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Article
Publication date: 10 August 2010

Phillipp Hypko, Meike Tilebein and Ronald Gleich

In 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…

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Abstract

Purpose

In 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/approach

Conducting 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.

Findings

With 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/value

This 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.

Details

Journal of Service Management, vol. 21 no. 4
Type: Research Article
ISSN: 1757-5818

Keywords

Book part
Publication date: 24 October 2011

Tony Bovaird and Rhodri Davies

In the United Kingdom under the New Labour government from 1997 to 2010, there was a shift of power away from local towards central government, leading to a situation in which the…

Abstract

In the United Kingdom under the New Labour government from 1997 to 2010, there was a shift of power away from local towards central government, leading to a situation in which the role of public service organisations could appear to be mainly implementing priorities set by central government and complying with national standards, enforced through the setting of targets and the use of performance management frameworks. The key performance management systems, and the standards within them, became increasingly focused on outcomes, defined as the results that services produce that have an impact on the lives of service users and citizens – the benefits of the service rather than the volume or quality of the outputs (Willis & Bovaird, 2011).

Details

New Steering Concepts in Public Management
Type: Book
ISBN: 978-1-78052-110-7

Article
Publication date: 9 March 2012

Jan Devos, Hendrik Van Landeghem and Dirk Deschoolmeester

The purpose of this paper is to critically rethink the concepts and the theoretical foundations of IT governance in small‐ and medium‐sized enterprises (SMEs).

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Abstract

Purpose

The purpose of this paper is to critically rethink the concepts and the theoretical foundations of IT governance in small‐ and medium‐sized enterprises (SMEs).

Design/methodology/approach

The paper is based on multiple case studies. In total, eight cases of outsourced information system projects where failures occurred were selected. An outsourced information system failure (OISF) is suggested as a failure of governance of the IT in a SME environment. A structure for stating propositions derived from two competing theories is proposed (Agency Theory and Theory of Trust).

Findings

The results reveal that trust is slightly more important than control issues such as output‐based contracts and structured controls in the governance of IT in SMEs.

Practical implications

The world of SMEs is significantly different from that of large companies, and therefore, the concept of IT governance in SMEs needs reconsideration. For researchers and practitioners, it would be more meaningful to focus on actual, working SMEs instead of on a version of their activities derived from those of large companies.

Originality/value

The paper offers two contributions. First, it elaborates the limited research on IT in SMEs and second, it brings theoretical foundations for their IT governance. The value of IT governance in SMEs is explained.

Details

Industrial Management & Data Systems, vol. 112 no. 2
Type: Research Article
ISSN: 0263-5577

Keywords

Article
Publication date: 28 January 2014

Nigel Caldwell and Mickey Howard

– The aim of the paper is to identify and review the impact and challenges of new contractual arrangements on UK military procurement and other limited or oligopolistic markets.

3120

Abstract

Purpose

The aim of the paper is to identify and review the impact and challenges of new contractual arrangements on UK military procurement and other limited or oligopolistic markets.

Design/methodology/approach

The unit of analysis is the large-scale procurement programme. Two cases of major military platforms (naval and air defence) examine through-life maintenance or “contracting for availability” and build theory on procuring complex performance (PCP). Propositions are developed from the literature then tested and extended from the case analysis, supported by 35 interviews from buyer and supplier representatives.

Findings

Examining UK military platform procurement reveals a perspective not present in fast moving high volume supply chains. In oligopolistic markets such as defence, the Ministry of Defence (MOD) represents a market of one, seeking ambitious and non-incremental innovation from the prime contractor during the procurement process. The new contractual arrangements show an increasing shift in responsibility to the prime contractor who coordinates service support and supply chain incentivisation over extended, often multi-decade platform lifecycles.

Research limitations/implications

The cases were conducted separately and later compared. Whilst based on defence sources, the paper concludes with general recommendations for all public-private complex procurements and seeks to explore other industry sectors as part of further research into PCP.

Originality/value

Examined from a theoretical and practical perspective, the cases reveal the challenges facing procurement in major public-private projects. The changing role identified reflects extended timescales and the quasi-market military procurement environment, compounded by current economic and politically charged conditions. Procurement by default increasingly plays a new shaping role in large-scale programme management driven by outcome-based contracting. Customers such as the MOD must re-evaluate their role under these new contractual arrangements, providing leadership and engaging with future contracting capability and innovation.

