Designing Outcome-based Contracts for Machine Manufacturers: A Taxonomy of Decision Criteria

Outcome-based contracts (OBCs) offer machine outcomes while maintaining machine ownership with the manufacturer. To this end, the scientific literature lacks systematic studies on sharing insights from the perspective of small and medium-sized enterprise (SME) machine manufacturers (MMs) while implementing OBCs. We interviewed four SME MMs that have successfully offered OBCs. Further, we use exploratory multiple-qualitative case study research. We identified that SME MMs face various challenges, such as ownership of expensive machines, the long payback period of OBCs, protection of IP, the need for constant innovation, and delivering the required performance while offering OBCs. Further, we identified that SME MMs have identified ways to mitigate these challenges, such as involving third parties to own the machine and ensuring earnings by including separate contracts for other activities such as installation, maintenance, training of the employees working on machines, and logistics, to overcome the challenge of the long payback period of OBCs. Additionally, we identified various SME MM-related benefits from OBCs, such as entering competitive markets, optimizing the cost of operating the machine, novel efficient ways of selling and marketing machines, avoiding money laundering and legal issues, and reducing investment through recycling the machine and its components that SME MMs have while offering OBCs. We share insights into how SME MMs offer OBCs, which typically involve significant risks, by empirically studying the challenges, mitigation of challenges, and benefits of offering OBCs.

Purpose Outcome-based contracts (OBCs) are gaining attention as an innovative approach potentially able to foster social innovation. By linking payments to specific social outcomes, OBCs create a dynamic and adaptive collaboration between stakeholders, aligning their efforts toward designing innovative services and achieving shared goals. However, the literature highlights that OBCs’ potential to foster social innovation is contested. This paper aims to examine the key barriers and enabling factors that shape the ability of OBCs to drive social innovation. Design/methodology/approach The authors conducted a case study research using qualitative methods, including 15 semistructured interviews with key stakeholders involved in NetImpact, an ongoing and early OBC pilot project in Italy, along with weekly meetings. The data were analyzed through thematic analysis. Findings This research suggests that cultural mindsets, institutional barriers, cross-sector frictions, performance measurement focused on procedural compliance and poor coordination between actors hinder the capacity of OBCs to support social innovation. OBCs risk being absorbed into existing procedural routines and relationships, limiting their ability to stimulate new social innovation practices or reconfigure institutional roles. Practical implications The authors suggest that policymakers and practitioners could focus not just on adopting OBCs but on concrete support: building technical and managerial capacities in public administrations, promoting shared learning platforms and strengthening inclusive governance that balances power among public, private and third sector actors. Originality/value This study argues that the true potential of OBCs to foster social innovation requires not only contractual reforms and cultural change but also capacity building and new forms of governance that prioritize ethics, learning, inclusion and long-term social value creation.

Although outcome measurement is a key element of outcome-based contracting, the main challenges related to the measurement processes in these programs are still under-investigated. To fill this gap, this article examinates the challenges and opportunities of measuring social outcomes in outcome-based contracting, focusing particularly on three main areas: the design of measurement processes; the definition of outcomes, metrics, and targets; and the practical implications of the measurement processes. The analysis focuses on four case studies in the UK. Regarding the measurement of payment outcomes, our results bring into question the viability of outcome-based contracting for providing evidence that can inform policymaking. However, the results highlight the opportunities emerging from the measurement of outcomes not related to the payment mechanism and from involving different stakeholders in the measurement process. Finally, we discuss future research on the influence of governance and bargaining power on the measurement of outcome-based contracting.

