Alchian on tenure: Some long awaited empirical evidence

Armen Alchian made many important contributions to our understanding of organizations. One of the most important insights was related to organizations of higher education and the existence of tenure. However, the primary empirical predictions of his explanation for tenure have remained unexplored. This paper provides some empirical evidence on these predictions. Alchian's predictions receive strong support. The results indicate that tenure is significantly more likely to occur in nonprofit institutions than in for-profit institutions, tenure is more common in public institutions than in private nonprofit institutions, and among private nonprofit institutions the incidence of tenure is positively related to the level of endowment support and negatively related to the institution's reliance on tuition and fees.