When mergers fail: a case study on the critical role of external stakeholders in merger initiatives

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1 European Journal of Higher Education ISSN: (Print) (Online) Journal homepage: When mergers fail: a case study on the critical role of external stakeholders in merger initiatives Bjørn Stensaker, Mats Persson & Rómulo Pinheiro To cite this article: Bjørn Stensaker, Mats Persson & Rómulo Pinheiro (2015): When mergers fail: a case study on the critical role of external stakeholders in merger initiatives, European Journal of Higher Education, DOI: / To link to this article: Published online: 19 Oct Submit your article to this journal Article views: 14 View related articles View Crossmark data Full Terms & Conditions of access and use can be found at Download by: [University of Cambridge] Date: 29 November 2015, At: 08:27

2 EUROPEAN JOURNAL OF HIGHER EDUCATION, When mergers fail: a case study on the critical role of external stakeholders in merger initiatives Bjørn Stensaker a, Mats Persson b and Rómulo Pinheiro c a Faculty of Educational Sciences, Department of Education, University of Oslo, Oslo, Norway; b Faculty of Business, Languages, and Social Sciences, Department of Organization and Leadership, Østfold University College, Halden, Norway; c Faculty of Social Sciences, Department of Political Science and Management, University of Agder, Kristiansand, Norway ABSTRACT One can, in principle, identify numerous arguments for mergers in higher education (HE), including efficiency, diversity, quality, and regional needs. This diversity can be explained by the growing societal interest in the sector, not least concerning the contributions from HE to society at large. However, research on merger processes has tended to prefer intra- and inter-institutional dynamics within the HE sector, paying less attention to the role of external stakeholders, and their view concerning the arguments for mergers. This paper argues that merger outcomes are heavily dependent on the role and actions taken by external stakeholders. Through the analysis of a failed merger attempt in Norwegian HE, arguments are advanced that not only shed light on the underlying dynamics driving the interest in mergers throughout the sector, but also provides new empirical insights into the outcomes of merger initiatives. 1. Introduction ARTICLE HISTORY Received 10 July 2015 Accepted 9 September 2015 KEYWORDS Mergers; higher education; external stakeholders; Norway; failed mergers In many countries, there is a growing interest in merging higher education institutions (HEIs). The arguments for such initiatives may vary between countries, although typical reasons mentioned are to boost efficiency, strengthen the regional relevance, stimulate diversity within the sector, save costs, and/or increase quality and excellence (Skodvin 1999; Lang 2003; Stephenson 2011). The drivers behind these arguments can be related to both functional and political factors (Kyvik and Stensaker 2013). Functional factors behind the interest in mergers are first and foremost related to the increased size (and complexity) of the higher education (HE) systems in various countries, where new institutions have been established, where existing ones have broadened their activities, and where there is often a questioning of the systems effectiveness and efficiency following this expansion. Political factors are more related to what activities and what role HE should play in society. During the last three decades, one can identify a distinct trend towards viewing HE as an important sector in driving economic growth, through the fostering of innovation and through developing a more educated work force (Greenberg 2007). CONTACT Bjørn Stensaker Taylor & Francis bjorn.stensaker@iped.uio.no

3 2 B. STENSAKER ET AL. However, while mergers can be seen as a solution to many perceived problems in the organizational field of HE, a question remains of whether mergers are actually capable of addressing all the expectations. Numerous studies have indicated that mergers are a challenging policy path (Skodvin and Stensaker 1998; Skodvin 1999; Eastman and Lang 2001; Norgård and Skodvin 2002), both regarding whether merger attempts actually are taken forward (Kyvik and Stensaker 2013), and whether merger initiatives deliver what they promise (Harman and Harman 2008). Kyvik and Stensaker (2013, 324) have argued that reasons for merger failures that is, merger outcomes that are not in line with formal expectations may be linked to other factors than cultural dimensions and poor management and organization of the merger process (as suggested in the existing literature, cf. Pinheiro, Geschwind, and Aarrevaara in press). Instead, they have drawn attention towards the importance of the pre-merger process and the broader contextual and political embedding of the merger initiatives undertaken. Their research shows that the majority of earlier voluntary merger attempts in Norway did not materialize into actual mergers, thus suggesting that agreeing to merge is a considerable challenge in and of itself (Kyvik and Stensaker 2013, 335). In this article, we explore this issue further through a case study investigating the positioning of key stakeholders, and especially the external stakeholders, as regards to a merger initiative in Norwegian HE. By focusing on what could be labelled as the stakeholder triangle (Clark 1983) composed of the state (through the Ministry of Education), the HEIs (or oligarchy ), and representatives from industry and business ( the market ), and their argumentations with respect to the potential gains of mergers, we analyse the level of agreements and potential conflicting issues at play, thereby identifying the initial conditions that potentially may affect merger initiatives, an aspect that has been largely neglected in earlier studies. 2. A triple helix of stakeholders in merger processes alignment or antagonism in argumentation and support? Although many potential stakeholders to HE could be identified, including those of parents and students, we are applying the concept of external stakeholder in a more narrow way in this article. During the last two decades or so, the concepts of triple helix (Etzkowitz and Leydesdorff 1997) and Mode 2 (Gibbons et al. 1994) have influenced policy-making in the realm of science, technology, and innovation in a number of countries. The key points related to these concepts are the importance of HE in developing and stimulating the overall knowledge infrastructure in a given society, in tandem with the claim that deepening the structural linkages between HEIs and industry results into new forms of knowledge production emphasizing more inter-disciplinary research in new institutional arrangements (Etzkowitz and Leydesdorff 1997; Gibbons et al. 1994). In short, both concepts stress the importance of collaboration and commitment between government, HEIs and the private sector in the context of boosting and further developing the knowledge and innovation capabilities of societies. What is more, there is a fundamental belief that future knowledge-based societies will benefit both the society and the economy (Chou and Gornitzka 2014). Research has demonstrated that the trends identified above may have long historical roots, and that governmental decisions and industry dynamics associated with newer forms of knowledge production

