Governments and organizations design performance-based research funding systems (PBFRS) for strategic aims, such as to selectively allocate scarce resources and stimulate research efficiency . In this work we analyze the relative change in research productivity of Italian universities after the introduction of such a system, featuring financial and reputational incentives . Using a bibliometric approach, we compare the relative research performance of universities before and after introduction of PBFRS, at the overall, discipline and field levels . The findings show convergence in the universities' performance, due above all to the remarkable improvement of the lowest performers . Geographically, the universities of the south (versus central and northern Italy) achieved the greatest improvement in relative performance . The methodology, and results, should be of use to university management and policy-makers.