Using performance-based contracts to foster innovation in outsourced service delivery

While many scholars claim that Performance-based Contracts (PBCs) foster supplier-led innovation, empirical research into their actual use and effects remains limited. We therefore explore two cases of IT outsourcing through such contracts to see whether, and if so how, PBCs foster innovation. Our findings suggest that in both cases, the low degree of term specificity in PBCs (i.e., their openness regarding how to render the contracted services)...