Outcome-based contracts as a new business model : the role of partnership and value-driven relational assets
Ng, Irene C. L., Ding, Xin and Yip, Nick (2012) Outcome-based contracts as a new business model : the role of partnership and value-driven relational assets. Working Paper. Coventry: Warwick Manufacturing Group. (Service Systems Research Group Working Paper Series).
This is the latest version of this item.
PDF (Updated version)
WRAP_Ng_WP4-Version2.pdf - Submitted Version - Requires a PDF viewer such as GSview, Xpdf or Adobe Acrobat Reader
The concept of business models has been increasingly discussed in academic literature since the advent of internet and proliferation of e-businesses in the 1990s (Morris, Schindehutte & Allen, 2005). To attract funding, the early “dot.com” companies used the idea of business models to pitch the attractiveness of their proposed business ventures (Shafer, Smith & Linder, 2005). In academic literature on business models, several themes have emerged that are key concepts of a business model. First, value drivers are important elements for businesses and new business models are often a consequence of changes in these value drivers. These are defined as valuecreating activities or transformations that generate revenue for the firm (Chesbrough, 2007). Second, the performance of a company, through the change in such value drivers, is an essential element in a business model. Literature have described performance of business models as that which requires a joined-up, systems-focused and holistic understanding across the firm’s existing resources and capabilities to retain or achieve a competitive advantage in the industry it sits within as environmental conditions change (Wirtz, Schilke & Ullrich, 2010). Third, the formation of successful partnerships is a feature of new business models. This is echoed in strategy literature where the ability to establish strong partnerships as capabilities is recognised as core-competencies (Johnson, Christensen & Kagermann, 2008). According to Demil and Lecocq (2010), the firm’s “value chain of activities” should include the fostering of partnerships as part of the building blocks of a business model. Clearly, business models exhibit a need to be value-driven, partnership focused, and with the unit of analysis centred on the value-creating system which spans boundaries (Zott & Amit, 2010). There is also the need to understand the inter- or intra-organisational activities that contribute to that system, of which revenues are derived from its performance.
|Item Type:||Working or Discussion Paper (Working Paper)|
|Subjects:||H Social Sciences > HF Commerce|
|Divisions:||Faculty of Science > WMG (Formerly the Warwick Manufacturing Group)|
|Library of Congress Subject Headings (LCSH):||Business enterprises, Strategic planning, Value, Partnership|
|Series Name:||Service Systems Research Group Working Paper Series|
|Publisher:||Warwick Manufacturing Group|
|Place of Publication:||Coventry|
|Number of Pages:||38|
|Status:||Not Peer Reviewed|
|Access rights to Published version:||Open Access|
|References:||Amit, R. and C. Zott (2001), “Value Creation in e-Business.” Strategic Management Journal, 22 (6), 493-520. Anderson, E., & Weitz. B. (1992). The use of pledges to build and sustain commitment in distribution channels. Journal of Marketing, 58 (4), 1-14. Anand, B.N., & Khanna, T. (2000). Do firms learn to create value? The case of alliances. Strategic Management Journal, 21, 295-315. Baden-Fuller, C., & Morgan, M.S. (2010). Business models as models. Long Range Planning, 43 (2-3), 156-71. Baines, T., Lightfoot, H., Evans, S, Neely, A., Greenough, R., Peppard, J., Roy, R, Shehab, E, Braganza, A., Tiwari, A. Alcock, J., Angus, J., Bastl, M., Cousens, A., Irving, P., Johnson, M., Kingston, J., Lockett, H., Martinez, V.,Micheli, P., Tranfield, D., Walton