Outcome-based contract performance and value co-production in B2B maintenance and repair service

Author's conference paper. To be published in Proceedings of the 11th International Research Seminar in Services Management, 24-26 May 2010, La Londe, France; issued as working paper; article under review at Management ScienceThis paper investigates co-production in a B2B Maintenance, Repair and Overhaul (MRO) service contract where the firm is tasked to deliver outcomes of MRO service rather than activities directly related to maintenance and repair. Our qualitative findings show that the promise of outcomes has extended the boundary of the firm to include the customer system within its responsibility, resulting in the allowance of customer variety into the firm’s system as the consumption of the service is contextual and varied. The ability to deliver the service in such an environment requires the firm’s operations process design to be extended beyond supply chain management for material/equipment transformation, but to include information and people transformation as well. Through a quantitative study and Partial Least Squares analysis, the paper shows that outcome-based contract performance is dependent on the co-production alignments of behaviors and information but not material/equipment, with the alignments partially driven by the co-production inputs of complementary competencies and congruence of expectations.This research was made possible through the joint funding of the Engineering & Physical Science Research Council (UK) and BAE Systems on the Support Service Solutions: Strategy & Transition (S4T) project consortium led by the University of Cambridge.http://business-school.exeter.ac.uk/documents/papers/management/2010/1001.pd