Managing co-production in a servitization context: an analysis of the roles of contracting.

The essence of the transition process from a pure manufacturing firm towards servitization is the shift from selling the product alone to selling an integrated product and services package. This process entails significant co-production activities with the customer. To date, little empirical research has been conducted to examine how the servitized manufacturer manages the roles and responsibilities of the customer to enable effective service delivery through contractual perspective. The objectives of this research are twofold: firstly, to understand and explain how contractual governance shape the specifications of customer’s roles and responsibilities in service delivery and secondly, to understand the process of co-production with the customer in service delivery after contract stipulation.

As the nature of this research is exploratory, a multiple case study approach was deployed to enable an in-depth investigation of the issues. This study draws on five case studies, representing the three types of servitization (product-oriented services, use oriented services and result-oriented services). The analyses of how the contractual mechanism was used to shape the customer’s roles and how the process of co-production activities in service delivery takes place after contract stipulation were based on 35 semi-structured interviews, a review of 493 documents including contracts and 277 email exchanges.

The findings of the study show that contractual governance features mainly in shaping the specifications of customer’s roles and responsibilities in service delivery. This research contributes to the literature by providing empirical evidence of the importance of contractual governance in shaping customer roles and responsibilities. Equally important, with the use of the Process Chain Network (PCN) diagram, this study provides insight into how service delivery in the servitization context is co–produced with the customer after contract stipulation. Therefore, it is argued that identifying the elements of co–production activities that require significant interactions between service provider and customer is crucial when designing effective contract provision.