I., & Wilson, H. (2007). State-of-the-art in product service-systems. Proc. IMechE Part B: Journal of Engineering Manufacture, 221(10), 1543- 1551. Baron, R., & Kenny, D. (1986). The moderator-mediator variable distinction in social psychological research: conceptual, strategic and statistical considerations. Journal of Personality and Social Psychology, 51(6), 1173-1182. Bellman, R., Clark, C.E., Malcolm, D.G., Craft, C.J., & Ricciardi, F.M. (1957). On the construction of a multi-stage, multi-person business game. Operations Research, 5 (4), 469- 503. Birkinshaw, Morrison, J., A. & Hulland, J. (1995). Structural and competitive determinants of a global integration strategy. Strategic Management Journal, 16, 637-655. Bolton, R.N., Lemon, K.N., & Verhoef, P.C. (2008). Expanding business-to-business customer relationships: Modeling the customer’s upgrade decision. Journal of Marketing, 72, 46-64. Bramwell, J. (2003). What is performance-based building?” In A. Lee, & P.S. Barrett (Eds.), Performance-based Building, First International State of the Art Report, CIB Report 291, The Netherlands: CIB Publication. Brandenburger, A. & Harbone, S. (1996). Value-based business strategy. Journal of Economics and Management Strategy, 5 (1), 5-26. Calson, D.W. & P.L. Perrewe (1999). “The role of social support in the stressor-strain relationship: an examination of work-family conflict. Journal of Management, 25, 513-540. Casadesus-Masanell, R., & Ricart, J.E. (2010). From strategy to business models and onto tactics. Long Range Planning, 43 (2-3), 195-215. Chesbrough, H. & Rosenbloom, R.S. (2002). The role of the business model in capturing value from innovation: Evidence from Xerox Corporation's technology spin-off companies. Industrial and Corporate Change, 11 (3), 529-55. Chesbrough, H. (2007). Why companies should have open business models. MIT Sloan Management Review, 48 (2), 22-28. Chin, W.W., Marcolin B.L., & Newsted, P.R. (2003). A partial least squares latent variable modeling approach for measuring interaction effects: results from a monte carlo simulations study and electronic- mail emotion/adoption study. Information System Research, 14 (2), 189-217. Conger, J.A., & Kanungo, R.N. (1988). The empowerment process: integrating theory and practice. Academy of Management Review, 13 (3), 471-482. Cox, A., & Townsend, M. (1997). Letham as half-way house: A relational competence approach to better practice in construction procurement. Engineering Construction and Architectural Management, 4 (2), 143-158. Creager, A. H., Lunbeck, E., & Norton, W.M. (2007). Science without laws: model systems, cases, exemplary narratives. Durham, NC: Duke University Press. Das, T.K., & Teng, B.S. (2000). A resource-based theory of strategic alliances. Journal of Management, 26 (1), 31-61. Dean, A.M. (2004). Rethinking customer expectations of service quality: Are call centres different? Journal of Service Marketing, 18 (1), 60-77. Deeds, D.L., & Hill, C.W.L. (1996). Strategic alliances and the rate of new product development: An empirical study of entrepreneurial biotechnology firms. Journal of Business Venturing, 11, 42-5. Demil, B., & Lecocq, X. (2010). Business model evolution: In search of dynamic consistency. Long Range Planning, 43 (2-3), 227-46. Dwyer, D.J., & Ganster, D.C. (1991). The effects of job demands and control on employee attendance and satisfaction. Journal of Organizational Behavior, 12, 595-608. Dyer, J.H. (1997). Effective interfirm collaboration: How firms minimise transaction costs and maximise transaction value. Strategic Management Journal, 18 (1), 553-556. Dyer, J.H., & Singh, H. (1998). The relational view: Cooperative strategy and sources of interorganizational competitive advantages. Academy of Management Review, 23 (4), 660- 679. Ehret, M., & Wirtz, J. (2010). Division of labour between firms: Business services, nonownership- value and the rise of the