Three types of relations are becoming contract-like:

a. Institution-students
The relations between students and teachers in the early days of the university were purely contractual. A modern variation, vouchers, is not yet implemented, but this may be a matter of time. However, the introduction of (differentiated) tuition fees, paid to the institution and not the State, is a step towards contractual relationships. The higher tuition fees are, the stronger the idea of having a contract. Tuition fees imply feelings of mutual obligations between parties; students asking direct value for money. Competition, for example through funding based on student numbers or diplomas, has the same effect.
b. Institution-State
In the light of the trend towards 'dialogue', it is not a surprise that lump-sum and budget funding are being introduced. These funding methods have a higher level of contractuality and thus fit better in equal relationships than line-item budgeting. Rightly, Albrecht & Ziderman (1992) advise caution about purely negotiated funding because of uncertainties in relation to enrolments, job security, lack of incentives for efficiency and opportunities for strategic planning. In public institutions, there are signs that staff contracts are following private labour law. Nonetheless, only recently and not in many countries do staff have a negotiated (collective) contract with the institution instead of a fixed regulated position as civil servants usually have. Finally, university centres are actively tendering for contracts.
c. Intra institutional
The intra-institutional forms of contract-like governance are management contracts and project management. These are basically operational contracts between any combination of staff member, department, faculty, institution. The increasing popularity of these forms of management coincides with the implementation of enhanced institutional autonomy. University governance has always been highly decentralised, but management contracts change the appearance. They imply departing from traditional forms of academic oligarchy and cyclic planning. Complex hybrid organisations have to mitigate hierarchical management and turn to project management, also at the work-face. These pseudo-contracts, because it is a contract-like working style in a formal hierarchical structure, are interesting, but unstable. They easily fall back into the habits of a formal hierarchy. Pseudo-contracts do not create a minimum level of equality; often nothing is put on paper; they are often vague job descriptions on a new format. Nonetheless, complex organisations need project management. This requires improved management contracts, including a mandate, budget responsibility and responsibility for the internal, sometimes even external, accountability.

To co-ordinate relations, processes and projects, requires a flat structure, network-management, and fast flowing information. Consequently, the type of relations is naturally contractual: based on negotiating tasks and budgets within the general mission, and not on orders. Holding-company structures and contracts provide opportunities to make governance leaner. Directive rules should be reserved to protect the legitimate interests of the State (see 5.2), to provide intervention instruments for when efficiency and effectiveness are at stake. For the rest, a contractual style of governance that facilitates and stimulates the work has to be achieved through adjusting laws and by-laws.

It has been argued that administrative contracts are subversive to democracy as they escape democratic control. This is not correct. Agreements with representative elected bodies or accountable persons who are nominated through a democratic process are subject to control. Unlike public law, contracts presuppose equal partners. Democracy profits if the procedures are open and well-designed. Already in the phase of making the contract, and not only ex-post, 'balances' become intrinsically a part of governing. The system becomes more democratic and more flexible when autonomy is combined with contract-management.

4.4 Regulating networks

Splitting up the great number of managerial processes within the higher education system is useful as a theoretical exercise in order to understand and regulate mechanisms and behaviour, hut not practicable as a method of co-ordination. The management of research based education, professional education, free 'basic', and contract research, require different techniques and, consequently, different conditions. We should, therefore, explore a path towards creating and continuously updating a regulatory structure for higher education and research networks. This is vital to any environment, especially one for which the taxpayer pays and the government is politically responsible.
Peterson (1995), apparently drawing on Morgan (1986), describes new organisational, governance and leadership images. Dill & Sporn (1995) refer to three basic trends:

• from 'government steered' to 'market driven' to a trend towards the 'supervisory state' (see also Van Vught, 1989; and Neave, Van Vught, 1991)
• towards isomorphism of large corporations, meaning that management structures are all over the world acquiring more and more similar features
• analogous trends, in traditional public bureaucracy as well as business, towards networks

Dill & Sporn consider the university as a network organisation that they define as Powell (1990): 'A network implies a structured process for relations among individuals or groups, a lateral pattern of exchange with reciprocal lines of communication.' A network is a loosely-coupled series of rather informal relationships in a field that the individuals or groups regard as common. Dill & Sporn consider networking as the inevitable response to the high environmental complexity and the high speed of change. They suggest adaptations of university governance to the network type organisation by strengthening integration. In their view, integration should be achieved through definition of the university mission, a combination of large and small units in the structure, management based on definition, articulation and communication of shared values and information technology. We can agree with Dill & Sporn that networking is not new in higher education, and that it is not sufficiently instrumentalised. Nonetheless, there are more problems than fragmentation: in a self-regulatory system this is merely an institutional problem.
lt is likely that the State will remain the main funder and thus the most influential policy maker on the European continent; not just a supervisor in the narrow sense of the word. The tradition of social market regulation to soften undesired effects of the pure market, has resulted in another kind of supervision by the State. Networking definitely suits the management of daily operations, hut seems not always appropriate for the top management and strategic policy making. Networks seem less appropriate for:

• connecting Parliament, government and institution;
• securing political support for sufficient base funding;
• producing sufficient graduates;
• ensuring that the institution plays the role society expects;
• counteracting fragmentation and assuring critical mass and diversity;
• providing a multi-disciplinary environment.