Impact of Performance-Based Contracting on Product Reliability: An Empirical Analysis

• 成果类型: Article
• 署名作者: Guajardo, Jose A.; Cohen, Morris A.; Kim, Sang-Hyun; Netessine, Serguei
• 署名单位: University of Pennsylvania; Yale University; INSEAD Business School
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.1110.1465
• 发表日期: 2012
• 页码: 961-979
• 关键词: reliability; maintenance repairs; Empirical Operations Management; Supply Chain Contracting; aerospace industry

摘要

Using a proprietary data set provided by a major manufacturer of aircraft engines, we empirically investigate how product reliability is impacted by the use of two different types of after-sales maintenance support contracts: time and material contracts (T&MC) and performance-based contracts (PBC). We offer a number of competing arguments based on the theory of incentives that establish why product reliability may increase or decrease under PBC. We build a two-stage econometric model that explicitly accounts for the endogeneity of contract choices, and find evidence of a positive and significant effect of PBC on product reliability. The estimation of our model indicates that product reliability is higher by 25%-40% under PBC compared to under T&MC, once the endogeneity of contract choice is taken into account. Our results are consistent with two mechanisms for reliability improvement under PBC: more frequent scheduled maintenance and better care performed in each maintenance event.