intrusion of business principles into higher education can be found in Veblen, Thorstein. 1935. The Higher Learning in America: A Memorandum on the Conduct of Universities by Business Men. New York: Viking Press.
For a discussion of the social and economic benefits of higher education, see Baum, Sandy, Jennifer Ma, and Kathleen Payea. 2013. Education Pays: The Benefits of Higher Education for Individuals and Society. New York: College Board.
Marshall, Alfred. 1874. Where to House the London Poor, reprinted in Pigou, A.C., 1966, Memoirs of Alfred Marshall. New York: Kelley.
For example, between 1819 and 1851, real wages doubled in Great Britain as a result of the industrial revolution. Lindert, Peter H. and Jeffrey G. Williamson. 1983. “English Workers Living Standard during the Industrial Revolution: A New Look.” Economic History Review 36: 1–25.
The case for state support of higher education can be found in Akai, Nobuo and Masayo Sakata. 2002. “Fiscal Decentralization Contributes to Economic Growth: Evidence from State-Level Cross Section Data for the United States.” Journal of Urban Economics 52: 93–108.
Also look at Feller, Irwin. 2004. “Virtuous and Vicous Cycles in the Contributions of Public Research Universities to State Economic Development Objectives.” Economic Development Quarterly 18 (2): 138–150.
Cohn, Elchanan, Sherrie L. W. Rhine, and Maria C. Santos. 1989. “Institutions of Higher Education as Multi-Product Firms: Economies of Scale and Scope.” Review of Economics and Statistics 71 (2): 284.
Also see Laband, David N. and Bernard F. Lentz. 2003. “New Estimates of Economies of Scale and Scope in Higher Education.” Southern Economic Journal 70 (1): 172.
Lucas, Christopher J. 1994. American Higher Education: A History. New York: St. Martins.
For a different perspective, David Morris finds economies of scale but not of scope. Morris, David. 2008. “Economies of Scale and Scope in E-Learning.” Studies in Higher Education 33 (3): 331–343.
On the other hand, economies of scope but not of scale are found in
Smith, David E. and Darryl J. Mitry. 2008. “Investigation of Higher Education: The Real Costs and Quality of Online Programs.” Journal of Education for Business 83 (3): 147–152. Both analyses precede the emergence of MOOCs. It is not just faculty time, but physical infrastructure that is the important point ignored by both papers. It is the same reason the Internet has displaced many industries that had previously relied on physical spaces.
A discussion of crowdsourcing can be found in Bloodgood, James. 2013. “Crowdsourcing: Useful for Problem Solving, But What about Value Capture.” Academy of Management Review 38 (3): 455–465;
Chandler, Dana and Adam Kapelner. 2013. “Breaking Monotony with Meaning: Motivation in Crowdsourcing Markets.” Journal of Economic Behavior and Organization 90: 123–133;
Busarovs, Aleksejs. 2011. “Crowdsourcing as User-Driven Innovation, New Business Philosophy’s Model.” Journal of Business Management (4): 53–60.
The classic article that is often cited to demonstrate how markets emerge is Radford, Richard A. 1945. “The Economic Organisation of a P.O.W. Camp.” Economica, N. S. 12: 189–201.
This is the essence of Austrian economics. See, for example, the classic article Hayek, Friedrich A. 1945. “The Use of Knowledge in Society.” American Economic Review 35: 519–530.
Howe, Jeff. 2012. “The Crowdsourcing of Talent.” Slate, February 27. Accessed September 14, 2013, http://www.slate.com/articles/technology/future_tense/2012/02/foldit_crowdsourcing_and_labor_.html
Meaningful play occurs when the relationships between actions and outcomes in a game are both discernible and integrated into the larger context of the game. Salen, Katie and Eric Zimmerman. 2004. Rules of Play: Game Design Fundamentals. Cambridge: MIT Press, 34.
Analysts place the value of Valve somewhere between $2 and $4 billion dollars. Chiang, Oliver. 2011. “Valve and Stream Worth Billions.” Forbes, February 15. Accessed December 21, 2013, http://www.forbes.com/sites/oliverchiang/2011/02/15/valve-and-steam-worth-billions/
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© 2014 Neil B. Niman
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Niman, N.B. (2014). Gamification as a Business Strategy. In: The Gamification of Higher Education. Palgrave Macmillan, New York. https://doi.org/10.1057/9781137331465_4
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