Introduction

This paper explores strategic mergers of higher education institutions entered into with the objective of safeguarding and enhancing competitive advantage, rather than addressing such problems as institutional fragmentation, falling enrolments or non-viability.¹ Strategic mergers are formal combinations of two or more organizations into a single organization deliberately planned so as to more effectively meet external challenges and opportunities. In relation to higher education, strategic mergers are what Martin and Samels (1994) describe as strategies of 'merging colleges for mutual growth'. Driven by an increasingly competitive global market for higher education services and external research funding, institutional mergers are one of a number of responses seriously considered by higher education institutions. Other strategies include informal collaboration; joint business ventures; strategic alliances; regional, national and international networks and consortia; and cross-institutional mergers of academic and/or service departments.

Here, the focus is on one particular form of strategic merger where strong universities or colleges on their own initiative amalgamate with other strong institutions in order to enhance their competitive advantage. Our interest is particularly in mergers of strong universities. The paper sets this particular form of merger within the context of the historical use of higher education mergers and the scholarly literature on such mergers, before proceeding to consider one particular case — the October 2004 merger of the Victoria University of Manchester (VUM) and the Manchester University of Science and Technology (UMIST) to form the new University of Manchester. This new university was the outcome of a strategic vision shared by UMIST and VUM that the external environment favoured larger institutions with broader and deeper subject coverage, and a shared understanding that merger was a realistic option to achieve this. The new university is an institution of some 35,000 students, with clear ambitions to be among the top world-class research universities by 2015. This combination provides an informative case study of the strategic considerations that prompted two strong research-intensive universities to consider merger despite the costs involved, especially in terms of social disruption and risks to reputation and status. The case study also illustrates possible strategies to facilitate relatively smooth merger processes, the importance of effective leadership from the top in merger negotiations and post-merger developments and how strong universities deliberately plan to enhance their research standing and institutional reputation.

Distinctions need to be made between strategic mergers per se and strategic mergers involving strong institutions. Strategic mergers aimed to help institutions cope more effectively with external environmental changes and opportunities can be entered into by both strong and weak universities and colleges, with the aim of safeguarding and enhancing reputation, academic programmes, financial results and sometimes survival prospects. While most American higher education mergers in the private sector have been strategically motivated, many have not involved strong institutions, or have been cases of strong institutions combining with weaker institutions. In terms of institutional strength, mergers between two institutions can be classified as mergers of strong institutions ('strong/strong'), mergers of a strong and weak institution ('strong/weak') and mergers of two weak institutions ('weak/weak'). But this distinction raises difficult questions about what definitional criteria should be used to identify strong and weak institutions, and the relative emphasis that should be given with such criteria to financial viability, student enrolments and enrolment trends and research strength and outputs.

Strong institutions do not necessarily mean universities. In the UK, many strong colleges and institutes have been involved in mergers; many such institutions could have continued without mergers, but for strategic reasons came to the view that in a highly competitive higher education environment universities clearly are favoured over specialist colleges. Even among strong institutions that enter into merger negotiations, differences in size, resources and commitment to research have major impacts on negotiations and outcomes. When strong institutions merge with weaker institutions ('strong/weak'), the likely outcome is a 'takeover', with the weaker institution being absorbed into the stronger institution. But even then, sufficiently attractive colleges are often able to negotiate takeovers on reasonably attractive conditions, especially for staff and students.

While in a number of countries there have been recent proposals for mergers of strong research-intensive higher education institutions, very few of these have actually proceeded to final merger. This raises the question of how common such mergers are likely to be in the next decade and beyond. Over a decade ago, two American scholars and consultants, Martin and Samels (1994), in their book, Merging Colleges for Mutual Growth, predicted a major increase in mergers among American universities and colleges and that many of these would be 'growth' initiated with the aim of saving money, sharing resources and enhancing educational missions. They even suggested that American higher education was on its way to the creation of numerous mega-institutions. Such an accelerated move to mergers, however, did not occur and in 2002 Martin and Samels retracted their prediction, admitting that few mergers had occurred and American higher education instead seemed to be moving increasingly to strategic alliances. They admitted that national and regional databases recorded only about six to eight mergers per year, but their book continued to sell well and they continued to work with colleges interested in mergers. They wrote: We listened politely to yet another hopeful college administrator talk about how he or she wanted to find a partner and 'build something new that we could never build by ourselves' but no, 'our Board would never let us actually merge with them'. Then the shock of our recognition took hold: American higher education is not moving towards mergers. Rather we predict that, over the coming decade strategic alliances will outnumber mergers by at least 20 to 1 (Martin and Samels, 2002).

