A case study of a merger in Chinese higher education

7/21/2019 A case study of a merger in Chinese higher education

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changing policies and regulations. There is a

significant lack of research that studies merger

activity at the institutional level. This study is

intended to fill this void. The purpose of the study is

to examine the process of a higher education merger

in China and to reveal the important factors thataffected the process.

This study is designed to look into the creation

and transformation of Sichuan University (SU) in

Southwest China as a result of the merger of two

institutions in 1994. The study addresses a general

question: What major factors affected the merger

process and its outcomes? The data collection is

guided by the following sub-questions:

(1) What were the major external and internal

factors that led to the merger?

(2) How was the decision to merge made?(3) What were the major factors that facilitated or

inhibited the integration process?

(4) What were the outcomes of the merger?

2. Research context

Chaffee and Tierney (1988) see higher education

institutions as seeking equilibrium between external

demands and the values and needs of the members.Changes in colleges and universities are often

shaped by various external and internal forces.

Merger, as a radical form of institutional reorgani-

zation, is often an institutional response to such

forces.

In countries such as Australia, Britain, the

Netherlands, Norway, South Africa, and Sweden,

governments have either mandated or encouraged

mergers by providing policy incentives so as to

rationalize their higher education systems (Fielden

and Markham, 1997; Goedegebuure, 1992; Har-

man, 1988; Hay and Fourie, 2002; Kyvik, 2002;

Skodvin, 1999). Harman and Meek (2002) identify a

variety of motives in governments’ promoting

higher education mergers, such as to increase

efficiency and effectiveness, to widen access, to deal

with narrow specialization and institutional frag-

mentation, and to ensure that higher education

institutions more directly serve national and regio-

nal economic and social objectives.

Merger can also be a voluntary institutional

response to changing external and internal contexts.

In the United States, a number of conditions and

tensions, such as reduction in state and federal

allocations, the shrinking high school graduate

pool, and concerns about the efficiency and effec-

tiveness of higher education, led many institutions

to merge during the period from the late 1960s to

the early 1980s (Breuder, 1989). More recentlymerger has become a common response strategy in

higher education nationally in the United States as

support for education dwindles. In Arizona, Mon-

tana, New Jersey, New York, Oregon, Washington

and elsewhere, merger and program elimination

were a fact of life in the 1990s (Coffman, 1996).

Between November 2000 and June 2003 at least 12

college mergers were completed or announced in the

United States (Williams, 2003). A wave of merger

also hit the for-profit sector of higher education

(Borrego, 2001).

Higher education today to a great extent is stillfacing many of the tensions and challenges that

have given rise to mergers in both the public and

private sectors in the past several decades. It is quite

likely that governments and higher education

institutions will continue to use merger as a means

to cope with these tensions and challenges. For

example, in Japan, as the population and enroll-

ments dwindle, universities have started to consider

merger. According to an education ministry report

issued in January 2003, at least 35 of Japan’s 99

national universities are planning mergers withinthe next 3 years (Brender, 2003). In China, new

mergers are being negotiated and implemented.

Taiwan is also considering consolidating its higher

education institutions so as to improve their quality

and prestige (http://news.xinhuanet.com/taiwan/

2004-10/27/content_2143614.htm).

There is no doubt that a critical understanding

of the past experience with merger is essential to the

success of higher education mergers in the future.

But unfortunately, in turning to the literature to

learn more about mergers in higher education, it can

be reported that fragmentation and incompleteness

is evident. In countries like Australia, Britain and

the Netherlands, merger as a policy issue has

received a great deal of scholarly attention. A

number of studies provide information about how

merger activity as a national policy was initiated

and implemented and the outcomes have been made

public (e.g.,Fielden and Markham, 1997; Gamage,

1993; Goedegebuure, 1992; Harman, 1988; Martin,

1996; Meek, 1988). A majority of the litera-

ture, however, focuses mainly on describing the

reasons why institutions merged. How institutions

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Y. Wan, M.W. Peterson / International Journal of Educational Development 27 (2007) 683–696 684

http://news.xinhuanet.com/taiwan/2004-10/27/content_2143614.htm






implemented a merger and how integration was

achieved were dealt with to a much lesser extent.

Many researchers in higher education mergers have

noted the lack of serious theoretical and empirical

research in this area (Chambers, 1987; Eastman and

Lang, 2001; Goedegebuure, 1992; Mulvey, 1993).The literature on mergers stresses that merger

denotes radical institutional changes. Many have

described these changes as drastic and dramatic

(Chambers, 1983; Millett, 1976; Mulvey, 1993). Not

only are the governing systems of the institutions

affected, but the ‘souls’ of the partners involved are

also affected. Merger is by all means a complex

process. The tensions in the dynamics of this process

also center on factors associated with change in any

organization. Although each merger can be seen as

a unique arrangement between the institutions

involved, there are some common issues andconcerns that have emerged in all merger processes.

Some major concerns identified in the literature

include management and leadership, the reaction

and resistance of faculty and staff, communication,

the financial implications, concerns about institu-

tional identity and reputation, and the difficulties in

merging diverse cultures (Cannon, 1983; Chambers,

1987; Martin and Samels, 1994; Millett, 1976).

Fig. 1 illustrates a framework that help how all of

these factors can be integrated to illuminates

understand higher education mergers. The frame-work provides guidance in examining the merger

process. It serves as a broad map for approaching

pertinent issues that have appeared in the process.

However, it was not viewed as definitive when the

study began. During the course of data collection,

other elements were also revealed as important to

the merger process.