service economy. Service Science 2 (3) 136-145. Evans, S., & Jukes, S. (2000). Improving co-development through process alignment. International Journal of Operations & Production Management, 20 (8), 979-988. Eyring, M.J., Johnson, M.W., & Nair, H. (2008). New business models in emerging markets. Harvard Business Review, 89 (1/2), 88-95. Fornell, C. (1992). A national customer satisfaction barometer: The Swedish experience. Journal of Marketing, 56 (1), 6-21. Fornell, C., & Bookstein, F. (1982). Two structural equations model: LISREL and PLS applied to consumer exit-voice theory. Journal of Marketing Research, 19, 440-452. Fornell, C., & Larker, D.F. (1981). Evaluating structural equation models with unobserved variables and measurement error. Journal of Marketing Research, 18, 39-50. Gambardella, A., & McGahan, A. M. (2010). Business-model innovation: General purpose technologies and their implications for industry structure. Long Range Planning, 43 (2-3), 262-71. Ganster, D.C. (1989). Worker control and well-being: A review of research in the workplace. In S. Sauter, J. Hurrell, & C. Cooper (Eds.), Job Control and Worker Health, (pp. 3-24). Chichester: John Wiley and Sons. Gatignon, H., Tushman, M.L., Smith, W., & Anderson, P. (2002). A structural approach to assessing innovation: Construct development of innovation locus, type, and characteristics. Management Science, 48 (9), 1103-1122. Gefen D., Straub, D.W., & Boudreau, M.C. (2000). Structural equation modeling and regression: Guidelines for research practice. Communications of the AIS, 4(7), 1-77. Gerbing D.W., & Anderson, J.C. (1988). An updated paradigm for scale development incorporating unidimensionality and its assessment. Journal of Marketing Research, 25, 186- 192. Gronroos, C. (2004). The relationship marketing process: Communication, interaction, dialogue, value. Journal of Business & Industrial Marketing, 19 (2), 99–113. Guimaraes, T., & Bond, W. (1996). Empirically assessing the impact of BPR on manufacturing firms. International Journal of Operations & Production Management, 16 (8), 5-28. Gulati, R., & Singh, H. (1998). The architecture of cooperation: Managing coordination costs and appropriation concerns in strategic alliances. Administrative Science Quarterly, 43, 781– 814. Gunasekaran, A., & Yusuf, Y. (2002). Agile manufacturing: A taxonomy of strategic and technological imperatives. International Journal of Production Research, 40 (6), 1357-1385. Hanna V. (2007). Exploiting complementary competencies via inter-firm cooperation. International Journal of Technology Management, 37 (¾): 247-258. Hedman, J., & Kalling, T. (2003). The business model concept: theoretical underpinnings and empirical illustrations. European Journal of Information Systems, 12, 49-59. Heide, J.B., & Miner, A. (1992). The shadow of the future: Effects of anticipated interaction and frequency of contact on buyer-seller cooperation. Academy of Management Journal, 35(2), 265-291. Hoetker. G., & Mellewigt, T. (2008). Choice and performance of governance mechanisms: Matching alliance governance to asset type. Strategic Management Journal, 30, 1025-1044. Hung, R.Y., Chung, T., & Lien, B.Y. (2007). Organizational process alignment and dynamic capabilities in high-tech industry. Total Quality Management, 18 (9), 1023–1034. Johnson, M.W., Christensen, C.M., & Kagermann, H. (2008). Reinventing your business model. Harvard Business Review, 86 (12), 50-59. Jones, G.M. (1960). Educators, electrons, and business models: A problem in synthesis. The Accounting Review, 35 (4), 619-26. Joskow, P.L. (1988). Asset specificity and the structure of vertical relationships: Empirical evidence. Journal of Law, Economics and Organization, 4, 95-117. Kale P., Dyer, J.H., & Singh, H. (2002). Alliance capability, stock market response, and longterm alliance success: The role of the alliance function. Strategic