The London School of Economics has established a commercial distance-learning university with a venture capital company and four American universities.
Called Unext, it will offer MBAs by internet-based distance learning to the corporate sector, targeting managers in global organisations such as IBM.
The five universities - the LSE, and Chicago, Colombia, Stanford and Carnegie Mellon universities - will develop the content of these courses, but will not have a hand in selecting students or awarding degrees. Unext is applying for degree-awarding powers from one of the six regional bodies that accredit higher education in the United States.
"There is massive demand from people hungry to acquire knowledge but (who are) hindered by the unavailability of quality provision," said Andy Rosenfield, chief executive of Unext.
"We are interested in giving people at work access to education. We are initially concentrating on working people because the internet is more readily accessible to them."
Stephen Hill, pro-director of the LSE, said: "Internet-based distance learning is a major new development in global education and it is important for an internationally respected institution like the LSE to get into it."
The arrangements allow the universities to dip a toe into distance learning without exposing themselves to financial risk, he added. LSE's participation is through ELSE, its consultancy and IPR trading company.
Unext expects to generate revenues of at least $300 million (Pounds 187.5 million) within five years, enrolling thousands and possibly tens of thousands of students. It was set up 15 months ago as a venture capital company.
The main shareholders are the education and training company Knowledge Universe, backed by Larry Ellison of Oracle, and the universities of Chicago and Columbia. Subsidiary shareholders are ELSE and Stanford and Carnegie Mellon universities. Senior Unext managers also have equity.
The company could be floated on the New York Stock Exchange within a year, according to the LSE. But Unext said that it had no immediate plans to do so. It is also paying the universities "non-trivial" consultancy charges for developing course materials.
The universities are confident about standards at Unext, Professor Hill said. "No university has core skills in marketing and managing a major global organisation," he said.
"What we are very good at is academic excellence and quality assurance. We are confident that Unext will be a quality institution, and we will also have rights of veto over the use of LSE material."
Unext founder Dr Rosenfield is a part-time senior lecturer in law at the University of Chicago; he is also chairman and chief executive of Unext. The company's five-strong academic advisory board includes three Nobel laureates: Kenneth Arrow, Gary Becker and Merton Miller.