Details

International Journal of Operations & Production Management, vol. 34 no. 2
Type: Research Article
ISSN: 0144-3577

Keywords

Article
Publication date: 1 April 2003

Lilly Chow and Lorelle Frazer

This paper analyses operational differences between mobile franchising arrangements and fixed‐site franchises from an agency‐theoretic perspective. Almost 40 per cent of all…

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Abstract

This paper analyses operational differences between mobile franchising arrangements and fixed‐site franchises from an agency‐theoretic perspective. Almost 40 per cent of all franchised units in Australia operate as mobile or home‐based businesses, predominantly in service industries where products or services are provided directly to consumers. A two‐stage methodology is reported in this paper, incorporating quantitative and qualitative research methods. In stage one, data obtained from a survey of the population of Australian franchisors in 1998 are analysed to compare operational variables of mobile and fixed‐site franchise units. The second stage of the research employs in‐depth interviews with a sample of mobile franchisors and franchisees to further explore relevant issues. The results confirm the agency theory perspective that start‐up investment risk is lower in mobile units and mobile operations exhibit a higher level of repeat customers than fixed‐site franchises. No significant differences between the two arrangements are revealed in relation to the levels of franchisee monitoring, initial training or essential franchisee experience. This study indicates that agency theory contributes to our understanding of mobile franchising arrangements, yet also suggests the findings are not completely explained by agency theory. The results imply that both monitoring and alignment of incentives have complimentary effects and that both forms of contract are necessary in a franchisor's control system.

Details

European Journal of Marketing, vol. 37 no. 3/4
Type: Research Article
ISSN: 0309-0566

Keywords

Article
Publication date: 4 February 2014

Subasinghage Maduka Nuwangi, Darshana Sedera, Shirish C. Srivastava and Glen Murphy

Contemporary offshore information system development (ISD) outsourcing is becoming even more complex. Outsourcing partner has begun “re-outsourcing” components of their projects

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Abstract

Purpose

Contemporary offshore information system development (ISD) outsourcing is becoming even more complex. Outsourcing partner has begun “re-outsourcing” components of their projects to other outsourcing companies to minimize cost and gain efficiencies. This paper aims to explore intra-organizational information asymmetry of re-outsourced offshore ISD outsourcing projects.

Design/methodology/approach

An online survey was conducted to get an overall view of information asymmetry between principal and agents (as per the agency theory).

Findings

Statistical analysis showed that there are significant differences between the principal and agent on clarity of requirements, common domain knowledge and communication effectiveness constructs, implying an unbalanced relationship between the parties. Moreover, the authors' results showed that these three are significant measurement constructs of information asymmetry.

Research limitations/implications

In this study the authors have only considered three main factors as common domain knowledge, clarity of requirements and communication effectiveness as three measurement constructs of information asymmetry. Therefore, researches are encouraged to test the proposed constructs further to increase its precision.

Practical implications

The authors' analysis indicates significant differences in all three measurement constructs, implying the difficulties to ensure that the agent is performing according to the requirements of the principal. Using the agency theory as theoretical view, this study sheds light on the best contract governing methods which minimize information asymmetry between the multiple partners within ISD outsourcing organizations.

Originality/value

Currently, to the best of the authors' knowledge, no study has undertaken research on intra-organizational information asymmetry in re-outsourced offshore ISD outsourcing projects.

Details

VINE: The journal of information and knowledge management systems, vol. 44 no. 1
Type: Research Article
ISSN: 0305-5728

Keywords

Book part
Publication date: 11 June 2021

John Struthers and Dina Modestus Nziku

Within developing countries, particularly in Africa, there is an emerging literature which highlights the unique obstacles faced by women entrepreneurs who start and develop their…

Abstract

Within developing countries, particularly in Africa, there is an emerging literature which highlights the unique obstacles faced by women entrepreneurs who start and develop their own businesses (De Vita, Mari, & Poggesi, 2014; Jamali, 2009; Minniti & Naude, 2010; Naude & Havenga, 2005; Nziku & Struthers, 2018). A key objective of this chapter is to critically appraise some of the conceptual approaches adopted in this literature. In so doing, the authors revisit a seminal paper first developed by Granovetter (1973) which suggested that female entrepreneurs, instead of being disadvantaged by the so-called ‘weak ties’ that bind their business networks, actually enjoy compensating benefits which Granovetter referred to as the strength of weak ties (SWT). Building on the conceptual work of Nziku and Struthers (2018) which developed an innovative taxonomy for analysing the SWT concept within a Principal-Agent (P-A) paradigm, the chapter will set out new insights which challenge some of the assumptions of the extant entrepreneurship literature. In particular, that women are inherently more risk averse in their business decision making than men. The theoretical context for this will be derived from a behavioural economics methodology first developed by Kahneman and Tversky (1979). They introduced the concept of loss aversion as a more realistic approach to attitudes towards risk on the part of entrepreneurs than risk aversion. The chapter contends that the loss aversion perspective may be more appropriate to the decision-making frame adopted by female entrepreneurs, especially in the context of Africa as well as in other developing regions of the world. The chapter will therefore suggest that such an approach can yield fresh insights on the topic of female entrepreneurship which the extant literature heretofore has not addressed, though this will have to be subsequently tested empirically.

Details

Enterprise and Economic Development in Africa
Type: Book
ISBN: 978-1-80071-323-9

Keywords

Article
Publication date: 16 August 2010

Judith M. Whipple and Joseph Roh

The purpose of this paper is to propose using agency theory for assessing the likelihood of quality fade in buyer‐supplier relationships and prescribing contractual mechanisms for…

3616

Abstract

Purpose

The purpose of this paper is to propose using agency theory for assessing the likelihood of quality fade in buyer‐supplier relationships and prescribing contractual mechanisms for reducing quality fade. In this paper, quality fade, an element of supply chain vulnerability, is defined as the unforeseen deterioration of agreed to or expected quality levels with respect to product and/or service requirements. The use of outcome‐based, behavior‐based, or mix contracts can be used to reduce the likelihood of quality fade and illustrate preferred scenarios for buyer and suppliers.

