Contracts, relationships and integration: towards a model of the procurement of complex performance. (23rd February 2009) - Lewis, Michael A.
Although there is a growing body of research exploring the transition to a more service-based orientation in complex product markets, the majority of this literature adopts what might be classified as a 'manufacturer-active' point of view that explores the challenges faced by firms (e.g., aircraft and capital equipment manufacturers, building firms, etc.) seeking to 'sell' their reconceptualised streams of revenue. There has been much less research exploring the challenges associated with the transition from traditional asset acquisition processes to 'buying' or Procuring Complex Performance (PCP) – defined as a combination of transactional and infrastructural complexity. This paper explores the macro- and microeconomic contexts to this specific problem space and develops a preliminary conceptualisation of the what, why and how of PCP. It draws on two principle literatures: one focused on the boundary conditions that firms consider when choosing to 'make or buy' a range of different activities from the market (e.g., Fine and Whitney, 1999; Gilley and Rasheed, 2000; Williamson, 1985; Grover and Malhotra, 2003) and the other, on public procurement (e.g., Thai and Piga, 2006; Knight et al., 2007) and public-private partnerships, in particular (Broadbent and Laughlin, 2005; Froud, 2003). Three distinct governance challenges are presented: (1) contractual, (2) relational and (3) integration. The paper explores the implications of the conceptual model by developing a range of research propositions that are intended to be the foundations for future research.