3. Research method

3.1. The case study method

The case study method is used for this study.

Merriam (1998) states that case study research is a

method designed to gain an in-depth understanding

of the situation and meaning for those involved. The

case study method uses an inductive–interpretive

approach rather than the hypothetical–deductive

research model (Van Maanen, 1998). This research

approach emphasizes process and context of a

phenomenon. The research goal is not focused onprediction or control, correlation or causal infer-

ence, but interpretive understanding of a complex

phenomenon and the real-life context in which it

occurs. As a methodology, the case study method

fuls a unique role in research (Guba and Lincoln,

1989).

Yin (1994) suggests that the case study method is

favorable under three conditions: (1) the study asks

‘‘how’’ or ‘‘why’’ questions; (2) the topic under

study does not require control over external events;

and (3) the study focuses on contemporary events.According to Yin’s criteria, the case study method

seems to be a good fit for this particular research.

First of all, the purpose of this study is not to test an

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Organizational FactorsSize, Capazcity, Decisionmaking process,Funding

External ForcesGovernment policiesand regulations,Changing societalconditions

Internal ForcesStrategic factors,Economies of scale

/cost-saving

Merger

Outcomes

Post-Merger

Integration

Planning the

Merger

Human FactorsLeadership,Institutional identity,Employees’ reaction

Fig. 1. A conceptual framework for understanding Chinese higher education mergers.




existing theory or a preconceived hypothesis on

institutional merger, but rather to seek to under-

stand the merger process (how it has occurred).

Second, merger is widespread in higher education

and can be studied by an active observer without

control over the change. Third, merger is definitely acontemporary topic. Finally, the case study method

is a useful methodology to investigate and explain

the causal links in real-life situation that are too

complex for survey or experimental methods

(Merriam, 1998), and higher educations merger is

no doubt such a complex process.

3.2. Description of the case

The case selected for this study is SU, the largest

university in Southwest China formed through the

merger of the former Sichuan University (abbre-viated as SCU so as to differentiate from the post-

merger institution SU), Chengdu University of

Science and Technology (CUST) in 1994 and later

joined by Huaxi Medical Science University

(HMSU) in 2000. This study focuses only on the

1994 merger between SCU and CUST. The merger

of SCU and CUST in 1994 is the first case of merger

between two key national universities of compar-

able prestige and capacities in China and is

considered by some researchers as one of the most

troubled mergers (Chen, 2002). SU is now one of the biggest universities in China in terms of student

enrollment, faculty population, and research capa-

city. The evolution of SU in a sense is an epitome of

the development of Chinese higher education in the

past decade, which makes it a valuable case to

study.

3.3. Data collection

The research strategy for this study incorporates

documentary analysis, the personal interview meth-

od and observation. Multiple sources of informa-

tion are sought and used because no single source of

information is adequate to provide a comprehensive

perspective on such a complex process. Using

multiple sources of information also allows trian-

gulation of data collected so as to build stronger

assertions about the merger process (Creswell,

1998). Documents and archival records are used to

identify and understand major concepts, concerns,

trends, and events concerning the merger process.

The semi-structured interview method is the pri-

mary method of data collection in this study. The

interviews are semistructured in that the questions

are constructed in advance but the interviewer can

change the questions and the mode of asking or

following up according to his or her discretion

(Hammer and Wildavsky, 1989). When studying

organizational changes in higher education, it isnecessary to obtain the many views of the change

through the experience of those involved in the

change. This is even more important in studying a

merger since it involves people from different

organizations. In this particular case, people origin-

ally came from two institutions and it is critical to

listen to different voices and obtain different

perspectives. The purpose of the interviews was to

have members of the two institutions reflect on the

merger process and report in detail their attitudes,

feelings, and opinions concerning the merger.

Given the design of the study, my goal in theseinterviews is not to gain a representative statistic

sample of opinions of people involved in the merger

process. Instead, the purpose of the interviews is to

expand my understanding, capturing and general-

izing emerging themes and patterns. Therefore

purposive sampling (Creswell, 1998) is used to select

informants. Purposive sampling is a strategy to

select the most information-rich participants. In this

case, following a preliminary investigation of both

institutions and discussions with an assistant pre-

sident of SU and the director of its Research andDevelopment Center, 15 individuals were identified

as potential informants for the initial phase of the

interview. Individuals were chosen based upon their

official standing in their institution and upon their

degree of involvement in and knowledge of the

merger process. This sample is mainly composed of

top-level administrators and academic deans from

both institutions.

After several rounds of contact with the potential

interviewees, ten of them agreed to participate. All

interviews were conducted in Chinese. Four of the

interviews were tape-recorded with the consent of

the participants, and later transcribed. The inter-

viewer kept detailed notes of the other six inter-

views. In addition to formal interviews, the

researchers also had informal conversations with

other members of the organization, including

faculty and staff member, students, and alumni.

3.4. Role of the researcher

One of the researchers was a graduate student at

SU between 1995 and 1998 and then worked there

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from 1998 to 2001. Her prior experience with SU

was an advantage when the study started. It helped

the researchers to get access to the site. Also because

of this prior knowledge, the researchers were

familiar with the general context of the study so

that they could ask critical questions while remain-ing sensitive. At the same time the researchers are

aware of the potential undue influence of this

previous experience on the study because of any

prior biases about the institution.