Management Journal, 23 (8), 747-767. Kambil, A., Friesen, G.B., & Sundaram, A. (1999). Co-Creation: A new source of value. Outlook, 2, 38-43. Kanter, R.M. (1994). Collaborative advantage: The art of alliances. Harvard Business Review, July/August. Karasek, R.A. (1979). Job demands, job decision latitude, and mental strain: Implications for job redesign. Administrative Science Quarterly, 24, 285-306. Kim S.H., Cohen, M.A., & Netessine, S. (2007). Performance contracting in after-sales service supply chains. Management Science 53 (12), 1843-1858. Leventhal, L. (2008). The role of understanding customer expectations in aged care. International Journal of Health Care Quality Assurance, 21 (1), 50-59. Leuthesser, L., & Kohli, A.K. (1995). Relational behavior in business markets: Implications for relationship management. Journal of Business Research 34 (3), 221-33. Li, X., & Wang, Q. (2007). Coordination mechanisms of supply chain systems. European Journal of Operational Research, 179 (1), 1-16. Lin, Z., Yang, H., & Arya, B. (2009). Alliance partners and firm performance: Resource complementarity and status association. Strategic Management Journal, 39, 921-940. Macneil, I. R. (1978). Contracts: adjustment of long-term economic relations under classical, neoclassical and relational contract law. Northwestern University Law Review, 72 (1) 854- 942 Madhok, A. (1995). Opportunism and trust in joint venture relationships: An exploratory study and a model. Scandinavian Journal of Management, 11 (1), 57-74. Madhok, A., & Tallman, S.B. (1998). Resources, transactions, and rents: Managing value through interfirm collaborative relationships. Organization Sciences, 9 (3), 326-339. Mansfield, G.M., & Fourie, L.C.H. (2004). Strategy and business models - strange bedfellows? A case for convergence and its evolution into strategic architecture. South African Journal of Business Management, 35(1), 35-44. Magrath, A.J., & Hardy, K.G. (1994). Building customer partnerships. Business Horizons, January/February. Levitt, T. (1960). "Marketing Myopia". Harvard Business Review. Mayer, K.J., & Teece, D.J. (2008). Unpacking strategic alliances: The structure and purpose of alliance versus supplier relationships. Journal of Economics, Behavior, and Organization, 66, 106-127. Morris, M., Schindehutte, M., & Allen, J. (2005). The entrepreneur's business model: Toward a unified perspective. Journal of Business Research, 58 (6), 726-35. Neely, A.D. (2009). Exploring the financial consequences of the servitization of manufacturing. Operations Management Research, 2 (1), 103-118. Nenonen, S., & Storbacka, K. (2010). Business model design: Conceptualizing networked value co-creation. International Journal of Quality and Service Sciences, 2(1): 43-59 Ng, I.C.L., & Nudurupati, S. (2010). Outcome-based service contracts in the defence industry: Mitigating the challenges. Journal of Service Management, 21 (5), 656-674. Ng, I.C.L., Maull, R., & Yip, N. (2009). Outcome-based contracts as a driver for Systems thinking and service-dominant logic in service science: Evidence from the defence industry. European Management Journal, 27 (6), 377-387. Nickerson, J.A., & Zenger, T.R. (2004). A knowledge-based theory of the firm – the problemsolving perspective. Organization Science, 15, 617–632. Normann, R., & Ramirez, R. (1993). From value chain to value constellation. Harvard Business Review, 71(4), 65–77. Nunnally, J.C. (1978), Psychometric theory. (2nd ed.). New York: McGraw-Hill. Nunnally, J.C., & Bernstein, I. (1994), Psychometric theory. (3rd ed.). New York: McGraw Hill. Osterwalter, A., Pigneur, Y., & Tucci, C.L. (2005). Clarifying business models: Origins, present, and future of the concept. Communications of the Association for Information Systems (CAIS), 15, 1-43. Parasuraman, A., Zeithmal, V.A., & Berry, L.L. (1988). SERVQUAL: A multiple-item scale for measuring consumer perceptions