ABSTRACT
A central theme of approaches to new public management is the emulation of the market through state-induced competition. Basing state funding allocations on comparative performance is one way of setting an incentive for competitive practice amongst universities. Reforms in funding allocation have occurred in Germany at both state and university level. German higher education is often seen as a late starter in terms of the structural reforms and changed emphasis in governance associated with new public management (NPM), a goal encapsulated in the term "steering at a distance". The chapter explains the general context of current university reform initiatives and sketches the specific structural context within which reform can be realized. It describes the performance-based allocation systems utilized at state and university level, respectively. The chapter discusses the German character of NPM and, on the basis of recent developments, provides an outlook for the future of models of performance-based funding in Germany.
