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

This paper investigates co-production in a B2B Maintenance, Repair andOverhaul (MRO) service contract where the firm is tasked to deliver outcomes of MROservice rather than activities directly related to maintenance and repair. Our qualitativefindings show that the promise of outcomes has extended the boundary of the firm toinclude the customer system within its responsibility, resulting in the allowance ofcustomer variety into the firm’s system as the consumption of the service is contextualand varied. The ability to deliver the service in such an environment requires the firm’soperations process design to be extended beyond supply chain management formaterial/equipment transformation, but to include information and people transformationas well. Through a quantitative study and Partial Least Squares analysis, the papershows that outcome-based contract performance is dependent on the co-productionalignments of behaviors and information but not material/equipment, with the alignmentspartially driven by the co-production inputs of complementary competencies andcongruence of expectations.