Rethinking excellence: the impact of the Excellence Initiative on the relative productivity of German universities

Abstract The German Excellence Initiative is a path-breaking initiative to transforming the higher education system towards better performing universities and performance enhancing competition among them. Despite the reclassification of universities and other systemic changes brought about by this new funding format, it remains unclear whether and how the Excellence Initiative does have the intended impact on the performance of funded universities compared to non-funded universities. This paper examines the Initiative’s effect on German universities’ relative productivity in research and in teaching using a novel data set that integrates publication and detailed university-level data covering a 20-year period. A two-step method is employed: first, calculating relative productivity through a non-parametric approach, and second, estimating treatment effects using a difference-in-difference analysis. Our findings reveal that the Excellence Initiative impact on funded universities to improve their relative productivity is modest at best. In research, some Excellence-funded universities, particularly those that won Graduate Schools and Clusters of Excellence funding, improved significantly, although this effect is temporary. Winning the funding line Future Concepts does not (yet) result in a higher relative research productivity. In teaching, we found no significant average treatment effect, but a slightly significant time-specific decline in relative teaching productivity two years after funding.