4 EUROPEAN JOURNAL OF HIGHER EDUCATION 3 indeed underline the importance of collaboration between the aforementioned actors or trio (Berman 2012). However, studies have also questioned whether collaboration between government, HEIs and industry occurs without frictions, indicating, for example, that, as social institutions, universities may totally transform following the pressure to become more oriented towards the market (Gumport 2000; Slaughter and Rhoades 2004). Greenberg (2007) has also shown that what is good for the individual university may not always be good for the government, and that collaboration between universities and industry can be laden with tensions and conflicting views with respect to intellectual property rights, research strategies and future collaborations. There are, in other words, many reasons to doubt whether there always is an alliance or consensus between these two key stakeholders with respect to what HEIs should do, how they should be organized, and what their future activities ought to encompass (Stephenson 2011). This situation also relates to the debates about the challenges of adapting multi-level and multi-actor governance approaches in HE (Chou and Gornitzka 2014), and how we can increase our knowledge on the mechanisms and processes involved in this governance mode. In this article, we want to explore the possible tensions between government and industry/business more in detail, with a special focus on their impact in merger initiatives and dynamics, hence suggesting that the inherent motives of key actors is crucial for the outcome of merger initiatives. For example, although relevance, diversity, quality, and efficiency are frequently mentioned as key arguments for merging two or more HEIs, it does not necessarily follow that the key stakeholders involved have similar views concerning the relative importance of these arguments. While system efficiency may be a key interest for the government, such arguments may not always be applauded within HEIs, particularly when/if this might imply cutbacks and shrinking budgets. While industry interests may push for increased relevance, this may be seen by both HEIs and government as a potential threat for quality and excellence (cf. Perry 2012). And while diversity may be seen as a positive aspect of the HE sector at the system level, views might differ when diversity is to be decided upon at the governmental and institutional levels. In the former case, there might even be disagreements between national and regional authorities, and within the local business community as well. 3. Case selection, data and methods In the present article, the data are mainly qualitative, based on document analysis from the institutions involved in the merger initiative, newspaper articles, and formal statements and press releases from the key actors, combined with interviews with a total of 29 key persons involved in the process. We have also analysed green and white papers from national authorities, and consulted previous research on mergers in both Norway and abroad. Hence, our approach can be labelled as a mixed-methods design (Bryman 2006), substantiated on a single case study (Yin 2013). The case in question is about a failed merger initiative between three university colleges in Norway. This merger initiative was chosen due to (1) the availability of public information about the merger process, and (2) that the case is an example of a rather typical merger initiative in Norway the latter decade. The case study approach was also chosen because it allows us to investigate (indepth) a given phenomenon (e.g. merger failure), in its real-life context, particularly

