Incentives, rationales, and expected impact: linking performance-based research funding to internal funding distributions of universities

In this chapter, we aim to “open the black box” of universities in their efforts of linking performance-based research funding system (PRFS) and their efforts of internal incentivisation. We discuss on how PRFS affects universities’ internal incentivisation structures and how this behaviour translates into shifts in university research performance. We argue that agency theory helps to explain how individuals, units and universities attempt to resolve tensions between motivation and performance. This leads to an understanding in which the PRFSs are based on the validity of two interconnected premises; an individual or unit is sensitive to financial incentives of PRFSs if they have the sufficient motivation and the sufficient capability to align their research production with PRFS incentives. We conclude that PRFSs are only able to deliver the expected benefits to the extent their basic assumptions are in with the intra-institutional causal chain; incorrect assumptions likely lead to higher unintended effects.