Abstract
Internationally and domestically, depopulation and the decrease of student enrollment caused are becoming an issue of interest in higher education, especially in regions such as east Europe, south Europe, and East Asia. This article analyzes strategies of Japanese universities to tackle depopulation issues in Japan. The 18-year-old bracket population has been halved for the last quarter century, and steep depopulation currently occurs in Japan. Such demographic changes strongly affect the Japanese higher education system. Through document and secondary data analysis, five major strategies were identified: subject diversification; merger (vertical and/or horizontal integration); campus relocation; take-over by local authorities; and closure. From these findings, a framework to describe the strategic decision-making of Japanese universities that consisted of environmentally determined exogenous factors, endogenous factors of university, and strategic options in managing the contraction of student enrollment was proposed. Finally implications on each strategy were discussed both in domestic and international contexts.
Keywords
Introduction
Depopulation and higher education
This article is an early attempt to explore the strategy formation and implementation of Japanese private universities to tackle depopulation issues in Japan. The demography of a country affects various aspects of the society, economy, and culture. Among them, the education system is influenced by the size of the population and the young population. In particular, depopulation and the contraction of the proportion of the youth population in some developed countries are becoming crucial issues for their higher education systems. For example, over 40% of the world’s population lives in nations with sub-replacement fertility (defined as any rate below 2.1 children per woman), which is a common feature among the most prosperous countries (Yun, 2012). The population is already declining in countries such as China, Brazil, Germany, Italy, Singapore, Hong Kong, Hungary, Latvia, Lithuania, Bulgaria, Moldova, Estonia, Kazakhstan, Georgia, Armenia, Bosnia, Croatia, Slovenia, Ukraine, and Belarus, and many more are on the brink (Yun, 2012). With a few exceptions such as Ireland and Israel, the youth population of almost all OECD countries has been decreasing since the 1990s (OECD, 2018a). These demographic trends will have a number of implications for government and private spending on higher education as well as pensions, health care, and in general for economic growth and welfare (OECD, 2018a).
This article considers recent Japanese demographic changes from the mild increase to the decrease of population and its effects on the higher education system, mainly focusing on Japanese private universities. It explores how higher education institutions (HEIs) strategically manage such a changing demography.
The depopulation of society is a fairly new issue in higher education research (Inaba, 2016). Japan is one of the fastest-depopulating developed countries because of low rates of fertility, migration, and an ageing society. The population under 18 years old has decreased by nearly half since the 1990s. Despite the increase of participation rates in higher education, the decline of student enrollment is recognized as a serious issue in Japan. Closures of universities have increased since the 2000s, although the number is still small. The current literature dealing with the relationships between depopulation and actual strategies of HEIs in Japan has significant limits.
In this research, Japanese private universities will be investigated. More than 70% of Japanese universities are private, and when compared with Japanese public universities, the private universities are affected by the influence of depopulation. This article focuses on depopulation in Japan and its responses by Japanese private universities. This research aims to obtain implications of the strategies these universities generate and implement against depopulation to fill the above theoretical gap.
Research method and article outline
This study employed an exploratory research method through document review to find strategies of Japanese private universities to overcome the contraction of applicants. As this is early stage research to broadly identify depopulation-related issues and the strategies of HEIs, this research thoroughly relied on multiple sources of secondary data. Qualitative and statistical documents were collected, reviewed, and analyzed. Data provided by the Ministry of Education, Culture, Sports, Science and Technology of Japan (MEXT), other governmental organizations, non-governmental organizations, and universities were used. Newspapers and journal articles were collected through systematic keyword searches using multiple databases (mainly Asahi Shimbun Kikuzo II Visual, Yomiuri Shimbun Yomidas, and Nikkei Telecom), as well as other related literature and data.
This article’s structure is as follows. In the next section, the current depopulation in Japan will be overviewed, followed by an explanation of the structure of the Japanese higher education system and its recent demographic challenges. Survival strategies of Japanese private universities are then considered and analyzed, and in the final section, theoretical and practical implications obtained from these analyses are discussed.
Depopulation in Japan
In 2010, the Japanese population was at one of its peaks (128,057,352 people), making Japan the world’s tenth-most populous country at that time. The decline of the Japanese population started in 2011. Among the OECD countries, Japan had the smallest proportion (12.7%) of youth population (under the age of 15) and the largest proportion (26.7%) of elderly population (over the age of 65) in 2015 (Cabinet Office, 2016; OECD, 2016a). Japan became the first country to be categorized as a hyper-aged society among OECD countries. 1 Table 1 describes the historical changes and forecasts of the future Japanese youth, working-age, and elderly population (Cabinet Office, 2016).
Historical change in and future estimates of Japanese youth, working-age and elderly population.
Source: Cabinet Office, 2016.
Table 1 represents how Japanese society has gradually challenged by “low birthrates and longevity” (shoshi koreika). The youth population decreased from 35.4% in 1950 to 12.7% in 2015 and is expected to decrease to 9.1% in 2060, while the elderly population increased from 4.9% in 1950 to 26.7% in 2015, and is expected to increase to 39.9% in 2060 (Cabinet Office, 2016). The decline of the Japanese population will be accelerated in the future. It is expected that, on average, the population will decline by approximately 700,000 people every year between 2020 and 2024; 800,000 between 2025 and 2029; 900,000 between 2030 and 2034; and one million per annum thereafter (Cabinet Office, 2016).
