Procuring complex performance: implications for exchange governance complexity

• Published in: International journal of operations & production management 2014-01, Vol.34 (2), p.221-241
• Main Authors: Roehrich, Jens, Lewis, Mike
• Format: Article
• Language: English
• Subjects: Case studies; Complexity; Complexity theory; Contracts; Information sharing; Management science & operations; Operations/process management; Organization theory; Personal relationships; Studies; Suppliers; Trust
• ISSN: 0144-3577; 1758-6593
• DOI: 10.1108/IJOPM-01-2011-0024

Purpose – While previous studies explored the argument that allies the notion of complexity to the complex product-service offerings being procured, this paper aims to explore whether there is a corollary with exchange governance complexity. More specifically, the paper analyzes the relationship between systemic complexity and complexity of contractual and relational exchange governance in procuring complex performance (PCP) arrangements. Design/methodology/approach – A multiple, longitudinal case study method is used to examine the relationship between systemic complexity and exchange governance complexity. The study deploys rich data sets by combining government and company reports with 43 semi-structured interviews. Findings – Preliminary conclusions suggest that as a response to increasing systemic complexity, organizations respond with increasing contractual governance complexity. However, better performing PCP arrangements illustrate that the use of simplified contractual governance in form of working agreements in combination with relational governance such as inter-personal relationships may be more effective to counteract complexity. Practical implications – The paper questions whether organizations should respond with increasing exchange governance complexity to counteract systemic complexity. Managers must consider the manageability and enforceability of complex contracts in combination with the formation of inter-personal relationships and simplified working agreements. Originality/value – This study adds to the limited empirical understanding on the nature of long-term public-private interactions in PCP. It also contributes through a rare focus on the relationship between systemic complexity and exchange governance complexity in PCP arrangements.