When should universities launch online degrees? New research offers a competitive roadmap

With 88% of colleges planning to expand their online degree programs, timely research from the University of Florida Warrington College of Business, a leader in online education, identifies key strategic and tactical levers for introducing successful online programs.  

The research provides prescriptive guidelines for university administrators and governing boards to simultaneously achieve social goals of market coverage and economic viability through online education. 

“Educational services are contributing more than $315 billion to the U.S. GDP,” explained Asoo Vakhaira, McClatchy Professor at the UF Warrington College of Business. “Online degree programs offer a substantive opportunity for universities to expand not only their market coverage through strategic technology investments but also to generate revenue streams to cover budget shortfalls.”

Interestingly, the interplay between externally publicized rankings and the market cost of technology plays a role in whether a university should introduce the online education program.  For universities not significantly differentiated in rankings, there is a greater possibility of competition when technology costs are low. 

On the other hand, when universities are significantly differentiated, competition within the market emerges only when technology costs are high. In essence, the magnitude of technology costs acts as a barrier in whether universities will face competition when introducing an online program.

Regardless of the presence of competition, complete market coverage (to enhance educational outreach) can be achieved through appropriate investments in technology and setting tuition to ensure economic viability. From a relative ranking perspective, a higher-ranked university, in comparison to the lower ranked one, can simultaneously invest less in technology and charge higher tuition. Thus, it is worthwhile for policy makers to direct efforts to increase public rankings of online education programs.

The research, “Introduction of Online Degree Programs: A Competitive Framework,” is forthcoming in Production and Operations Management. 

Researchers:

• Asoo Vakharia – University of Florida Warrington College of Business
• Arda Yenipazarli (Ph.D. ’12) – Georgia Southern University Parker College of Business
• Vashkar Ghosh (Ph.D. ’18) – University of North Carolina Greensboro Bryan School of Business and Economics
• Gulver Karamemis (Ph.D. ’16) – Georgia Southern University Parker College of Business