Migration has not had much impact on the Japanese population. As Japan has one of the most strict immigration policies, and there is a strong language barrier, the number of immigrants to Japan has been very limited. The aggregation of net migration to Japan between 1990 and 2016 was only 24,000 (Statistics Bureau of Japan, 2018). Immigration does not and will not have much impact on any increase in the Japanese population if the government’s current immigration policies are unchanged.
Incoming international students increase the demand for higher education. However, alike with immigration, the number of international students have increased slowly and its impact is limited. The proportion of international students gradually increased from 0.47% in 1983 to 3.59% in 2003 (Ota, 2003). In 2017, the number of international students enrolled in higher education was 188,384, yet the proportion of international students was still 6.20% (MEXT, 2018; Nihon Gakusei Shien Kikō, 2017).
The 18-year-old bracket population decreased from 2.05 million at its recent peak in 1992, to 1.20 million in 2017. From 2018, the 18-year-old bracket population is expected to resume its decline from 1.18 million in 2018 to 1.04 million in 2031. If participation rates to universities do not increase during this period, the number of university enrollees will decline in 2018 for the first time and will continue to decline from 650,000 in 2018 to 480,000 in 2031 (Harada, 2015). This is known as the “2018 problem” in Japan, and is one of the major effects of the decline of the Japanese population on higher education. From these aspects, Japan is an ideal case for analyzing the strategies of universities for depopulation. The following presents detailed Japanese cases.
The Japanese higher education system
Universities, junior colleges, technical colleges, and specialized training colleges make up the Japanese higher education system. In Japan, participation rates in higher education have increased consistently over time. There are 53.3% participating in universities, however almost 81.5% of the 18-year-old bracket population participates in higher education in Japan (MEXT, 2018). 2 The higher education market is regarded as almost saturated.
MEXT has exercised overwhelming enforcements and influences over the Japanese HEIs, and has the statutory power to charter universities and junior colleges as established by local governments and private educational legal entities. Financially, MEXT controls universities with considerable amounts of government subsidies (un-eihi kohukin for national universities and keijohi hojokin for private universities), as well as introducing and enforcing various legislation and new policies.
The Japanese university education system was marketized significantly between 1991 and 2004 (Amano, 1997; Kariya, 2013). There are 782 universities: 179 public (86 national and 93 public) and 603 private universities in Japan (MEXT, 2018); 77.1% are private, and 73.6% of university students go to private universities (MEXT, 2018).
Public/private university dualism can characterize the Japanese university education system. This is reinforced by government subsidies (heavily biased toward public universities), and its general reputation is based on the hensachi (standardized rank score) system. 3 Public financial support affects the quality of education and consequently the reputation of universities, which heavily influences applicants’ perceptions on their choice of universities. Hensachi also influences hierarchy formation in both the public and private university sectors.
The dual structure of public and private universities can be clearly observed both nationally and locally. Competing with public universities, private universities in Japan need to secure unique niches. The lowest-ranked private universities in Japan, commonly known as “F-rank universities,” accepts applicants automatically, and are in danger of collapse.
Japanese private higher education faces significant oversupply. Nihon Shiritsug akkō Kyōsai Jigyōdan (2015) surveyed the enrollment of private universities in 2015, and found that 250 from 579 universities surveyed (43.2%) did not fill their governmentally allocated enrollment quotas. In Japan, if these quotas are not significantly fulfilled, the amount of subsidies will be decreased in addition to the decrease of tuition fees. This proportion of failure in achieving the quotas has been increasing for 20 years, with 18 out of 410 (4.4%) in 1995; 131 out of 471 (27.8%) in 2000; 160 out of 542 (29.5%) in 2005; and 218 out of 569 (38.3%) in 2010 (Nihon Shiritsu Gakkō Kyōsai Jigyōdan, 2015).
The same survey also revealed that in 2015, all universities with capacities of less than 800 students did not fill their enrollment quotas, while most medium-sized (4000–8000 students) and large-sized (more than 8000 students) universities did (Nihon Shiritsug akkō Kyōsai Jigyōdan, 2015). Therefore small-sized universities (less than 4000 students), especially very small universities, had difficulties in procuring sufficient numbers of students to fill their enrollment quota.
Depopulation occurs unevenly in Japan. Population in rural areas decreases faster than that of urban areas, which decreases gently, or even increases by incoming flows from rural areas. Such rural–urban demographic imbalances affect the popularity of universities by their location. Generally speaking, regional distribution in metropolis areas saw most universities fill their governmentally allocated enrollment quotas (Miyagi, Tokyo, Kanagawa, Saitama, Aichi, Kyoto, Osaka, and Fukuoka prefectures; Nihon Shiritsug akkō Kyōsai Jigyōdan, 2015), while rural areas in the Hokkaido, Tohoku, Chugoku, Shikoku, and Kyushu regions suffered from low enrollment. Although there have been a few exceptions, there is a clear tendency that private universities in large cities and urban areas hold higher hensachi, where those in rural areas comply with lower hensachi.