3.5. Limitations of the study

One of the limitations of this study is caused by

the mortality effect, namely, the loss of individuals

from a group, thereby making it no longer

representative (Krathwohl, 1997). As this study

covers a period of about 10 years, some of the keyparticipants of the merger process were not avail-

able for interview. The long reference period

(1994–2003) constitutes another limitation of this

study. The long recall period might influence the

accuracy of some factual data. Moreover, since the

merger between SCU and CUST took place in 1994,

the participants’ perceptions and evaluation of the

process might be more of retrospective sense-

making. Another limitation of this study is related

to the inherent difficulty in studying a complex

organization such as a university. There is alwaysthe possibility of uncovered information and

untapped perspectives due to time and other

constraints. Sometimes the untold part of the story

may be disparate, incompatible or even contra-

dictory to the data collected. Fortunately, our

previous experience and familiarity with SCU may

to some extent make up for this uncertainty.

4. Findings and discussion

This part of the paper reports the findings of the

case study. It follows the sequence of pre-merger

planning, implementation of the merger plan, and

evaluation of outcomes. Key concerns and issues in

this process are identified.

4.1. Why merge?

4.1.1. Pre-merger connection between the two

universities

The connection between the SCU and CUST can

be dated back to the 1950s. SCU was founded in

1931 by combining several existing higher education

institutions in the city of Chengdu. At the time of its

founding, SCU was one of the 13 national

universities in the country and the only one in

Southwest China. By 1949, with six colleges (arts

and humanities, sciences, law, engineering, agricul-

ture, and education), 25 departments and a studentpopulation of 5300, SCU was one of the most

prestigious universities in China. However, in the

nationwide restructuring in the 1950s SCU was

dismantled and reorganized. Four colleges (educa-

tion, law, agriculture, engineering) were either

merged into other institutions or separated to form

new independent specialized colleges. The remain-

ing two colleges, together with some colleges and

academic departments in arts, humanities and

sciences in other universities in the region, formed

the new SCU, which was positioned as a compre-

hensive university of arts, humanities and sciencesdirectly under the Ministry of Higher Education.

Chengdu Polytechnics Institute (CPI), the pre-

decessor of CUST, was founded in 1954 as a result

of the same nationwide restructuring process. It was

composed of the engineering schools of a number of

universities in Sichuan Province and nearby pro-

vinces, including the engineering school of SCU.

CPI was renamed as CUST in 1978 and was

administered by the Chinese Academy of Science.

In 1980, the State Education Commission (SEC,

later renamed as Ministry of Education) took overand CUST became an institution directly adminis-

tered by the SEC.

The campuses of SCU and CUST were only one

street across from each other. Geographical proxi-

mity is generally considered to be one favorable

condition for mergers (Norgard and Skodvin, 2002;

Skodvin, 1999). That might be what was going

through the minds of the leaders of the two

universities when they were considering the possi-

bility of a merger. The spectrum of academic fields

of the two institutions, however, was very different.

As a comprehensive university with strong pro-

grams in arts, humanities and sciences, SCU was

known for its academic excellence in disciplines such

as history, Chinese linguistics, archeology, and

mathematics. CUST on the other hand was a

polytechnic institution and was nationally and

internationally recognized for its research in macro-

molecule material, textile, hydraulics, and chemical

engineering. However, since the 1980s both institu-

tions had been expanding its academic offerings. In

addition to setting up programs in burgeoning fields

such as business management and information

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management, SCU started new programs in applied

sciences and technologies while CUST started new

programs in natural sciences, humanities and social

sciences. By the early 1990s, the size of the two

institutions was almost the same in terms of student

population (both about 12,000), the number of faculty and staff (both about 3500), as well as the

size of their campus.

4.1.2. Impetus for the merger: external factors

The idea of merging SCU and CUST was first

proposed by the Sichuan provincial government and

the State Education Commission in the 1980s. The

two institutions held some preliminary discussions

about it but failed to give it serious considerations.

Both institutions were then too occupied with their

own expansion and other reform initiatives. Then

why were the two institutions willing to reconsiderthe idea of merger in the early 1990s?

When asked about the reasons for the merger,

nearly all the institutional leaders interviewed

started with explaining how the social and economic

development of the Chinese society called for

reforms of higher education institutions. The

1980s saw a rapid expansion of higher education

in China. However, the expansion took place

without paying sufficient attention to the cost-

effectiveness and economies of scale. Higher educa-

tion then was characterized by small size with anaverage enrollment of only 1922 in 1988 (Min,

1991), low student–staff ratio (5.3:1 in 1988

according to China Education Yearbook, 1989),

and low unit cost. This mode of expansion put

serious financial constraints on higher education.

Moreover, Chinese higher education in the early

1990s still retained many characteristics of the

Soviet system. Particularly, college curriculum was

still divided along narrow specializations. By then it

was generally recognized that students prepared by

such a narrow curriculum lacked flexibility and

would have difficulty meeting the needs of the

changing world. The Chinese government was also

aware of the need to restructure its higher education

system into a more efficient and effective one.

In 1993, the government revealed its determina-

tion to restructure and reform higher education in

an official document entitled The Outline for

Educational Reform and Development in China

(hereafter referred to as The Outline). Various

reforms were proposed in The Outline. The

objectives of the reforms were described as follows

(Ministry of Education of China (MOE), 1993):

diversification of the sources of funding for

institutions of higher education;

decentralization of the administrative structure

and expansion of university autonomy; and

reconstruction of universities for efficiency,

effectiveness, and reasonable expansion.