The current book chapter addresses the result-oriented servitization business models coined in the academic literature as outcome-based contracts or performance-based contracts. Indeed, the given polarization in terms of academic terminology certainly does not serve to decrease the conceptual complexity of these business models. As extant arguments with the pro “outcome” prefix have built on its unambiguousness compared to “performance,” I intend to provide further insights into the debate by offering pragmatics- and syntax-based perspectives on the topic. In this effort, I draw upon a systematic literature review of over 80 top-tier academic journal papers (AJG3, AJG4, and AJG4*). Thus, the current chapter contributes to the concept stream of the outcome-based service (OBS) literature. For managers, the chapter synthesizes research trends, offers an outlook of the eminent research facets that publish on the topic, and provides some contextualized explanations and antecedents of the differences in academic terminology.KeywordsServitizationOutcome-based contractsPerformance-based contracts

This study analyzes the effect of financial risk management on the competitiveness of MSME Story Ceta in Cianjur Regency, which is engaged in plant-based food with the main products of birthday cakes, dessert boxes, baked sponge cakes, and vegetable flour. Using a qualitative method with a case study approach, data was collected through interviews, observations, and literature studies. The results show that financial risk management, such as adaptive cash flow management, consistent financial recording, supplier diversification, and utilization of social capital, significantly improves the financial stability and competitiveness of MSMEs. Financial literacy is an important supporting factor in the effectiveness of risk management. However, MSMEs face constraints in the form of limited access to formal financing and low financial literacy. This study makes theoretical and practical contributions by emphasizing the importance of integrating financial risk management and financial literacy to improve the competitiveness of MSMEs. The practical implications can be used to develop training programs and policies to support MSMEs at the local level.

Purpose – The purpose of this paper is to propose a product-service systems (PSS) risk management decision-making framework for PSS operation, which can enable global manufacturing companies to offer PSS successfully. Thus, the authors aim to contribute primarily to developing the PSS literature by integrating insights from the literatures on risk management and decision making. Design/methodology/approach – This study is based on an exploratory, single case study with a Swedish manufacturing company that has long-term experience with providing PSS. In total, the authors conducted 25 semi-structured interviews with diverse respondents from different functional units. Findings – The study’s main findings include identifying and proposing an interconnection between the operational risks associated with providing PSS, possible risk management responses, and decision criteria, all of which enable decision makers to select an appropriate risk management response. Research limitations/implications – The study contributes to the literature in three ways. First, the authors classify PSS operational risks into three categories related to delivery competence risks, technical risks, and behavioural risks. Second, the authors explain conditions under which each risk can be mitigated using different risk management strategies (avoidance, reduction, sharing/transfer, and retention). Finally, the authors combine different risk categorizations, decision criteria, and risk responses into an integrated decision framework of PSS risk management. Originality/value – The novel contribution is developing a PSS risk management decision support framework, which holds theoretical and practical value.

Purpose – Construction projects are fraught with hazards that have a detrimental impact on schedules, estimates, and quality. The project execution phase exposes contractors to internal and external hazards, either implicitly or explicitly. A project’s achievement is contingent on the proper handling of internal and external hazardous concerns. This study investigates the connection linking internal and external risk factors with risk management in Saudi Arabian contractors and the moderation role of government bylaws linking this connection. Research methodology – This study investigates 303 Saudi Arabian contractors to explain the influence of internal hazards, external hazards, and governmental by-laws on risk management by applying the Partial Least Squares Structural Equation Modeling (PLS-SEM) method. Findings – The outcome indicates that internal hazards (active leadership, team competency, and skills and effective communication), external hazards (technological, political, cultural, and economic factors), and government by-laws (also, its moderation role with external hazards) are positively connected with risk management resulting a moderate effect. Furthermore, the outcome also highlights that the moderating influence of government by-laws with internal risk factors is insignificant. Research limitations – The current research model depicted 74.4% of the overall variation in risk management. Other latent variables can explain the 25.6% remaining overall variation in risk management which can be taken into account for future aspects of effective construction risk management. Practical implications – This study raises the efficiency of Saudi Arabian contractors by improving project output delivery. This study made recommendations to boost risk management usage. Originality/Value – This research was conducted for the first time in the Kingdom of Saudi Arabia, and it is an original work.

