skip to primary navigationskip to content

Cambridge Service Alliance

developing new understanding and approaches to complex service systems

Studying at Cambridge

 

Effects of Social Capital on Risks Taken by Suppliers in Outcome-Based Contracts

PhD Research by Jingchen Hou.

On the journey of servitization, services provided are moving from basic services to advanced services where capabilities are delivered. In this circumstance, outcome-based contracts (OBC) are increasingly used. Two important issues in OBC are risk and relationship (social capital).

An outcome-based contract refers to an agreement between the supplier and the customer that the supplier gets paid based on the outcomes of total solutions or the outcomes of customer value in a continual use situation.

Two approaches to deliver outcome-based contracts are first, the supplier-customer binary approach and second, the alliance / joint venture approach.

JH Fig1 Supplier Binary Approach
Figure 1. Effects of social capital on risks of outcome-based contracts with a supplier-customer binary approach from the supplier's perspective

In the supplier-customer binary approach, two major risk categories are commercial risk regarding the contracting of OBC, and operational risk regarding the implementation of OBC. Eighteen risk factors in six categories are identified to be the influencing factors. Social capital can prevent and mitigate risks to a certain extent.

JH Fig1 alliance approach
Fig 2. Risk and social capital building blocks in outcome-based contracts with an alliance approach

In the alliance or joint venture approach, three major risk categories are commercial risk regarding the commercial solutions among partners, operational risk regarding the operations of the alliance, and social capital risk regarding the construction of social capital in the alliance. The three risks mutually influence each other.

JH Fig1 risk management process
Figure 3. A risk management process for outcome-based contracts

Outputs:

RSS Feed Latest news

Introducing Industry Day - Dr Zaki tells us about this years Industry Conference

Sep 13, 2017

Dr Mohamed Zaki - Deputy Director of the Cambridge Service Alliance - Introducing Service Week Industry Conference 2017

Webinar - Bridging the Co-Creation Gap

Sep 11, 2017

11 September 2017 - Bridging the Co-creation Gap between Co-creators, Companies and Living Lab - Katharina Greve

September 2017 Newsletter

Sep 01, 2017

Find out the latest news in this new edition of the Alliance Newsletter.

19th IEEE Conference on Business Informatics

Jul 27, 2017

Mohamed Zaki invited to be one of the organizing committee members of '19th IEEE Conference on Business Informatics', held in Thessaloniki, Greece on 24-26 July 2017

Podcast Interview with Deputy Director Dr Mohamed Zaki

Jul 20, 2017

In a new podcast from the Cambridge Service Alliance, Dr Mohamed Zaki, talks about his new role as Deputy Director, of the Cambridge Service Alliance, University of Cambridge.

View all news

Upcoming events

Cambridge Service Week 2017 - Academic Conference

Oct 05, 2017

IfM, Cambridge, UK

Cambridge Service Week 2017 - Industry Conference

Oct 10, 2017

Moller Centre, Cambridge, UK

Cambridge Service Week 2017 - Partners Day

Oct 11, 2017

Moller Centre, Cambridge, UK

Shift to Services Executive Education Programme

Nov 15, 2017

IfM, Cambridge, UK

Upcoming events