of service quality. Journal of Retailing, 64, 12-40. Parasuraman, A., Zeithmal, V.A., & Berry, L.L. (1994). Reassessment of expectations as a comparison standard in measuring service quality: Implications for future research. Journal of Marketing, 58 (January), 111-124. Parkhe, A. (1993). Strategic alliance structuring: A game theoretic and transaction cost examination of interfirm cooperation. The Academy of Management Journal, 36 (4) 794- 829. Paulraj, A., Lado, A.A., & Chen, I.J. (2008). Inter-organizational communication as a relational competency: antecedents and performance outcomes in collaborative buyer-supplier relationships. Journal of Operations Management, 26, 45-64. Pisano, G.P. (2006). Can science be a business? Lessons from biotech. Harvard Business Review, 84 (10), 114-124. Podsakoff, P.M., MacKenzie, S.B., & Podsakoff, N.P. (2003). Common method biases in behavioral research: A critical review of the literature and recommended remedies. Journal of Applied Psychology, 88(5): 879-903. Poppo, L. &, Zenger, T. (2002). Do formal contracts and relational governance function as substitutes or complements? Strategic Management Journal, 23, 707–726. Powell, W.W., Koput K.W., & Smith-Doerr, L. (1996). Inter-organizational collaboration and the locus of innovation: networks of learning in biotechnology. Administrative Science Quarterly, 15 (1), 88-102. Ramirez, R. (1999). Value co-production: Intellectual origins and implications for practice and research. Strategic Management Journal, 20 (1): 49-65. Reich, B.H., & Benbasat, I. (1996). Measuring the linkage between business and information technology objectives. MIS Quarterly, 20 (1): 55-81. Reich, B.H., & Benbasat, I. (2000). Factors that influence the social dimension of alignment between business and information technology objectives. MIS Quarterly, 24 (1): 81-113. Ren, G. (2009). Service business development in manufacturing companies: Classification, characteristics and implications. (Doctoral dissertation, University of Cambridge, 2009). Reuer, J.J., Zollo, M., & Singh, H. (2002). Post-formation dynamics in strategic alliances. Strategic Management Journal, 23, 135–151. Ring, P.S., & Van de Ven, A.H. (1994). Developmental processes of cooperative interorganizational relationships. Academy of Management Review, 19 (1): 90-118. Rodin, J., Rennert, K., & Solomon, S.K. (1980). Intrinsic motivation for control: Fact or friction. In A. Baum & J. Singer (Eds.) Advances in environmental psychology: Vol 2, applications of personal control (pp. 131-148). Hillsdale, NJ: Erlbaum. Schulz, A.J., Israel, B.A., Zimmerman, M.A., & Checkoway, B.N. (1995). Empowerment as a multi-level construct: Perceived control at the individual, organizational and community levels. Health Education Review, 10 (3), 309-327. Seddon, P.B., G.P. Lewis, P. Freeman, and G. Shanks (2004), "The Case for Viewing Business Models as Abstractions of Strategy," Communications of the Association for Information Systems (CAIS), 13 (1), 427-42. Shafer, S.M., Smith, H.J., & Linder, J.C. (2005). The power of business models. Business Horizons, 48 (3), 199-207. Sheridan, K., & Bullinger, N. (2001). Building a solutions-based organization. Journal of Business Strategy, January/February, 37-40. Slack, N., Chambers, S., & Johnston, R. (2004). Operations management (4th ed.). Harlow, England: Prentice Hall Financial Times. Smith, C.S., Tisak, J., Hahn S.E., & Schmieder R.A. (1997). The measurement of job control. Journal of Organizational Behavior, 18 (3), 225-237.|
Available Versions of this Item
Outcome-based contracts as a new business model : the role of partnership and value-driven relational assets. (deposited 15 Feb 2012 15:37)
- Outcome-based contracts as a new business model : the role of partnership and value-driven relational assets. (deposited 10 Apr 2012 10:00) [Currently Displayed]
Actions (login required)