Achieving long-term effectiveness in natural disaster risk management needs a multifaceted approach. This approach should integrate the disaster’s impact with the region's social, economic, and physical characteristics. A variety of models have been developed to measure the disaster’s impact and propose risk reduction solutions. However, finding the optimal local solution is challenging. To enhance the sustainability of these solutions, it is crucial to consider the local pressing issues, which may be social, economic, cultural, or physical in nature. These issues manifest in the decision criteria when determining the most appropriate risk mitigation or management strategies. Multi-Criteria Decision Analysis (MCDA) methods are instrumental in evaluating suitable solutions by integrating the outputs of risk assessment models with local priorities, which are represented as rankings of the decision criteria. Since the local experts and community representatives have the most practical information regarding regional issues, their input is essential in ranking the decision criteria. Various preference elicitation methods can be employed to capture experts’ perceptions on important issues.When it comes to disaster risk mitigation and management, the elicitation of stakeholders’ collective perception on important issues is challenging. Different experts with different backgrounds, concerns, and visions for the future can have different perceptions on important issues that should be addressed by the disaster risk mitigation solution. This difference of opinion can lead to conflict of priorities. Since the disaster risk mitigation and management solutions are usually led to policy making or implementation of those solutions, the existing conflicts can have a negative impact on the effectiveness of these solutions. As such, it is vital to address these conflicts and elicit the collective priorities of local stakeholders.In this research, a Simos-based silent negotiation process is developed for eliciting the stakeholders’ collective priorities for natural disaster risk mitigation and management. The developed process is designed to engage the representatives of local communities and other experts and decision-makers and systematically direct them to compromise on less important issues. The designed process benefits from different methods to increase robustness. By directing participants to compromise on their less important issues, this process provides the collective local priorities in mitigating disaster risk. Furthermore, it can gauge the level of conflicts among the stakeholders at the end of the silent negotiation. Additionally, it creates equal opportunity for all the participants to raise concerns and argue their point of view. This creates the opportunity to address issues and concerns from different communities.The process is developed and implemented in the Horizon Europe project MEDiate (Multi-hazard and risk-informed system for Enhanced local and regional Disaster risk management). The MEDiate project is dedicated to creating a decision-support system (DSS) for disaster risk management that considers the complexities of multiple interacting natural hazards and fits the final disaster risk management solution to the characteristics, priorities, and concerns of the local communities and decision-makers. The MEDiate framework is implemented on four different testbeds (Oslo (Norway), Nice (France), Essex (UK), and Múlaþing (Iceland)), each of which has a different multi-hazard pair and different socio-economic characteristics.

Paper aims This study aims to explore the relationship between Total Quality Management (TQM), Technology Management (TM), and sustainable performance in manufacturing. Originality The originality of this study lies in its integrated approach, combining TQM and TM to assess their collective impact on Corporate Sustainability Performance (CSP). While prior research has examined these concepts separately, this study provides a comprehensive framework that highlights their synergies in driving sustainability. Research method This study employs a mixed-methods approach, combining surveys and expert interviews. The quantitative phase assesses TQM and TM practices' impact on sustainability in manufacturing firms, while qualitative interviews provide deeper insights into key success factors, challenges, and mechanisms driving the adoption of these strategies. Main findings The findings indicate that TQM and TM collectively enhance CSP by improving operational efficiency, reducing waste and emissions, fostering sustainable innovation, and promoting a culture of continuous improvement and employee involvement. These findings highlight the need to integrate quality management and technology for sustainability goals. Implications for theory and practice Theoretically, this study enriches the understanding of how TQM and TM interact to drive sustainable performance. Practically, it provides organizations with actionable strategies to align quality management and technology for long-term sustainability.