We anticipate that the 2002 revised prediction by Martin and Samels for a strong preference for strategic alliances over mergers will prove to have wider validity than just to the United States, but it is more difficult to estimate to what extent strategic alliances will outnumber mergers.

Higher Education Merger Literature and Experience

There is a long history of the use of mergers within higher education systems and institutions that is well documented and analysed in various recent higher education literatures (e.g. Harman and Meek, 1988; Goedegebuure, 1992; Harman and Robertson Cuninghame, 1995; Fielden and Markham, 1997; Skodvin, 1999; Eastman and Lang, 2001; Jansen, 2002; Lang, 2002a, 2002b; K.M. Harman, 2002; Locke, 2007). Significantly, apart from Martin and Samels, there has been relatively little analysis in this literature of strategic mergers of strong institutions with other strong institutions ('strong/strong'). On the other hand, the literature on mergers and acquisitions in the non-profit and business sectors has paid attention to the growing phenomena of large organizations being involved in strategic mergers. Within the American not-for-profit sector, there has been a clear trend towards increased numbers of strategic partnerships of major organizations seeking mutual advantages, such as larger market share, better access to capital and enhanced ability to win government contracts (La Piana, 2003; Kohm and La Piana, 2003), while in the corporate sector there is an increased tendency towards 'strategic megamergers' (Weston and Weaver, 2004) often aiming to create quasi monopolies (Karier, 1993). But unlike higher education, mergers in the corporate sector are often closely related to equity-leveraged buyouts or payment in stock while share price plays key roles in decisions to merge or break up large corporations.

Within higher education, mergers have been used to combine academic departments or faculties but more importantly they have been used to combine one of more institutions in order to create new entities. While most institutional mergers have caused major disruption and often considerable controversy, at the same time, many have achieved positive outcomes, especially in terms of building larger and more comprehensive institutions and increasing the range and quality of academic programmes (Harman and Harman, 2002). In particular cases, mergers have also enhanced institutional research capacity, funding and outputs.

In the development of many modern higher education systems, mergers were frequently used to provide the basis for creation of new universities or multi-school colleges. In the UK, for example, the University of Bristol was created by a merger in 1893 of the University College Bristol (established 1876) and Bristol Medical College (established 1833). During the charter negotiations, these institutions were joined by the Merchant Venturers Technical College, which became the university's first Faculty of Engineering. Frequently, single-purpose or single-discipline teachers colleges, agricultural colleges, music colleges and medical and allied health colleges were drawn into universities, or were combined to form more comprehensive institutions.

Over the past four decades, mergers became an increasingly common phenomenon across many higher education systems, particularly as higher education provision rapidly expanded and governments looked for cost savings and ways to build stronger degree-awarding institutions. Mergers thus increasingly became the tools of government to address problems of institutional fragmentation, small and expensive specialized institutions, and build larger and more comprehensive institutions. Governments also used mergers in times of financial crisis and/or declining enrolments to deal with non-viable institutions. In private higher education sectors, such as in the United States, mergers have been commonly used by individual institutions to deal with threats of closure, declining enrolments or bankruptcy.

Internationally, from the 1960s until the early 1990s, the majority of mergers were government-initiated aiming to solve problems of fragmentation and small institutions usually located in non-university sectors. Thus, in the UK, Australia, Canada, the Netherlands and Norway, major government efforts were made to rationalize college sectors, creating larger and more comprehensive institutions. Except for the absorption of small numbers of specialist colleges into universities, generally these efforts had minimal efforts on universities. In Australia, for example, throughout the 1970s and the early 1980s, numerous small colleges were combined or absorbed into universities (Harman and Meek, 1988) while between the mid-1980s and 1999 in the Netherlands the number of HBOs (i.e., institutions for higher professional training) was reduced from almost 350 to 58. In Norway, in the early 1990s, some 98 vocationally oriented colleges were amalgamated to create 26 new state colleges (Kyvik, 2002).