Design/methodology/approach

This paper proposes a conceptual model for using agency theory to explain and address a type of supply chain vulnerability called quality fade. A 2×2 matrix is proposed that contrasts outcome measurability with outcome uncertainty to illustrate buyer and supplier vulnerability and to suggest contractual mechanisms that can be used to mitigate vulnerability for both parties.

Findings

A typology of governance mechanisms is presented and described with the use of a manufacturer third‐party logistics provider example to illustrate the theoretical framework. Four different scenarios are discussed and described. Contractual mechanisms are provided to mitigate vulnerabilities and reduce quality fade.

Originality/value

Quality fade is a term that has not been described extensively in academic literature but is a term that is relevant in the broader discussion of supply chain vulnerability. Given that quality fade is a behavioral, as opposed to process oriented, approach, it requires a theoretical framework rooted in behavioral considerations. Agency theory is an appropriate framework for studying governance options.

Details

The International Journal of Logistics Management, vol. 21 no. 3
Type: Research Article
ISSN: 0957-4093

Keywords

Article
Publication date: 4 March 2014

Kostas Selviaridis and Andreas Norrman

The performance of service supply chains in terms of service levels and cost efficiency depends not only on the effort of service providers but also on the inputs of…

5857

Abstract

Purpose

The performance of service supply chains in terms of service levels and cost efficiency depends not only on the effort of service providers but also on the inputs of sub-contractors and the customer. In this sense, performance-based contracting (PBC) entails increased financial risk for providers. Allocating and managing risk through contractual relationships along the service supply chain is a critical issue, and yet there is scant empirical evidence regarding what factors influence, and how, provider willingness to bear PBC-induced risk. This paper aims to address this gap.

Design/methodology/approach

The paper draws on agency theory and two cases of logistics service supply chains, in the food retail and automotive industries respectively, to identify key influencing factors. Data were collected through semi-structured interviews with 30 managers of providers and sub-contractors and review of 35 documents, notably contracts and target letters.

Findings

Four influencing factors were found: performance attributability within the service supply chain; relational governance in service supply chain relationships; provider risk and reward balancing; and provider ability to transfer risk to sub-contractors. The propositions developed address how these factors influence provider willingness to bear PBC-induced risk.

Research limitations/implications

The factors identified are external to the provider mindset and refer to the management of contractual relationships and service delivery interactions along the service supply chain. The paper contributes to agency theory by stressing the risk allocation implications of bi-directional principal-agent relations in service supply chains.

Practical implications

The study suggests ways in which providers can increase their capacity to bear and manage financial risk related to PBC design.

Originality/value

The paper identifies factors that influence provider willingness to bear financial risk induced by PBC in service supply chains.

Details

Supply Chain Management: An International Journal, vol. 19 no. 2
Type: Research Article
ISSN: 1359-8546

Keywords

Article
Publication date: 15 June 2015

Jenny Billings and Esther de Weger

Service transformation of health and social care is currently requiring commissioners to assess the suitability of their contracting mechanisms to ensure goodness of fit with the…

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Abstract

Purpose

Service transformation of health and social care is currently requiring commissioners to assess the suitability of their contracting mechanisms to ensure goodness of fit with the integration agenda. The purpose of this paper is to provide a description and critical account of four models of contracting, namely Accountable Care Organisations, the Alliance Model, the Lead Provider/Prime Contractor Model, and Outcomes-based Commissioning and Contracting.

Design/methodology/approach

The approach taken to the literature review was narrative and the results were organised under an analytical framework consisting of six themes: definition and purpose; characteristics; application; benefits/success factors; use of incentives; and critique.

Findings

The review highlighted that while the models have relevance, there are a number of uncertainties regarding their direct applicability and utility for the health and social care agenda, and limited evidence of effectiveness.

Research limitations/implications

Due to the relative newness of the models and their emerging application, much of the commentary was limited to a narrow range of contributors and a broader discussion is needed. It is clear that further research is required to determine the most effective approach for integrated care contracting. It is suggested that instead of looking at individual models and assessing their transferable worth, there may be a place for examining principles that underpin the models to reshape current contracting processes.

Practical implications

What appears to be happening in practice is an organic development. With the growing number of examples emerging in health and social care, these may act as “trailblazers” and support further development.

Originality/value

There is emerging debate surrounding the best way to contract for health and social care services, but no literature review to date that takes these current models and examines their value in such critical detail. Given the pursuit for “answers” by commissioners, this review will raise awareness and provide knowledge for decision making.

Details

Journal of Integrated Care, vol. 23 no. 3
Type: Research Article
ISSN: 1476-9018

Keywords

1 – 10 of over 1000