In 2004, national universities in Japan were transformed into national university corporations with a juridical public body separated from the central government. National universities entered a new and difficult phase. This structural reform is theoretically explained by the administrative theory called Principal-Agent Theory (PAT) developed by new institutional economics.The purpose of this paper is firstly to examine how national universities were reconstructed over the last decade under the PAT theory, based on empirical data gathered from 86 of them. What can clearly be seen is that not only the numbers of administrative professors have increased, but also the change of focus of administrative staff from departmental matters to administrative institutional building. This finding shows the managerial turn in academia as predicted by PAT.Secondly, the paper challenges PAT Theory which implicitly assumes the rationalist, objective-oriented models of organizational behavior, from the perspective of sociological new-institutionalism. Central to new-institutional theory is the focus on ‘rational myth’ and trust beyond university stakeholders, and the idea that formal structures of organization are decoupled from the actual activities, not simply functional ends in and of themselves.Thirdly, the paper departs from the new-institutionalism by approaching colonization of the university. This shift in perspective is caused by the appearance of World University ranking. Under the pressures of ranking, which are part of global movement and produces an artificial market triggering virtual competition among the universities, it is difficult to decouple actual university activities from a new virtual reality. Rather than assuming that decoupling automatically occurs, decoupling should be treated as dependent on the characteristics of institutional environments.