Spending Up the Ranks? The Relationship Between Striving for Prestige and Administrative Expenditures at U.S. Public Research Universities

Despite occupying a central position in contemporary U.S. higher education discourse, empirical research on administrative costs is limited. The purpose of this study was to extend existing research on administrative spending in higher education by empirically examining whether recently shifting to research university status in the Carnegie Classification influences administrative costs. Informing the analysis was a theoretical framework consisting of neo-institutional theory and the revenue theory of costs. The study examined 164 public research universities between 2004 and 2012 using a a pooled regression model with Driscoll-Kraay standard errors and a first-order autoregressive (AR1) lag. Results showed that shifting to research university status had a significant, positive influence on administrative spending at public research universities. Nevertheless, the influence of reclassification on administrative spending dissipated over time and to the point where the difference was no longer statistically significant. Importantly, results also showed that state appropriations and tuition revenue were positively associated with administrative spending, while enrollment was negatively associated with administrative spending. These results have important implications related to understanding and managing administrative spending among U.S. public research universities