Investment Policies Models in the State Universities With Autonomous Legal Entities: Evidence From Indonesia

Research on hybrid organizations has gained interest from many scholars. This is due to the combined characteristics of private- and public-sector organizations, embedded in a single entity; thus, it carries distinctive challenges for the researchers. State universities with autonomous legal entities are educational institutions in Indonesia that are obliged to provide world-class education services for the public. In fulfilling the mission, the university management needs support, such as finance and regulation, from the government. However, the government limits the flexibility of the university management in generating profit. For instance, the tuition fee rate, which is one the university’s primary revenue sources, must be submitted to the government's guideline. In other words, the university management does not have the flexibility to determine the tuition cost rate. Consequently, the university management must seek for other revenue streams, i.e., optimizing the use of endowment funds for investment, to achieve the university’s objective. Also, the university management must explore strategies that can deliver maximum return for its investment while at the same time minimizing the risk. Therefore, This study explores to identify the investment policy model in hybrid organizations especially higher education institutions. A qualitative approach through documents review was conducted in this study. The findings reveal that an ideal portfolio investment model should consider factors, such as attitude to risk, the number of funds invested, income received during the period for investment, and the restrictions derived from the regulations. Therefore, the decision-makers, i.e., The ministry of higher education should consider issuing regulations that allow flexibility for the state university with autonomous legal entities in making investment decisions. Other than that, the management must develop investment policy models that can provide maximum return, but with moderate risks to support the financial needs of the university.