Publication
Incentives for Universities to Support Regional Growth
Published: 2 November 2026
ERC SOTA Review No 71
Associated Themes
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Entrepreneurship -
Productivity and performance
This paper reviews academic and policy evidence, together with selected evaluations of specific policy instruments, on the nature, operation, and effectiveness of incentives intended to support universities’ engagement with regional economies. It examines different types of incentives—including financial, performance-based, governance, commercialisation, and reputational mechanisms—and how they operate within multi-level policy environments. Programme-level evidence is used to assess how incentives influence institutional behaviour and intermediate outcomes and, where evidence is available, their contribution to regional economic outcomes.
The review suggests that incentives can influence university behaviour, strengthen organisational capacity for engagement, and in some cases affect firm-level outcomes. Evidence is considerably weaker, however, on whether and under what conditions these effects translate into sustained regional economic performance. Effectiveness appears to depend on factors including institutional capabilities, the scale and specialisation of university activity, regional economic conditions, and the alignment between university strengths, policy objectives, and regional opportunities.
The paper also highlights the importance of interactions between different incentives. In practice, universities respond to overlapping funding mechanisms, performance frameworks, and place-based initiatives, while financial constraints can alter the relative strength of these signals. Limitations in the linkage of programme, partner, and spatial data also make it difficult to assess how incentives combine and whether effects persist or diffuse beyond directly supported organisations. Overall, the evidence base remains fragmented, particularly in relation to aggregate regional outcomes and the interaction of incentives within policy mixes. The paper concludes by identifying policy considerations around coherence, context, time horizons, evaluation, and institutional financial capacity.
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