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ESRC AIM Business-to-Business Services: Pricing, Contracting and Value-based Mechanism Design


Funding

Economic and Social Sciences Research Council (ESRC)


Project timeframe

October 2008 – March 2011

 

 

 

About the Project

Business-to-business (B2B) transacting has achieved phenomenal growth with contribution from an increase in equipment based service provision. The research investigates outcome-based contracting (OBC) as a mechanism that allows customers to pay only when the firm achieves the agreed outcomes of equipment for use. From a Transaction Cost perspective, OBC achieves incentive compatibility, thus reducing opportunism by focusing both the firm and the customer on achieving value-in-use and compelling the firm to jointly co-create value with the customer in achieving outcomes consistently over time and over repeat usage.

This project investigated three OBC-type contracts between three firms and the Ministry of Defence (MoD) through a series of longitudinal qualitative studies and one quantitative study. Specifically, it seeks to understand:

  1. What theoretical perspectives can I contribute towards in the understanding of the design, delivery and performance of outcome-based contracts?

  2. How does the firm co-create value with the customer to achieve outcomes and can we identify attributes that could assist in developing the firm’s capability to achieve such outcomes?

  3. How does a Service-Dominant logic view of value creation (Vargo & Lusch, 2004; 2008) inform the understanding of value propositions in the product-to-service transition toward outcomes?

  4. Can we develop a generic and theoretical understanding of the value propositions of equipment and equipment-based service?

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Underlying Theories & Methodology

The project operationalises a Service-Dominant logic (Vargo and Lusch, 2004; 2008) lens to re-evaluate the nature of the offering and capability to deliver and manage it. Methodologies used include qualitative analysis, process mapping, simulation modelling, conjoint analysis, end-to-end visualisation.

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Achievements

A demonstrator of an End-to-End (E2E) Decision Support tool of service capability was constructed to link value to service attributes and to resources, costs and processes for a visualisation of a defence supplier organisation’s service capacity to deliver to the various dimensions of value.

 

Research Team

Irene Ng
Laura Smith

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Publications/Research Outputs

Working Papers

Ng, Irene C.L., Sai Nudurupati and Paul Tasker, (2010) “Value Co-creation in Outcome-based Contracts for Equipment-based Service”, AIM working paper series, WP No 77 - May – 2010 http://www.aimresearch.org/index.php?page=wp-no-77under second review in Journal of Service Research

Butterfield, Joe, Irene C L Ng, Rajkumar Roy and William McEwan, “Enabling Co-production in the Provision of Support Service Engineering Solutions Using Digital Manufacturing Methods,” working paper

Ng, I and Smith L. (2012) An Integrative Framework of Value. Review of Marketing Research. Forthcoming. Interim Location: WMG Service Systems Research Group Working Paper Series, paper number 03/12, ISSN 2049-4297. Available at: http://wrap.warwick.ac.uk/41761/

Books

Ng, Irene C.L., Glenn Parry, Duncan MacFarlane, Peter Wild and Paul Tasker (Eds) (2011), Complex Engineering Service Systems: Concepts & Research, (ISBN: 978-0-85729-188-2), London: Springer, including the following chapters:

  • Ng, Irene C.L., Sai Nudurupati and Jason Williams, (2011) “Redefining Organizational Capability for Value Co-creation in Complex Engineering Service Systems in Complex Engineering Service Systems: Concepts & Research, Ng, Irene C.L., Glenn Parry, Peter Wild, Duncan MacFarlane and Paul Tasker (Eds.) ISBN: 978-0-85729-188-2, London: Springer
  • Guo, Lei and Irene C.L. Ng (2011), “Behaviour transformation: An examination of relational governance in complex engineering service delivery,” in Complex Engineering Service Systems: Concepts & Research, Ng, Irene C.L., Glenn Parry, Peter Wild, Duncan MacFarlane and Paul Tasker (Eds.) ISBN: 978-0-85729-188-2, London: Springer


Book Chapters

Smith, Laura and Irene C.L. Ng (2012). Service Systems for Value Co-Creation. A book chapter in preparation for Managing Services: Challenges and Innovation, Kathryn Haynes and Irena Grugulis (Eds). Interim location: WMG Service Systems Research Group Working Paper Series, paper number 01/12, ISSN 2049-4297. Accessible at: http://wrap.warwick.ac.uk/41098/