Taiwan is a major exporter and producer of machinery and machine tools in the world. There are at least hundreds of components for various machining machines. According to the concept of Taguchi loss function, when the process quality of the spare parts of machining machines is not good, the failure rate will increase after the product is sold, resulting in an increase in maintenance costs and carbon emissions. As the environment of the Internet of Things (IoT) becomes more common and mature, it is beneficial for manufacturers of machining machines to collect relevant information about process data from outsourcers, suppliers, and machining machine factories. Effective data analysis and application can help the machining machine industry move towards smart manufacturing and management, which can greatly reduce the average number of failures per unit time for all sold machines. Therefore, this paper developed a practical evaluation and improvement decision-making model for the machining operation performance to help machining machine manufacturers find out the components that often fail and improve them, so as to reduce the total loss caused by machine failures. This paper first defined the machining operation performance index for the machining machines and discussed the characteristics of this operation performance index. Subsequently, the confidence interval of the index was deduced, a fuzzy evaluation model based on this confidence interval was proposed, and decision-making rules regarding whether to make any improvement was established. The fuzzy evaluation and improvement decision-making model for the operation performance of machining machines proposed in this paper will contribute to various tool industries to boost their process quality, reduce costs, and lower carbon emissions, in order to achieve sustainable management of enterprises and the environment.

This article aimed to analyze the determinants of alignment level of risk management practices in Brazilian municipal health management, based on the perception of municipal managers, using the Committee of Sponsoring Organizations of the Treadway Commission - Enterprise Risk Management (COSO - ERM) as a reference. This study presents theoretical and practical contributions by identifying the determinants, socioeconomic characteristics, and manager profile influencing the alignment level with municipal health risk management based on the COSO framework. In Brazilian public sector, the literature on risk management is still incipient. References are often drawn from business-oriented research, with the adoption of standards occurring coercively due to academic or private institutional pressures. The accounting literature has advanced through the proxy used to measure health risk management. Its adoption improves governance and management practices in health and education. The study used a survey based on COSO - ERM components, through the Likert scale to determine the dependent variable: the level of alignment with risk management. Additionally, a Tobit regression model with secondary variables was applied to test hypotheses regarding managers’ profiles and municipal socioeconomic characteristics. The survey results have showed that Brazilian municipalities have an 80% agreement with public health risk management practices proposed by COSO - ERM. Hypotheses related to effectiveness, 1 (health), 2 (education), and 3 (governance in information technology), were not rejected. Hypotheses 4 (indebtedness) and 5 (financial dependency) were rejected; hypothesis 6 (manager profile variables) was not rejected. This indicates that the manager’s profile is a determinant for aligning health risk management practices, while socioeconomic characteristics of indebtedness and financial dependence have a significant inverse influence.

In this article, dynamics and stability of milling operations with cylindrical end mills are investigated. A unified–mechanics–based model, which allows for both regenerative effects and loss–of–contact effects, is presented for study of partial–immersion, high–immersion and slotting operations. Reduced–order models that can be used for certain milling operations such as full–immersion operations and finishing cuts are also presented. On the basis of these models, the loss of stability of periodic motions of the workpiece–tool system is assessed by using Poincare sections and the numerical predictions of stable and unstable motions are found to correlate well with the corresponding experimental observations. Bifurcations experienced by periodic motions of the workpiece–tool system with respect to quasi–static variation of parameters such as axial depth of cut are examined and discussed. For partial–immersion operations, consideration of both time–delay effects and loss–of–contact effects is shown to have a significant influence on the structure of the stability boundaries in the space of spindle speed and axial depth of cut. The sensitivity of system dynamics to multiple–regenerative effects, mode–coupling effects and feed rate is also discussed.

