Just following the money? How research funding shapes the governance of university research

Abstract Two main reforms have taken place in many European university systems: first, universities have supposedly become autonomous strategic actors. Second, research funding has changed to a complex mix of often performance-based block grants and competitive project-based grants. However, literature so far has barely investigated how different research funding characteristics affect universities’ capacity to act strategically. We build a novel conceptual framework to argue that funding arrangements impact university leadership’s strategic space to steer research along three dimensions: the locus of the governance of research activities, how strategies are implemented, and which directions research takes. We investigate this in a comparative analysis of how research is governed at universities in Sweden and Austria, providing a systematic account of the effects of varying characteristics of research funding on strategically steering research at universities. Our results inform the discussion on whether and how financing can be used to govern university research.