Understanding supplier motivation to engage in multiparty performance-based contracts: The lens of Expectancy theory

Research on performance-based contracts (PBCs) has emphasized outcome uncertainty (lack of attributability) as an obstacle to applying such effectively and investigated possible ways mitigate this uncertainty. Most studies primarily address dyadic buyer-supplier the that originates in environment or buyer behaviour. However, suppliers often also depend other sub-suppliers process creation. Such reciprocal interdependencies between more than two parties cannot easily be addressed through contracts. This paper examines how effective multiparty PBCs can designed align interests multiple suppliers. To develop our a priori conceptualisation, we first review literature identify factors affect suppliers' willingness engage PBCs, drawing Expectancy theory unravel motivational effects rewards. We then use case from construction sector investigate these apply specific variables influence supplier motivation settings. Based findings, propose expectancy (the relationship effort performance) is enhanced by parties’ joint participation planning control project activities, their reputation, contractual elements codification collaboration reward design hybrid PBCs. Instrumentality link performance reward) affected perceived fairness sharing codified collaboration, valence objectives) mainly influenced monetary amounts at stake. • Multiparty are appropriate existing ‘technical’ interdependence its Motivation financial design, but actions ensure perception attributability collaborative relationships (sub)suppliers Hybrid carry risk multi-party setting, if individual input-based rewards PBC conflicting In some aspects, setting similar bilateral