National research funding systems are an important part of the financing of national research programs. Several countries are restructuring their research funding systems by, for instance, creating new agencies which have to allocate the available resources or by applying competitive methods to allocate subsidies to projects. Also, it is now possible to allocate subsidy to a specific goal or mission, by which the focus on quality and relevance of the research activities is enlarged.

DG Research and Innovation of the European Commission has launched a study to assess the effectiveness of the national research funding systems: does more competition necessarily mean a better performance? This study is led by a consortium consisting of Empirica (Germany) and Dialogic with the goal to create a detailed description on the variation in the competition-based allocation of public research funding in the EU Member States.

Several countries have introduced reforms in their research funding systems during the last decade in order to make the research system more competitive. Some countries show a slight shift from institutional (block) funding to project-based funding (often on a competitive basis). However, a more prevalent pattern is to introduce competitive elements within all types of funding.

In many cases the underlying assumption of introducing competition in research funding is that there is a direct positive effect on research performance: when money goes to the best researchers this is an incentive to prepare excellent proposals. However, when we look at available data, this relation seems not clear. Accepting the current indicators for the time being (while these are the only verifiable input and output indicators available at the moment) we should reject the assumption that competitive funding has a direct positive effect on research performance or that this assumption is flawed (or at least too basic) and neglects elements that are more important with regard to research performance.

Research funding mechanisms are seen as only one of the variables that might have an impact on research performance. Other contextual factors like path dependency, the political system or the quality of the educational system might be as important or even more important in predicting the research performance of a country. Moreover, the link between competitive research funding and the outcome of the system is only indirect: it is mediated by the strategic behaviour of the various agents.