Performance-based contracts (PBC) have become ubiquitous in industries ranging from aerospace and defense to computer support services. Despite advantages of paying for performance under PBC that have been highlighted in many previous studies, the more traditional Transaction-based Contracts...

Traditional sourcing arrangements for after-sales product support have centered around physical assets. Typically, a customer would pay the supplier of maintenance services in proportion to the resources used, such as spare parts, that are needed to maintain the product. In recent years, we have...

Using a proprietary dataset provided by a major manufacturer of aircraft engines, we empirically investigate how product reliability is impacted by use of two different types of after-sales maintenance support contracts: time and material contracts (T&MC) and performance-based contracts (PBC)....