Asymmetry in information acquisition—Exploring the principal–agent dyad of sport organizations and sport management higher education institutions

Although agency theory originated in the field of economics, it has been widely applied, both theoretically and empirically, in many different disciplines since ‘examples of agency are universal’ (Ross, 1973, p. 134). A growing number of authors are using agency theory as a conceptual framework, heuristic tool or organizing concept in the higher education context (Gornitzka, Stensaker, Smeby, & de Boer, 2004; Kivistö, 2008; Kivistö & Zalyevska, 2015; Liefner, 2003). However, most of these studies employ common agency theory models, which assume asymmetrical distribution of information rather than asymmetrical gathering of information.

We assume the existence of a metaphorical contract within a principal–agent dyad, wherein sport organizations (the principal) engage sport management HEIs (the agent) in adequately qualifying graduates for employment (Fig. 1). This assumption is grounded in the formal and informal pressures exerted on both parties by their institutional environments (European, national, local) and cultural expectations (DiMaggio & Powell, 1983). HEIs are responsible for adequately qualifying graduates to function as valuable citizens (European Commission, 2019; Kultusministerkonferenz, 2000).

The principal in our dyad is a diverse set of sport organizations with converging and diverging interests and organizational logics, sharing the need for a highly qualified and flexible workforce. While a sport marketer is interested in profit maximization, a non-profit sport association aims to maximize utility for its stakeholders, and a professional sport club pursues both interests simultaneously. The agent in our dyad represents HEIs with sport management programmes. While the institutional pressures exerted on higher education (i.e. the Bologna Process) have partly resulted in convergence of formerly divergent logics of research and teaching, diversity still exists. Whereas the primary role of public universities remains ensuring ‘excellence, prestige, and influence’ in research (Bowen, 1981, p. 20) and providing education with academic freedom, this does not necessarily characterize private HEIs with profit-maximizing goals. We assume that SMHE fails to quickly respond to industry demands as a result of problematic asymmetry in information acquisition (Crémer et al., 1998; Kessler, 1998; Lewis & Sappington, 1993).

Sport organizations’ preferred information structure does not provide specific planning information to sport management HEIs or induce them to acquire such information. We argue that is due to incentive problems for sport organizations, because they believe that an optimal level of activity for SMHE is not sensitive to the output level that maximizes sport organizations’ benefits. When recruiting qualified graduates, sport organizations can select candidates from a wide range of study programmes, not just those offered by SMHE (Kaiser & Schütte, 2012). Indeed, sport organizations have few incentives to recruit sport management graduates or inform HEIs about the qualifications, competencies, skills and abilities they require. This might be due to ambiguity about whether SMHE is a distinct academic discipline or a profession (Chalip, 2006; Dowling, 2018).

As a consequence of the contract design, sport management HEIs remain uninformed about industry demands and may decide whether to take the information provided by sport organizations or acquire superior planning information. We argue that sport management HEIs decide to remain uninformed or ignorant (Kessler, 1998; Lewis & Sappington, 1993) due to the information costs of conducting labour market research, which are perceived to be excessive.

We assert that sport organizations are willing to subsidize the cost of information acquisition for SMHE to avoid ignorance in sport management HEIs (Kessler, 1998). However, since sport organizations assume that unified information acquisition and contract fulfilment by these HEIs produce undesired outcomes, they signal to the institutional environment that a third party, such as specialized labour market research entities, should be responsible for information acquisition. The EU-funded research project “New Age of Sport Management Education in Europe” (NASME) was tasked with acquiring information about qualification and competency requirements as well as sport management HEIs’ role in developing these requirements. From 2017–2019, research teams from nine European countries partnered to question and enhance SMHE based on industry demands. The project was divided into two consecutive data collection phases, with an overall sample of 635 responses by experts in the sport management labour market in the nine partner countries. After acquiring information, NASME was to publicly report their findings so that sport management HEIs could use this information to diligently fulfil the metaphorical contract (Lewis & Sappington, 1997).

We employed a purposeful sampling strategy based on the work of Patton (2015), selecting individuals with senior positions such as managing director, chief executive officer (CEO), and general secretary. To gain a holistic perspective of the sport industry, four main stakeholder categories were included: (1) professional sport clubs (C), (2) non-profit sport clubs and federations (NP), (3) private sector organizations (P) and (4) public sector organizations (PU). The selected organizations were representative of their sector, and their size varied from medium to large (Bayle & Robinson, 2007). In addition to institutionalized internships, the organizations offer job opportunities for career entrants as well as experts in specific fields. Most positions focus on general management, project management or aspects of communication management (marketing, sponsoring), and full-time commitment is expected (Table 1).