Enrollment rate is heavily affected by each university’s hensachi. According to Maita (2014) and Yomiuri Shimbun Kyōikubu (2014), there was no university out of 487 surveyed (at which the hensachi was over 60) that did not fill their governmentally allocated enrollment quotas in 2014. However, five universities of which the hensachi were between 50 and 59, 48 universities between 40 and 49, and 170 universities between 30 and 39 did not fill their governmentally allocated enrollment quotas.
Private universities were seen to trail public universities in student popularity. Literature shows that, among universities in Japan, vulnerable universities to population decline are (a) small-sized, (b) private universities, (c) in rural areas, and (d) are of low hensachi. These universities are losing students rapidly and face challenges to their survival.
A study on recent student enrollment and revenues of private universities indicates significant challenges of depopulation to the Japanese higher education system. FACTA magazine (2016) investigated the fulfillment rate of governmentally allocated enrollment quotas of Japanese private universities in 2015 (regarding public universities, few universities failed to fulfill these). Among 79 of 606 private universities (13.0%) at which the fulfillment rate of quotas was under 70% (FACTA, 2016), 77 institutions of 79 were small-sized and most were located in suburban or rural areas. Their hensachi were low, and they struggled to establish the good reputation required to attract applicants, including those from overseas (FACTA, 2016).
The contraction of student enrollment affects the main revenues of private universities. For example, in 2013, 76.9% on average of the total revenues of private universities was from student tuition fees (MEXT, 2015). According to MEXT (2015), the financial stability of private universities in Japan depends on the size and location. Table 2 illustrates the relations between size, location, and finance in Japanese private universities. 4
Size, location, and finance in Japanese private universities.
Source: MEXT, 2015.
While there is little literature that analyzes actual relationships between the fulfillment rate of the governmentally allocated enrollment quotas and the financial stability of HEIs in Japan, these data do show the vulnerability of small- and medium-sized universities in rural areas.
Findings on strategies for the survival of Japanese private universities
From the review of quantitative data on the enrollment of university students, the effects of depopulation have had various degrees of impacts on HEIs by foundation (public/private), location, size, and so on. Considering further future population decline, private rather than public universities are especially vulnerable, particularly small-sized and rurally located institutions.
This section presents findings from document reviews on how Japanese private universities act to manage the decrease of youth population. What are the strategies for universities? Are there any differences in strategic options implemented by universities? This section explores their strategies.
Diversification of subjects
To continue attracting students, universities have created new faculties and departments. Kawai Juku, a Japanese cram school mainly specializing in university entrance exam preparation, surveyed names of faculties and departments of Japanese universities based on the School Basic Survey by MEXT. According to this survey, there were 59 types of faculties/departments in 1970 (Asahi Shimbun, August 30, 2015). The names of faculties/departments gradually increased until the early 1990s (69 in 1975; 78 in 1980; 80 in 1985; 97 in 1990). Since the University Establishment Standards were relaxed in 1991, they have significantly increased again, and the 18-year-old population peaked in 1992 (145 in 1995; 235 in 2000; 360 in 2005; 435 in 2010; and 464 in 2015; Asahi Shimbun, August 30, 2015). 5
New faculties/departments were created to cultivate new niche markets, and have contributed to increased participation rate at universities. Although the 18-year-old population has been in decline since 1992, and government quotas have remained equal to the number of applicants since 2009, such diversification enabled the numbers of student enrollments to decrease mildly when compared with the decrease of the 18-year-old bracket population.
This diversification has enabled universities to respond to the rapidly changing needs of the labor market, and therefore motivates potential students who intend to look for emerging jobs. Such diversification has also enabled universities to avoid over-competition against other universities that have similar faculties/departments as triggered by the relaxation of the University Establishment Standards, and this is also an effective option in managing competition in a depopulating society.
However, some universities have failed to create faculties/departments that could attract a sufficient number of applicants. For example, the Faculty of Letters, Sonoda Women’s University, located in an urban area in Hyogo Prefecture, was forced to create and scrap a faculty three times (the Faculty of International Studies, the Faculty of Future Design, then the Faculty of Human Education) over 20 years after failing to attract applicants (Asahi Shimbun, August 30, 2015). This example shows that it is not always easy to identify and enter a new niche market that yields enough potential applicants. Rather, there is always the risk of obtaining fewer students than expected by a mal-segmentation of the market.
Mergers
Although the number is limited, the merger of universities and/or schools is one of the increasing survival strategies for HEIs in a population declining society.
Vertical integration
Japanese universities have recently started to stress the connectivity or cooperation between senior high school and university (kodai setsuzoku, or kodai renkei). Vertical integration refers to lower education institutions (such as nurseries, elementary institutions, secondary institutions, or specialized training colleges) that are merged with, or grouped with, universities. 6 MEXT (2016) reported that there were three cases where nurseries merged with universities, 28 cases for secondary institutions, and 17 cases for specialized training colleges.
