The impact of digital outcome measurability on the effectiveness of performance-based contracting: Overcoming inter-organizational barriers and team stagnation

We are living through a new industrial revolution where Smart
Manufacturing and Industry 4.0 are reshaping how companies create
and capture value. Digital technologies (DTs) now connect machines,
people, and data in real time, offering unprecedented visibility,
efficiency, and precision. These developments have also enabled new
business models, such as Performance-Based Contracting (PBC),
where outcomes, rather than transactions, measure success. This
dissertation examines the impact of digital transformation on the
success of PBC in the manufacturing sector. Drawing on successful
and failed case studies from the food and beverage industry, this study
examines the opportunities and challenges of implementing digitally
enabled performance measurement systems and proposes strategies
to enhance contract effectiveness. The work is organized into a
literature review and three empirical studies. Chapter 2 maps the
current state of PBC research in digitally enabled manufacturing
contexts, highlighting gaps and emerging themes. Chapter 3 explores
how DTs improve outcome measurability and help address principal–
agent conflicts, while also revealing the barriers firms face in adopting
new technologies. Chapter 4 discusses the dynamic capabilities
suppliers need to implement effective PBCs in Smart Factories.
Chapter 5 emphasizes organizational learning as the process through
which firms turn data into actionable performance knowledge. The
research concludes that technology alone does not drive
transformation. Sustainable success happens when firms combine
digital literacy with dynamic capabilities, strategic alignment,
and continuous learning.