5 4 B. STENSAKER ET AL. when the boundaries between phenomenon and context are not clearly defined, as is the case of changing dynamics within HE systems and institutions more generally (cf. Clark 1983). As part of the case study, a number of interviews were conducted from March to May 2012 both at the colleges in question, but also with involved actors outside the colleges. Informants were selected using purposeful sampling (Patton 2002, 230), targeting key internal actors involved with the merger process between the three colleges. The informants included rectors, college directors, union representatives, internal and external members of the board, human resource managers, heads of communication, and student leaders. A total of 29 open-ended interviews were undertaken where the informants were encouraged to tell their story of what happened in the merger process, and why the merger failed. These narratives covered relations within each college, relations between the three colleges, as well as relations between the colleges and external stakeholders. In addition, minutes from meetings between the project organization and the Ministry of Education, reports produced during the merger process and consultative statements from the industry were analysed to explore the dynamics between internal and external stakeholders. Secondary data emanating from key policy and strategy documents in the period were also collected to provide the case with more context. From the government side, special attention was paid to green and white papers from the Ministry of Education, tackling issues concerning mergers and the future structure of the Norwegian HE system. From the side of industry, particular attention was given to the national interest organization for business and industry in Norway (NHO), a rather powerful lobby group. Finally, a number of strategic plans by selected HEIs have also been reviewed. 4. Empirical setting The period was characterized by considerable interest in mergers in the context of the future Norwegian HE landscape. The interest in mergers can be said to have been shaped by a long historical process of development of the Norwegian HE system. Following World War II, HE in Norway was characterized by few comprehensive universities alongside a relatively large number of professional schools and colleges spread throughout the country, in cities, towns, and local communities. This geographical and institutional diversity continued throughout the 1970s with the establishment of new professional schools and district colleges in various parts of the country. By 1990, the sector encompassed no less than 127 public institutions, serving a population of about 4.2 million inhabitants. In addition, 22 private institutions were receiving government support. The regional college system alone encompassed about 100 state-run and state-funded institutions. The large number of colleges under the Ministry s auspices created considerable administrative capacity problems. At the end of the 1980s, a governmental committee was set up to, amongst other issues, suggest the future structure of the Norwegian HE system. The solution suggested was to force mergers among the existing regional colleges, and in 1994, 26 state colleges were created based on mergers of 25 teacher-training colleges, 16 engineering colleges, 30 colleges of health education, 3 colleges of social work, 6 conservatories of music, and 4 other specialist colleges for other vocations. In addition, 14 district colleges with programmes in economics and business administration, many other types of vocational programmes, and

6 EUROPEAN JOURNAL OF HIGHER EDUCATION 5 some university courses were also a part of this wide-ranging structural reform (Kyvik 2002). The merger process, in 1994, resulted in the creation of a formal binary system with a clear division between a university sector and a college sector (including some private colleges). The universities became responsible for basic research, graduate education and research training, while the colleges took on board a wide variety of short-cycle professional and vocational study programmes, while, in addition, also taking on some of the university programmes for basic and undergraduate education and catering for the needs of the surrounding region. Within certain fields where the universities did not offer similar programmes, the new colleges could offer graduate education (Kyvik 2002). However, over the next decade, differences between the two sectors decreased considerably (Kyvik 2009). In 1995, the university academic rank system was introduced in the colleges, and in 1996, all public HEIs were regulated by a common act which specifically asserted that the colleges should engage in research and that teaching should be research-based. Since 1999, the colleges have had the possibility to apply for accreditation of PhD programmes provided some specific criteria are fulfilled. Hence, the binary system came under pressure from colleges with university ambitions. In 2000, a new governmental committee on HE addressed the issue of institutional drift in the college sector, and proposed that colleges and specialized university institutions should be given the opportunity to be classified as universities, provided they successfully fulfilled a number of specific requirements. In 2004, the government decided that colleges which fulfilled certain minimum standards could apply for accreditation to full university status. To offer master degrees in at least five different areas and PhDs in at least four different fields were the most important requirements. This, in turn, triggered a renewed interest in mergers in Norway, resulting in several successful and unsuccessful attempts to merge (Kyvik and Stensaker 2013). While much attention has been devoted to the rationale for HEIs to merge in this period, little is yet known regarding the position of other key stakeholders in the process. The following section explores this issue (knowledge gap) more in-depth. 5. Empirical case: the failed merger of Buskerud, Vestfold and Østfold colleges In 2009, three Norwegian University Colleges initiated a merger process. The University Colleges of Buskerud, Vestfold, and Østfold were three mid-sized HEIs located in the counties of Buskerud, Vestfold, and Østfold, respectively, in the south-east part of Norway surrounding the Oslofjord. With student numbers ranging from approximately 3000 (Buskerud) to 5000 (Østfold), these risked becoming a target by the Ministry of Education as too small to survive in a globally competitive education market: My experience is that the Ministry of Education has been very clear that life will be tough as small and alone. (Employee at Østfold University College) Together with the Norwegian University of Life Sciences (UMB), located in the county of Akershus, they formed an alliance (Oslofjordalliansen) in The initiation of the merger process was seen as the next step of formal cooperation. However, already in a pending merger with the Norwegian School of Veterinary Science (to be approved in