Lower education institutions have also suffered from the decline in youth population, resulting in some cases of mergers as a result. 7 In Japan, private universities tend to give preference to pupils from high schools within their own group when pupils apply to those universities. According to Iwasaki (2009), such mergers aim to secure sufficient students by attracting potential students from merged high schools. Merging high schools with private universities with high status can utilize the relationship with the university to attract applicants. For similar reasons, the merging of specialized training colleges with universities has been implemented.
Horizontal integration
In Japan, the merger of universities was historically rare, with only three cases between 1947 and 2000. Since the early 2000s, the number of merger cases have gradually increased (see Table 3). Mergers have been implemented between national universities, prefectural universities, municipal universities, or private universities only, and no hybrid mergers have been observed so far.
Mergers of universities since 2000.
Source: Asahi Shimbun and Nikkei, various dates; various university websites.
Horizontal integration has various strategic goals, and Japan recognizes the following goals:
Expansion and cost reduction.
Downsizing and cost reduction.
Restructuring and diversification.
Expansion and cost reduction
In terms of public university mergers, there were 13 between national universities and seven between prefectural universities between 2000 and 2013. The mergers of national universities and national universities of medical science (Fukui, Oita, Saga, and so on) typically falls in the expansion and cost reduction category of horizontal integration goals. As shown in Table 3, all mergers occurred with institutions in the same regions. These mergers should yield a reduction of indirect (fixed) costs of operation following the incorporation of public universities at the beginning of the 2000s. Therefore, these mergers were not directly related to strategies for combating the decline of the youth population, although this move will also contribute toward preparedness for the possible future decline of student enrollment.
As for private universities, there have been seven mergers during the same period. Among them, four cases (Osaka International University, Tokai University, Tokyo City University, Tokoha University) were mergers of universities of which owners were of the same school corporation. Alike the cases of public universities, these cases consider aiming for the economization of the indirect costs of operation.
Downsizing and cost reduction
There are also important cases of private university mergers. For Osaka International University for Women with Osaka International University in 2002, their owner (Osaka International School Corporation) had forecasted a decline in the number of applicants to Osaka International University for Women (Nikkei, 23 September 2001). By merging, the corporation intended to scrap unpopular faculties of Osaka International University for Women by downsizing, after integrating with the Osaka International University and attaching its Women’s Junior College to Osaka International University (Nikkei, 23 September 2001; Osaka International University, 2015). Thus, integration enabled the university to update its faculty structure for co-education and to downsize itself to an appropriate institutional size.
Restructuring and diversification
On the contrary, the merger of Kyoritsu College of Pharmacy (Tokyo) with Keio University (Tokyo) in 2008 was a case of expansion. Keio University, with approximately 28,000 students, is one of Japan’s top private universities, but lacked any faculty related to pharmaceutical sciences. It intended to generate such a faculty to obtain synergy with the School of Medicine and the Faculty of Nursing and Medical Care (Asahi Shimbun, November 21, 2006). Kyoritsu College of Pharmacy, with a good reputation in pharmaceutical sciences and located nearby Keio University with approximately 800 students, needed to manage increasing competition with other colleges of pharmacy in Japan (Asahi Shimbun, November 21, 2006). This merger provided Keio University with the capable faculty staff of Kyoritsu College of Pharmacy, and Kyoritsu staff may utilize various resources of Keio University including its brand name. By integrating Kyoritsu as a part of Keio University, both Keio University and its new faculty of pharmacy (the former Kyoritsu College of Pharmacy) have established a stronger position in the higher education market.
Similar cases have been found, such as the merger of Kwansei Gakuin University (Nishinomiya City) and Seiwa University (Nishinomiya City, including Seiwa Women’s Junior College) in 2009 to create a new faculty of education with the capable staff of Seiwa (Asahi Shimbun, January 23, 2006; Kwansei Gakuin University, 2007).
From these cases, some characteristic features of Japanese university mergers can be stated. Mergers have occurred so far at universities that:
are geographically co-located (all cases of public universities and some private universities (Keio University and Kwansei Gakuin University);
have the same owner school corporation (Osaka International University and Tokai University), or of which owner school corporations share similar backgrounds (all public universities, Kwansei Gakuin University, and Seiwa University);
are a large top-ranking private university seeking the possibility of further diversification, expansion, and/or restructuring, and which are relatively small universities or colleges holding a specific niche market (Keio University and Kwansei Gakuin University).
Geographical proximity functions as a crucial factor for horizontal integration if the goal is to economize operation costs. The public universities share very similar administrative structure and financial structures, which help create a smooth merger. In the cases of Osaka International University and Tokai University, mergers were of branch universities, which shared the common university values. Kwansei Gakuin University and Seiwa University had been owned by school corporations with a Methodist background, and such common backgrounds encourage universities to seek and merge with particular parties with similar backgrounds. The merging of universities are all top-ranking, large-scale private universities, and have already established appealing brand names before seeking the possibility of a merger.
Campus relocation
Large private universities with enough financial resources relocate their suburban campuses to more convenient urban areas. In the early 1960s, creating new university campuses in dense population areas (Tokyo, Osaka, Nagoya, and surrounding metropolitan areas) was severely restricted by law (Kōjōtō Seigen Hō: Restriction of Factories and Other Facilities Act). Large private universities needing to expand their faculties to cope with an increase of students in those areas were forced to create new campuses in suburban areas. These universities tended to teach first- and second-year students at the new suburban campuses, and teach third- and fourth-year students at the original urban campuses. A small number of universities relocated to suburban areas.
