1 Introduction
In recent decades, university funding has changed considerably across Europe. National governments have started to implement new allocation mechanisms by tying the funding provided to universities to their performance. The aim is to increase efficiency and productivity by fostering competition and rewarding output. The main argument is that if funding is provided to those who perform best, better results will be achieved, and others will have an incentive to perform better (Auranen and Nieminen
2010). In addition, third-party funding from both public and private sources has gained importance. As third-party funding is typically awarded through a competitive process, this development has put even more weight on competition and output. However, earlier research has revealed that competition and output-based incentives do not always result in a higher level of efficiency and productivity. Rather, they may have some unintended negative consequences, such as a mainstream focus and weaker societal impacts (e.g. Butler
2003; Langford et al.
2006).
For policy-makers, it is thus decisive to understand the relationship between different sources of funding, the process through which funding is provided, and the universities’ output to design effective and efficient policy measures. To do so, it is necessary to first understand the funding structure in a particular country before exploring how it affects output. In this paper, we will explore the funding of Austrian universities and the importance of different sources of funding. Austria is a good example for a university sector that has changed from input-oriented public funding to performance-oriented public and private funding during the last 2 decades. Using data from four public universities for the period from 2007 to 2017, we will first investigate the relationship between third-party funding and core funding as well as the relationship between third-party funded scientific staff and the entire scientific staff. In addition, we will investigate the structure of third-party funding based on funding sources. Then, we will focus on the role of third-party funding in business and economics. Our findings reveal the increasing importance of third-party funding in business and economics. They further highlight that the non-periodic allocation of funds by the funding institution makes it necessary to use longitudinal data. For policy makers, our results indicate the importance of adapting policies to their own systems, accounting for the political and systemic environment (Auranen and Nieminen
2010). This requires an understanding of the funding structures as well as of the relationship between funding structures and output.
3 Data and methods
Data about funding was collected from four public universities in Austria that offer study programs related to business and economics: Karl-Franzens-University Graz (
KFU), Johannes Kepler University Linz (
JKU), Alpen-Adria-University Klagenfurt (
AAU), and Vienna University of Economics and Business (
WU). The four universities were selected to due to certain characteristics like age, size (number of students and number of employees), region as well as specialization. While three of these universities (
KFU,
JKU,
AAU) comprise different faculties, such as natural sciences, social sciences, medicine or law, one university (
WU) only has one faculty. The data were obtained from the data warehouse of the Austrian Federal Ministry of Education, Science and Research (BMBWK
2018). The main task of uni: data is the provision of up-to-date facts about the Austrian higher education sector.
KFU was founded in 1585 is divided into six faculties: “Faculty of Catholic Theology”, “Faculty of Law”, “Faculty of Business, Economics and Social Science”, “Faculty of Arts and Humanities”, “Faculty of Natural Sciences” and “Faculty of Environmental and Regional Science and Education”. As the second oldest and second largest university in Austria, KFU is one of the most distinguished institutions with a comprehensive range of educational opportunities. Over 120 study programs are organized in these six faculties. In the winter term 2017, a total of 31,232 students (share of females: 61.1%) studied at KFU. The number of scientific staff during the same period of time was 1341.1 full time equivalent (FTE) (share of females: 42.0%), of which 175 FTE (13.05%) were professors. Almost 60% of all employees was scientific staff.
JKU was founded in 1966 and is one of the youngest universities of Austria. “Faculty of Social Sciences, Economics & Business”, Law” and “Medicine”, and three schools, “JKU Business School”, “Linz Institute of Technology” and “Linz School of Education”, which have their own subject-specific departments. In the winter term 2017, 21,283 students (share of females: 50.33%) were enrolled in 19 bachelor programs and 37 master studies. At that time, the scientific staff amounted to 1016.3 FTE (share of females: 30.57%), of which 126.8 FTE (12.48%) were professors. In total, around 60% of all university employees work in research and teaching.
