Connecting the dots in performance-based contracting: A literature-based social network analysis

Performance-based contracting (PBC) is a procurement strategy that utilizes outcome specification and performance-based remuneration to manage suppliers. Historically, research on PBC has predominantly focused on the constructs influencing supplier management to ensure specific levels of performance quality. However, existing studies often emphasize isolated cause-effect relationships among selected constructs, thereby overlooking other potentially influential constructs. To motivate suppliers towards effective performance, a comprehensive understanding of the cause-effect relationships among PBC constructs within a broader context is essential. This study addresses this gap by identifying and systematizing these relationships through a systematic literature review, and by deriving propositions concerning the interconnections among PBC constructs. The constructs and their interrelations are visualized and evaluated using social network analysis. The findings indicate that most relationships are only weakly supported by empirical evidence. To address this fragmentation the PBC constructs were clustered into a systematic framework. The results underscore the importance of effective PBC implementation and investment in quality to realize the potential benefits of PBC in terms of service effectiveness and cost reduction. The clustering of 17 core PBC constructs enables the derivation of a generic PBC pathway, progressing from the prerequisites for PBC execution, through its design and implementation, to incentivized supplier behaviour, ultimately leading to desired outcomes and effects. • The stock of knowledge on Performance-based Contracting (PBC) lacks consolidation of cause-effect relations. • Cause-effect relations of PBC constructs are identified by applying a systematic literature review and a network-analysis. • The network of PBC relations is complex, heterogeneous, amorphous, and widely untested /unvalidated. • Core PBC constructs are identified and clustered based on network metrics. • A synthesis of the clusters is used to derive a framework and propose three avenues for future (quantitative) research.