Understanding the transformation of educational institutions : the case of direct subsidy scheme in Hong Kong

Abstract

The present study aims to understand the issues related to the institutional transformation of educational institutions in Hong Kong. Schools under the Direct Subsidy Scheme (DSS) in Hong Kong are chosen for this study because they are perceived to have been transformed by the DSS policy, resulting in a hybrid institutional regime. Specifically, this study stems from an observation that while the injection of market elements into schools should stimulate the educational regime, it has also created incentives for opportunistic behaviours and other externalities. Instead of focusing on examining the matching of ‘institutional archetype’, this study adopts an alternate analytical framework that delves deeper into the structure to explore how the rules, an exogenous variable, configure the operation of the DSS schools and shape the behaviours of DSS schools. The impact of other exogenous variables, including the background, the attributes of the community to which the schools belong would also be examined. The host of provision and production problems, namely, the problems of free-riding, inequity, rent-seeking, information asymmetry, principal-agency relationship, scale and scope, co-production, team work, and paper-pushing, serves as analytical lenses for understanding the patterns of responses of the DSS schools, the emerging issues, and whether and how the DSS schools could extract themselves from perverse incentives. This study is a single case analysis which adopts an exploratory approach and is based on data collected by several means, including interviews, archival search, and a simple questionnaire survey for understanding the nuances of operation. Findings from the investigation indicate that the implementation of the DSS embodies a position problem, allocation problem, rule-design problem, regulation problem, externality management problem, and a contribution-recognition problem. Moreover, the role of the government remains pivotal and justified. In gist, this study is a progress report of how the DSS policy operates in Hong Kong, and there are still plenty of outstanding questions to be answered and examined. In short, institutional transformation is not simply about matching an institutional archetype with education. Instead, it is about incorporating the concepts of ‘balance’, ‘differentiation’, ‘synergy’, and ‘trust’ in institutional design.