7 6 B. STENSAKER ET AL. 2008), UMB declined any involvement in yet another merger process. The first step on the path of merging the three institutions was to produce an internal report addressing the question of whether such a complex merger was at all viable. In March 2010, a majority of the members who produced the report recommended that the three colleges continue the negotiation process. A minority, however, recommended that the process with an ambition to merge should not be pursued on the grounds that the cost of entering into a merger process will exceed the possible positive effects in relation to the overarching ambitions (Oslofjordalliansen 2010, 66 [our translation]). The overarching ambition of becoming a university was seen as a threat to lower level educations as resources would have to be reallocated from bachelor s and master s programmes to PhD programmes. The majority s opinion prevailed, and based on the report, the three boards at the colleges decided to initiate a merger process with the intention to merge no later than 1st of January After the Ministry of Education had sanctioned the merger, a project organization was set up, composed of a steering committee and a number of workgroups. A total of five workgroup reports were produced to answer questions regarding: (1) Vision, academic profile, and strategic objectives; (2) Governance and management structure; (3) External cooperation; (4) Academic organization; and (5) Administrative organization. Based on the workgroup reports and other consultative statements, the three rectors wrote a final, joint report, which was intended to serve as the foundation on which a decision as to whether to merge or not could then be made. However, the consultative statements following the report showed substantial resistance to the merger by Østfold University College. Before a formal decision was made, a press release was sent out (dated 13 March 2012) announcing the termination of the merger. So, what constituted the resistance from Østfold University College? While internal processes certainly can be said to play important roles in the process, also influencing the outcome, our interest is here to shed some light on the role of the external stakeholders involved in the process. As already mentioned earlier in the paper, there was substantial political pressure from the Ministry of Education to merge HEIs as to achieve fewer and larger units ( economies of scale argument). However, it was clearly communicated by governmental officials to the project organization that attainment of full university status should not be the focal point of the merger between the three colleges: We had meetings with the Minister [of education] and received a clear message on our direct question [about university ambition]; I would advise you not to focus on this because this is not a crucial point for the development in this region of the Oslofjord. (External boardmember at Østfold University College) The official policy from the Ministry of Education corresponded with the merger objective at Østfold University College: to become a robust and competitive regionally embedded HEI. At the same time, it was at odds with the strategic objectives at both Buskerud and Vestfold University College, of becoming a full-fledged university (i.e. more globally oriented, focusing on the teaching and research nexus ). Notwithstanding, the Ministry of Education did not interfere or backed up in any way the Østfold University College s ambitions. On the contrary, when resistance grew at Østfold, the latter was blamed by the Ministry for the merger failure. Part of this blame resulted from a financial due diligence. Østfold University College wanted a due-diligence process conducted by an independent external auditor, as to get a

8 EUROPEAN JOURNAL OF HIGHER EDUCATION 7 thorough understanding of the three merger partners financial situation. Buskerud and Vestfold argued that such a due diligence was unnecessary since the official numbers were already publicly available. They did not see the point in spending money on a task that could be undertaken internally. In the end, Østfold University College paid for the due diligence and, in addition, undertook its own additional analysis of the data produced by the auditor. This analysis revealed that Vestfold University College was in a strained economic situation. In short, the analysis described Østfold University as a HEI with sound and solid finances, while the other two, especially Vestfold University College, faced considerable financial challenges. This, in turn, provoked the other two institutions leading to a conflict amongst the parties that came to involve the Ministry of Education as well. However, and somewhat surprisingly to most observers, instead of backing up Østfold University College, the Ministry of Education critiqued the former for having too much money left of their annual budget. This is a classic public sector conundrum (in Norway and elsewhere), as publicly funded HEIs revenues are not a goal in themselves (this is often referred to as postponed activities ). Rather, the opposite holds truth, that is, if/when public appropriations are not spent according to the budgeted activities, this can be seen as if the social mandate has not been fulfilled, thus leading to an erosion of trust by the main funder, that is, the state, on behalf of society. In defence, Østfold University College argued that economic resources are crucial in a merger process, and that, instead of criticism, the Ministry should lend its support towards financial due diligence. In spite of the fact that the Ministry did not support a university ambition as the goal of the merger, and although it considered financial matters to be of central importance, seen from Østfold s perspective, the central authorities were perceived to take side with Buskerud and Vestfold in the conflict: There have been many insidious ways of doing things. Like when Vestfold and Buskerud ran to The Ministry of Education immediately after the due-diligence report was known, for example. And they got to them to say that this is not correct. (Employee at Østfold University College) In a letter from the Ministry to Østfold University College (dated 7 February 2012), a number of issues critiquing Østfold were pointed out. Firstly, it was stated that the analysis presenting Vestfold University College in financial dire straits was inaccurate: The argument being that Vestfold s financial position was much better than what Østfold s auditing report gave the impression of. Secondly, although it was acknowledged that it is important to put money aside for future investments, it was indicated that this sum cannot be too large as to not jeopardize ongoing operations and core activities. According to the Ministry, Østfold s case fitted this latter situation. Thirdly, it was argued that the financial focus in the context of a future merger should not be put on the current financial situation. Although it was important that all three partners had balanced budgets, at the time of the merger, and according to the Ministry, the focus should be on a realistic and documented long-term budget for the three institutions for the period , the period after the merger had been completed. Furthermore, in the letter, the Ministry emphasized that it is legally responsible for all HEIs in Norway, stating that it is the Ministry of Education s duty to follow up closely the institutions financial management, which we have also done. In other words, Østfold s analysis of the due diligence was not seen as a constructive contribution to the merger process, but as a serious interference in the legal mandate of the Ministry (as regards system oversight and accountability).

