Servitising manufacturers: the impact of service complexity and contractual and relational capabilities

Contract functions in service exchange governance: evidence from logistics outsourcing

“…The extant literature has associated complexity with various characteristics of service exchanges and existing definitions of service complexity depend also on their purpose and focus (Kreye, Roehrich, and Lewis 2015). In their comprehensive review of service complexity, Benedetinni and Neely (2012) defined it in terms complicatedness and difficulty.…”

“…It empirically demonstrates how specific contractual provisions are used to codify the service exchange, to safeguard parties against perceived risks and opportunism, to coordinate their actions to improve service delivery, and to adapt the service exchange in response to environmental changes. The paper also builds upon recent efforts to examine the role of contracts in managing (service) complexity (Kreye et al 2015;Roehrich and Lewis 2014) by suggesting that contract functionality extends beyond safeguarding. In addition to offering economic and legal safeguards, contracts are used to coordinate and adapt service exchanges in the face of service complexity and uncertainty.…”

“…This raises the level of perceived complexity and uncertainty and may result in more detailed contracts to provide safeguards against potential opportunism (Kreye et al 2015). Extensive contracts also entail the development of contracting capabilities, which may evolve gradually as contracting parties adapt contracting terms to increase exchange effectiveness (Spring and Araujo 2014).…”

“…On the other hand, in cases with limited perceived uncertainty and service complexity (cases B and D) the parties did not opt for an open-book mechanism. The above suggest that perceived uncertainty related to complex and evolving service requirements and changes in the exchange environment (Kreye et al 2015) may motivate contracting parties to adopt more flexible payment mechanisms in formal contracts so as to safeguard against financial risks more effectively (Corts and Sigh 2004;Kalnins and Mayer 2004). It is thus proposed:…”

“…Roehrich and Lewis 2014) and the development of (advanced) contracting and relational capabilities (Kreye et al 2015).…”