Since the early 1990s, however, merger efforts, particularly in the public sector, have increasingly affected universities as well as colleges and have involved various combinations of government and institutional initiatives. In some cases, such as South Africa, China, Japan, Vietnam and Eastern Europe, the moves have been initiated by governments, often as key elements of major national reform efforts. In South Africa, the national government employed mergers to address post-apartheid issues concerning race and the structure of the higher education system (Jansen, 2002; Hall et al., 2004), while in China and Vietnam the main efforts were to bring highly specialized universities together to form new comprehensive universities. In China, between the early 1990s and 1998, 207 universities were merged into 84 universities. Mergers in China were part of major reform efforts initiated by the central authorities, seeking to create larger comprehensive universities, to move specialist medical universities into comprehensive universities, to transfer control for many universities from central ministries to provincial governments, and at the central government level transfer control of all universities to the Ministry of Education (Chen, 2002). As part of major structural reform of Japanese national universities, the central government in 2001 decided that 10 single-faculty national universities would be merged with comprehensive universities and that the number of national universities would be reduced through mergers from 99 to 88 (Hata, 2004, 33). Apart from these kinds of developments, in a number of other countries there have been examples of strong institutions on their own initiative, but often with government support, seeking suitable partners to enhance their competitive position in both student and research markets. Later in the paper reference is made to particular developments in the UK and Australia that have been selected for analysis because of the availability of detailed information.

Mergers can be viewed from a number of different perspectives. In this paper, they are set primarily within the context of different forms of institutional collaboration, sought by either governments or institutions. Driven by increased use of market mechanisms by governments and increased cross-border trade in both educational services and research outputs, higher education institutions are under strong pressure to both compete and collaborate. Competition is not only for financial resources, students and staff but also for reputation and status. Higher education produces 'positional goods' that provide benefits to both students (in terms of access to social prestige and the capacity to earn high incomes) and institutions (to maximize their ability to attract top-class students and research income) (Marginson, 2006). Positional markets are segmented into vertically aligned groupings that have implications for both competition and collaboration. National segmentation typically groups universities into elite research universities, aspirant research universities and teaching-focused universities, with high-value positional competition in the top tier being marked by scarcity and exclusion. Elite research universities in particular are affected by global competition and more recently by the global rankings of institutions (Dill and Soo, 2005; Shanghai Jiao Tong University, 2006). Both competition and collaboration tend to lead to larger and stronger producers of both educational services and research particularly in public higher education sectors. However, within private higher education, such as in the United States, strong institutions such as Caltech can remain small and internationally competitive.

Higher education collaboration can take many forms, from highly informal and ad hoc linkages to formal institutional mergers or amalgamations. These are depicted in Figure 1, which sets various forms of collaboration on a continuum based on the degree of autonomy being surrendered by participating institutions.

Figure 1.

Models of institutional collaboration.

Full figure and legend (21K)

At the far left of the continuum lie various forms of informal collaboration including academic collaboration and shared use of expensive or highly specialized equipment. Such collaboration is often organized by individual staff or individual departments but other times it is formally organized. For example, in many major cities today universities have formal agreements to provide sharing of resources in the teaching of foreign languages.

Moving to the right produces more formal types of collaboration, including joint ventures; consortia to manage particular collaborative functions; affiliation agreements, such as those that enable non-university organizations to award university degrees or gain other forms of academic recognition; and jointly owned facilities, combined academic departments, or joint research institutes. In some cases, formal agreements for particular forms of collaboration may be based simply on exchange of correspondence, while in other cases collaboration is underpinned with formal and legally binding agreements. One increasingly important joint venture strategy internationally is offering MBA degree programmes by partnerships of prestigious universities from different countries.

Moving further along the continuum are full mergers or amalgamations, either using a federal structure or a unitary form. A merger can be defined as the combination of two or more separate organizations, with overall management control coming under a single governing body and single chief executive. Normally all assets, liabilities and responsibilities of the former institutions are transferred to either a continuing institution or to a new institution (Harman and Meek, 1988; Goedegebuure, 1992). With a federal structure, participating institutions are more likely to be able to retain a measure of their own identity and autonomy. In the Netherlands, for example, three universities of technology have recently established themselves as the Dutch 3TU Federation of Universities of Technology.