The one policy proposed in The Outline that had

significant implication for institutional merger was

Project 211. The purpose of the Project was to select

100 universities and a number of academic fields in

which the government would concentrate its finan-

cial support in order to achieve academic excellence.

Although not stated in the official announcement, it

was understood that the rest of the institutions

would be transferred to provincial or local govern-

ance, which might mean declining funding andreputation as well. The Project revealed the govern-

ment’s determination to build some world class

universities. It effectively introduced competition

among higher education institutions. Many univer-

sities and colleges began to deliberate the possibility

of merger in order to be included in the list of the

favored 100. In the early 1990s, six or seven other

institutions in the same region with SCU and CUST

were considered to be their peer institutions with

comparable reputation and capacity. Project 211 to

a great degree pitted these institutions against eachother in the competition for a position in the

Project.

It may seem obvious that Project 211 introduced

competition among higher education institutions,

but participants interviewed for this study disagreed

about the extent that the concern about Project

211 had influenced the decision to merge. Some

talked about competition in a very general and

abstract way, not willing to cite Project 211 as

directly driving the decision to change. Others

would claim that SCU and CUST merged for the

simple reason of strengthening their position in the

competition for the Project. In fact an interviewee

believed CUST would have no chance to be

included in the Project if it had not merged with

SCU. But of course all interviewees from CUST

disagreed about that. Despite the disagreement the

interviewees all agreed that the merger almost

guaranteed the new institution’s position in the

Project because the newly formed university would

become the largest university in the country and was

too important to be left out of any central

initiatives.

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4.1.3. Impetus for the merger: internal factors

A number of internal factors also made merger an

attractive idea. First of all, the historical connection

and geographical proximity of the two institutions

were considered to be two advantages that would

make it easier for the constituents of the twoinstitutions to accept the merger and thus would

smooth out the integration process. In fact the two

institutions had engaged in a great deal of coopera-

tion even before the merger. For example, many

student activities and events were open to students

from both campuses. The information exchange

between the two institutions was also quite frequent.

In Chinese universities, since most students and

staff members (and their families) lived on campus,

the social life of the two institutions was in fact

highly integrated even before the merger. One of the

participants mentioned how the ‘‘blood ties’’ of thetwo institutions had been built because of the high

rate of ‘‘intermarriage’’ between employees of two

campuses:

The children from the two sides went to the same

schools. They played together and grew up

together. Many of them ended up marrying each

other. We are actually in-laws.

In planning for the merger, such close relation-

ship between the two institutions was regarded as an

enormous advantage by the decision makers.Second, as was mentioned earlier, both SCU and

CUST had tried to expand their academic offerings

since the 1980s. As a result, SCU in the early 1990s

had added new programs in computer science,

chemical engineering, bioengineering and other

fields of applied sciences. CUST on the other hand

had added programs in basic sciences such as

mathematics, physics, chemistry and some in

humanities and social sciences. But after about 10

years’ development, most of these new programs

remained marginal in their institutions. Both

institutions realized that this mode of expansion

was a waste of the limited resources. Without some

fundamental changes in the forms of inter-institu-

tional cooperation, neither institution could fulfill

its ambition of achieving national or international

fame within a short period of time. This urged the

leaders of both institutions to come up with new

ways of cooperation. As the curricula of the two

institutions were perfectly complimentary to each

other, a merger appeared to be a viable option.

Complementariness in academic offerings has been

identified as one important feature conducive to

merger success in studies on higher education

mergers in other countries (Goedegebuure, 1992;

Skodvin, 1999). And the leaders of the SCU and

CUST clearly recognized this.

Finally, the merged institution would become the

largest university in China then in terms of studentpopulation and the scope and range of academic

offerings. The Chinese higher education system is

driven by status and reputation and characterized

by a process of cumulative advantage in which

institutions with a high status and with good

reputation are rewarded with more resources.

Under such a system, the enlarged capacity would

mean more attention and funding from the govern-

ment. The decision makers of SCU and CUST were

well aware of this. As one participant described, ‘‘In

China, the government’s funding to higher educa-

tion has always been to make the rich richer.’’Under such a principle, a substantial increase in

state funding to the new institution was expected if

the two institutions were to merge.

4.2. Planning the merger

4.2.1. Making the decision to merge

Facing the external pressures and considering the

various favorable conditions for a possible merger

between the two institutions, the President and

Party Secretary1

of SCU and CUST first proposedthe idea of merger in November 1992 at a

conference attended by college and university

presidents in Sichuan Province. The idea was given

serious consideration and won general support from

the high-level administrators of both institutions. A

preliminary agreement about the merger was

reached between the Party Committees2 of the two

institutions. In January 1993, President and Party

Secretary of both institutions conveyed the idea of

the merger to Governor and Vice-Governors of

Sichuan Province and obtained their support. In

February, a proposal was submitted to State

Education Commission and won the support of

the Commission leaders. In May, the merger

obtained its formal approval from the State Educa-

tion Commission. In the meantime, Sichuan pro-

vincial government agreed to support the new

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1In Chinese universities, Party Secretary and President are two

top executive positions. Normally they are two parallel positions

with separate responsibilities but arguably equal status.2In Chinese institutions, Party Committee is the highest

decision-making body headed by Party Secretary. The Committee

is usually composed of high-level administrators.




institution in the form of ‘‘joint construction.’’3 It

promised to provide 150 million yuan (about US$

18 million) to the new institution to help it with its

bid for Project 211.

It can be seen that the decision to merge SCU and

CUST was made in a surprisingly short period of time and was made through an entirely top-down

process. No open effort was made to engage the

faculty and staff in the decision-making process.

