Industrial service innovation through improved contractual relationship

Abstract

PurposeThe purpose of the paper is to discuss various contractual issues that could encourage industrial service innovations with special reference to improving operation and maintenance process effectiveness of complex and advanced production facilities in the capital‐intensive industries.Design/methodology/approachA case study was performed to study the influence of contractual relationships on industrial service innovations. The study focused on contractual relationships between service companies that sell operation and maintenance services to production facility operators in the Norwegian oil and gas industry.FindingsThe case study shows that service innovations are desired in most of the operation and maintenance contracts, but existing contractual relationships most often do not support innovations. Moreover, contract duration, contract type and control mechanisms can influence cooperation and collaboration during contract execution.Research limitations/implicationsThe findings are based on a case study with participants from the Norwegian oil and gas industry. The study is limited to knowledge and technology based services required to support operation and maintenance of advanced, complex and integrated production facilities. However, we believe that the study is of value for other capital‐intensive industries such as mining, energy, paper and pulp, chemical, etc.Originality/valueThe development of contracts that support industrial service innovations and create an environment for cooperation and collaboration could be of value to improve the efficiency and effectiveness of operation and maintenance processes in the capital‐intensive industries. Studies focusing on improving contractual relationships and service innovations for operation and maintenance services are scant.