Incentive-Oriented Financial Allocation and Resource Allocation Efficiency in Universities: The Mediating Role of Perceived Incentive Effectiveness in Jiangsu Province, China

Abstract

Incentive-oriented financial reforms have become a central instrument in higher education governance, yet empirical evidence remains fragmented regarding how such mechanisms translate into resource allocation efficiency, particularly within centrally governed university systems. Existing studies have predominantly emphasized direct policy–performance linkages, overlooking the motivational mechanisms through which financial allocation rules are interpreted and enacted by institutional actors. Grounded in incentive theory, this study addresses this gap by examining the effects of performance-based financial allocation, transparency of allocation criteria, and strategic alignment of funding priorities on resource allocation efficiency, with perceived incentive effectiveness conceptualized as a key mediating mechanism. Using a quantitative design, survey data were collected from approximately 400 senior academic and administrative managers in public universities across Jiangsu Province, China. The proposed model was analyzed using partial least squares structural equation modeling (PLS-SEM) via Smart-PLS, enabling simultaneous assessment of measurement reliability, structural relationships, and mediation effects. The results indicate that performance-based financial allocation (H1: t = 6.084, p < 0.001), transparency of allocation criteria (H2: t = 2.025, p = 0.043), and strategic alignment of funding priorities (H3: t = 4.908, p < 0.001) significantly enhance perceived incentive effectiveness. While direct effects on resource allocation efficiency are mixed (H5 and H7 significant; H6 nonsignificant), perceived incentive effectiveness significantly mediates the relationships between performance-based allocation (H8: t = 3.823, p < 0.001; competitive partial mediation), transparency (H9: t = 2.080, p = 0.038; competitive partial mediation), and strategic alignment (H10: t= 3.538, p < 0.001; full mediation) and efficiency outcomes. The study contributes theoretically by advancing a mechanism-based explanation of incentive governance in higher education and practically by demonstrating that efficiency gains depend less on financial rules per se than on how incentives are perceived and internalized by institutional decision-makers.