They were formally informed of the decision only

after it was made final, although rumors had

circulated before that. Once the decision to merge

was made, there seemed to be no way to reverse the

course of action. Such a process of decision making

would have significant impact on the implementa-

tion of the merger, which will be discussed later in

this paper.

4.2.2. Making merger plans: it is about the name

A task force was soon created in May 1993 to

make plans and preparations for the merger. The

task force was comprised of mainly administrators.

Some urgent issues to be resolved were identified,

including: (1) to choose a new name for the

institution; (2) to develop a new governance

structure; (3) to develop a new academic structure;

(4) to make timetables an implementation plans; (5)

to set up the layout of the new campuses; and (6) to

make the new budget.With the effort of the task force, all the planning

seemed to have gone smoothly except for naming

the new institution. A name is critically important

to an organization (Linenkugel, 2001). From a

name, identity is derived and reputation is created.

In the merger of SCU and CUST, since the two

merging partners had similar capacity and reputa-

tion, it seemed proper to use a new name for the

new institution rather than adopting the name of

either institution. While the leaders of both institu-

tions agreed to this, it proved difficult to discardwell-recognized names. This was especially true for

SCU employees. For them the glories and emotions

attached to the name ‘‘Sichuan University,’’ which

had been in use for about 60 years, were too strong

to be given up. Moreover, while the pre-merger

name of CUST no longer fitted the new institution,

that of SCU still fitted the new institution well

because of its inclusive nature.4 But naming the new

institution SCU would be considered appallingly

unfair and therefore unacceptable to the CUST

community. According to one of the intervieweesfrom CUST, in the negotiation about the new name

for the institution, the representatives from SCU

adopted a strategy of ‘‘escape’’ by not suggesting

any new names themselves but vetoing any name

that the CUST representatives proposed. As a result

the negotiation relapsed into stagnation for quite a

long time. The task force later tried collecting

recommendations from the community, but no

agreement could be reached on this. The dispute

had seriously delayed the planning process of the

merger and it was eventually resolved only with the

intervention from the provincial government. InNovember 1993, the two parties agreed to name

the new institution ‘‘Sichuan Union University

(Sichuan University & Chengdu University of

Science and Technology)’’ (abbreviated as SUU in

this article) as proposed by Governor and a Vice

governor of Sichuan Province.

People from both sides were not satisfied with the

name. For one thing, adding parentheses to a name

was unconventional in naming an organization and

sounded rather awkward. For another, some

thought the word ‘‘union’’ had negative connota-tions in the Chinese context—it sounds like the

combination of several institutions of lower quality.

Several other universities in China with the name

‘‘union university’’ were generally considered to be

of inferior quality. In addition to that, both sides

worried that the name had poor social recognition

and would lead to a decline in applications to the

university. Nevertheless, since neither SCU nor

CUST could provide a better choice agreed upon

by both sides, the name proposed by a powerful

third party (in this case, the provincial government)

was accepted. On 8 April 1994, the merger of SCU

and CUST was formally announced.

4.3. Post-merger integration

Merger often involves fundamental changes in

administrative and academic structures. The greater

the organizational changes required by the merger,

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3Under the arrangement of ‘‘Joint construction’’ (Gongjian),

the provincial government and the State Education Commission

exercise a dual leadership over the institution. While the central

government still provides the bulk of funding for the institution,

the provincial government will provide extra funding in the

amount that is agreed by negotiation between the State

Education Commission and the provincial government.

4Sichuan is the name of the province. In China, being named

after the name of the province usually denotes an exclusive

prestige and indicates the importance of the institution.




the greater the need for more complex interventions

to help manage the integration process (Buono and

Bowditch, 1989; Napier, 1989). Failure to achieve

integration will impede merger performance(Jemi-

son and Sitkin, 1986). In the merger between SCU

and CUST, the integration of the two institutionstook longer than most people had expected.

4.3.1. Integrating the governance structure

The governance of both pre-merger institutions

followed the two-level structure of university and

department. When the merger was considered, it

was agreed that such a two-level structure would no

longer fit the new institution due to its huge size.

Thus, a three-level structure (university–school/

college–department) was adopted by the newly

formed institution. Under such an arrangement,the old departments were consolidated and restruc-

tured into 14 colleges. After 2 years, however, some

serious problems of the new three-level structure

were identified.

First, most of the 14 colleges were formed by

simply combining several existing departments

without real integration. The old departmental

boundaries still existed and the division of power

and responsibilities between schools and the depart-

ments under them was rather fuzzy. As a result

coordination and further integration within schoolswere very difficult. Secondly, the schools and

colleges were formed within the boundary of two

pre-merger institutions. Little cross-institutional

combination and integration occurred. This made

the integration superficial and few duplicate pro-

grams were cut as a result of the combination. The

expected outcome of the merger in terms of better

utilization of resources failed to realize. Thirdly, due

to the addition of one more level to the governance

structure, the number of middle level administrators

increased dramatically. This ran counter to the

objective of improving administrative efficiency by

reducing the number of administrators. Thus,

compared with the pre-merger two-level structure,

the new three-level structure lacked efficiency as well

as effectiveness.

Faced with these problems, the university read-

justed its structure in 1997 by strengthening the role

of the school-level administration and set clear

division of authority between schools and depart-

ments. But the school–department conflict remained

visible. For quite a long time, the center of power

kept shifting between schools and departments.

