"Pay for Promise" in Higher Education: the Influence of NPM on Resource Allocation in German Universities

Abstract

Quantification as a way to govern by numbers has colonised all sectors of modern societies. In the German higher education sector, a Performance-Based Resource Allocation scheme (commonly referred to as Leistungsorientierte Mittelverteilung - LOM for short) has steadily been developed since the 1990s. In an organisational context characterised by increasing international competition and internal differentiation, universities and their regulators have embraced the notion of smart resource allocation through performance indicators. At the same time, the sector has historically been characterised by a traditional cameralistic resource allocation mechanism, where the interactions between the main financiers (state governments), and beneficiaries (universities) were underpinned by a desire to ensure continuity and predictability. Based on empirical evidence, we outline how the university has transformed from a bureaucratic public service deliverer to an adaptable organisation that is supposed to learn from quantified information. This perspective allows for the discussion of quantification as a contemporary steering mechanism.