Managing the complexity of service contracting in buyer-supplier collaboration

Purchasing business services have become increasingly important for companies as they strive for competitive advantages. Service contracts are an essential part of purchasing business services. The importance and complexity of service contracts increase with the complexity of the services, indicating managing service contracts can be very complicated. Yet, very little work has examined how service contracts' structure influences supplier performance. This dissertation focuses on managing service contracting and performance from the service complexity perspective. The present study aims to improve the current understanding of the essential dimensions of service complexity by investigating how service complexity influences service contracts and supplier performance. This study also examines how the different dimensions of service performance affect the business relationship and service contract renewal. The insights of this study draw from systematic literature review and survey research studies among the professional respondents from 25 countries. The systematic literature review identifies four dimensions of service complexity - multiplicity, diversity, interdependence, and variability. The review provides a basis for understanding service complexity as the perspective for the study. The empirical results show the crucial role of contract structure in effective service delivery. This dissertation finds the three major contract dimensions (definition of responsibility, performance criteria, and incentives) and follow-up management practices that positively influence buyer-perceived supplier performance. It also finds that service complexity significantly increases the need to design incentives in the service contract and buyer's follow-up management towards better supplier performance. In terms of business service contracting outcomes, this dissertation finds all three dimensions of service performance – competence-based, expressive, and collaborative – drive relationship performance that increases customer repurchase intentions. The relationship performance mediates the links between expressive and collaborative service performance with customer repurchase intentions This dissertation contributes to the existing body on the characteristics of services by identifying the essential dimensions of service complexity. The findings contribute to advancing knowledge on performance-enhancing aspects of designing and monitoring the B2B service contracts. This dissertation is among the first few studies to incorporate the structure and the follow-up management into the services contracts in studying service delivery and performance. The results advance knowledge on the development of contractual governance for improving supplier performance by specifying the contract dimensions. This dissertation also contributes to comprehensively understanding the factors that impact business customers' service contract renewal. It also adds the role of service complexity in successful B2B service purchasing.