This review examines issues which need to be addressed in order to increase the effectiveness of institutional management of innovation and change in higher education, and is written primarily from a practical perspective rather than from a theoretical or research viewpoint. The paper is divided into two parts: Part I briefly reviews a number of key issues in the management of higher educational institutions in the 1990s; and Part II builds on this to consider the management of innovation and change in more detail. Part I discussions examine changes in institutional decision-making, financial management and funding, leadership, higher education diversification, performance assessment, and people management. Part II discussions include whether or not institutions of higher education are resistant to change, the main sources of innovation in higher education, institutional readiness for change, implementing change in higher education, and the strategies for innovation and change. Contains 55 references. (GLR)