Significantly, strong universities and colleges that combine with other institutions for mutual advantage tend to favour points at each end of the continuum, opting mainly for informal collaboration, joint business ventures and consortia, or for full mergers with unitary structures. At any one time, strong universities have numerous less formal linkages with a wide range of local and international universities, especially with other strong universities. But federations are not favoured as they tend to be less efficient and provide greater challenges in identifying future strategic directions and achieving these.

While an extensive literature on institutional mergers in higher education has been built up over the past two decades, much of it deals with events associated with individual cases of mergers or sets of mergers. A considerable amount of this material have been produced by participants in mergers. Together, it provides informative accounts of the main drivers for mergers, the roles of key participants, merger processes from initial discussions to legal endorsement, particular issues that tend to dominate in merger negotiations and the kinds of academic and administrative structures that emerge. But there is far less about longer-term results and impacts, and relatively little about the costs (both human and financial) and the extent to which longer-term financial savings were realized or could be realized. Another relatively neglected dimension of mergers is the influence of cultural factors. Considerable attention has been paid to the role of governments and institutional leaders in mergers discussions and negotiations, but less attention has been paid to the role of culture, especially when two or more different institutional cultures are forced to become one. Attempting to create integrated and 'coherent educational communities' (Bruno and Bowditch, 1989) from the merging of cultures that are historically and symbolically non-complementary poses enormous challenges for higher education leaders (K.M. Harman, 2002).

Mergers of Strong Institutions

Strategic mergers are by no means a recent phenomenon. In fact, during earlier periods of government-initiated consolidations of non-university sectors, various universities made strategic decisions to encourage non-university institutions to enter into formal mergers in order to gain new fields of study, consolidate existing disciplinary areas such as education and engineering or to substantially increase student enrolments and institutional size. For example, in Australia, in the late 1980s mergers that targeted primarily small colleges attracted many universities as partners. Monash University absorbed four separate colleges of advanced education while the University of Queensland linked with Gatton Agricultural College, and the University of Sydney incorporated Sydney College of Advanced Education, the Sydney Conservatorium of Music and a rural agricultural college. Similarly, in the UK, with the rationalization of teacher education in the 1970s and 1980s, a number of colleges of education were absorbed by universities based on strategic decisions taken by the universities concerned. In the United States, between the 1960s and 1980s there were various cases of strong institutions coming together to form stronger institutions. Examples are the merger of Carnegie Institute of Technology with the Mellon Institute of Industrial Research in 1967 to form Carnegie Mellon University, Tift College with Mercer University in 1986 and the 1982 merger of Delaware Law School and Boston State College with the University of Massachusetts Boston (Martin and Samels, 1994, ix).

Since the early 1990s, however, strategic mergers involving strong institutions have become more common and are to be found in a variety of different countries, including South Africa and China (where institution-initiated mergers of strong institutions have occurred within an overall government programme of mergers) and in the Netherlands with the proposed merger of the University of Amsterdam and a major HBO following government approval for such mergers to take place. There also have been a number of cases of merger proposals that in the end did not lead to mergers. A number of these in the UK and Australia are discussed later in the paper. Following Hong Kong's return to China in 1997, a comprehensive review of the higher education system recommended that Hong Kong concentrate its tertiary resources in fewer institutions leading to at least two proposals — one to combine the highly successful Chinese University of Hong Kong with newer Hong Kong University of Science and Technology, and the other to combine the City of Hong Kong Polytechnic University and Hong Kong Polytechnic University. However, despite serious consideration, both proposals failed to win the support of academic communities and institutional governing bodies.

United Kingdom and Australia

Considerable merger activity has taken place in the UK since 1992, as shown in Table 1. While the bulk of the mergers and merger proposals involved incorporation of smaller colleges into established universities, a number of mergers and merger proposals involved combination of comprehensive universities, or the absorption of medical and medical-related schools and institutes into major universities. The latter phenomenon was particularly important in London when in the 1990s the government encouraged reorganization of medical and dental education and the more recent merger of the University of Wales College of Medicine with Cardiff University. In the table, we have tried to identify cases of strong institutions that merged or proposed merging with other strong institutions ('strong/strong' mergers) but because of difficulty in securing detailed financial and enrolment data, we did not attempt to evaluate the strength of the colleges involved in mergers or merger discussions or to identify 'strong/weak' or 'weak/weak' mergers. Thus, only 'strong/strong' mergers are identified.

