The ownership and governance structures of Finnish universities of applied sciences have undergone several changes during the past years. After the national university of applied sciences reform carried out in the 2010s, the ownership of many universities of applied sciences has been changed.

After the reform an increasing number of universities of applied sciences began to operate as a part of their owners’ concern structures and besides municipalities (hereinafter referred to as cities), universities have emerged as a new, significant owner group.

Universities of applied sciences are independent legal persons established as limited liability companies, and their shareholders have responsibilities and rights to carry out corporate governance. The subject of this study is the corporate governance practiced by cities and universities as corporate parents of universities of applied sciences. The controlling interest of a corporate parent relative to a university of applied sciences, which operates as its subsidiary, has so far been a scarcely studied and less known phenomenon in the governance of higher education institutions. This study aims to fill this gap by producing new knowledge and insights on this issue from the perspective of owners using the methods of qualitative research. This study is exploratory in nature.

The purpose of this study is to increase and advance our understanding of this phenomenon. The definition of corporate governance in this study includes the ownership strategy and the corporate governance practices carried out by the corporate parent. There are two research questions: the research question concerning the ownership strategy considers the justifications and aims of ownership, and the research question on corporate governance practices focuses on the currently used and targeted management and governance instruments.

The study utilises a comparative setting, in which the two compared owner groups are formed of samples of city owners and university owners. The theoretical framework of the study is based on the contingency theory and the theory of corporate parenting. The empirical data, consisting of interviews and documents, were collected in 2019–20.

The results of the study indicated that corporate governance is a part of the governance entity of universities of applied sciences. The owner organisations justify the ownership with judicial-administrative and psychological-social factors. Owner organisations are active owners in several roles: they provide strategic guidance, change structures, seek synergy, supervise performance and guide resources. By nature, corporate governance is influencing proactively on the decision-making of the university of applied sciences and implementing concern level planning and management systems.

The study found differences between the two owner groups in the motives and goals of owning universities of applied sciences. University owners strive for a more synergetic concern structure than city owners. University owners are reaching to the level and methods of producing the basic operations, structures and support services of universities of applied sciences.

University owners as corporate parents seek benefits by revising the internal value chains of the concern and by striving for organic growth. The aims of university owners’ corporate governance have similarities with the aims typically set for higher education institutions’ fusions. City owners’ corporate governance is more distant, and cities have adopted the role of controllers and enablers, which does not aim at significantly changing the internal methods of operation of universities of applied sciences. City owners execute corporate governance in the networks of local innovation policies and with the ownership, aim at positive, indirect effects on the economic structure and renewal of the region. The data indicated that the views of the owner groups’ representatives differed from each other in terms of which owner qualities and parenting style best create added value for the owned university of applied sciences.

I recommend that corporate governance is included as an independent governance element in the future research of universities of applied sciences’ governance, and that it is taken into account in a more versatile manner in higher education research which focuses on structural changes. The topic requires more in-depth research on how the different ownership solutions are linked to the universities of applied sciences’ institutional profiles, performance results or realization of institutional autonomy. In local decision-making and in particular in connection with the national higher education policy, open discussion is required on the desired direction of the higher education system and the development of universities of applied sciences which profile themselves in different ways. In practice, the results of the study can be applied in the development of the legislation on corporate governance and how corporate parents govern concern level organisations.