MAPping the Future

One of the existing programs of the University of the Philippines (UP) is the Archipelagic and Ocean Studies Program, which is intended to underscore the country’s “archipelagic reality” as the basis for the formulation of developmental strategies.

In line with this program, and in view of the vast cultural and physical diversity of the country, the UP Board of Regents has recently approved the creation of a vastly expanded Virtual Archipelagic University of the Philippines (VAUP) with the purpose of integrating into a single collective framework the UP System (UPS) and all other institutions in the country that are engaged in the production and dissemination of knowledge. Among these are the following: state universities and colleges, privately run institutions of higher learning, the Department of Education, the Commission on Higher Education and the Technical Education and Skills Development Authority. The creation of such a body was deemed necessary in view of the felt need to weld these wide-ranging entities into coherence in pursuit of a common set of goals and objectives.

Definitions

The proposed VAUP is a digital platform that brings together the UPS and the other educational institutions in the country into a collaborative effort to achieve a common set of objectives for themselves, for their constituents and for society.

Digital platforms are commonplace in the world of business. They are a group of organizations that employ cloud-based software and services that allow them to form extended value networks (EVNs aka “supply chains”) of interactive product users and providers for the purpose of maximizing their joint production of economic value.

Blockchain is the most common software used by digital platforms to facilitate interaction and sharing of resources. It is a technology that ensures permanence, transparency and privacy in the record-keeping of transactions among multiple parties, and provides real-time access to a single source of verifiable information on these transactions.

Rationale

Their wide diversity notwithstanding, the entities that will comprise VAUP have one thing in common: they are all engaged in the production and dissemination of knowledge.

The theoretical principles that underpin the concept of VAUP derive from certain unique properties of knowledge as an economic resource. These are the following:

The consumption of knowledge is said to be nonrivalrous, that is to say, its value to the owner is not lost or diminished by sharing this with others. In fact, the sharing of knowledge with others enhances its value, both to the owner and to the recipient. Thus, should the Institute of Marine Sciences of UP Diliman share its research findings on coral reefs with, say, the Palawan State University, the former does not lose anything while the latter gains needed information relating to its current research activities.

Indeed, both institutions together benefit from this transaction. This is due in part to other related properties of knowledge:

Knowledge is subject to what are known as network effects or network externalities. The value of knowledge—in this case, the value of research data on coral reefs—increases with the number of users.

Knowledge is subject to the economies of complementation. If complementary knowledge is shared, its value to all parties is greater than the sum of its value to the individual players. Unlike all other economic resources, knowledge is subject to increasing returns. Each addition to knowledge is more valuable than the previous increments. It follows, therefore, that it pays for knowledge producers and users to maintain their productive and collaborative activities ad infinitum.

By contrast, the traditional factors of production, such as labor and land, are subject to diminishing returns. This sets limits to the production of economic goods and services because it makes no sense to increase output beyond the point where the value of additional output is less than its cost.

Challenges to successful implementation

The successful implementation of collective action, such as the proposed VAUP, is fraught with challenges and difficulties. Collective action is prone to failure due to a number of factors:

Conflict of interests: Joint activities tend to flounder because participants fail to find a common set of goals. Mechanisms must therefore be found to coalign the interests of the participants and to identify results that are mutually beneficial, a task easier said than done.

The free rider problem. Collective action often fails to materialize because some participants are unable—or unwilling!—to contribute to the joint effort. This causes resentment among those who are actively involved in the joint undertaking, and may lead to the eventual breakup of the collaborative effort.

Finally, there is a tendency among many participants in a collective effort, known in the trade as the “not-made-here syndrome,” to avoid using or buying products, research, standards or knowledge from external origins.

Value capture theory: Its irrelevance to VAUP

In the world of business, EVNs are organized for the purpose of maximizing joint output and for the ultimate strategic goal of each individual participant to capture as much value as possible for itself from the joint effort. There is no need for such competitive strategies among educational institutions, whose main function is to create and disseminate knowledge, because in such joint undertakings, all participants—each and collectively, as well as the entire community—enjoy the benefits of abundant knowledge.

It’s a win-win strategy any way one looks at it!

The article reflects the personal opinion of the author and not the official stand of the Management Association of the Philippines or MAP.

The author is a retired professor of economics and management at UP Diliman.

Feedback at map@map.org.ph and nspoblador@gmail.com.