Performance-based funding and university research productivity: the moderating effect of university legitimacy

The introduction of competitive funding mechanisms in higher education is found to generally increase research productivity. However, the diversity within higher education systems may lead universities to behave in substantially different ways in response to the adoption of competitive funding criteria. In particular, we argue that the legitimacy of universities, defined as their level of recognition based on the adherence to socially accepted norms and expectations, is crucial in shaping their reaction. This paper investigates the change in research productivity experienced by Italian universities following the introduction of the first Performance-based Research Funding System (PRFS) in 2003, focusing on the moderating effect of university legitimacy. Using a sample of 75 universities observed during the period 1999-2011, we find that the introduction of PRFS leads to an increase in research productivity, and this increase is significantly more pronounced among more legitimate universities.