Contracts, Relationships and Integration : Towards a Model of the Procurement of Complex Performance

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 is it explores the challenges faced by firms (e.g. aircraft & capital equipment manufacturers, building firms, etc.) seeking to ‘sell’ their re-conceptualized 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) – here defined as a combination of transactional and infrastructural complexity. This paper explores the macro and micro-economic context to this specific problem space and develops a preliminary conceptualisation of the process of PCP. It draws on two principle literatures: one focused on the boundary conditions 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