UNIVERSITIES AS NON-PROFIT PARTNERSHIPS

Universities present some similarities with professional partnerships in law and accounting. Universities are close to being partnerships in a non-profit environment. In particular, the practice of co-option for the appointment of new teachers is similar to partnership rules according to which a new partner cannot be appointed without the consent of all the other partners. We compare co-option with other recruitment procedures such as delegation of recruitment to headhunters or the sale of academic positions at auction. Asymmetries of information, reputation, joint production of teaching and research and externalities in academic production, explain that co-option is the commonly adopted way of hiring new faculty. Still, the incentives to recruit the best candidate are weakened by free-riding, moral hazard, and the fact that academics do not invest their own wealth in the university. We explore some ways of realigning incentives to recruit good candidates in the framework of a collective co-option procedure in French universities. We end up by concluding that the key factor to improve the situation lies in the institution of the university president, who should be chosen to be more independent from the academic senate.