Nav: Home

Do companies need corporate universities?

February 05, 2018

Researchers at the Higher School of Economics, International Laboratory of Intangible-driven Economy (IDlab), have examined the role of corporate universities in developing human capital and improving performance. Their findings were published in the Journal of Intellectual Capital at https://doi.org/10.1108/JIC-01-2017-0011.

The hypothesis that a corporate university can create competitive advantages for a company was tested on data provided by Russian and European public companies. The sample included some 2,500 companies located in Russia, France, Germany, Italy, Spain and the United Kingdom. The Russian market was chosen as an example of a developing economy, while the European market represented a developed economy. Research indicated that a mere 2.4% of Russian companies have corporate universities, compared to 28% of European companies. It is worth noting that both in Russia and in Europe, most corporate universities are located in capital cities, with the exception of Germany.

The study's key findings are as follows: a company's capitalisation correlates negatively with the probability that the company will found a corporate university. This is true in the case of both Russia and Europe and may be due to negative investor expectations of returns on such assets, given the high associated risks. Consequently, businesses seeking to attract investors may be less likely to invest in a corporate university.

'Corporate universities create risks for companies. It appears that successful companies tend to consider less risky ways of investing in employee human capital', explains Petr Parshakov, co-author of the study and research fellow at the International Laboratory of Intangible-driven Economy at the HSE campus in Perm.

Another interesting finding concerns proximity to leading classical universities in Russia and in Europe. In Europe, geographical proximity to a conventional university increases the likelihood that a company will found its own corporate university. The opposite is true in Russia, where the likelihood of a corporate university drops by 2% if a conventional university is located nearby.

In addition, the study reveals a common trend: a short-term positive effect of investing in a corporate university is not always sustainable in the long-run. Other variables being equal, the capitalisation of a company with a corporate university is, on average, 271 million euros less than the capitalisation of a company without one. However, at the same time, positive synergy has been observed between corporate and conventional universities in developed economies over an extended period of time.

The findings of the study are useful to companies considering founding a corporate university as part of a human capital development strategy: risks can be mitigated significantly by conducting thorough prior analysis, planning, and assessment of such investments. Russian companies are advised to focus on smaller-scale investments and work on improving the performance of already-existing corporate universities. The authors of the study plan to continue this research by examining investments in corporate universities using non-financial performance indicators, such as their impact on company image and employee retention.
-end-
This publication is based on findings from Project No. 15-18-20039, 'Competitiveness of Russian Companies in the Context of Import Substitution: the Role of Intellectual Resources', supported by the Russian Science Foundation.

National Research University Higher School of Economics

Related Research Articles:


Related Research Reading:

Best Science Podcasts 2019

We have hand picked the best science podcasts for 2019. Sit back and enjoy new science podcasts updated daily from your favorite science news services and scientists.
Now Playing: TED Radio Hour

Setbacks
Failure can feel lonely and final. But can we learn from failure, even reframe it, to feel more like a temporary setback? This hour, TED speakers on changing a crushing defeat into a stepping stone. Guests include entrepreneur Leticia Gasca, psychology professor Alison Ledgerwood, astronomer Phil Plait, former professional athlete Charly Haversat, and UPS training manager Jon Bowers.
Now Playing: Science for the People

#524 The Human Network
What does a network of humans look like and how does it work? How does information spread? How do decisions and opinions spread? What gets distorted as it moves through the network and why? This week we dig into the ins and outs of human networks with Matthew Jackson, Professor of Economics at Stanford University and author of the book "The Human Network: How Your Social Position Determines Your Power, Beliefs, and Behaviours".