When Excellence is not Excellent: The Impact of the Excellence Initiative on the Relative Productivity of German Universities

Since the Bologna Process, universities have experienced a tremendous increase in competitive pressure. The Excellence Initiative is a path-breaking initiative to the historically-based egalitarian higher education system in Germany to boost universities' competitiveness and the competition among universities. Despite this systematic change, it remains rather unclear to what extent the Excellence Initiative influences the performance. In this paper, we investigate the effect of the Excellence Initiative on universities relative productivity in teaching and research and hence on the divergence or convergence of universities in these performance dimensions. Based on a unique dataset that combines publication and detailed university-level data, we apply a two-step approach by calculating relative productivity with a non-parametric procedure in the first step and using a difference-in-difference approach for estimating treatment effects of the Excellence Initiative in the second step. Overall, we note only a few moments when universities funded by the Excellence Initiative seem to excel and make progress compared to non-funded universities. In research, only some of the Excellence-funded universities, particularly the winners of the Graduate Schools and Clusters of Excellence funding line, manage to improve significantly, even if only for a few years. In teaching, we found no significant average treatment effect of the Excellence Initiative, but a slightly significant time-specific decline in relative teaching productivity two years after funding.