9 8 B. STENSAKER ET AL. The Ministry made it very clear at the outset of the merger process that they had no intention of forcing the colleges to merge. This was in line with governmental policy. However, for all those supporting the merger, this was perceived as frustrating. It was argued that merger initiatives demand considerable human and financial investments, and that it is a waste of public money when these do not lead to a formal merger. In contrast, those (against a merger) who felt that a merger would lead to a disadvantageous power position amongst the parties involved very much believed in voluntary mergers and that the Ministry should not interfere in the process. In short, expectations from supporters that the state should take responsibility as a stakeholder and force a merger that had already consumed considerable public resources clashed with the adopted official policy of voluntary mergers and the value of institutional autonomy. Turning now to the representatives from industry, the national interest organization for business and industry in Norway (NHO), and following the final report written by the three rectors, sent a series of consultative statements from their local representatives based at each of the three counties. Although they represented the same interest as mother-organization, the arguments varied substantially between the three consultative statements. NHO Buskerud clearly supported the merger, focusing on both the quality and relevance of educational provision. The ambition to achieve full university status, so important for Buskerud University College, was not, however, explicitly supported. When it comes to university status, we [NHO Buskerud] will come back with our view when applicable. NHO Buskerud was also concerned about how regional campuses (geographic spread or access) at Buskerud University College would be affected by the merger. Finally, they were of the opinion that the new merged institution should consist of a Board reflecting both internal and external interests in alignment with recent reforms (2003/04 Quality Reform) in the governance structures of Norwegian HEIs. More specifically, an increase in the number of Board members and that the Chairman should be an external representative were forwarded as concrete suggestions. NHO Vestfold also supported the merger, but in contrast to NHO Buskerud, they were not concerned with the ambition to become a full-fledged university. In fact, they did not comment on it at all. What was in focus instead was on how a merged college could deliver needed skills to regional industry. For NHO as an organization, the university college is an institution that, first and foremost, provides what (or responds to) industry needs, most notably graduates skills and competencies. In this respect, NHO s interests were more aligned with those of the Ministry. Both NHO Vestfold and NHO Buskerud quoted a phrase from the final report written by the three rectors, stating that: A merged college will provide enhanced strategic vigor to ensure sustainable business and welfare development in the three regions and meet regional expectations of quality and relevance of education. (From the report Sammenslåing av høgskolene i Buskerud, Vestfold og Østfold, 15 February 2012, 6) Finally, for NHO Østfold things were a bit different. Just as NHO Buskerud and NHO Vestfold, they also focused on regional interests. However, in this case, the university ambition was at the centre of their arguments. It was stated that, although they started out with a positive attitude towards a merger which would lead to a research-intensive university, their views changed during the merger process. The main reason pertained to how

10 EUROPEAN JOURNAL OF HIGHER EDUCATION 9 Buskerud and Vestfold developed PhD programmes to achieve university status, reallocating resources away from undergraduate programmes, and away from Østfold. These arguments very much coincided with the arguments presented by Østfold University College, substantiated on the fact that, as a County or region, Østfold would not necessarily benefit from a merger. Other regional stakeholders such as regional authorities, municipality authorities and different interest groups reflected the difference in NHO s positions. The local authorities of Drammen municipality (campus-site for one of three campuses in Buskerud) supported both the merger and the ambition to become a university. They were in line with Buskerud University College but in conflict with governmental policy of limiting the number of new universities. Local authorities in Kongsberg (another campus-site in Buskerud) also supported the merger and the university ambition. However, the focus here was on securing local interest by highlighting local (political and economic) ambitions of making Kongsberg a world-leading technology city. An interest organization Ringerike Næringsforum addressed the third campus in Buskerud at Hønefoss. The former was very clear that if a merger was necessary to secure the interests of Buskerud University College and Campus Hønefoss, they would provide support to it. However, it was indicated that, if, in anyway, the campus would be weakened they would not support the merger. Vestfold University College had only one campus and the local authorities hosting that campus supported the merger. They argued that a merger would strengthen education and research, create more robust institutions, and better face regional challenges. They, nonetheless, did not address the issue of university status. The Norwegian Association of Local and Regional Authorities (KS) is an employer s organization. In KS Vestfold s consultative statement, particular concerns regarding the professional educations of health/nursing education, teacher education, and engineering were expressed. As a future employer for many of the college students, KS Vestfold outlined that it was of great importance for the municipal sector that these programmes would continue to maintain a high professional level. The regional authorities of Vestfold did not write their consultative statement until after the merger had been terminated. They simply noted that Østfold University College had resigned from the merger, and that they supported a merger between Vestfold University College and nearby colleges. They also supported the ambition to achieve university status. The regional authorities in Østfold were initially positive towards the merger. However, they stated that, throughout the preparation process, the needs of Østfold region had not been adequately addressed. More specifically, it was emphasized that all planned PhDs would (as a result of the planned merger) be located outside Østfold, and that the reallocation of resources from lower level (bachelor) to PhD educations would have negative consequences for the quality of the former. Given the low levels of education in Østfold, the focus by local authorities was on getting more young people from the within county to pursue HE. Local authorities hosting the two campuses in Østfold (Fredrikstad and Halden) were in line with regional authorities and Østfold University College, stating that the region s interests had not been carefully taken into account during the merger planning process. The suggested solution by regional stakeholders in Østfold was to continue the existent alliance (Oslofjordalliansen), which also included the Norwegian University of Life Sciences (UMB), and, instead, investigate the possibility for a future merger between Østfold University College and UMB.