This law, which forced universities to divide students and university staff in two or more places and to commute, was lifted in 2002 due to the decreased pressure of over-crowding in the urban areas. Since then, large private universities have started to move back to their original campuses or to newly purchased urban campuses. They have expanded their capacity by building high-story buildings on the original campuses, or by purchasing neighboring sites that were originally factory or industrial sites. In the Tokyo metropolitan area, the number of governmentally quotas for universities increased from approximately 319,000 in 2000 to approximately 351,000 in 2009 (a 10.0% rise; Nochi, 2010).
The aims of this campus relocation for universities are as follows (Kurabe, 2015):
As mentioned above, the Restriction of Factories and Other Facilities Act caused the new development of suburban campuses, and most universities had to develop multiple campuses. This required universities to divide students in multiple locations, and such redundancy brought inconvenience to both students and staff.
More importantly, such relocation contributes to students’ satisfaction. Students tend to prefer universities with good commuting access in urban areas, as there are more part-time job opportunities for students, along with opportunities for company internships and job interviews. 8
The campus relocation of Toyo University is an early successful case (Nochi, 2010). Toyo University built the Kawagoe Campus in Saitama Prefecture in 1961, the Asaka Campus (also in Saitama Prefecture) in 1977, and the Itakura Campus in 1997 in the Gunma Prefecture. First- and second-year students of the Faculties of Letters, Economics, Business Administration, Law, and Sociology studied at the Asaka Campus then they moved to the Hakusan Campus in their third and fourth years. In 2005, these faculties at the Asaka Campus integrated into the Hakusan Campus (a new faculty, the Faculty of Human Life Design was created at Asaka Campus in 2005). In 2009, Toyo University expanded the Hakusan Campus (Hakusan Second Campus) and moved the Faculty of Regional Development Studies from the Itakura Campus. Nochi (2010) compared the number of applicants of the above faculties in 2005 and 2009, and found the number of applicants to all faculties increased, aside from the Faculty of Letters.
According to Eguchi (2014), campus relocation attracts more students, thus improving applicants’ academic quality. As shown in Table 4, Eguchi (2014) investigated the change in the hensachi of universities with and without relocation in 2004 and 2013 in the Nagoya area. Eguchi selected five economic and business universities with similar hensachi values in 2004. Compared with universities without relocation, those with relocation featured significantly improved hensachi.
Comparison of hensachi of universities with and without relocation.
Source: Eguchi, 2013: 48.
Although it requires a huge amount of investment, positive effects of relocation have been widely recognized in Japan. 9 The relocation of universities derives from the government’s policy of site restriction in metropolitan areas of increasing population in the 1960s. Therefore, campus relocation may be a unique strategy to Japan among higher education in developed countries. It is still one of the major strategies to Japanese universities, particularly those originating in metropolitan areas.
Take-over by local authorities
Universities in rural areas in Japan are generally small (less than 4000 students) or medium-sized (4000–8000 students), reflecting different higher education markets. Among them, a number of private universities or school corporations were invited by local authorities to operate private universities in rural areas for regional economic development or regeneration purposes. In such areas, the market for higher education is not always large enough for sustainable operation, in a period of depopulation for example, and a considerable number of universities failed to obtain a sufficient number of students (Nihon Shiritsu Gakkō Kyōsai Jigyōdan, 2015). In these cases, local authorities take over the sponsorship of those private universities.
Minnesota State University in Akita
The Minnesota State University in Akita was a branch of the Minnesota State Colleges and Universities System, established in 1990 by the invitation of Yuwa Town Office (now Akita City Office), Akita Prefecture. Yuwa Town’s population in 2005 was approximately 7800, located in a typical rural area in Japan. Utilizing the investment of JPY3.2 billion from Yuwa Town, a private school corporation was established and operated this branch in cooperation with the Minnesota State Colleges and Universities System. The Minnesota State University could only achieve its governmentally allocated enrollment quota (250 per year) in 1990, and soon suffered from financial deficit (Torii, 2003). In 1999, the cumulative deficit increased to JPY430 million, and the university decided to close in 2003 (Mock, 2005; Torii, 2003).
Minnesota State University was then indirectly taken over by a public university, Akita International University, as established by the Akita Prefecture with full university status (Asahi Shimbun, May 7, 2003; Mock, 2005). 10 Akita International University started its operation in 2004, and with its innovative curriculum and well-developed liberal arts education, it has become a top-ranking public university.
Kochi University of Technology
Kochi University of Technology was a private university established in 1997 on the initiative of the Kochi Prefectural Office, with an investment of JPY26.8 billion (Asahi Shimbun, June 23, 2008). Kochi is the third-lowest populated prefecture in Japan. As there has been no higher education institution teaching engineering in Kochi, the Kochi University of Technology was established as a public-built and private-operated (kōsetsu min-ei) university to fill this gap and create a knowledge base in engineering. The university had failed to achieve its government quota since 2006 until becoming a public university in 2009. As a result, Kochi University of Technology could gain public university status which is regarded more highly than that of private universities, and could reduce its annual tuition fee charges from approximately JPY1.24 million to approximately JPY500,000 in total (Asahi Shimbun, June 23, 2008). While the government quota was 460 in its first year as a public university, it gained popularity and attracted 5812 applicants, although a significant amount of tax money was injected (Asahi Shimbun, January 31, 2012).