The 12 informants were 34–52 years of age and had academic degrees, mostly in sport management or sport economics. They had 9–25 years of work experience, with 3 months to 25 years at their current organization.

We performed qualitative content analysis of the 12 interview transcripts in accordance with Mayring (2015). Of eleven main questions, six focused on competencies, qualification requirements and the role of HEIs in their realization, but the data analysis included all interview data. The lead author repeatedly read the transcripts and coded segments using MAXQDA Analytics Pro 2018 (VERBI Software. Consult. Sozialforschung GmbH, Berlin, Germany). Coding employed deductive categories identified from the literature review and theoretical background (e.g. divergence of interest; information asymmetry, qualifications; competencies) as well as inductive categories related to the main research interest that emerged from the transcribed interview materials (e.g. expectations, empathy, assessment). The qualitative data analysis resulted in 67 codes and 927 coded segments.

Following a social-constructivist epistemology and post-qualitative perspectives on research, we acknowledge that theory-free knowledge does not exist (Smith & Hodkinson, 2009). The lead author analysed and interpreted the coded segments in regard to the research aim (qualifications, competencies, role of sport management HEIs, information asymmetry). To ensure rigour in the overall research and data analysis process, we employed ‘critical friends’ and self-reflexivity, as advocated by Smith and McGannon (2018). The role of a critical friend is ‘not to “agree” or achieve consensus, but rather to encourage reflexivity by challenging each other’s construction of knowledge’ (Cowan & Taylor, 2016, p. 508). This provides opportunities for rich dialogue about interpretive possibilities and requires researchers to make their thought processes explicit.

We extracted quotes from the interview transcripts to illustrate the findings and interpretations. All interviews were held in German, and a professional translator translated the quotes into English. The lead author examined the translations to ensure that the informants’ voices were maintained and avoid possible misunderstandings (Denzin & Lincoln, 2011).

According to the interviewees, there are no specific qualifications required for positions at sport organizations:

Well, I believe that sport management certainly is a good prerequisite. […] I don’t believe that what a sport manager brings along compared to a business administration graduate is a hiring criterion to the left or to the right. For us, both are programmes that offer the prerequisites for being hired, as well as some other study programmes. (C-2)

The informants showed no preference for graduates from a specific type of HEI (e.g. public or private, full-time or part-time). Likewise, they did not value specific study programmes and degrees over others:

To be honest, it would be all the same to me. […] What matters to me is that there is a passion for what he [or she] wants to do here, yes. Whether it is someone with a bachelor’s, a master’s or another degree, would make no difference to me. (P-3)

One interviewee from a non-profit sport organization (NP-2) mentioned the importance of cooperation with a specific educational programme for selecting future sport managers. The same interviewee negated the importance of certificates:

I have a look at what he or she has done. And also, the important things, such as personality. If I read that someone travelled for a year, I think it is sensational. […] So, I prefer that over someone who somehow did 10 quick internships in a row. […] So, in practical terms: When it comes to applications, I don’t even have a look at any certificates. (NP-2)

The interviewees did not value a master’s degree over a bachelor’s degree in sport management. This finding substantiates early research in the field. For example, DeSensi et al. (1990) pointed out the conflict between ‘what college/university faculty suggested as recommended degree levels and what business/agency personnel suggested as required degree levels’ (p. 56). This divergence of interest has been immanent since the foundation of the first academic programmes and presents a typical agency-problem (Akerlof, 1970). The prolonging situation of “over-education” within sport management would indicate opportunistic behaviour of SMHE in consciously offering highly specialized graduate programmes which students do not necessarily need for employability (Meroni & Vera-Toscano, 2017).

In the attempt to reduce asymmetry in information acquisition relevant information for SMHE, we further analysed the competencies required by interviewees. Based on a modified version of the competency explorer proposed by Heyse and Erpenbeck (2004)¹ as well as previous studies (Fahrner & Schüttoff, 2020; Schlesinger et al., 2016), we allocated coded segments to four competency classes: self, social and methodological competencies (i.e. generic competencies) and professional (sport management) competencies (i.e. subject-related competencies).

Decision-making capacity was mentioned by most interviewees and was identified as the most critical self-competency. However, the interviewees ascribed different meanings to decision-making, such as making firm decisions (C‑2, NP‑2, P‑1), taking responsibility for decisions made (C‑1, P‑3), decision-making as a team process (C‑3, PU-2) and guiding and preparing decisions as part of the decision-making process (NP-1). Affinity for sport was the only other crucial self-competency for all sport organizations. Interestingly, the interviewees did not necessarily associate affinity for sport with a sport management degree, supporting the ongoing discussion on the relevance of sport-management-specific programmes (Tsitskari, Goudas, Tsalouchou, & Michalopoulou, 2017; Zhang, 2015). Leadership, responsibility, passion and organizational identification were vital self-competencies for future sport managers. The interviewees from non-profit sport organizations emphasized the importance of special leadership skills, since sport managers need to lead two types of employees: paid staff and volunteers (NP‑1, NP-3).

