Financial Sustainability as a Structural Challenge in Malaysian Public Higher Learning Institutions: An Institutional Theory Perspective

Abstract

Financial sustainability has emerged as one of the most pressing structural challenges confronting Malaysian public higher learning institutions (HLIs). Although there has been a strong articulation of policy commitments in successive national blueprints, the financial structure of public universities in Malaysia has continued to be characterised by a strong and structural reliance on government grants, decreasing per-student spending, and insufficient ability to generate autonomous income. This conceptual paper, based on Institutional Theory and in particular the terms of institutional logics and loose coupling, critically discusses the nature, factors, and implications of financial unsustainability in Malaysian public HLIs. This analysis has shown that financial sustainability is not simply a fiscal management issue but an even more institutional phenomenon influenced by conflicting logics of academic mission and market accountability. The paper goes further to explore how Malaysia Higher Education Blueprint 2026-2035 (MHEB 2026-2035) and the New Funding Formula (NFF) reconfigure the financial governance terrain, escalating institutional demands on public universities to diversify their revenue streams and achieve performance-based results. In its argument, the paper contends that it is not only necessary to technically reform funding mechanisms but also contextually sensitive institutional strategies that align competing organisational logics in order to achieve financial sustainability in the Malaysian context. Moreover, the analysis contributes to the higher education finance literature as it provides a policy-synthesized, theoretically based analysis of financial sustainability within a developing-country setting.