University decision making and prestige: An empirical study

In this paper, we examine the factors that influence the reputation or prestige of universities. We first develop a model of university behaviour which indicates how the decisions made by university officials would be chosen in order to maximize their respective reputations. In doing so, we assume that reputation is enhanced by the quality of students produced, the caliber of research and the service provided to the community in terms of the provision of publicly funded education services. We argue that the relative weights placed on these intermediate outputs may vary by university type as well as the means of producing them. Using the results of the reputational survey – a ranking of the institution in terms of reputation – conducted as part of the Canadian magazine Maclean’s overall ranking exercise, we then estimate an Error Correction—Ordered Probit Model of the rankings of Canadian universities to determine the factors that influence the change in reputation or “prestige” of the university as viewed by the external community. We find evidence that the change in reputation of a university is based on what might be considered the appropriate “signals” that one might use in estimating the respective quality of the institution given the respective differences in mission.