Table 1 - Mergers achieved and selected proposed mergers of British higher education institutions 1992–2006.

Full table

Apart from the London mergers of medical schools with strong research-based constituents of the University of London, between 1992 and 2006 at least 10 mergers between well-established universities were seriously considered:

• University College London/School of Slavonic and East European Studies
• University of Birmingham/Aston University
• University of Leicester/Loughborough University
• University of Bath/University of West of England
• Imperial College of Science, Engineering Medicine/University College London
• University of Aberdeen/Robert Gordon University
• London Guildhall University/University of North London
• Cardiff University/University of Wales College of Medicine
• VUM/UMIST
• University of Glamorgan/University of Wales Institute Cardiff

But only four of these proposals actually resulted in mergers — combination of University College London and the University of London School Slavonic and East European Studies; London Guildhall University and the University of North London to form London Metropolitan University; Cardiff University and University of Wales College of Medicine; and VUM and UMIST to form the new University of Manchester. The Manchester merger will be discussed in the next sub-section.

Incorporation of the relatively small, specialist University of London School of Slavonic and East European Studies with the nearby University College London was achieved relatively easily in August 1999, especially as it was agreed that following merger the School would retain its identity, although departments were soon linked to the corresponding faculties of University College.

London Metropolitan University was created on 1 August 2002 as a result of the merger of two former polytechnics, thus creating an institution serving 25,000 students and with a combined annual income of £110m. London Guildhall University became a university in 1992 when the former City of London Polytechnic achieved university status. Its origins go back to the evening classes established in 1848 by the Bishop of London that in time became the City of London College, which in turn merged with the Sir John Cass's College of Arts and Science in 1970 to become London City Polytechnic. The University of North London began life in 1896 as the Northern Polytechnic Institute, which, in 1970, merged with the North Western Polytechnic to become the Polytechnic of Northern London which became a University in 1992. According to Roderick Floud, the London Guildhall Provost at the time of the merger decision: The basic reason [for the merger] is that the universities are convinced that separately we are really too small to meet the challenges of higher education. Although we are both achieving surpluses in our finance they are very small and don't provide sufficient funds for investment so that we can develop new activities (The Guardian, 17 May 2001).

The merger decision was made simpler by strong stakeholder support and an agreement between the two executive heads to share management responsibilities in the new university for an initial period, with one becoming the Vice-Chancellor and the other Chief Financial Officer.

A study by the Higher Education Policy Institute, however, commented that, in this case, 'the highly competitive London higher education market played an important role in encouraging both institutions to think about merger–both in terms of opportunities to exploit as well as ways to survive' (Brown et al., 2003a, 10). This raises questions about the financial strength of both institutions and our categorization of 'strong/strong' mergers in Table 1.

Merger of Cardiff University and the University of Wales College of Medicine was achieved on 1 August 2004, making the amalgamated Cardiff University the largest higher education institution in Wales with 22,000 students and an annual turnover of £300m. The official Merger News at the time boasted that the amalgamated university 'now has the size and span of expertise to establish itself as a world-class institution, undertaking research, learning and teaching of international distinction for the benefit of Wales and the wider world' (Merger News, 2004). Of particular assistance was a grant of £10.8m, most of which came from the Department of Trade and Industry, to purchase state-of-the-art brain-imaging facilities.

Of the proposals that did not lead to merger, one of the more significant was the 2002 proposal for merging University College London and Imperial College of Science, Technology and Medicine. These two London-based institutions are usually ranked with Oxford and Cambridge as constituting the top four UK research institutions. Significantly, the idea of a merger between the two institutions came from the Acting Provost of University College, who saw the possibility of merger creating a 'European Harvard' (Rukin, 2002). The Imperial College Rector, Sir Richard Sykes, at the time fairly recently recruited from the position of CEO of a leading pharmaceutical company, was strongly supportive of the idea of a merger that would have created UK's strongest research university. For the financial year 2002–2003, Imperial College had attracted total research funds of £60.7m from the Higher Education Funding Council of England (HEFCE) while University College London had attracted £66.8m (HEFCE, 2002). In comparison, the University of Cambridge had attracted £67.8m and the University of Oxford $64.9m. Thus, a combined Imperial College/University College London would have attracted about twice the research resources from HEFCE that came to either Oxford or Cambridge. Unfortunately for the proposers, considerable publicity associated with the proposal before discussion with the academic communities resulted in the proposal's defeat. Particularly important was opposition of UCL academics, who feared an Imperial College 'takeover' and that they might be caught up in the threat of Sykes to 'take Imperial private' if the Government did not agree to 'top-up' student fees.

