The Performance-Based Funding Scheme of Higher Education Institutions

The purpose of this study is to assess the new performance-based funding scheme of the Finnish universities of applied sciences. In many countries, such schemes have largely failed and have been uneven and unstable. The results of this study indicate that, in Finland, the funding scheme has improved the graduation rates, especially among male students. This study proposes the use of the balanced scorecard approach to improve the funding scheme. The learning and growth perspective of the balanced scorecard is non-existent in the Finnish scheme, which means that the funding scheme does not include the research and teaching skills necessary to achieve efficient and effective processes and high quality. Moreover, the funding scheme does not include the funding of education, which is important in market-oriented education. The research findings of this study are useful for those who want to modify the funding scheme so that all the necessary indicators are incorporated in the improved scheme.