The turning point came in 1998 when a new

President took office. At the same time, the Ministry

of Education began a new round of systematic

review of existing academic programs nation wide.5

Taking advantages of this opportunity, SUU made

fundamental changes to its governance structure.Within half a year, as a result of the reorganization

the number of middle level administrators was

reduced by half. The number of schools and colleges

increased from 14 to 22, with schools and colleges

now established as administrative entities and the

role of departments reduced to that of pure

academic units. Some duplicate programs were

eliminated and as a result the number of under-

graduate programs was reduced from 93 to 75.

Despite some frictions in the process, the new

structure was fully established in July 1998 and

remained functioning until the present.

4.3.2. Re-emergence of the naming issue

The name for the new institution Sichuan Union

University (SUU) was a ‘‘lesser’’ choice from the

very beginning. Many of the worries about the

possible negative effects of the new name were

proved to be real immediately after the merger. In

the 2 years after the merger, the number of students

applying to SUU suffered from serious decline. The

low social recognition of the new name was heldresponsible for that. One of the interviewees told the

researcher about an embarrassing experience of his

in which he was treated as someone from some

negligible institution when he went to another

province to recruit students.

By the end of 1996, the calls for a better name

were voiced through various channels. Senior

faculty members, alumni, the local congress repre-

sentatives, and students wrote to the university

administration and also the Ministry of Education,

asking for a name change. Some people even took

more radical means such as distributing flyers or

brochures on campus. Different rumors about the

issue spread in and outside of the university. Local

media also covered various stories about the naming

issue. To quote one of our interviewees, ‘‘the

naming issue has become the topic of the town.’’

The institutional leaders who planned for the

merger told us they had not anticipated that the

ARTICLE IN PRESS

5In Chinese higher education system, every new academic

program must be approved by Ministry of Education (MOE).

MOE makes the directory of academic programs and majors.




naming of the institution would cause such turmoil

and turbulence. Finally, the issue attracted the

attention from the central government that exerted

enormous pressure on the institution to come up

with a solution. But the institution eventually failed

to provide a solution that could satisfy all. At theirwits’ end, in July 1997 the Party Committee of SUU

decided to hand the issue over to the Ministry of

Education and accept whatever name it designated.

With the direct intervention from then Vice

Premiere, Mr. Li Lanqing, a decision was finally

made: the name of the institution was to be changed

from Sichuan Union University to Sichuan Uni-

versity. He stressed that naming the institution

Sichuan University was by no means simply

adopting the name of the pre-merger Sichuan

University (SCU). Instead, the new name not only

reflected the respect to the history of both institu-tions, it also implied an extension of the historical

missions of both institutions. By shifting the

responsibility to the central supervising body, which

had absolute power over the institution but at the

same time was considered to be an impartial third

party in the dispute, opposition from either of the

pre-merger institutions was expected to subdue.

Despite that people from CUST still felt it to be a

loss on their side. Many considered the institution’s

decision later to build the central administration

building and the main entrance on the originalCUST campus as a means to make up for that loss

for the CUST community.

The dispute about naming in the merger of SCU

and CUST has attracted wide publicity nationwide.

It seriously impeded the integration of the two

institutions. Nearly all the interviewees agreed that

the dispute had cost the new institution 4 years of

time, in which the institution did not make any

substantial progress in integration. Quite a number

of interviewees believed that the education quality

of the new institution actually declined and its

management deteriorated in those 4 years. The

dispute around the name and the resentment it

aroused among employees on both sides were often

cited as primarily responsible for this. When

reflecting upon this, one interviewee said, ‘‘This is

a heavy price we paid. Four years for such a small

matter!’’ This, however, sounds like some hindsight.

The decision makers in both institutions had never

anticipated the degree of turmoil that could be

caused by the naming issue. Even if they had, it is

doubtful whether this could have been handled

differently. After all, naming an organization,

especially a cultural organization like a university,

is by no means a ‘‘small’’ matter.

The turbulence about naming the new institution

in the merger of SCU and CUST provided a

valuable lesson to many Chinese institutions that

were involved in mergers after them. Premier Linoted at a conference on higher education that the

naming issue must be solved before any merger

started. In 1998, when the first law on Higher

Education in China was drafted, it stipulated that

naming colleges and universities was essentially a

right of the government. Many believed that the

experience of SCU and CUST merger directly

precipitated the formulation of this stipulation.

4.3.3. Balancing the power

One of the most challenging tasks the leaders of

the new institution faced was how to balance the

power between the two pre-merger institutions in a

way that both sides would deem as fair and

impartial. The two institutions’ being comparable

in size and capacity was identified as a major factor

that made this task extremely difficult. As one

participant described,

If a small institution merges with a bigger one, in

most cases the merger will be dominated by the

larger institution. This might be unfair to the

smaller institution, but the whole process wouldprobably be much easier. The situation between

SCU and CUST was that both were afraid that

the process would be dominated by the other and

were therefore not willing to make the first step

to compromise.