Compared with the UK, Australia has had far fewer mergers in higher education since the early 1990s, as demonstrated in Table 2. This is because Australia reorganized its higher education system over the period 1987–1991 when numerous mergers involved 14 out of 19 1987 universities. Since 1993, mergers have involved 10 Australian universities but only five of those achieved can be classed as 'strong/strong', with a majority being cases of universities incorporating colleges, mainly from the vocational education and training sector. Again, only 'strong/strong' mergers are identified.

Table 2 - Proposed and achieved mergers and affiliations involving Australian Universities 1993–2005.

Full table

The proposal in 2004–2005 about merging two successful metropolitan Perth-based universities, Curtin University of Technology and Murdoch University, is of particular interest. This would have created a new university with a total enrolment of almost 50,000 students, making it Australia's largest university. Both Commonwealth and State Governments encouraged this development and the Commonwealth even provided a grant of $50,000 to support an exploratory study. Late in the discussions, Edith Cowan University, also located in Perth, proposed that it should join the partnership. This would have produced a new institution of about 72,000 students that would be in competition in metropolitan Perth only with the University of Western Australia (with about 17,000 students) and the private Notre Dame University (with just over 4,000 students). In the end, no merger went ahead, mainly because the governing bodies of Curtin and Murdoch Universities decided that the costs would be too great in relation to the possible advantages. However, a substantial Commonwealth or State Government grant might well have resulted in merger while it appears that an unstated factor was that Curtin and Murdoch Universities were unable to agree on composition of the post-merger senior management team.

The 'New' University of Manchester

The new University of Manchester was created on 1 October 2004, bringing together VUM, established in 1851 as Owens College, and UMIST, which can trace its origins back to the Manchester Mechanics Institute founded in 1824. The merger was strategically planned to create a new university in the north England with the capacity and expertise to compete effectively with Oxford, Cambridge and the leading London universities. It was a voluntary amalgamation that was achieved with strong regional and UK Government support, together with support from the academic communities, Vice-Chancellors and key stakeholders of the merging institutions. It was also achieved with comparatively little conflict and the kind of anxiety and disturbances that have characterized even many successful mergers.

The result was creation of the largest single-site university in the UK, with a new executive management team, a new academic structure consisting of four super faculties and 22 schools, and streamlined management and decision-making structures. Under its new President and Vice-Chancellor, Alan Gilbert, its strategic plan explicitly sets a key objective to make the University of Manchester one of the top 25 universities in the world by 2015. This is a most ambitious and high-risk objective, but it is probably not unrealistic as in the last academic ranking of world universities by the Shanghai Jiao Tong University Institute of Higher Education (2006), the University of Manchester was placed 50th out of the top 100 world universities. Further, in the 2001 Research Assessment Exercise (RAE), both predecessor institutions produced impressive results, with VUM achieving a 5 or 5^* in 31 out of 46 research areas submitted for assessment, while UMIST achieved 5 or 5^* star ratings for nine out of 20 areas submitted (Brown et al., 2003b, 1)

The University of Manchester merger is a particularly interesting case in terms of its strategic aims, how the merger was actually achieved, the main merger drivers, the new strategic objectives and how these are planned to be achieved, and the early indications of success. The merger was deliberately and strategically planned by the predecessor universities as a response to the changing environmental conditions within UK higher education as they monitored their combined research performance in relation to leading institutions in the south of England. The actual merger process was handled by both predecessor institutions and the new management team with considerable skill. It was achieved after low-key discussions between the Vice-Chancellors of VUM and UMIST, who wisely did not make public their plans until the proposal had been well canvassed with their respective staffs and governing bodies.

