Politics and Policies of Private Enterprise

Politics of Private Enterprise

5.  The Role of For-Profits in Education, Beyond Good and Evil
Horn, Michael. (2011). “Beyond Good and Evil: Understanding the Role of For-Profits in Education through the Theories of Disruptive Innovation.” American Enterprise Institute Special Report.

Horn argues that the role of for-profit companies in education differs substantially from the arguments put forth by critics and supporters alike. First, for-profit companies are usually responding to market incentives, and if we want to change their behavior, we should change the incentive structure. Second, the functional differences between for-profit and non-profit education organizations are far fewer than is conventionally believed, and are usually influenced by legal rules of corporate structures. Unlike non-profits, for-profit companies have a natural pathway to attract capital and grow by rewarding investors, whereas, non-profits can continue to provide services when there is not a viable market. In that way, both types of organization have an important role to play in education, which the government should recognize by supporting results regardless of corporate structure. Horns ties this argument to the theory of disruptive innovation, which holds that a new entrant to a market can find success by offering consumers a more affordable or convenient product that differs from conventional definitions of quality.   To read more.......


Policies in Private Enterprise

5. Insiders Compare For-Profit and Non-Profit Higher Education
Wildavsky, Ben. (2011). Cross to the Dark Side? An Interview Based Comparison of Traditional and For-Profit Higher Education. American Enterprise Institute Report.

Wildavsky interviews administrators, board members, and instructors with experience in traditional higher education institutions who are now associated with for-profit institutions. He draws out salient administrative and education differences between these educational options, and concludes that the for-profit sector could offer some lessons to its non-profit and public peers. Many interviewees report that for-profit institutions have superior administrative flexibility, are more open to experimentation and more responsive to market demands. The faculty at for-profit institutions differs substantially from traditional academia because instructors are hired and evaluated based on teaching ability and student outcomes rather than research accomplishments. While interviewees credit for-profit institutions with serving students who are underrepresented in traditional universities, they caution that good organizational governance must protect against socially irresponsible practices such as fraudulent recruitment. To read more......


Policies in Private Enterprise

4. Achieving For-Profit Quality in Early Care and Education
Grindal, Todd. (2012) Unequal Access: Hidden Barriers to Achieving Both Quality and Profit in Early Care and Education. American Enterprise Institute Report.

In the early childhood education (ECE) sector, while public and non-profit options may provide higher-quality education overall, private options are often better able to facilitate parents’ workforce participation. The abundance of largely unregulated home-based child care businesses could account for this difference. Grindal examines the history of ECE in the United States, and provides case studies of public and private ECE models. Grindal argues that growth of high-quality private ECE providers has been inhibited by parents’ inability to effectively assess and compare program quality. The report recommends policymakers address this by creating quality ratings systems for publically subsidized ECE providers, and instituting equitable oversight of ECE programs regardless of size, or home vs. center-based venue.  To read more......


Policies in Private Enterprise

3. For-Profit Education Organizations Bring Innovation and Quality at Scale
Vander Ark, Tom. (2009). Private Capital and Public Education: Toward Quality at Scale. American Enterprise Institute Working Paper.

Vander Ark compares public, non-profit, and for-profit models of education service delivery, and concludes that the underrepresentation of for-profit organizations is inhibiting our global competitiveness in the 21st century. Vander Ark argues that the structure and culture of public and non-profit education institutions is not conducive to large-scale improvements and innovation, whereas for-profit organizations have access to flexible capital, incentive to consistently improve and grow, and ability to utilize multiple business strategies. He points to application development, online learning, open content, supplemental education services, and school operations as the frontiers of private investment in education.  To read more......


Politics of Private Enterprise

4. Outsourcing to Fund America’s Classrooms
Smith, Barbara Weaver and Smith, Lawrence. (2012). Let Them Learn: Outsourcing to Fund America’s Classrooms. Smith Weaver Smith.

This paper examines how American public schools are using outsourcing (aka privatization) to become more educationally effective and cost efficient. Most outsourcing is focused on non-teaching related responsibilities, such as food service, transportation, and security. The paper is structured to address the common fears around outsourcing, such as loss of control and diminished accountability. Despite divided opinions on this issue, the authors’ research suggests that outsourcing can accomplish its goals if school districts exercise due diligence in contract management, on which they provide guidelines.  To read more.......

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