Universities must cooperate more if they are to avoid "suicidal" levels of competition, warned vice chancellors' chief executive Diane Warwick.
Ms Warwick also told the Association of University Administrators' conference at Strathclyde University that universities and colleges should seize the initiative and start wielding more of their now considerable economic and political power.
More than 1,400 conference delegates heard Ms Warwick deliver a thoroughly upbeat, and at times bullish, keynote speech in Glasgow's Royal Concert Hall on Monday.
She said that institutions had to be bold in fighting their corner with government but warned that swallowing market theories hook, line and sinker would be a counterproductive, if not outright disastrous, move for many.
Ms Warwick said: "The potential for conflict is real, but more intense competition inside the sector, in these circumstances, seems suicidal.
"Institutions will survive and thrive only if they are clear about their purpose if they cooperate; if they find new partners; if they seek actively to engage their supporters."
After the speech she blamed the present uncertainty over funding for fostering inappropriate levels of inter-institutional competition but again warned against succumbing to competitive ruthlessness.
She said: "I do not think we will stop competition entirely but I think that it is no good in terms of a scrabble for funding because institutions end up doing each other down. There is no reason why the current institutions shouldn't emerge out of this stronger than ever."
Ms Warwick praised administrators for the "virtuosity" shown in managing institutions as they adapted to the present financial environment.
She said: "In many ways this year may look like our darkest hour. My thesis is that only by looking forward can we influence events. Bemoaning the loss of a rosy past won't do. We ought to decide where higher education ought to be in the next ten years, then influence the decision makers to achieve it."
Ms Warwick said that administrators had to demonstrate the value of universities in order to justify public spending in the face of continuing pressures on resources.
The AUA said in a new policy statement that it will be concentrating on more training for members to enable them to meet the demands of their increasingly crucial role.