Who’s to blame or praise?:performance attribution challenges in outsourced service provision in supply chains

Purpose The aim of this paper is to understand the antecedents and effects of performance attribution challenges arising in the provision of business-to-business (B2B) services in supply chains. Design/methodology/approach The study draws on three in-depth case studies of logistics service providers (LSPs) offering supply chain solutions to their clients in Sweden. The analysis of performance attribution challenges and their antecedents and effects is based on 38 semi-structured interviews and review of 43 documents, including contracts and performance monitoring records. Findings Three key antecedents of performance attribution challenges are stressed. Two of these, the inseparability and contestability of service inputs, are closely related to the notion of service co-production. The third antecedent is the limited provider capability in performance data collection and analysis. Performance attribution challenges may result in provider aversion to performance-related risk and have a harmful effect on client relationships, for example, in terms of provider perceptions of opportunism and unfair allocation of gains. These effects can be mitigated through contracting, interventions in performance measurement system design and deployment of relational mechanisms. Research limitations/implications The paper extends the service management literature that emphasises on service co-production by suggesting that inputs of the client firm and its supply chain partners may not only vary in quality but also can be inseparable from provider inputs and highly contestable. It also empirically demonstrates how performance attribution challenges and their antecedents and effects manifest themselves in B2B service provision, as opposed to supply chain settings where the main user of logistics services is the consumer. Practical implications LSP managers should contract for performance based on high-quality and incontestable external inputs they rely upon. Contractual specifications (performance indicators and related incentives) should explicate and consider the inputs required by clients and their supply chain partners to minimise their contestability. Originality/value The study proposes an empirically based framework of the antecedents and effects of performance attribution challenges, an issue that has received scant attention in logistics outsourcing research and the business services literature more broadly

Coordination in service supply networks:insights from “Airport Collaborative Decision Making”

We examine the relationship between governance (alignment of interests) and coordination (alignment of actions), of mutually-dependent organisations in extended service networks. Research on governance has explored the interplay of contractual and relational mechanisms, mainly in dyads. In service operations management, interaction between provider and customer is understood as ‘co-production of value’. We examine the link between the two, and how coordination is achieved among several closelyinterdependent organisations on a single site. ‘Collaborative Decision-Making’ practices in airport operations provides the setting for the study, and we propose an initial framework to explain the role of information sharing and coordination mechanisms

Contract functions in service exchange governance:evidence from logistics outsourcing

The logistics outsourcing literature emphasises relational governance mechanisms and has underplayed the role of formal contractual provisions. This paper empirically examines the multiple functions that contracts perform in the governance of service exchanges. Codification, safeguarding, coordination and adaptation functions are linked to contract specification schedules, payment mechanisms, (early) termination rights, performance review and communication provisions, service variations clauses and renegotiation provisions. Contracts may also embody exchange- or partner-specific learning, albeit to a limited extent. Overall, the empirical findings lend support to the functional view of contracting. The functionality of contracts extends beyond safeguarding against opportunism and financial losses. In addition to offering economic and legal safeguards, contracts are used to coordinate and adapt service exchanges in the face of complexity and uncertainty

On the Business Models of Cloud-based Modelling and Simulation for Decision Support

Simulation modelling is one of the techniques used for decision support in a wide range of domains and cloud computing is beginning to make some impact on simulation modelling by enabling ubiquitous, convenient and on-demand access to a variety of computing services. The cloud-based modelling and simulation (CBMS) literature has focused on how to develop CBMS tools using existing technologies. While this technical aspect is important, understanding the business aspect of CBMS is instrumental for its adoption by users and for ensuring the sustainability of the broader CBMS service supply chain. This paper presents a review of the business models adopted by vendors that provide Web or mobile applications for simulation modelling. An analysis of the offerings of these vendors provides some insights into how cloud services can be provided and used as part of CBMS business models. The study is conducted by reviewing the websites of simulation vendors. This study fills a gap in the literature on the business aspect of CBMS by providing insights into CBMS business model patterns. It highlights the importance of developing innovative business models that can help generate new market opportunities and revenue streams along the CBMS service supply chain. It also stresses the role of contracting in addressing the reported challenges and risks underpinning the provision and use of CBMS services

On the Business Models of Cloud-based Modelling and Simulation for Decision Support

Simulation modelling is one of the techniques used for decision support in a wide range of domains and cloud computing is beginning to make some impact on simulation modelling by enabling ubiquitous, convenient and on-demand access to a variety of computing services. The cloud-based modelling and simulation (CBMS) literature has focused on how to develop CBMS tools using existing technologies. While this technical aspect is important, understanding the business aspect of CBMS is instrumental for its adoption by users and for ensuring the sustainability of the broader CBMS service supply chain. This paper presents a review of the business models adopted by vendors that provide Web or mobile applications for simulation modelling. An analysis of the offerings of these vendors provides some insights into how cloud services can be provided and used as part of CBMS business models. The study is conducted by reviewing the websites of simulation vendors. This study fills a gap in the literature on the business aspect of CBMS by providing insights into CBMS business model patterns. It highlights the importance of developing innovative business models that can help generate new market opportunities and revenue streams along the CBMS service supply chain. It also stresses the role of contracting in addressing the reported challenges and risks underpinning the provision and use of CBMS services