AAU was established in 1970. In total, 35 departments are spread across the university’s four faculties: “Faculty of Interdisciplinary Studies”, “Faculty of Humanities”, “Faculty of Management and Economics” and “Faculty of Technical Science”. The university offers 18 bachelor programs, 24 master programs, 10 teacher training courses, and 4 doctoral programs. In the winter term 2017, 11,644 students (share of females: 60.6%) studied at AAU. During the same period, the number of scientific staff was 456.6 FTE (share of females: 46.8%), of which 70.3 FTE (15.4%) were professors. Around 58% of all employees are hired as scientific staff.
WU was founded in 1898 and has eleven research departments. In addition, there are the six competence centers: “Emerging Markets and Central-Eastern Europe”, “Empirical research methods”, “Experimental research”, “Sustainability”, “Non-profit organizations and Social Entrepreneurship”, and “
WU-Start-up center”. The number of students at
WU amounted to 23,580 (share of females: 47.4%) in the winter term 2017. They could choose between two bachelor programs, 15 master programs and five PhD studies. In this semester, the total number of scientific staff was 766.2 FTE (share of females: 44.7%), of which 89.6 FTE (11.7%) were professors. In total, around 56% of all university staff (in FTE) work in research and teaching. Third-party funding has the highest priority for the university and is seen as an important source to supplement its core funding. Accordingly, it has professionalized the acquisition and the management of third-party funds. In the US, a common source of external funding is alumni (Potter
2008). Although this type of private funding is still in its infancy in Europe, also
WU aims at fostering this source.
Overall, the universities included in this study differ considerably in terms of (1) founding year, ranging from 1585 to 1970, (2) size, with the number of students ranging from 11,644 (
AAU) to 31,232 (
KFU) and the number of scientific staff ranging from 456.6 FTE (
AAU) to 1341.1 FTE (
KFU),
1 (3) region, and (4) number of faculties.
Data obtained from the data warehouse of the Austrian Federal Ministry of Education, Science and Research relies primarily on the respective university’s intellectual capital reports and the university’s performance agreements. The Austrian university act of 2002 stipulates that universities have to prepare such reports on an annual basis. The first reports were prepared in 2005 and reported to the Austrian Federal Ministry of Education, Science, and Research. The content of these reports, however, was not harmonized and therefore differed a lot with respect to the information provided on sources of funding. Due to a directive that was issued in 2006 and determined the content of intellectual capital reports a common standard that allows for comparing universities’ sources of funding established by 2007. We therefore rely on data from 2007 to 2017 to track changes in the universities’ funding structure and in third-party funding over time. In the figures below, we report baseline data (from 2007) as well as data from the last five available years (2013–2017). Regarding the sources of funding, we have data from fewer years because the level of detail and presentation changed over time and therefore limited the possibility to track developments. Hence, we are only able to analyze changes in the sources of funding that occurred between 2013 and 2017.
In our analysis, we differentiate between the university level and the faculty level (business and economics) to account for influences resulting from different disciplines. At university level, our benchmark is the respective university’s core funds or the number of staff funded by core funds. As described above, core funds consist of funds distributed on the basis of performance agreements and structural funds. While the former are allocated on a yearly basis, the latter are allocated for a 3-year period. We thus divide the overall amount of structural funds by three and add them to the funds distributed on the basis of performance agreements in order to calculate the core funds for a specific year. Whenever possible, we rely on charts to better illustrate changes over time.
5 Discussion and conclusion
This paper aims at exploring the role of third-party funding at Austrian universities between 2007 and 2017. The results from our analysis indicate that the funding structures of Austrian universities have changed over time, albeit not always as expected. The data clearly indicates that the overall level of third-party funding has increased over the last decade. However, we can see that universities developed differently over time with regard to the share of the respective university’s third-party funding in its core funding. At university level, KFU and WU experienced an increase in the share of the university’s third-party funding in its core funding, whereas this share slightly decreased at JKU and AAU in the last 5 years. The reasons for the increasing and decreasing shares of third-party funding may differ for each university but a lack of data unfortunately prevents us from analyzing the reasons underlying these developments in more detail. Interestingly, the level of third-party funded employees compared to employees funded by core funds does not always correspond to the level of third-party funding (in monetary terms). Both KFU and JKU have higher levels of third-party funded employees, which might reflect the comparatively lower rank positions of project staff. It is important to note that the level of third-party funding and third-party funded employees varies considerably in some of the years at some universities. A reason for these fluctuations might be non-periodic payments from funding institutions. As these fluctuations make it difficult to compare data in single years, we suggest analyzing data over a longer period of time.
