From Traditional Income to Strategic Revenue: Which Revenue Sources Actually Strengthen the Financial Stability of Kenyan Public Universities?

Abstract

Purpose: This study examines the relative contributions of five revenue sources, namely tuition and related revenue, research and innovation revenue, service revenue, asset-utilization revenue, and partnership revenue, to the financial stability of Kenyan public universities. Methodology: The study adopted a positivist philosophy and a quantitative longitudinal panel-data design, using audited financial data from 22 public universities over seven financial years (2017/18–2023/24), yielding 154 university-year observations. Financial stability was measured using the Composite Financial Index (CFI). Descriptive statistics, pairwise correlations, and panel regression analysis were used, and the Fixed Effects (FE) model was selected following the Hausman specification test. Findings: The results demonstrate substantial variation in the contribution of individual revenue sources. Tuition and related revenue was the strongest contributor to financial stability (β = 8.675, p < 0.001), followed by research and innovation revenue (β = 3.256, p < 0.001), asset-utilization revenue (β = 1.983, p < 0.001), and service revenue (β = 1.701, p < 0.001). Partnership revenue had a positive but statistically insignificant contribution (β = 0.134, p = 0.415). Unique Contribution to Theory, Policy and Practice: The findings demonstrate that multiple revenue streams do not necessarily generate equivalent financial benefits. The study extends Resource Dependence Theory, Portfolio Theory, and Resource Mobilization Theory by emphasizing the differential financial value of individual revenue sources. It proposes a strategic revenue hierarchy that protects tuition income, prioritizes research and innovation, improves asset productivity, professionalizes services, and restructures partnerships around financially substantive outcomes. The study therefore advances a quality-over-quantity perspective on revenue diversification, emphasizing financial productivity, sustainability, and strategic value rather than the number of revenue sources.