Supply chain alignment as process:Contracting, learning and pay-for-performance

Purpose The purpose of this paper is to understand how buyers and suppliers in supply chains learn to align their performance objectives and incentives through contracting. Design/methodology/approach Two longitudinal case studies of the process of supply chain alignment were conducted based on 26 semi-structured interviews and 25 key documents including drafts of contracts and service level agreements. Findings The dynamic interplay of contracting and learning contributes to supply chain alignment. Exchange-, partner- and contract framing-specific learning that accumulates during the contracting process is used to (re)design pay-for-performance provisions. Such learning also results in improved buyer-supplier relationships that enable alignment, complementing the effect of contractual incentives. Research limitations/implications The study demonstrates that the interplay of contracting and learning is an important means of achieving supply chain alignment. Supply chain alignment is seen as a process, rather than as a state. It does not happen automatically or instantaneously, nor is it unidirectional. Rather, it is a discontinuous process triggered by episodic events that requires interactive work and learning. Practical implications Development of performance contracting capabilities entails learning how to refine performance incentives and their framing to trigger positive responses from supply chain counterparts. Originality/value The paper addresses supply chain alignment as a process. Accordingly, it stresses some important features of supply chain alignment

The Governance of Collaboration in Complex Projects

Purpose Inter-organisational collaboration is becoming increasingly important in complex projects; some project customers even formally require evidence of collaborative competence from potential providers. The purpose of this paper is to explore the governance of collaboration and the ways in which it is enacted in practice for complex projects. Design/methodology/approach The study is based on a qualitative analysis of 29 semi-structured interviews, primary data from meetings and events supported by secondary data, including standards and industry-specific contract templates. Findings The paper identifies how collaboration can be effectively governed in complex projects through the emerging role of the collaboration standard and its impact on contractual and relational governance mechanisms. The standard sets higher-level institutional guidelines that affect the way in which collaboration is governed in complex projects. It helps formalise informal relational practices whilst also providing guidelines for building flexibility in contracts by including coordination- and adaptation-oriented provisions conducive to collaboration. Originality/value The paper demonstrates the emerging role of the collaboration standard and its influence on contractual and relational mechanisms deployed in complex projects. It shows how the standard can formalise and codify informal collaborative practices and help transfer related learning across projects, thereby contributing towards the dual requirement for standardisation and flexibility in project settings

Framing contractual performance incentives:effects on supplier behaviour

Purpose The purpose of this paper is to investigate the effects that the framing of contractual performance incentives have on supplier's behavioural and relational responses and on the buyer-supplier relationship. Design/methodology/approach The authors conducted three in-depth case studies of contractual relationships, which exhibit differences in terms of how performance incentives are framed, i.e., using promotion, prevention and hybrid frames, respectively. The study involved 38 semi-structured interviews and content analysis of contract agreements. Findings First, while promotion-framed incentives lead to positive supplier responses and improved relationships, prevention-framed incentives result in negative responses and deteriorating relations. Second, hybrid-framed incentives can lead to productive supplier responses when positive ex ante expectations are met, although the creation of such positive expectations in the first place depends on the proportionality of bonus and penalty elements. Third, promotion- and hybrid-framed incentives do not by default lead to positive effects, as these are contingent on factors pertaining to contractual clarity. Fourth, the overarching purpose of the contract moderates the effects of contract framing on supplier responses. Research limitations/implications The study contributes to contracting research by showing how the framing of performance incentives influences supplier behavioural and relational responses. It also extends the existing literature on contract framing by examining the effects of hybrid-framed incentives, and stressing that contract framing should be considered in joint with the clarity and overall purpose of the contract to elicit desired supplier behaviours. Practical implications Managers of buying firms may differentiate their approach to contract framing depending on the type of supplier relationship in focus. Furthermore, effective design of promotion- and hybrid-framed incentives requires attention to: realistic performance targets (on the short, medium and long term); salient bonuses related to these targets; incentive structures that appropriately balance rewards and risks; and: mechanisms that explicate and consider uncontrollable factors in the calculation of bonus-malus payments. Originality/value The paper extends the literature stressing the psychological impact of contracts on buyer-supplier relationships by highlighting that contractual clarity and the overarching purpose of the contract moderate the effects of contract framing on supplier behavioural and relational responses

Me, myself and I:Non-collaborative customer behavior in service outsourcing – the key role of outcome orientation and outcome attributability

This research focuses on the role of customer behavior in service outsourcing relationships that are governed by outcome-oriented contracts. It aims to explain how non-collaborative customer behavior impedes the effectiveness of outcome-oriented contracts to align the goals and incentives of the customer and service provider, and leads to service provider opportunism. Nine hypotheses are developed regarding customer behavior and the reaction of the service provider to this. These are tested using structural equation modelling with data from 213 service outsourcing relationships. Outcome-orientated contracts in service outsourcing may have unintended consequences because they create value attribution ambiguity. This ambiguity induces non-collaborative customer behavior, which, in turn, results in service provider opportunism. This reveals a paradox, where customer behavior aimed at curbing service provider opportunism instead induces such opportunism. This chain of effects can be counteracted by increased outcome attributability, which reduces the ambiguity and, thus, the motivation for non-collaborative customer behavior. This research extends the existing literature by stressing that non-collaborative customer behavior is a key reason why outcome-oriented contracts fail in effectively governing outsourcing relationships, and that this can be counteracted by increased outcome attributability