Purpose -Although performance-based contracting (PBC) is gaining importance in manufacturing industries, corresponding research is still in its infancy. In order to provide a basis for future research on this emerging topic, thus paper aims to propose a specific conceptual model. Design/methodology/approach -Conducting a comprehensive literature review, 39 academic publications dealing with this topic in-depth were analyzed. To structure the various approaches of PBC in manufacturing industries, existing preliminary conceptual models in the form of morphological boxes were built upon and developed further. Findings -Focusing on manufacturing industries, the review reveals a comprehensive view on PBC, with three topics that are important to PBC but have been largely neglected in research: even though research considers PBC foremost regarding manufacturers, independent service providers can also offer PBC; closely related to ownership, financing constitutes an essential issue in PBC; and PBC may include maintenance as well as operation. Originality/value -First, the paper systematizes existing literature and clarifies the concept of PBC in manufacturing industries. Second, it presents a specific conceptual model for analyzing this topic in more depth. Third, it reveals promising avenues for future research.
PurposeIn view of a lack of understanding of the consequences of performance‐based contracting (PBC), this paper aims to reveal deeper insights into the mechanisms inherent to PBC and explore which benefits and uncertainties may result for providers and customers.Design/methodology/approachConducting a comprehensive literature review and drawing on insights from agency theory as a framework, the auhtors analyzed a broad range of academic publications on the benefits and uncertainties of PBC and developed testable propositions from the provider's and the customer's perspective.FindingsWith PBC, in comparison to the conventional selling and supporting of machinery or equipment, the manufacturers are more likely to acquire customers for highly innovative technologies, to increase their profit, and to improve customer loyalty. Manufacturers, however, have to deal with uncertain revenues and costs which affect their profit. The customers are more likely to receive increased performance at decreased costs. Concerning the performance, however, the customers enter into an uncertain relationship of dependence.Originality/valueThis is the first paper to analyze the benefits and uncertainties of PBC in manufacturing industries systematically from an agency theory perspective. The paper further develops extant research by outlining the mechanisms of PBC and relating the benefits and uncertainties that are scattered over a broad body of literature. The paper proposes several promising avenues for further research.
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