Most interviewees mentioned soft skills required of sport managers. This term was used in various ways, but most often as a synonym for generic competencies. We separated the social aspects of this generic term and highlighted the complexity of social competencies. Within this category, teamwork was identified as the most important competency across all sectors:

Teamwork […] is a great skill. On the other hand, I can tell you that many of our organizations, you need to picture them as rather compartmentalized organizations. I will never forget the manager of a regional association who said the only one to talk to is the mirror because I am the only one in the office. So, in many places we also have very, very small organizations which have one full-time employee, and the question is, what is teamwork there? Then, teamwork of course is the cooperation between full-time and honorary staff, and then teamwork is one of the key skills. (NP-3)

Furthermore, the interviewees from the professional sport clubs and private-sector sport organizations highlighted the importance of (English) communication skills. Finally, relevant methodological competencies included applying theoretical knowledge into practice, reflection and flexibility.

Professional competencies concerning sport-management-specific knowledge were given very little emphasis in the interviews. Specialized knowledge about sport systems and structures appeared to be helpful in non-profit and public sector organizations. Informants from all sectors regarded generic information technology (IT) skills as vital. More specialized IT skills were less important for sport management graduates since sport organizations hire IT specialists.

In conclusion, the key informants gave an abundance of in-depth information concerning field-adequate competence-requirements for the employment of sport management graduates. When and if transmitted to decision makers within the development of sport management programmes, this information can substantially promote the fulfilment of a competency-based qualification as required by the metaphorical contract (Research Aim 1).

Interestingly, only three interviewees had a solid understanding of the variance and diversity of sport management programmes in Germany (NP‑3, PU‑1, PU-3). We interpret this as the result of asymmetric information between the contracting partners due to weak signals from sport management HEIs concerning the unique value of their programmes (Jensen & Meckling, 1976; Spence, 1973). The principal, however, seems to be highly interested in such signals:

But if I knew that these skills are taught in the bachelor’s or master’s degree in sport management, I might prefer him [/her] much, much more. Because I say, okay, he [/she] has exactly these soft skills, teamwork, network, communication, plus can stand his [/her] ground and can do that because he [/she] comes from sports. And has at least basic knowledge in […] digitalization, communication and accounting. […] Then I would much prefer him [/her] over a pure journalist. Well, but you don’t know that at that moment. (C-3)

The CEO of a national sport federation agreed:

I’m not interested in whether it’s part-time or private or at a university […]. My point is, if I know this is a sport manager, then I [should] know that certain competencies and certain skills have been taught during their studies and that, so to speak, a minimum of quality standards are linked to them. And, let me give you another example: if someone has a doctoral degree, then it is relatively clear what steps they have gone through to get there. And I don’t see that with the sport manager, and I actually have to consider and worry that differences in quality are not comprehensible to outside parties. (NP-3)

These findings substantiate earlier studies, which found a lack of clear signals for sport organizations regarding sport management programmes (Chalip, 2006; Dowling, Edwards, & Washington, 2014). Due to this information asymmetry, the principal is not able to clearly interpret compliance of SMHE in fulfilling their assignment within the contract. This could in parts be due to the heterogeneity of sport management programmes in Germany, rendering the assessment of individual agents nearly impossible (Eisenhardt, 1989). Thus, sport management HEIs need to signal their unique value (i.e. developing graduates with strong generic competencies) via reputation assurances, such as the publication of study documents (e.g. module descriptors), ranking orders and successful graduate testimonials in order to reduce information asymmetry and demonstrate their compliance to the requirements of the metaphorical contract (Spence, 1973).

Surprisingly, all interviewees expressed specific expectations for sport management HEIs. They are regarded as responsible for developing the aforementioned generic competencies as well as holistically preparing students for the (sport) industry. As one representative from a professional football club explained, ‘I believe that a university today not only has the task to prepare [students] academically for the profession, but to prepare [them] for the profession in an all-around way’ (C-2).

