Document Type
Article
Publication Date
5-1-2007
Abstract
Today’s college and university endowments look dramatically different than they did 25 years ago. The quest for greater investment returns has been accompanied by an explosion in the number of asset classes in endowment portfolios\, particularly among large endowments. According to Modern Portfolio Theory\, greater diversification of holdings can help to improve the return/risk profile of a portfolio either by: a) enabling greater returns without adding to risk; or b) lowering risk without lowering returns. Transformation toward greater diversification has resembled to some extent the diffusion process described in institutional theory\, where new practices are initiated by large\, prestigious organizations and become increasingly adopted by smaller organizations as they seek legitimacy. While large endowments in general have embraced much broader diversification\, the adoption process has been mixed among smaller endowments and their overall performance has lagged. This inquiry addresses the question of how some smaller and mid-sized endowments have succeeded in adopting broader diversification while others have not. Institutional theory is used to explain some of the external factors that affect the diffusion of new practices (such as Modern Portfolio Theory) throughout an industry or organizational field. However\, institutional theory appears to fall short in explaining some of the internal factors in an organization that either facilitate or inhibit the adoption process. Absorptive capacity is explored in regards to its ability to explain some of those internal factors in the adoption/non-adoption process. The purpose of the study is to better understand the factors that facilitate and inhibit the adoption of broader portfolio diversification in an attempt to provide useful insights to endowment fiduciaries.,Doctorate of Management Programs
Keywords
Education\, Higher -- Economic aspects
Rights
© The Author(s). Kelvin Smith Library provides access for non-commercial, personal, or research use only. All other use, including but not limited to commercial or scholarly reproductions, redistribution, publication or transmission, whether by electronic means or otherwise, without prior written permission is strictly prohibited.
Department/Center
Design & Innovation
Recommended Citation
Lord, Mary (Mimi) E., "College and University Endowment Diversification: An Extension of Institutional Theory" (2007). Student Scholarship. 635.
https://commons.case.edu/studentworks/635