Smith, Laura and Irene C.L. Ng (2012), “ Value Co-creation”, A book chapter in preparation for Managing Services: Challenges and Innovation, Kathryn Haynes and Irena Grugulis (Eds)

Ponsignon, Frederic and Irene C L Ng (2012) “Axios: End-to-End Decision Support Tool for Innovation" in Methods in Service Innovation - Current Trends and Future Perspectives.Carsten Schultz, Walter Ganz and Gerhard Satzger (Eds)

Ng, Irene C.L., R.S. Maull and Laura Smith (2011) “Embedding the New Discipline of Service Science” in The Science of Service Systems, Demirkan, Spohrer and Krishna Eds., 2010 volume in “Service Science: Research and Innovations (SSRI) in the Service Economy” Book Series, Springer - ISSN: 1865-4924

 

Journal Articles

Ng I, Parry G, Smith L, Maull R & Briscoe G (2012). Transitioning from a Goods-Dominant to a Service-Dominant Logic: Visualising the Value Proposition of Rolls-Royce. Journal of Service Management, Vol 23, Issue 3, forthcoming. Interim location: WMG Service Systems Research Group Working Paper Series, paper number 05/12, ISSN 2049-4297. Accessible at: http://wrap.warwick.ac.uk/42144/

Smith, Laura, Roger Maull and Irene C.L. Ng, (2012) “Servitization and Operations Management: A Service Dominant Logic Approach”, conditionally accepted for International Journal of Operations and Production Management working paper at http://business-school.exeter.ac.uk/research/areas/topics/management/outputs/publication/?id=682

Smith, Laura, Irene CL Ng and Roger Maull, (2012) “The Three Value Cycles of Equipment Based Service,” Production, Planning and Control, pp1-18, DOI:10.1080/09537287.2011.640055

Ng, Irene C.L.,Ralph Badinelli, Primiano Dinauta, Sue Halliday, Helge Löbler and Francesco Polese, (2012) “ S-D Logic: Research Directions and Opportunities: The perspective of Systems, Complexity and Engineering,” Marketing Theory, forthcoming

Guo, Lei and Irene C.L. Ng, (2011) “The co-production of equipment-based services: an interpersonal approach” European Management Journal, Vol. 29,pp43-50

Guo, Lei and Irene C.L. Ng, (2011) “The examination of salespeople’s motivations for cultivating relationships with customers”, Journal of Business and Industrial Marketing, Special Issue for the 9th American Marketing Association Relationship Marketing Conference, forthcoming

Ng, Irene and Yip, Nick K.T. (2011) 'Mechanism design in an integrated approach towards revenue management: the case of Empress Cruise Lines', The Service Industries Journal, 31: 3, 469- — 482

Ng, Irene C.L.and Sai Nudurupati, (2010) “ Outcome-Based Service Contracts In the Defence Industry – Mitigating the Challenges,” Journal of Service Management, Vol. 21, No. 5,pp. 656-674

Ng, Irene C.L.(2010) “ Value and systems perspectives in combining human and automated services: Commentary on “Seven Challenges to Combining Human and Automated Service””, Canadian Journal of Administrative Sciences, 27: 81–8 4

Ng, Irene C.L. (2010), “Guest Editorial: Special Issue on Pricing and Revenue Models in the new Service Economy,” Journal of Revenue and Pricing Management, Vol. 9, No. 3, pp195-197

Ng, Irene C.L.(2010) “The Future of Pricing and Revenue Models”, Journal of Revenue and Pricing Management, Vol. 9, No. 3, pp276-281

Ng, Irene C.L.and Nick Yip, (2010) “ Theoretical Foundations in the Pricing of Intermediating Services: The Case of Mobile Phone Payments,”< /font>Journal of Revenue and Pricing Management, Vol. 9, 3, pp217–2 27

Ng, Irene C. L.(2009)“ A Demand-Based Model for the Advanced and Spot Pricing of Services”, Journal of Product & Brand Management, Vol. 18, No. 7, pp517-528

Ng, Irene C.L.,Roger Maull and Nick Yip, (2009) “Outcome-based Contracts as a driver for Systems thinking and Service-Dominant Logic in Service Science: Evidence from the Defence industry”,European Management Journal, Vol. 27, No. 6, pp377-387

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