Furthermore, the interviewees highlighted the need for practical applicability of learning content, as this leads to sustainable employability. However, the interviewees were unable to specifically describe how practical content can be increased in higher education programmes. Most representatives proposed obligatory internships as an optimal solution for both sport management HEIs, as this increases their applicability, and sport organizations, as they profit from extra human resources. One representative explains:

Interns […] make an important contribution in many areas. The basic problem is that the studies are too school-like and there are no more possibilities to get interns for six months. And we actually only want to have interns [for six months] because everything else really doesn’t make sense. […] I believe six-month internships should be integrated and enabled in all study programmes. (C-3)

Study programmes should take this into account when designing curricula and make them more flexible to allow for internships (DeLuca & Braunstein-Minkove, 2016; Dunkel, Wohlfahrt, & Wendeborn, 2018). Open and transparent communication between the principal and agent could help both sides of the dyad to reduce asymmetry in information acquisition and, in doing so, better understand the importance of practical opportunities. While German law on minimum wages regulates voluntary internship arrangements intended for students to gain work experience, we maintain that the principal is just as responsible for creating appropriate conditions (i.e. compensation) for internships (mandatory or voluntary).

Voluntary engagement in sports could be advocated within sport management programmes to improve the practical applicability of sport management content (Wicker & Breuer, 2011). As Wallrodt and Thieme (2020) have shown, sports volunteering has a positive effect on applicants’ perceived qualifications and operates as a positive signal of social skills. Integrating such experiences into study programmes has great potential to raise awareness of the practical applicability of content and, thereby, distinguish graduates.

Finally, possible cooperation between sport organizations and specific sport management programmes emerged as a central theme in the interviews. The CEO of a large non-profit organization (NP-3) spoke about a cooperative relationship in which a specific sport management programme allowed employees to further their education. While most representatives spoke about partnerships with HEIs in general, few of these partnerships involved sport management programmes specifically. One representative highlighted dual-career opportunities as a form of partnership with a private HEI offering sport management (NP-2). Many studies within and outside of sport settings have emphasized the advantages of contractual cooperation between HEIs and industry (Hardin, Bemiller, & Pate, 2013; Petersen & Pierce, 2009). HEIs could contribute to fulfilment of the metaphorical contract by consenting to needs-based qualification of sport management students and being receptive to cooperation with sport management organizations (i.e. involving sport organizations in curriculum development, hosting career fairs or creating professorial positions that combine practice and academia).

We conclude from the interviews that the key informants have quite specific expectations concerning the role of SMHE in the principal–agent dyad. They clearly endorse the idea of a metaphorical contract and to that effect the expectations of qualifying graduates according to their needs. Notwithstanding, the key informants also acknowledge the slow response of HEIs to labour market demands:

Especially in the areas that are developing dynamically in sports management, universities and especially the public ones […] are very much lagging behind. Because they are simply less able to adapt quickly to corresponding developments and to incorporate trends […] into their programs. (PU-1)

We assert that the metaphorical contract lacks clear information about how HEIs should professionally train students for employability. HEIs primarily aim to create and disseminate knowledge. However, sport organizations demand that sport management HEIs support students in their personal development and active citizenship in order to remain competitive and fulfil supranational and national economic policy goals (European Commission, 2019; Vossensteyn et al., 2018).

The interests of sport organizations and sport management HEIs are contradictory in parts (Akerlof, 1970). This typical agency problem is exacerbated by the heterogeneity of the institutions and existing outcome-uncertainty (Eisenhardt, 1989). Legitimized by the Bologna Reform, we recommend SMHE to both acknowledge and fulfil the metaphorical contract and take a seat at the table, willing to learn more about the requirements of the principal. This would in the long run potentially help SMHE in achieving their goals. Due to their institutional goals and structures, private HEIs might be better prepared for fulfilling the role of professional trainers, and public universities’ self-image as educators might be a considerable hindrance to fulfilment of their role according to the metaphorical contract.

In clarifying the role of sport management programmes in fulfilling the metaphorical contract (Research Aim 2), our findings offer two major implications for sport management HEIs. First, sport management study programmes need to develop students’ generic competencies through, for example, group work or volunteering services. Second, SMHE needs to establish a clear profile for sport management programmes. There is currently no need for sport-management-specific qualifications, possibly due to the ambiguity surrounding whether sport management is an academic discipline or profession (Chalip, 2006; Dowling, 2018; Dowling et al., 2014). Concise differentiation between the abundance of degrees seems to be a suitable starting point in signalling relevance and uniqueness. While the sport management bachelor’s degree was developed to be an independent professional degree (European Commission, 2019), the master’s degree was developed to enable graduates to take on leading positions in the sport business (e.g. manager, team leader). As the two programmes have different goals concerning the employability of graduates, they should develop different generic and subject-specific competencies. According to educational policy goals, a master’s degree programme must develop higher levels of competence across all competence blocks compared with a bachelor’s degree programme (European Commission, 2008, 2019; Kultusministerkonferenz, 2017). Finally, SMHE needs to define the institutional architecture needed to offer degrees and determine whether it is more efficient to engage all types of HEIs in this task or whether specific HEIs are better suited.