CHALLENGING UNIVERSITY GOVERNANCE IN EUROPE: IMPACT OF DIVERSIFICATION OF UNIVERSITY FUNDING

Universities are considered to be at the very heart of knowledge creation and development underpinning economic growth and competitiveness. Technological advancement and labor market changes raise new demands on universities. In a continuously more competitive environment, quality university education and research require significant funding. Under the scarcity of public resources, competition for funding increased among universities in order to enhance efficiency and quality. In the future, shifting priorities for public funding to sectors like social protection, health, environment, climate change, energy is likely to occur because of the demographic trends, aging population and other global challenges. Therefore it is expected that traditional government public funding for universities will not increase or will not increase sufficiently to cover full costs of universities; the economic downturn will also accrue this trend and universities are likely to compete with other priorities for public funding. To this end, universities have two major strategic options either concentrating of research and education activities to build up a strategic profile and to fully benefit thereof and/or diversifying their funding. This paper aims to analyze how the option of EU universities for diversification of funding may challenge the university governance and to identify which are the main areas of university governance to be influenced. New models of good university governance are required for these institutions to remain competitive.