Vocational Upper Secondary Institution Mergers in Finland: Analysis on the Benefits and Beneficiaries

The purpose of this study was to examine the role of school mergers in providing advantages to stakeholders in Finnish vocational upper secondary education. Stakeholders were divided into four groups: the state, education providers, personnel and students. The more specific purpose was to explore and analyse what kind of advantages each stakeholder group has received from mergers. Also factors affecting the success of schools were explored with a focus on economic goals due to their great significance. The stakeholders´ advantages or disadvantages were divided into four categories; 1) short and 2) long term performance effects, 3) effects of changing funding and 4) effects of changing administration. These were examined through the inputs (resources like funding, operating costs, salaries, number of teachers, etc.) and outputs (measured by e.g. performance index, completed credit units per student per year and number of graduates) of the schools. The most important metric for a school’s performance used was the performance index calculated by the National Agency of Education.

Adopting a quantitative research process and using statistical methods, the work consisted of two interlinked empirical phases. In the first phase two case mergers, introducing two different kinds of institutions were examined. One was privately owned with two fields of vocational education, while the other one was publicly owned with seven fields of vocational education. In the second phase, all the mergers were examined and the mergers realised in 2008 and 2009 were selected for more detailed analysis. The main methods used were regression analysis and analysis of variance and their tests. Both parametric and non-parametric methods were used to ensure the reliability of results and because of the limitations of the methods.

The empirical data was collected from the National Agency of Education´s databases but also other statistical sources were used. Data consisted on the input and output resources of schools including information from costs divided by operations and incomes they received. Also different types of non-monetary incomes and outcomes e.g. given instruction hours and number of graduates as well as number of students were used. Based on the first phase of the research, there was a total of 30 variables in the second phase, which was then reduced during the analysis when searching for the most important variables affecting schools´ performance. Depending on the model or stakeholder group, there were about 10 central variables left, from which 5-8 were statistically significant, and thus chosen for the final model.

The thesis argues that there are three main factors that indicate mergers’ success. The first and most important for all stakeholders is the performance index, because part of financing of institutions is based on it and it also builds the image of the institutions. Therefore, it is important for all schools to enhance their performance index. This index actually takes into account the success of students during their studies and after graduation including background information, and revealing how schools have allocated their resources to help students to succeed. The second factor is the number of completed credit units by the students. It indicates among other things how fast the students will complete their studies and graduate and thus indicates short and long term advantages or disadvantages. This in turn has an effect on the performance index and thereby affects also other stakeholders. The third factor is the given instruction hours per student, which benefits mostly the students but also indirectly other stakeholders and it is mostly a short term indicator.

The results indicate that there is little if any advantage realised from the mergers for any stakeholder group measured by the indicators used. The state and providers have not received economic benefits. They have received larger institutions but it remained unclear whether the merged units are stronger. At least the state has not gained financial savings. From the provider’s point of view, they have received at least the same amount of money than without merging. The personnel can be said to remain in the same position because they have kept their jobs. The largest stakeholder group, i.e. the students, seems not to have benefited from the mergers. They do not graduate faster, do not get more instruction hours or complete more credit units per year than before the merger or compared with the schools that have not merged. One can argue that all the operations in schools seem to remain almost unchanged and because the expected benefits have not been realised, the mergers have most likely failed. The above mentioned issues indicate that there were no short- or long-term advantages received. Cuts in funding seem to facilitate synergy benefits and increasing administration is one element hindering the realization of potential advantages.