Other cases
This kind of arrangement is observed in rural areas that have suffered from economic under-development or deterioration in Japan. Meio University (Nago City, Okinawa Prefecture) and Nagaoka Institute of Design (Nagaoka City, Niigata Prefecture) were established as public-built and private-operated universities in 1994, becoming public universities in 2010 and 2014 respectively (Asahi Shimbun, December 16, 2011, March 27, 2014). Tottori University of Environmental Studies (Tottori City, Tottori Prefecture) was established as a public-built and private-operated university in 2001, and became a public university in 2012 (Asahi Shimbun, January 31, 2012). Seibi University (Fukuchiyama City, Kyoto Prefecture) was a private university established in 2000, and became a public university in 2016 (Asahi Shimbun, March 23, 2016). Tokyo University of Science, Yamaguchi (Onoda City, Yamaguchi Prefecture) was a private university established in 1995, and became a public university in 2016 (Asahi Shimbun, April 2, 2016). Nagano University (Ueda City, Nagano Prefecture) was a private university established in 1966, and became a public university in 2017 (Asahi Shimbun, April 2, 2017). Other rural private universities (Asahikawa University, Niigata Sangyo University) are also in the process of becoming public universities (Asahi Shimbun, January 24, 2015).
Characteristics of take-over by local authorities
All cases displayed similar trends. The universities were established as private universities in rural or deprived areas on the initiative of, or in cooperation with, local authorities. They suffered from a decrease in student enrollment and had financial deficit. Local authorities, needing universities for the promotion of local education and economic activity, injected tax money to revive the universities. Once the universities became public, they could attract applicants across the country with their public university status and far lower tuition fees.
This strategy seems to be successful so far for the above cases. However, there are limitations, and this strategy can only be applied to a limited number of private universities. First, local authorities need to find good reasons for taxpayers to take over a private university. Second, whether local authorities can spare necessary financial resources for those universities, and whether such financial support will be sustainable in the long term are both crucial issues for this strategy. Third, considering the location of these universities, there is not much possibility to take-over multiple universities in a single region. Fourth, this strategy, like merger strategies, needs to manage the complex transition process from a private university to a public university.
Closures
When other strategic options are not available, universities are forced to close. Table 5 shows Japanese private universities that have been closed since 2000.
Private universities closed down after 2000.
While locations of the closed institutions are various, there are some common features among them. First, they were all small-sized institutions, and aside from St. Thomas University and Souzou Gakuen University, all institutions were single faculty colleges. Thus, once the number of students enrolling decreased, it was difficult for universities to survive. Second, excluding Fukuoka Social Medical Welfare University, Mie Chukyo University, St. Thomas University, and Tohwa University, all other institutions were originally junior colleges and were converted to universities because of the decrease of student enrollment to original junior colleges, but were unable to rectify this issue. They were late-stage participants in a shrinking market, and failed to adapt in the relatively short period of time. Third, their hensachi ranks were very low and there were many competitors in their subject areas. Consequently, they were forced to close.
To summarize, strategies of Japanese private universities in the shrinking higher education market were sought, described, and analyzed, and included:
subject diversification;
mergers – vertical and horizontal integration;
campus relocation;
take-overs by local authorities;
closures.
These strategies were closely related to Japanese higher education policies and pressures from the Japanese higher education market. Subject diversification and campus relocation emerged as the result of the relaxation of the University Establishment Standards in 1991 and the Restriction of Factories and Other Facilities Act in 2002, in addition to the decline in enrollment. Take-over by local authorities emerged mainly as a result of a “boom” in public-built and private-operated universities in the early 2000s, and their subsequent failure. Mergers and closures occurred due to direct pressure from the market. Therefore, what are the implications for managing HEIs in a depopulating society as can be drawn from these findings?
Discussion: implications from Japanese cases
Based on previous findings, this study reveals the following implications.
Strategic decision-making model of Japanese private universities
By regarding Japanese private universities, this study establishes the survival strategies of HEIs in a depopulating society and the various factors related to the strategic decision-making of private universities to manage the contraction of the youth population. These variables are illustrated in Figure 1 as part of the strategic decision-making process.
A model of the strategic decision-making of Japanese private universities.
This model includes the following exogenous factors discussed in the second and third sections:
Public/private university dual structure with hensachi-based evaluation by applicants.
Higher education policies of the Japanese government such as the relaxation of the University Establishment Standards in 1991, which accelerated the marketization of the Japanese higher education system, and the relaxation of the Restriction of Factories and Other Facilities Act in 2002, which triggered the relocation of private universities in the 2000s.
Actual demographic changes.
Universities recognized these factors and responded to the issues of contraction of student enrollment while considering their own endogenous factors such as subjects, size, location, resources available, perceptions of current positions in the higher education market, and future prospects. As described in the fourth section, universities generate different solutions (strategies) to deal with both exogenous and endogenous variables. This model is an early analysis on strategy generation and implementation processes connected with exogenous and endogenous variables.
