Analyzing Neoliberalism in Theory and Practice: The Case of Performance-Based Funding for Higher Education

Dougherty, Kevin J.; Natow, Rebecca Spiro

Neoliberal ideas – whether the new public management, principal-agent theory, or performance management – have provided rationale for sweeping reforms in the governance and operation of higher education. Despite this, little attention has been devoted to how well neoliberal theory illuminates the policy process by which neoliberal policy is enacted and implemented. This paper expands our understanding of the origins, implementation, and impacts of neoliberal policies by examining the case of performance-based funding (PBF) for higher education in the United States, Europe, Canada, Australia, and elsewhere. With regard to policy origins, neoliberal theory anticipates the key role that top government officials play in the development of PBF but fails to anticipate the important roles of business and higher education institutions in the formation of neoliberal policies. Neoliberal theory notes the important role of monetary incentives as policy instruments and the obstacles posed by gaming on the part of agents, but the implementation of PBF also involves other policy instruments and faces additional obstacles to implementation. Policy outcomes fitting the neoliberal focus on organizational effectiveness and efficiency are only weakly produced by PBF, but PBF is associated with a host of unintended impacts that neoliberal theory ignores.


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More About This Work

Academic Units
Education Policy
Centre for Global Higher Education
Published Here
June 7, 2019