This article analyses the behavior of national universities after corporatization based on an analysis of financial statements from 2004 to 2015. Internationally, new public management is playing an increasing role in higher education to strengthen competition and to promote institutional responses in line with stakeholders’ needs and demands. Under financial pressure, the Japanese government uses competitive elements in the process of allocating public funds to national universities on the basis of an evaluation of their project proposals. This article analyzes how reduced subsidies for operating expenses, which are decreasing 1% a year, and an increase in competitive funding affect the behavior of national universities at the macro-level through panel data analysis of financial statements.
The main findings of this study are as follows: (a) Results using fixed-effects models show that the effect of the reduction of operating budgets on the increase of external funds, depends on the “organizational inertia” of national universities. Former imperial universities and general national universities are more responsive to subsidies from government than other type of national universities. (b) The personnel expenses of national universities have been affected not only by operating expenses but also external funding (subsidies, donations, contract research expenses, and grant-in-aid for scientific research), especially within research universities such as former imperial universities, national universities with attached hospitals, and national institutes of technology and medicine. But, for the personnel expenses of teachers’ colleges, colleges of humanities and social sciences, external funding has not been able to replace the reduced operating budget. These findings suggest that after corporatization the national sector of Japanese universities has been managerially bipolarized towards a neo-feudal hierarchy. Old questions of the relationship between autonomy and disparity remain central to the political economy of the national sector of higher education in Japan.