Student diversification vs. subject diversification
The first major finding concerned the subject diversification of Japanese universities. Vincent-Lancrin (2008) suggested the diversification of student enrollment as a primary strategy to increase student numbers. Target groups for recruitment included: part-time students; international students; older, less “traditional” students; company employees; and retirees.
On the contrary, in this research, such student diversification is not regarded as a major strategy when compared with subject diversification, because student diversification is not seen as creating sufficient new scales in the market. The reasons are as given below.
First, part-time courses are not common in Japan, as full-time students raise part of the necessary funding for their education by taking a part-time job while at university. According to the Benesse Corporation (2008), 63.7% of sample university students had part-time jobs, for 14.3 hours per week on average. Universities have reduced their evening part-time degree courses (nibu) for decades because of declining popularity.
Second, the Japanese government and universities have tried to attract more international students. Despite this, the recent proportion of international students has stagnated at around 6%. The distribution of international students is uneven, and some universities successfully attract them, although the number of such cases is still limited (Nihon Gakusei Shien Kikō, 2017; THE, 2018). Due to this low proportion, most universities still choose subject diversification to squeeze Japanese applicants out rather than gaining overseas students by student diversification.
Third, Japanese universities (excluding professional graduate schools) are not actively trying to attract mature, retired, or non-traditional people. The reasons relate to the characteristics of the Japanese labor market. Many of the top Japanese companies tend to have policies of simultaneous recruitment of new graduates (shinsotsu ikkatsu saiyō) aged between 22 and 24 and life-time employment (shūshin koyō). Thus, when securing a job, graduates can essentially utilize their academic record only once at the first recruitment, as many graduates do not change their companies. If they do, career history rather than academic history is used for reference. Therefore, from the view of employment, Japanese universities heavily rely on the population aged between 18 and 24.
Fourth, Japanese companies put more stress on company-specific knowledge rather than general portable knowledge obtained at school. Thus, they rely on in-house training rather than sending employees to school.
Fifth, retirees, housewives, and other adults tend to prefer studying at privately run further education institutions (such as karuchā sukūru), rather than in university degree courses.
For these reasons, the focus of Japanese universities has been on subject diversification to attract high school graduates. This has been an effective strategic option for Japanese universities so far. Universities can, however, take either student or subject diversification, reflecting the structure of higher education system and endogenous factors.
Vertical and horizontal integration
Existing literature has not critiqued actual merger strategies in detail. One of the findings of this research is that private universities (especially large private universities) implement vertical integration by acquiring secondary education institutions and their school corporations to secure potential applicants from these schools. In many countries, secondary institutions and HEIs have been completely separated, and this tendency of Japanese private universities seems unique. Strategically, this type of integration reduces the pressure of horizontal competition for both higher and secondary institutions. More importantly, this type of integration is particularly suitable in the period of decline of the youth population for large-scale universities that have a well-established “brand name” and need to secure a reasonable number of potential students in advance.
Another result of this research is that it analyzed details of horizontal mergers (horizontal integration) from actual cases in Japan. In merger cases, there were three types of strategic goals:
Expansion and cost reduction.
Downsizing and cost reduction.
Restructuring and diversification.
Among them, (2) and (3) should be emphasized when discussing survival strategies in relation to the contraction of the youth population. In a depopulating society, the merger of HEIs are implemented to improve the quality of teaching with downsizing or restructuring. As in the cases, mergers between a large university with an established reputation and a small university which has strength in a particular niche market segment was found to be effective. Various other types of mergers will also be possible, and mergers between small- and/or medium-sized universities in suburban or rural areas, which have not been found so far, may need particular attention as they will form one of the key survival strategies for those vulnerable universities.
Campus relocation
Another finding concerns campus relocation of Japanese private universities. Campus development or redevelopment, particularly campus relocation to urban areas as a strategy to improve the quality of teaching, research, and geographical access contributes to attracting applicants, and therefore is one of the recent major strategies of Japanese private universities. As observed, such efforts are generally compensated by the increase of applicants and the improvement in reputation (hensachi). This strategy is possible, as most Japanese private universities have rather compact campus sites compared with universities in other developed countries (e.g. most universities in Japan have very limited or no student accommodation on campus). While this strategic option may not be familiar in other countries, demographic change can cause such relocation. In particular, the progress of electronic devices and other technologies may reduce the physical factors affecting relocation, as well as financial expenditure, and therefore may lower the barrier to choosing this strategic option.
Take-over by local authorities
The take-over of private universities by local authorities is a form of a public funding and cost sharing strategy (Vincent-Lancrin, 2008), and is worth considering in rural or underdeveloped areas. It will be particularly applicable to countries with low proportions of public HEIs, and with regions that need HEIs. Including take-overs, various types of cooperation between HEIs and local governments will be possible. Development of such cooperative inter-organizational relationships will be an important issue in this case.