11 10 B. STENSAKER ET AL. 6. Discussion 6.1. Divergent and shifting positions among the stakeholders The ambition of the current analysis is to shed light on whether and how the positioning of public authorities, industry, and HEIs may have affected the outcome concerning possible mergers and the future structure of Norwegian HE. Our key argument took, as point of departure, the idea that an alignment between these external stakeholders could be seen as a strong driver for mergers across the sector; alternatively, that disagreements and antagonism between the interest groups would have the opposite effect. Although our data is based on a single case, the study should nonetheless be considered exploratory in nature; thus, a number of key issues are worth reflecting upon. First, our case suggests that all actors over time have changed their position concerning the issue of mergers. Although the Ministry could be said to be quite positive towards the issue of university status early in the process (early 2000s), this changed rapidly during the latter part of the period when it adopted a more nuanced position. Mergers leading up to larger institutions were then met with enthusiasm, with the Ministry becoming increasingly more reserved as regards the issue of university status, as our case illustrates. Looking more closely at the postures by the three university colleges involved in the process, they, according to the empirical data, cannot be said to have had a consistent or even an agreed-upon position throughout the period under investigation. As such, different views were held within each of the colleges, and these also developed (shifted) over time. For example, internal fears by certain groups with respect to academization or academic drift. The representatives of business and industry followed very much the position of the national authorities, paying close attention to and also supporting university ambitions of colleges early on, while, at the same time, one could also identify more restrictive positions against the idea of university status. In other words, the issue of merging and of obtaining university status as an end result were inconsistently articulated in the strategic agendas of all external stakeholders. A second point of interest lies on the fact that at no point during the period were all stakeholder groups in a similar normative position (agreement) concerning the issue of mergers. This is, of course, due to the fact that the issue with respect to university status dominated the agendas of at least two out of the three colleges, and that mergers tended to be seen as just a means for reaching that strategic objective. A quite interesting fact is that public authorities held quite different views. The university idea was heavily supported by the regional authorities, whereas the Ministry became rather negative towards that goal. Representatives for business and industry also parted, depending on the region in which they were located and due to disagreements regarding the institutional profiles and the division of labour amongst the merged colleges The role of external stakeholders, and possible theoretical and political implications What is there to learn from our case? Is it just a special case with little relevance for the broader field, or should more attention be given to the role of external stakeholders in general (processes of change and transformation)? We would argue for the latter position.

12 EUROPEAN JOURNAL OF HIGHER EDUCATION 11 In the period analysed, and as alluded to earlier, two major independent public committees initiated by the Ministry of Education discussed a number of critical issues concerning the quality, effectiveness and the efficiency of the domestic HE system. In the first of the green papers coming out of these committees, a key theme was the acknowledgement of an emerging knowledge economy, and that the sector played a major role in stimulating the economy in broad terms (NOU 2000, 70). In this discussion, the regional relevance of HE and the importance of basic research for innovation were particularly underlined. This emphasis was echoed when the structure of the Norway s HE system was discussed in the same green paper. Considerable attention was given to whether colleges should be allowed to change their legal status and become full-fledged universities (NOU 2000, 342), where the issue of mergers became subordinated to the university issue. Only if there is no need of more universities within the same region should mergers be considered (NOU 2000, 345). Furthermore, the size of the individual institution was not mentioned or problematized as a very central factor when criteria for new universities were outlined (NOU 2000, 346). In the white paper that followed up the suggestions from the commission, university status was again the dominating issue. The Ministry of Education stated that more universities should indeed be allowed, although it was also underlined that those colleges that wanted to become universities should conduct research linked to their profile in vocational and professional education (St.meld , 46). If one is to summarize this process, it can be argued that most attention was given to quality issues (university status) and diversity, at the expense of other important issues such as the efficiency and effectiveness of the sector as whole, which were only discussed briefly. However, during the decade ( ), this situation changed remarkably as the opening up of university status to colleges created considerably dynamics in the sector (Kyvik and Stensaker 2013). Hence, another public commission was appointed only a few years after the previous one, with the specific aim of discussing the future structure of the system (NOU 2008). In this report, effectiveness and efficiency issues dominated the agenda with considerable worries expressed regarding small, fragmented and not very sustainable academic milieus (NOU 2008: 15). The committee proposed several suggestions for structural change in the HE landscape, including a solution where all institutions would merge into 8 10 large regional universities. While the committee opened up for many structural solutions, the most controversial suggestion was the more active role of the state in forcing mergers to happen (NOU 2008). This controversy was also shared by the (centre-left) government at the time (Headed by Prime Minister Jens Stoltenberg, ), resulting in more soft measures for stimulating mergers, voluntary processes, and the more prominent role of regional authorities in initiating and funding merger initiatives (Kyvik and Stensaker 2013). After a new (right wing) government came into position in Norway in 2014, no more colleges were allowed to apply for full university status, and a mandatory process was recently initiated by the Ministry forcing HEIs into merger discussions. The difference from the recent past seems to be that, mergers, this time around, and in line with the mergers of the mid-1990s, will be enforced by the government (top-down orientation), and that the institutional discretion in this matter is more limited. That being said, it is important to highlight that, as is often the case from political intentions to implementation in the context of HE reform efforts (cf. Gornitzka, Kogan, and Amaral 2005),

