Using contracts to manage services A study of contracts in public transport

Abstract: Contracts play a key role in many business to business relationships. Service organisations are no exception. Despite a growing interest of services and how services are managed, research on how to use contracts to manage services has been surprisingly sparse in service research. The overall aim of this thesis is to contribute to a deeper understanding of using contracts to manage services in business-to-business relationships. Contract theories together with concepts from service research are used to enrich and understand how contracts are used to manage services and thus make contributions to service research. The thesis will give an empirically grounded understanding of managing services through contracts.The thesis consists of six separate papers, all based on data gathered from contractual relationships between contractors and service providers. The results are based on studies of authentic contracts which are not the case in most previous studies. The methods used for gathering and analysing data involve case studies, content analysis of authentic contracts, interviews and document studies of the public transport sector in Sweden which is an empirically rich area for studying contracts.The three main contributions of this dissertation are; firstly, an extended understanding of how contracts are used to manage the prerequisites for service quality for the parties involved. It was found that the concept service quality is brought forward on three interdependent managerial levels; from a detailed operational level, to a systemic oriented strategic level, and also a visionary rhetorical level each specifying the prerequisite for the services. To manage the prerequisites, the contracts rely on three identified means; laws and regulations, standards and measurements and economical incentives. Secondly, the detailed contents and rigidity of the contracts bring forward an inflexible and asymmetric relationship, where the parties are restricted in their activities. Here the contracts become a substitute for trust and commitment instead of supporting the development of trust and commitment. Finally, the thesis deepen the understanding of the role of contracts in governing services, from being a static abbreviator to a dyadic market based relationship, to becoming a dynamic tool for developing and sustaining a value creating and value driven collaborative network.