The asymmetric impacts of governmental grant funding and block funding on research quality in Chinese universities

Abstract

Drawing on theoretical perspectives regarding the public good nature of research activities, this study develops a dual-dimensional framework to examine how universities of different ranks respond to various types of public funding. Using a unique dataset of Chinese public universities, we find that grant funding has a U-shape effect on research quality, while block funding has a positive effect on research quality of universities. Furthermore, highly ranked universities may benefit more from grant funding while other less highly ranked universities take better advantage of block funding. These findings contribute to the literature on the allocation efficiency of government funds by understanding the asymmetric impacts of grant and block funding, and by highlighting the distinct responses of universities to public fundings.