Performance-based contracting with digitally-enabled performance information

This paper explores, from a customer and supplier perspective, the impact of performance information as enabled by digital technologies to the notions of outcome measurability and information asymmetry. Our preliminary results show that improved outcome measurability provided certain advantages for the achievement of an adequate interplay between performance, incentives and risk. Furthermore, the transparency of these measurements may minimize classical agent-principal problems. Nevertheless, findings also suggest digitally-enhanced performance information per se does not lead to more effective contracts and better customer-supplier relations, as mistrust in technology and differences in the interpretation of this information appear to coexist in this environment.