Discontinuation
Closures are one of major options for HEIs confronting demographic changes, particularly depopulation (Vincent-Lancrin, 2008; Yonezawa and Kim, 2008). As discussed in the previous section, the number of university closures have been very small so far (see Table 5), and does not seem to reflect the contraction of the youth population. A possible explanation for this is as follows. The participation rate to universities has been increasing, therefore the total number of students has not decreased significantly. Further, junior colleges have functioned as a buffer to limit the impact of depopulation on universities. There has also been a shift of applicants from junior colleges to universities, and because of this shift, the number of junior colleges decreased drastically from 598 in 1996 to 331 in 2018 (a 44.6% decrease; MEXT, 2018). It is expected, therefore, that the number of closures may increase as such buffers diminish.
As a finding of this research, attributes of institutions that chose this option concerned the following: small-sized universities; single or few faculties; relatively new establishments; and low reputation (low hensachi rank).
To avoid closure, institutions may need to: (a) secure a niche segment that attracts enough applicants to make the institution sustainable; (b) not rely on a single subject for which competition is fierce; and (c) establish good reputations, enabling expansion of the institution.
Contrary to this, closure can be discussed when: (a) the decline of applicants is expected to continue; (b) there is financial difficulty in generating new investments; and (c) there are difficulties in establishing cooperative relationships with external organizations that can lead to alliances, mergers, or take-overs.
The closure of universities affects various stakeholders such as current students, teaching and office staff, and alumni, reducing the impact of closure will be one of the key issues. In particular, the preservation of the alumni’s academic and other records is crucial, and must be carefully managed.
Conclusion
The impact of depopulation and the decrease of youth population on a higher education system varies by country and context of the higher education system. Although a higher education system in decline may be in recent times a rare phenomenon, similar (if smaller scale) demographic challenges will face other higher education systems (Italy, Germany, eastern and northern Europe, South Korea, and so on), and this article indicates clues and implications for these countries by demonstrating unique strategies of Japanese universities. This article draws out Japan’s issues as compounded by the difficulty of attracting overseas students. Countries with a small proportion of overseas students against Japan’s 3.4% such as Chile (0.3%), Estonia (3.7%), Italy (4.7%), Norway (3.5%), Poland (2.0%), South Korea (1.6%), and Spain (2.4%) may confront the same problem over a longer period of time (OECD, 2016b).
Internationalization will be a crucial strategy for many Japanese universities in the future. In the era of globalization, the internationalization of universities has been a key issue for both policymakers and universities in Japan (Kudo et al., 2014; Mock et al., 2016). As previously discussed, the number of overseas students to Japanese universities has not grown as expected or planned, however, university strategies for internationalization should not be underestimated now or in the future. Several private colleges specializing in subjects such as commerce, nursing, and tourism have focused on attracting a relatively high proportion of overseas students mainly from China, Vietnam, and other Asian countries (Nihon Gakusei Shien Kikō, 2017; THE, 2018).
However, to increase the number of overseas students, universities must offer English-Japanese bilingual environments (such as increasing the number of classes given in English). This movement currently occurs in a limited number of universities because of the cost and lack of bilingual staff, and universities will need to improve this in the long term for this type of internationalization.
In this article, a framework to describe the strategic decision-making in managing the contraction of student enrollment to Japanese universities was induced as based on evidence from the Japanese higher education system. It consisted of environmentally determined exogenous factors, endogenous factors of universities, and strategic options. Concrete strategic options were identified as salient to Japanese universities. Five major strategies of subject diversification, mergers (vertical and/or horizontal integration), campus relocation, take-over by local authorities, and closures were discussed as practical implications of this analysis. These will be, to some extent, applicable to other Japanese private universities that have yet not tackled the issue (and possibly some public universities in rural areas that are expected to confront the same issues), as they share almost the same social, political, and demographical contexts. This study suggests new strategic alternatives (in addition to existing options proposed by other researchers) to universities in other countries, which also confronts these issues. However, contextual differences within higher education systems should be carefully considered before generalization. For example, Korea shares similar contexts of higher education with Japan (Yonezawa and Kim, 2008), therefore some findings may be applicable to Korean universities and vice versa.
While based on empirical data, the theoretical and practical implications discussed here are still at the hypothetical level. Further detailed research is needed to draw more precise analysis on each strategy and their results.
Although this research attempted to collect data from as many sources as possible, this study is based on secondary data only. For example, Vincent-Lancrin (2008) suggested possible strategies for procuring students in the face of demographic changes such as:
improving the attainment, quality, and number of graduates;
utilizing quality assurance and the recognition of qualifications;
utilizing e-learning (distant learning);
moderating numerical impacts, geographical distribution, and variations over time.
This research could not find sufficient evidence on Japanese universities related to the above strategies to manage the decline of student enrollment. It will be necessary to verify whether these strategies have been practically introduced, and if so, whether they are effective in the context of population decline.
Footnotes
Acknowledgements
I thank the anonymous reviewers for their careful reading of this manuscript and their insightful comments and suggestions. I would also like to thank Professor Roger Goodman and Professor Takehiko Kariya of Oxford University for their helpful comments during this research. I would also like to thank the Japan Society for the Promotion of Science for their generosity toward this research.
Funding
The author(s) disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: The author received grants from the Japan Society for the Promotion of Science (Grant numbers: 26380476 & 18K01763) for the research and publication of this article.