The most intense fight for power was seen in the

appointment of high-level administrators. Trying to

avoid the accusation of favoring either side, a

balanced strategy was adopted in the process. The

strategy put more emphasis on balancing two sides

rather than on selecting the best candidate for acertain position. Thus, the President of the CUST

became the President of the new institution and the

Party Secretary of SCU became the institution’s

new Party Secretary. Take the example of the

appointment of senior administrators for financial

affairs. If the Vice President for financial affairs was

from SCU, then the Director for the office of

finance must be from CUST,6 and two of the three

Associate Directors would be from SCU, the other

ARTICLE IN PRESS

6The Director of the Office for Finance is immediately under

the Vice President for financial affairs.




one from CUST. This rigid arrangement appeared

to be fair to both sides, but at the cost of

administrative effectiveness. As it stressed the

balance of the two sides, it often failed to place

the best candidate in a position. To make matters

worse, the subordinate staff members were alsodivided along the old institutional lines. Thus rather

than promoting integration of the two institutions,

this arrangement actually enhanced the ‘‘we vs.

they’’ mentality that is common in organizational

mergers (Astrachan, 1990; Blake and Mouton,

1985). It made cooperation and coordination more

difficult. It is interesting to notice that when

reflecting upon such an arrangement, many of the

institutional leaders interviewed considered it to be

unwise. Yet, as one of the interviewees stated,

At the time all of us knew that was kind of silly.But under the Chinese circumstances, what else

could you do to satisfy both sides? There must be

some kind of balance. I think the resulting

inefficiencies can be considered to be the price

that the reform must pay.

Such an arrangement remained in effect until

1998, when the new president launched another

round of reorganization, trying to break the old

institutional division.

4.3.4. Funding the mergerMany mergers aimed at cost-saving. Yet research

on higher education mergers reveals that mergers

actually incur considerable costs (Skodvin, 1999).

Without extra funding support, it is difficult to

implement many of the merger plans. That was true

in the merger of CUST and SCU. For example, the

cost of staff development was necessary as a result

of the merger. A heavy investment was also needed

in order to integrate IT systems and networks in

academic, library and administrative areas. There

were also substantial costs involved in bringing

departmental staff together. Yet government sup-

port to the new SU did not increase as was expected.

In the 3 years following the merger, the institution

only obtained an extra 8 million yuan (about US$ 1

million) from the government, 5 million of which

was spent on the building of a campus network.

Moreover, when the central government allocated

resources among institutions, the new SU was

treated as one institution and had therefore only

one share instead of two as it was before the merger.

The overall resources allocated to the new institu-

tion suffered from serious decline from the pre-

merger years. As a result, not only many of the

merger plans could not be implemented, even the

daily operation of the new institution was affected.

As one of the informants commented, ‘‘We were in

fact forced to make meals without rice.’’

In August 1997, the then Minister of Education,Mr. Zhu Kaixuan made a visit to the new SU. He

was shocked by the predicament of the institution.

Mr. Zhu was said to tell the leaders of SUU,

In the merger of Sichuan Union University, the

state owed a huge debt to the institution. I

promise that after I return to Beijing I will try all

means to seek funding for the institution, at least

tens of millions, and to give you the support you

need for the merger!

Zhu’s words cheered up the community and more

importantly he did fulfill his promise. Since Decem-ber 1997, the central and provincial government has

provided a substantial amount of funding to the

new institution. Many of the projects planned

before the merger were finally brought on the

institutional agenda.

4.3.5. Employees’ reaction

Previous research has generally shown that

employees react unfavorably to mergers, a result

often cited to explain why many mergers are not

successful (Cannon, 1983; Hay and Fourie, 2002;Hay et al., 2001). Why are employees’ reactions to

mergers so negative? First, research from a psycho-

logical perspective has identified such problems as

‘‘we vs. they’’ mentality, condescending attitudes,

distrust, tension, and hostility(Astrachan, 1990).

Second, mergers can severely affect career plans of

employees by forcing layoffs, relocation, and the

loss of individual influence. Finally, culture clashes

are not uncommon during the integration process of

two organizations with established routines each.

All these reasons can be used to account for the

negative employees’ reaction to the merger between

SCU and CUST. In this particular case, however,

one additional factor also contributed to the

negative reaction of employees, namely, the lack

of employees’ participation in the decision-making

process. The merger process was characterized by

too many ‘‘top-down’’ processes and too few

‘‘bottom-up’’ processes. Faculty and staff had no

part in making the decision to merge. In implement-

ing the merger plan, although the decision-makers

did from time to time seek opinions and suggestions

from the community, yet under the governance

ARTICLE IN PRESS




structure of the university, to what extent were the

opinions from the bottom taken into consideration

in the decision-making process depended largely on

the leadership style of individual leaders. There was

no formal channel for those opinions to be

expressed collectively so as to be reflected ininstitutional polices.

The lack of transparency in the decision-making

process and the poor communication between the

institutional leaders and the community were no

doubt detrimental to the integration process. In the

first 4 years following the merger, uncertainties and

disruptive changes resulted in considerable resis-

tance to change. Many people were not satisfied

with the process of merger and were disappointed

by its outcomes. Doubts about the viability of the

new institution were widespread. Senior employees

tended to express their opposition and resistance ina more direct way by writing to the supervising

agencies or arguing with the university leaders. A

story repeatedly told by the interviewees is about

how one of the most senior faculty members

allegedly dashed into the office of the new Dean

of Arts and Philosophy and started the conversation

by saying ‘‘You know nothing about arts’’. How-

ever most people resorted to more passive means to

express their dissatisfactions (e.g. disobedience,

shirking, low commitment to the new institution,

or distrust in top management). As a result of thesenegative feelings and reactions, implementation of

the merger could not be accomplished as planned

and integration was extremely slow.