While guarantees were given that there would be no compulsory redundancies, there were significant staff concerns, even to the extent that staff of VUM temporarily held up negotiations in October 2002 demanding further consultations on staff conditions. Key informants also reveal that there were acknowledged weaknesses in planning, particularly in relation to the complexity of the merger process and the HR implications especially for directors and senior staff of administrative and service departments. External assistance in the HR area was secured but it was brought in relatively late. But despite these difficulties, it is generally agreed that the process was handled with considerable skill and success. Communications with all staff and the issue of the differences in size of the two institutions were well handled, while relatively compatible cultures of the predecessor institutions facilitated integration. According to one informant, there 'were several styles and cultures operating in both institutions' and so the challenge was bringing together 'three, four, five or six cultures operating ... across the two institutions'.

Of considerable importance was strong regional and UK Government support, and £80m of additional funding provided by government and regional bodies, especially the Northwest Development Agency's contribution of £35m and the UK Government's Science Research Investment Fund's grant of £17m. Sensitivities that the merger could be seen as a VUM takeover were addressed by planning the more complicated 'double-dissolution' procedure of dissolving both predecessor universities and transferring their assets to the new university, rather than modifying the VUM charter. Both university governing bodies conveniently decided to extend the appointment terms of their Vice-Chancellors to the starting date for the new University and written commitments were made that there would be no forced staff redundancies.

In part, the merger was driven by the adjacent proximity of the two institutions, their historic close association and the fact that they continued to share a number of common services including residential halls and counselling, as well as some joint academic departments. While UMIST was created as a separate institution in 1905, until 1994, both institutions continued a close formal association with UMIST students taking out VUM degrees. In 1994, UMIST decided to end the formal relationships and emphasize its separate identity, but within 5 or 6 years there was a growing realization by both institutions that they would need the market presence and reputation built on research strength and depth to compete effectively particularly with the 'Golden Triangle' of Oxford, Cambridge and London. Discussions were initiated between VUM and UMIST and relatively quickly, with wide support from both institutions, a working group (the Dalton Committee) was established with a well-respected independent chairman to consider options for the future, including closer collaboration, a federal structure and merger through creating a new University. The working party reported in February 2002 recommending dissolution of VUM and UMIST and its replacement by a new university. It explained in its report that both VUM and UMIST were competing both nationally and internationally for students and research grants, that 'world class' research was becoming increasingly expensive and that the world's leading universities, particularly in the United States, had enormous financial resources. Thus, it reported, that Without question, the unanimously favoured option is that of creation of a new institution because it meets the needs of a world class 21st century. The grassroots collaboration fails on the grounds of not being able to be more tactical, whilst the federal option creates a lot of pain for little gain (Carter, 2002).

Four months of internal and external consultation followed, and in late 2002, on the recommendation of their academic senates and the governing bodies, both institutions endorsed the merger proposal. These decisions were confirmed in March 2003 when a sufficiently large sum of external funding became available. Wisely, UMIST predicated its agreement on attraction of sufficient additional funding while the Northwest Development Agency made its funding contingent on matching central government funding.

Reference has been made already to the new University of Manchester's ambitious strategic direction to achieve world-class status by 2015 and be ranked in the top 100 universities internationally. The new Vice-Chancellor explained this objective as follows: Creating a very good, very large 'Big Civic' university was not the driving vision of those in VUM, UMIST and the wider community responsible for the establishment of the new University of Manchester. Their purpose was to lay a superb foundation upon which those responsible for the new University might build something far more ambitious. Quite explicitly, they hoped that the new University would transcend its 'Big Civic' origins and become one the finest research and teaching universities in the world.
The task of transforming a very good institution into a great international centre of learning, scholarship, research and community engagement was thus the great defining idea behind creation of The University of Manchester. The new Board of Governors and those responsible at all levels for leading the new institution inherited this ambitious vision in accepting their new responsibilities (The University of Manchester, 2006).

The new university is pursuing its strategic objectives by fairly traditional means, including working to expand research income and outputs, enhancing teaching effectiveness and community service, endeavouring to make strong appointments of staff at all levels and encouraging more effective knowledge and technology transfer to research users (The University of Manchester, 2004a). But in addition, major emphasis has been given to enhancing communication at all levels and to:

• developing and articulating a new University of Manchester brand with its distinctive 'Manchester 1824' logo, based on market research and consultancy advice from marketing and communication experts;
• planning more effectively, with a detailed but practical strategic plan having 26 quantitative measures of operational performance and by setting out a clear 'Accountability and Reporting Cycle' that links planning and budgeting processes and simplifies reporting requirements (The University of Manchester, 2004b);
• developing a streamlined management system, with four super-faculties and 22 academic schools and major reductions in the numbers of committees and reporting arrangements;
• instigating major staff recruitment efforts to attract first-rate highly published academics, including Nobel laureates, and to recruit successful research teams from other universities;
• placing greater emphasis to teaching quality and effectiveness and a strategic partnership with the Open University for electronic delivery of courses;
• giving stronger emphasis to widening participation in order to support the Government's social agenda; and
• placing a surprisingly strong emphasis on empowering collegiality, presumably to balance a more managerial organizational structure.

