Historically Black colleges and universities and resource dependence: a Chow test of production functions

Abstract

While several studies have examined the impact of expenditures on graduation rates in higher education institutions, historically Black colleges and universities have strong government dependencies that suggest that these links might be different than for other universities. This paper investigates these links by estimating the production function of a subset of a large panel of 4-year institutions and uses a Chow test to find structural differences in production functions of Black universities and other universities. The analysis finds significant structural differences, notably that administrative expenditures have a significantly negative impact on graduation rates at Black universities. The findings suggest that the need to examine administrative frameworks and to diversify resource streams at Black universities is pressing. Using resource dependence theory, this paper concludes with a discussion about how these universities might mitigate the negative effects of government resource dependence.

Keywords:

• efficiency
• higher education finance
• historically Black colleges and universities
• production functions
• resource dependence