13 12 B. STENSAKER ET AL. policy ambiguity might come of aid to institutions. Although many colleges and universities have found new potential partners to merge with, there are still several smaller institutions throughout the HE landscape that have not found a new partner, and that even resist being forced into a merger (St.meld ). In this situation, one can imagine thattheroleofregionalstakeholderswillbeofparticularimportancefortheoutcomeof this process. The role of external stakeholders can also be important in other ways. For example, the representatives of the institutions have had very diverse views concerning mergers in the period. In general, one can split the sector into three major stakeholder groups. First: the older universities that tended to oppose any initiatives for more universities, and also initiatives to merge their own institution with others (Kyvik and Stensaker 2013). Second: representatives from more specialized institutions, who, like universities, argue strongly against any form of merger, perceived as blurring the traditional role and special identity of these institutions (cf. Birkeland et al. 2008). Third: representatives from the college sector can be positioned as both being very positive and quite negative concerning whether they should become universities, and also whether they should merge with other colleges (Bakken 2013; see also NOU 2008). When looking more closely into the arguments behind the various positions, it is clear that issues related to both university status and merger initiatives have caused considerably internal disagreement throughout the entire sector. Not least, it is easy to find examples of sceptical employees opposing mergers, and also academic staff especially in the vocational and professional areas that raised concerns about whether full university status would have a negative impact on the educational quality (cf. Mathisen and Pinheiro in press). Because there is a strong tendency of considerable disagreement within universities and colleges regarding merger issues, the backing of external stakeholders may be extremely crucial. However, whether such uniform backing from external stakeholders is easy obtainable is another issue. Generally speaking, it can be stated that the historical interest towards HE policy from external stakeholders, especially representatives of business and industry, have been relatively modest in Norway (Kyvik 2009). In responding to the first public commission s suggestions that colleges could become universities, all stakeholders from industry that responded to the proposition also supported it (St.meld , 46). Several local industry actors also became actively engaged in attempts by regional authorities to develop new (regional) universities during the 2000s (Kyvik 2009). For example, both public and private financial support can be said to have been a key resource (and legitimating basis) backing the new university establishments in the regions of Agder (Pinheiro 2013) and Stavanger (Stensaker 2004), and in the attempts to establish a university serving the Oppland and Hedmark regions (North of the greater Oslo area). Over time, the enthusiasm for new universities calmed down amongst industry stakeholders, especially at the national level. Hence, more recently the NHO s president explicitly warned against new university establishments in Norway, arguing that such endeavours weakened the relevance of educational offerings and the general quality of the educational provision (Skogen-Lund 2013). Whether the regional representatives from the business and industry sector agree with this view remains to be seen.