While it will take time to see how effective the new university proves to be in achieving its stated objectives, already there are significant achievements. The university has 10 Fellows of the Royal Society, 12 British Academy Fellows and a total of 169 academics appointed to prestigious academic bodies. In 2005, Nobel Laureate Joseph Stiglitz was appointed to a part-time chair and directorship in the new Brooks World Poverty Institute. Numerous senior academic appointments have attracted researchers of distinction from leading UK and overseas universities; for example, a new Director has been attracted to the Cockcroft Institute, together with other staff attracted from the Stanford Linear Accelerator Center and from leading UK universities. In November 2005, the University of Manchester was named as the inaugural UK Times Higher Education Supplement University of the year. Research income increased by 12% in the first year while the University of Manchester can boast that it has the highest investment among Russell Group Universities in the provision of 'Equity' bursaries and scholarships from traditionally under-represented sections of society. In a 2005 survey of employers, 98% of respondents registered high overall levels of satisfaction with Manchester graduates and 99% confirmed that they were likely to continue recruiting efforts at the University. Survey research also shows increased levels of staff satisfaction while there has been a decided increase in the numbers and diversity of staff undertaking professional development programmes designed to enhance their skills and assist with career development. Income from fund raising is 10 times larger than a decade ago (The University of Manchester, 2006).

Conclusions

Our argument is that the new globally competitive higher education environment not only provides strong incentives towards competition but at the same time also provide inducements for various kinds of partnerships between universities and colleges. Such partnerships range from informal cooperation through alliances and consortia, joint ventures and affiliations to federations and mergers with unitary structures. One clear trend is towards the development of larger and stronger producers of educational services and research. In a number of countries, full-scale mergers are being seriously considered, including mergers of two or more strong institutions ('strong/strong'). While between the 1960s and the late 1980s merger activity especially in the public sector tended to be mainly government-initiated and largely directed towards dealing with problem non-university institutions, since the early 1990s, there has been a distinct trend towards institutional-initiated mergers of strong institutions including many universities with the explicit strategic aim of enhancing competitive advantage.

The 2004 University of Manchester merger not only provides important insights into the factors that drive strong research-intensive universities to consider merger but also sets out a valuable blueprint about how effective mergers can be achieved with relatively limited organizational disruption, and emphasizes the importance of strategic and visionary leadership from the top. In the Manchester case, particularly important was the role played by the Vice-Chancellors of the merging institutions and the leadership of the new Vice-Chancellor, who previously led a successful merger at the University of Tasmania. As Bryan Carlson has argued, in a growth merger the chief executive must perform a macro-managerial role, being 'conceptualizer for the combined organization, including the governing board and faculty' (Carlson, 1994, 64). This means institutional leaders need to develop an entrepreneurial vision in consultation with colleagues, and communicate this vision effectively within the institution. They must also ensure ongoing effective communication with staff at all levels in an environment where rumour can create major damage. In addition, the Manchester case provides one of the few examples of detailed documentation of strategies being adopted by major research-intensive universities to dramatically lift their research performance and outputs, and hence to enhance their status and reputation. While the new University of Manchester has made explicit its ambitions in terms of 'world class' status, many other strong universities have similar ambitions but are often reticent to proclaim specific status and reputations objectives, with target dates. They also lack the kind of additional funding that the Manchester merger attracted.

While it is far too early to evaluate the success of the Manchester merger, there is considerable interest in the UK and beyond about how this particular 'strong/strong' merger works out, especially in terms of the strategic objectives so clearly articulated. To what extent Manchester succeeds may well have direct bearing on the possibility of other strategic mergers of strong universities.

Notes

¹ This is a revised version of a paper presented at the 19th CHER Conference, Kassel, 7–9 September 2006.

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