By the end of 1997, 4 years since the merger was

announced, it seemed that the process had been

disappointing and frustrating to most people

involved. All the participants in our study agreed

that the merger had been a total mess during those 4

years. None of the expected synergies had been

realized. The reputation of the university suffered

enormously as was reflected in the declining

numbers of applications. The institutional leaders

were too occupied in dealing with various conflicts

brought about by the merger that little attention

was paid to improve the quality of teaching and

research. Some of the participants believed that the

educational quality actually declined in those 4

years.

However, all our interviewees agreed that late

1997 and early1998 was a turning point in the

merger process because of two new developments:

(1) in December the naming issue was finally settled

with the intervention from the central government;

and (2) in January 1998, the Ministry of Education

announced the appointment of a new President to

the university. Mr. Lu Tiecheng, the new President,

was also appointed as Party Secretary of the

institution. Mr. Lu had worked in both the

provincial government and the central governmentbefore he took up this position. Since he was

someone from the ‘‘outside’’ and appointed from

the ‘‘above,’’ he was expected to be neutral and

therefore fair. The community accepted Lu’s leader-

ship soon after he took office. A new round of

reforms and reorganizations aimed at the further

integrating two institutions were initiated by Mr.

Lu. With more funding support from the govern-

ment, these initiatives produced positive outcomes

instantly.

4.4. Merger outcomes

The outcomes of higher education mergers are

usually examined along two major dimensions:

administrative, managerial efficiency and effective-

ness, and academic outcomes. This study will also

examine the outcomes of the SU merger from these

two perspectives.

4.4.1. Administrative, managerial efficiency and

effectiveness

Cost efficiency is one important basis for creatinglarger institutions (Rowley, 1997). However, no

effective measures have been developed to assess

this dimension of merger outcome. This is especially

true in Chinese higher education institutions where

decisions are usually not made based on solid data.

In this particular case, it is extremely difficult to

measure the cost-efficiency of the institution. For

one thing, no such data are available to measure the

administrative cost prior to and after the merger.

For another, a number of other dramatic changes

took place in the late 1990s as a result of change in

higher education policies in China, which makes it

difficult to evaluate the effects of merger separately

and make valid conclusions. However as has been

described in the previous sections, this objective of

cost-efficiency was clearly not borne out in practice

before 1998. The situation after 1998 is less clear

since no data are available.

On the other hand, the administrative effective-

ness of SU was called into question by many of the

people the researchers interviewed either formally or

informally. The academic deans complained about

the lack of autonomy at the school level. They

ARTICLE IN PRESS




hoped more power would be devolved to schools.

Particularly, the budgeting mechanism was consid-

ered too centralized to provide incentives and

flexibility to schools. They suggested that creative

modes of governance and management be devel-

oped as the post-merger institution was too big forthe old governance and management structure to be

effective. Again merger is not solely responsible for

these problems. For instance, the drastic expansion

of the enrollment between 1999 and 2002 to a large

extent exacerbated this problem.

4.4.2. Academic outcomes

One of the objectives of mergers is to create larger

and better academic institutions in terms of both

teaching and research. In this respect, results from

this case study are much more positive. The mostsignificant benefit of the merger is the enhanced

academic portfolio. At SU, the integration of

academic structure is now accomplished to a large

extent, although not without tensions and conflicts

in the process. The new institution now gives more

breadth and choice to their students. There are clear

indications that the merger has improved the

academic position of the new institution, especially

in regard to the breadth of different education.7

However, most of the interviewees expressed their

regret about the 4 years of turmoil and turbulence

from 1994 to 1997. For some this was too dear aprice paid and they wished the transition period

could have been shorter. But others argued that the

cost was inevitable given the circumstances—No

better way could have been found to deal with the

tensions, conflicts, and difficulties encountered in

the process. Could the result have been better?

There is no way to verify this. Besides, as one of my

interviewees commented,

It is still too early to evaluate and assess the

outcomes of the merger. The long-term effect of

the merger is still to be seen. The next generation

or perhaps the generation after will be in a better

position to make any judgment.

5. Conclusions

This paper examines why and how a merger

happened in Chinese higher education. It shows that

the decision to merge was driven by a variety of

external factors and internal factors. Not surpris-ingly, the merger was a highly complex process

fraught with conflicts and controversies. Perhaps

the most prominent issue emerging in this case is

about the difficulty of building a unified identity for

the new institution as was reflected in the con-

troversies and fights about the name of the new

institution. This issue aroused a great deal of

negative feelings and reactions in the planning and

implementation of the merger and seriously im-

peded the progress of the merger in the first several

years.

At the time when the interviews were conducted,it was almost 10 years since the merger was first

announced. Sichuan University (SU) was involved

in another merger in the year 2000, this time with

one of the best medical universities in the region.

However, even with the second merger SU is no

longer the largest university in the country. A

number of mega-universities emerged as a result of

the merger wave in the late 1990s. Despite the

detours SCU and CUST had taken, when asked

about whether they now think merger was the right

decision, all of the participants of my studyanswered positively. They said that given the trend

of Chinese higher education in the late 1990s, SCU

and CUST would have had to merge anyway.

Compared with other merged universities that are

still struggling with integration, SU has gone one

step ahead and is now in a better shape to reap the

benefits that merger is expected to bring about.

Acknowledgments

The authors would like to thank Mr. ChangwenZhao, Mr. Cheng Zeng and Ms. Xiaoyan Wan in

the Development Research Center at Sichuan

University for their generous help in our field work.

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7According to the ranking by a non-government research

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its comprehensive capacity. For contrast, Southwest Jiaotong

University and University of Electronic Sciences and Technology,

two of the peer institutions in the same region, are ranked as No.

52 and 56, respectively.




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