Corporate universities should be given degree-awarding powers and be allowed to use the university title officially, the Council for Industry and Higher Education said this week.
Size should not matter in gaining degree-awarding powers, according to the council, paving the way for small colleges as well as firms to become universities.
Rules on the minimum size of a university, currently 4,000 full-time-equivalent students, and on what type of institution can use the title and award degrees should be relaxed to meet the changing needs of students and industry, the CIHE says in its response to the government's consultation on the issue.
There should also be a system for businesses to give their seal of approval to degrees that meet employer needs, it argues.
Existing universities do not offer the kinds of courses many international businesses will need in the future.
It says that, in a system where each institution is autonomous and develops its own courses and assessments, businesses that are not covered by professional bodies struggle to find consistency in the content and quality of higher-level training courses.
"The absence of any national consistency, and of a national system of credit accumulation and transfer, may explain why the vast majority of business expenditure on staff training and development is spent with private-sector providers who can guarantee consistency, as well as probably a faster response and more flexible delivery capabilities," it says.
The CIHE suggests this issue could be of increasing importance for advanced vocational learning, such as foundation degrees.
It adds: "If higher education in its present form is unable to offer this consistency, then the only alternative would be for those major businesses to offer their own awards - assuming they or their staff want those awards to align with a national framework."
It says that "size is not necessarily an adequate reflection of quality", and small institutions that collaborate can provide the kind of resources and learning environment needed on degree courses.
Small specialist institutions tend to work closely with businesses and so expose their students to experience that enhances their employability, it says.
Quality should be related to relevance, particularly on vocational degrees, and employers should have the opportunity to put their seal of approval on such courses.
Richard Brown, CIHE chief executive, said this principle could even be extended to the mixed economy group of further education colleges (Meg) that offer higher education courses.
He said: "We have to start thinking outside the current model. The Meg colleges would have enough students and resources to award degrees if they were to work together."
Richard Wilson, business policy executive for the Institute of Directors, said he thought many corporations would be keen to gain degree-awarding powers and establish a corporate university.
He said: "We think it would bring more competition into higher education and encourage institutions to meet the needs of industry and employers. We see no reason why corporations should not have these opportunities when many already engage in substantial levels of research."