WHAT IS KNOWN ON THE SUBJECT?: Risk assessment and management in mental health services are contested and perceived as problematic by both professionals and service users. There is substantial emphasis on risk as a core component of professional practice. However, recovery for people with mental health problems emphasizes self-determination which seems to conflict with risk management. A critique is emerging of risk assessment and management. However, there is a lack of empirical evidence which seeks to explore how professionals manage the conflicts between recovery orientated practice and risk management. WHAT THE PAPER ADDS TO EXISTING KNOWLEDGE?: The paper reports on qualitative research which highlights people with mental health problems are objectified and frequently associated with the potential for harm. Risk dominates the work of mental health professionals and undermines individualized care. Service users are subject to increased surveillance and medication as a result. WHAT ARE THE IMPLICATIONS FOR PRACTICE?: Service users' subjective experiences need to be prioritized in mental health care by renewed focus on the relationship between professionals and service users. Mental health professionals should question the centrality of risk to their practice. ABSTRACT: Introduction The emergence of recovery, alongside significant focus on risk management, creates potential for conflicting influences in mental health care. Although evidence has critiqued risk assessment, there is a lack of research that seeks to explore how professionals make decisions within these apparently incompatible agendas. Aim To explore how practitioners, experience potential tensions arising from delivering recovery-orientated care and enforcing containment. Method This paper reports on a case study inquiry, using interviews with mental health professionals and observations in an acute ward and an assertive outreach team. Results Risk governed the practice of mental health professionals to such an extent it defined how service users were understood and treated. Service users were constructed as objects of risk, first by being objectified and secondly by creating a link between that object and harm. Discussion Hilgartner's (1992, Organizations, uncertainties and risk (pp. 39-53). Boulder, CO: Westview Press) theory of risk explains how risk dominates the identity of people with mental health problems at the cost of recovery. This results in increased monitoring, surveillance and medication to enact control. Implications for practice To undermine the dominance of risk, professionals should reconnect with the subjective experiences of people with mental health problems and challenge the acceptance of risk as central to their role.

Purpose– Paired channel relationship constructs are used to conjointly compare the perspectives of Indonesian manufacturers and their connecting distributors when engaging and relating across each shared marketing channel. The purpose of this paper is to hypothesize long-term orientation (LTO) and role-performance as joint drivers that positively influence dependence, satisfaction, and trust constructs for each manufacturer and distributor domain.Design/methodology/approach– A structural equation modelling-comparative model is developed, tested, and validated for the Indonesian manufacturing sector. The sample size is 140 pairs of medium-to-large-sized manufacturers and their connecting distributors. The respondent is individual who is responsible and knowledgeable in dealing with his/her company’s manufacturer or distributor.Findings– Both the manufacturer-distributor LTO and their role-performance jointly drive the outcomes of the shared marketing channel relationship, and both parties’ behaving similarly (except for the influence of their role-performance onto their partner’s satisfaction).Research limitations/implications– This study have not investigated possible two-way interactions between constructs across the channel. Combined, paired, manufacturer and distributor dataset questions can expose the connectivities relationships between the partners. The insignificant influence of role-performance on economic satisfaction within the manufacturer domain requires further research on the possible presence of mediating construct(s) between those constructs, and on the broadening of the definition of satisfaction. Past channel research revealed that trust interacts with satisfaction, yet this study does not find significant interactions between the outcomes constructs.Practical implications– In Indonesia each marketing channel’s manufacturer and distributor management team should jointly enhance both their shared long-term relationship, and their respective role-performance. This long-term view is implementable through long-term marketing channel contracts.Originality/value– This study contributes to marketing channel theory with the LTO and the role-performance of a channel partner jointly driving the other partner’s economic satisfaction, trust, and their dependence specifically within the Indonesian context. The benchmarking of a marketing channel’s performance within a trusting and satisfying channel relationship sets the framework for the development of future optimization studies (of at least the five connectivities constructs used herein).

Wellheads and Christmas trees are the main equipment for oil production. They are manufactured in the plant and installed on the casing head to seal the annular space between casing and tubing. They are used to transport oil to pipeline in well field. The loss of wellhead and Christmas tree integrity can result in major accidents, presenting a severe risk to the environment. Therefor a purpose of this study is to investigate of an organization perception for risk management implementation in manufacturing wellhead and Christmas tree equipment. The responses were analysed using SPSS software by using Cronbach’s α, mean-value and standard deviation. Data was collected by posting a Google link form, or sent to the email of the companies listed in the Malaysia and Batam, Indonesia. This quantification of the risk management process and a risk identification tool onto the risk management process framework. The model can support and indicate the contribution of an industrial risk manager towards achieving project objectives, as well as making comprehensive decisions regarding analysis of risk management in manufacturing project and operation.