14 EUROPEAN JOURNAL OF HIGHER EDUCATION Conclusion In this article, we have argued that research on mergers have had too much attention on internal process issues, not paying enough attention to the external context surrounding merger attempts. By using perspectives focusing on the need for cooperation between external stakeholders to stimulate new knowledge infrastructures, we have argued that important external stakeholders such as the government and representatives of business and industry are needed to back successful merger attempts. Although one might argue that this is not very surprising in publicly funded HE systems, it should still be noted that in an era where most countries allow for and want to stimulate considerably institutional autonomy the ability and capacity by the institutions to act on this autonomy seems to vary considerably. While some merger attempts ( period) did succeed in Norway (Arbo and Bull in press; Mathisen and Pinheiro in press), the majority failed to reach a positive agreement to merge (Kyvik and Stensaker 2013). Hence, although mergers throughout the period were (perhaps) driven by the central element or goal of obtaining full university status, the backing (support and legitimacy) given by government and the advocacy from the side of both regional authorities and industry were found to be rather inconsistent. The fluent positioning of various actors during the period seems to have opened up for more unstable merger processes, which might explain the relatively high rate of unsuccessful mergers. This, in turn, suggests that, contrary to what has been described in the existing literature, the role of external stakeholders in merger processes may have substantial influence over the observed outcomes. These findings lend support to the broader claim that alignment (strategic interests and normative postures) amongst key internal actors and various (external) interest groups is a central feature for the attainment of successful reform processes across the public sector (Christensen and Lægreid 1998; Lægreid, Opedal, and Stigen 2005). Hence, our study does support the claims that developments of the knowledge infrastructure in HE are very much dependent on an agreement between the triple helix of stakeholders. The interests of governments and business and industry often point in the same direction. Both stakeholders want excellent and relevant research and education. Conflicts and tensions tend to be more visible when single cases are to be discussed, where the generic agreement within business or industry are overrun by specific regional or economic interests. Such disagreements may increase the power and influence of the individual HEIs involved in the merger attempt, suggesting that external alignment between the external stakeholders is a key condition for merger success. However, our study may also suggest that agreement between key stakeholders is perhaps not always desirable. Although a failed merger outcome may be perceived as a poor result, one should not rule out the option that some merger attempts do not have the potential to succeed and may not always provide the expected benefits. This may sometimes be more easily spotted from the outside, and underline the importance of bringing in the context when analyzing merger attempts. Acknowledgments Our thanks go to an anonymous reviewer and to Lars Geschwind (special issue co-editor) for constructive comments and suggestions on an earlier version of the paper. Any remaining errors are the authors only.

15 14 B. STENSAKER ET AL. Disclosure statement No potential conflict of interest was reported by the author(s). Notes on contributors Bjørn Stensaker is a professor of higher education at the University of Oslo. He has a particular interest in governance, reform, and organizational change in higher education, and has written extensively on these topics in international journals and books. Mats Persson is Assistant Professor at Østfold University College, Norway. His research interests include reforms and organizational change in higher education, especially higher education mergers. Rómulo Pinheiro is Associate Professor in Public Policy and Administration at the University of Agder, Norway. He is also a Senior Researcher at Agderforskning/Centre for Advanced Studies in Regional Innovation Strategies, and a Visiting Professor in Higher Education Studies at the Universities of Tampere (Finland) and Danube Krems (Austria). In addition, he is Associate member of the University of Oslo s ExCID (Expert cultures and institutional dynamics: Studies in higher education and work) research group. References Arbo, P., and T. Bull. in press. Mergers in the North: The Making of the Arctic University of Norway. In Mergers in Higher Education: The Experiences from Northern Europe, edited by R. Pinheiro, L. Geschwind, and T. Aarrevaara. Dordrecht: Springer. Bakken, P Institusjonell dynamikk i høyere utdanning og fagskolesektoren. Oslo: NOKUT. Berman, E. P Creating the Market University. How Academic Science became an Economic Engine. New Jersey: Princeton University Press. Birkeland, E., K. O., Ellefsen, J. I., Haaland, V. L., Haanes, and S. Loland Sammenslåing hjelper ikke. Aftenposten. Accessed September 2. Sammenslaing-hjelper-ikke html Bryman, A Mixed Methods. London: SAGE. Christensen, T., and P. Lægreid Administrative Reform Policy: The Case of Norway. International Review of Administrative Sciences, 64 (3): Chou, M-H., and Å. Gornitzka Building the Knowledge Economy in Europe. New Constellations in European Research and Higher Education Governance. London: Edward Elgar. Clark, B. R The Higher Education System: Academic Organization in Cross-National Perspective. Los Angeles, California: University of California Press. Eastman, J., and D. Lang Mergers in Higher Education: Lessons from Theory and Experience. Toronto: University of Toronto Press. Etzkowitz, H., and L. Leydesdorff, eds Universities and the Global Knowledge Economy: A Triple Helix of University-Industry-Government Relations. London: Pinter/Cassell. Gibbons, M., C., Limoges, H., Nowotny, S., Schwartzman, P., Scott, and M. Trow The New Production of Knowledge. The Dynamics of Science and Research in Contemporary Societies. London: Sage. Gornitzka, Å., M., Kogan, and A. Amaral Reform and Change in Higher Education: Analysing Policy Implementation. Dordrecht: Springer. Greenberg, D. S Science for Sale. The Perils, Rewards and Delusions of Campus Capitalism. Chicago: The University of Chicago Press. Gumport, P Academic Re-Structuring: Organizational Change and Institutional Imperatives. Higher Education, 39(1): Harman, G., and K. Harman Strategic Mergers of Strong Institutions to Enhance Competitive Advantage. Higher Education Policy, 21 (1):