At faculty level, the share of third-party funding at the faculty of business and economics compared to the university’s core funding increased at three universities (KFU, JKU, WU). However, the overall level of third-party funding in this faculty is still rather low, particularly at JKU. When comparing third-party funding for the faculty of business and economics to the faculty of social science’s funding, all universities record an increase. These results allow for two interesting conclusions: First, although there is no clear indication that third-party funding has gained importance at university level over time, it has become more important for the faculty of business and economics. One of the reasons for this development might be a change in the faculties’ strategies regarding third-party funding. To increase the number of submitted proposals for third-party funding a lot of faculties have started to offer trainings and financial support for faculty members to develop proposals for competitive research grants. Second, empirical studies on the role of third-party funding need to focus on a particular field or faculty to track changes over time, because counter-directional developments in different fields or faculties might otherwise be masked.
Our results show that the impact third-party funding has at faculty and university level also depends on the size of the respective university. Whereas individual, externally funded projects will in general have low impact on the share of third-party funding at larger universities, the same projects may have considerable impact at larger universities. This also reflects in our findings: KFU, which is the largest university in our sample both with regard to the number of students and the number of scientific employees, shows comparatively low changes in the level of third-party funding (irrespective of the level of analysis). In contrast, AAU—the smallest university in our sample—experiences substantial changes in the level of third-party funding. In addition, the size of the university will also affect the riskiness of third-party funding. This is because writing proposals to funding institutions is time-consuming, the chances for the proposal to be successful are slim, and even if the project is funded the time lag between submitting the proposal and starting the project may be considerable. Consequently, time to generate research output is missing, which influences the future allocation of core funds, as they are based on the university’s performance. Universities also compete with each other to obtain funding from public as well as private sources. Funding from private companies requires that universities do not only build a good reputation within the research community, but also within the private sector. This implies that they have to establish a track record and get in contact with companies that are willing to collaborate and able to fund projects.
In a nutshell, our research indicates the increasing importance of third-party funding in business and economics. For research, our paper highlights the importance of focusing on a specific faculty or field to avoid distortions due to differences in the availability of funding opportunities and way funds can be spent. It also shows that the non-periodic allocation of funds by the funding institution makes it necessary to use longitudinal data. For policy makers, our results indicate the importance of adapting policies to their own systems, accounting for the political and systemic environment (Auranen and Nieminen
2010). This requires an understanding of the funding structures as well as of the relationship between funding structures and output.
This paper gives insight into the funding structure of Austrian universities and its change over time. We used secondary and publicly available data for this analysis. We saw that most data relating to the funding structure is only available at university level but not at faculty level. To obtain a deeper understanding about differences of third-party funding and the development of third-party funding over time, it is necessary to have more specific and fine-grained data at faculty level and at the level of research institutes. Such data would also allow to consider the university’s, faculty’s and research institute’s funding strategies. As these strategies likely differ among research institutes, they will also impact the funding structure at the various levels. Therefore, future research on third-party funding should consider these diverse funding strategies and research approaches and focus on the institute or department level instead of the university and faculty level. As we now know that there are differences in the structure and sources of third-party funding, future research should also investigate the relationship between these aspects and research output. This would provide insight if the various sources of third-party funding actually increase research performance. Lastly, this research focused on the specific Austrian public university context. It would be interesting to compare our results with other countries and university systems to learn about how context influences third-party funding. Notwithstanding these limitations, the paper represents a promising step toward explaining the role of third-party funding at Austrian universities.
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