With or without CU. A comparative study of efficiency of European and Russian corporate universities
| DOI | https://doi.org/10.1108/JIC-01-2017-0011 |
| Published date | 08 January 2018 |
| Pages | 96-111 |
| Date | 08 January 2018 |
| Author | Petr Parshakov,Elena Anatolievna Shakina |
| Subject Matter | Information & knowledge management,Knowledge management,HR & organizational behaviour,Organizational structure/dynamics,Accounting & Finance,Accounting/accountancy,Behavioural accounting |
With or without CU
A comparative study of efficiency of European
and Russian corporate universities
Petr Parshakov and Elena Anatolievna Shakina
National Research University Higher School of Economics, Perm, Russia
Abstract
Purpose –The purpose of this paper is to address the issue of efficiency of corporate universities.
An efficiency is defined in relative terms: as having relatively better performance in comparison to other
companies. Different indicators of performance were employed in order to analyze short-term and long-term
efficiency. A comparative analysis of European companies and emerging Russian companies is performed in
order to understand if there are country differences in the efficiency of corporate universities.
Design/methodology/approach –To avoid potential omitted variable bias, fixed effect within estimator is
employed. This estimator enables controlling for a firm-specific time-constant effect which conditions
company’s performance and is responsible for other individual traits. The rest of the characteristics are
controlled with a proxy, which are traditional for corporate finance studies.
Findings –There are contradictory results for the efficiency of a corporate university; for the European
companies, a corporate university brings positive effect for the short-term performance, nevertheless, as the
authors have found that it destructs value in long term. A company with a corporate university has 70 percent
less market value added than an average company. There is a negative short-term synergy while the
long-term synergy is positive. The results for the Russian sample are very consistent: corporate universities
have negative or neutral effect on the performance.
Originality/value –This study contributes to the literature about strategic management and human
resources management. It addresses the issue on efficiency of corporate universities in companies considering
this as one of the key strategic investment in human resource policy. It appears that the corporate university
is not a panacea for all companies to develop their human development policy.
Keywords Organizationaldevelopment, Efficiency, Human capital,Intellectual capital, Corporate university
Paper type Research paper
Introduction
The first corporateuniversities emergedin the early 1980s (Blass, 2005).Despite their growing
popularity, there is a limited amount of research on these types of educational institutes that
are based withincompanies. Most of these papers,such as those by Allen (2002), Blass(2005),
and Baporikar(2014), focus on the issue of building corporateuniversities in an effective way,
or on analyzing the historyand the role of such institutes. It has been demonstrated that this
type of learning contributes to the future of education and to the development of traditional
universities. With regard to practical issues, corporate universities are supposed to establish
specific standards for the learning process within a company. Moreover, campus facilities of
corporate universities can be used to earn additional money by offering educational services
for clients outside those companies, usually rivals from the same industry. Thus, having a
corporate university can be considered a marker of industry leaders.
In the managerial literature, corporate universities are discussed from the strategic
investment perspective and are seen as a pivotal asset of HR policy (Patrucco et al., 2017;
Allen and McGee, 2004). Seminal papers in resource-based theory, such as those by Barney
(1991) and Grant (1991), have discussed investment in employee development and corporate
endeavor as a means of creating unique advantages in human resources; however, these
studies did not explicitly examine corporate educational programs. Moreover, a set of
empirical studies (Molodchik et al., 2014;Shakina and Barajas, 2015) that identified corporate
Journal of Intellectual Capital
Vol. 19 No. 1, 2018
pp. 96-111
© Emerald PublishingLimited
1469-1930
DOI 10.1108/JIC-01-2017-0011
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1469-1930.htm
This study comprises research findings from the Project No. 15-18-20039 supported by the Russian
Science Foundation.
96
JIC
19,1
universitiesas key intangible assets have notexplored this currently growingphenomenon in
depth. The only empirical evidence that exists has identified a positive correlation between
companies’performance and corporate universities. However, it appears that this discoverymay
not be considered in terms of policy implications, since it is not founded on any elucidated
causality; neither has an analysis of opportunity costs been comprehensively carried out.
The critical supposition of our research is derived from the intuition that corporate universities
can be unreasonably costly, and are associated with non-payback investments and high risk.
Nevertheless, these investments might be acceptable for corporations, and even bring
non-operational benefits that have commercial capacity. However, it is not unconditionally
reasonable for companies to establish an internal university in order to enhance human resource
development. Companies consider these costs as an investment in intangibles, although in such
cases, the question of the efficiency of those investments arises. From the stakeholders’
viewpoint (e.g. stock market investors), corporate universities might be considered risky,
bounded with high direct and opportunity costs and an unacceptably long payback period.
This study attempts to extend the analysis of corporate universities in the framework of
resource-based theory by focusing specifically on the conditions under which corporate
universities provide competitive advantages and are considered positively by investors.
Furthermore, it seeks to investigate the effect of the proximity of alternative educational entities.
The research problem of this study refers to the idea that the phenomenon of the corporate
university serves as a substitute for educational programs offered by traditional academic and
professional institutions. It is also examined whether corporate universities should create
synergy with traditional educational institutions, given that both teaching and methodology
exchange can occur. The study also specifies additional reasons for studying which conditions
might moderate or obstruct corporate universities’ability to become efficient investments.
The research question of our study is formulated as follows:
RQ1. Do corporate universities create competitive advantages, and are they positively
recognized by investors?
For the purpose of this study, the efficiency of corporate universities is interpreted in
relation to the benchmark of companies that have not introduced them. Corporate
universities are discussed in the literature as a part of human or structural capital, with an
emphasis on the long-term focus of investments. Corporate universities, as an investment in
intangible capital, are supposed to create competitive advantages for companies; these
should be reflected in higher corporate performance. If this is not achieved, investments in
corporate universities may not be considered efficient. Among several possible indicators of
companies’performance, this study applies two measures that are commonly accepted as
having an association with intangibles: economics value added (EVA) and market value
added (MVA). EVA is applied to evaluate short-term performance and reflects the
competitive advantages created, as it demonstrates whether a company outperforms its
rivals. By contrast, MVA represents longer-term outcomes of company activities, and
manifests the attractiveness of a company for investors (Naidenova and Parshakov, 2013).
There are a number of factors regarding corporate policy for human resources that are
considered relevant in the literature. For instance, previous studies show that being located in a
city with a university might also be considered as a competitive advantage, because companies
can benefit by attracting better human resources and fostering relations with that university in
order to increase innovation and development (Shakina and Barajas, 2013; Molodchik et al.,2014).
The corporate university is considered to be a way to enhance performance not only in
developed countries, but also for companies in emerging economies. In this paper, the
efficiency of corporate universities established or run by Russian companies is compared
with those in European companies. Russia is chosen as a representative example of an
emerging economy: according to World Bank estimates, Russian GDP doubled between
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European and
Russian
corporate
universities
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