Adoption of Technology-Mediated Distance Education among Higher-Education Institutions∗

Recent developments in Information Technology (IT) and the commercialization of the Internet have generated new opportunities for the delivery of education and allowed many higher-education institutions to bring their resources closer to a broad base of potential users. Graduate business degrees are especially in high demand; about 200 accredited schools offered Master of Business Administration (MBA) degrees over the Internet in 2002 according to the educational research firm Eduventures Inc. The population of online MBA students rose from about 5,000 students in 2000 to more than 100,000 in 2002 (Braun 2003). Enrollment at the largest U.S. online college, University of Phoenix Online, rose to around 100,000 students in 2003 and is expected to rise 50% in 2004. Business Week ranked the online college 22nd in its 2004 Info Tech 100 list and placed it among the top 10 most profitable IT firms (Baker and Green 2004). These developments suggest that the U.S. higher-education sector is finally embracing the information age. Despite the importance of the higher-education sector in the U.S. economy, the strategic use of technologymediated distance education (TMDE) has received limited research attention at best. We refer to TMDE as synchronous and asynchronous instruction delivered to remote locations via a combination of computer, communication, and data management technologies. The overwhelming majority of Information Systems (IS) research on TMDE has focused largely on the student level of analysis and has provided an understanding of the critical enabling role of IT in learning environments. However, there is also a need for research that takes a broader perspective on the impact of TMDE. In their research commentary, Alavi and Leidner (1995) called for a greater depth and breadth in this area and stressed the lack of studies that focus on the organizational and program levels. As a step toward understanding the strategic impact of TMDE at a broader level, we explore the types of higher-education institutions and degree programs that are more suited to utilize the new opportunities enabled by IT. In particular, we focus on the appropriate hybrid model—part online, part traditional—that best serves the interests of an institution. We first analytically model the value of education for students who have differentiated preferences for a certain institution’s degree, and then analyze which institutional characteristics support the adoption of TMDE. The hypotheses derived from the model are tested using two separate data sets obtained from surveys of Department of Education and U.S. News & World Report.