Browsing by Author "Han, Yujia"

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    When Primes adopt brokers in supplying complex infrastructure projects : a TCE and structural hole perspective
    (Heriot-Watt University, 2024-01) Han, Yujia; Christopoulos, Professor Dimitris; Bititci, Professor Umit
    Purpose: In some complex public private infrastructure projects, the Prime contractor (the Prime) relies on professional brokers to buy from, and coordinate with, Original Equipment Manufacturers (OEMs) activity. Broker, the Prime and OEM triads are formed. In most purchasing studies on complex performance (PCP) it is the Client who contracts with a Prime that is studied, and their relationship. Extant operations management literature has very little to say on why or when these broker roles exist and on how these professional brokers add value, which also suggests very little understanding of the Primes’ purchasing challenges as well as their corresponding solutions. This silence has driven the overarching aim of this thesis in exploring rationales of a Prime in adopting professional brokers in complex infrastructure projects. Design/methodology/approach: Four work packages are formed from observations and 34 interviews conducted in various engineering projects in the global power plant construction and retrofitting sector. Interview questions are informed by theoretical insights to investigate the nature of Primes’ challenges and how they are resolved by professional brokers. Transaction cost economics (TCE) provides this study with a foundational explanation for why brokers exist (trilateral governance), which is then complemented by the nuances of broker behaviour provided by structural hole theory. Finding: This thesis provides an empirically derived typology of a Prime’s scope of challenges, and Prime-OEM’s position in sourcing from OEMs in complex infrastructure projects. The typology confirms Prime’s challenge in materialising clear specifications for archetypal complex product and systems, as well as oligopolistic market patterns such as soaring and non-negotiable service price proposed by limited suppliers. However, shifting the perspective from the Client to the Prime reveals novel procurement challenges in sourcing non-archetypal complex product and systems. For example, procurement at project initiation phase could see client-imposed language and geographical barriers and asymmetric transaction interest. In addition, at project delivery phase asymmetric financial terms and conditions, problems directing sub-system OEMs on technical specifications and on-site services could emerge. This thesis finds that Primes are seen to purposefully adopt different categories of professional brokers to target specific procurement challenges. A common characteristic of these brokers is their relationship continuity with OEMs based on historical interactions and/or perception of future transactions, which is absent from the Primes in temporary, one-of-a-kind project settings. Through adopting different brokers in different project stages, Primes could focus on major tasks that form their competitive advantages such as project management and on-site construction work. Relevance/contribution: This study examines the under investigated area of PCP by expanding the typology of procurement challenges addressed in the literature, as well as the solutions. Such investigation refines the definition of procurement complexity by identifying two additional factors (i.e., the extent of interdependency of technical specifications from other product/service, and the extent of iterative process in defining technical specifications of the product/service) that describe the level of infrastructure complexity of product and service in complex infrastructure projects. In addition, the identification of five broker categories extends the approaches that encourage value co-creation between buyers and suppliers on top of formal (i.e., legal rules, standards and remedies etc.) and informal governance (i.e., workshops, incentives and punishments etc.) mechanisms introduced in the PCP literature. The adoption of TCE and structural hole lenses in this thesis confirms the applicability of TCE in a social network context, and the applicability of structural hole theory in a transaction-oriented context. For practitioners, this thesis contributes to prime contractors who undertake similar purchasing activities for complex infrastructure projects. In particular, prime contractors could benefit from this thesis by recognising similar procurement challenges, and the collection of approaches in resolving the corresponding challenges through the adoption of appropriate brokers.