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Literature is unanimous about the effects of functional diversity in new product development teams. This paper uses simulation modeling to investigate the contradictory and dynamic effects of functional team diversity on innovation revealed by empirical literature. This paper aims to start a discussion on this dynamic perspective of team diversity.

This paper presents a systemic approach toward investigating the contradictory and dynamic effects of functional team diversity on innovation by creating a simplified System Dynamics model of functional diversity in new product development teams.

Although the simulation model is highly simplified, it can integrate the contradictory results of empirical data and the dynamic component of teamwork. Therefore, it offers a new approach to investigating the effects of functional diversity on team innovation.

The model is highly simplified and exemplary. No actual data are included, thus limiting the results as fully theoretical.

Empirical studies often analyze the effects of functional diversity on innovation in new product development teams. However, empirical data are unclear regarding the nature of the effects of functional diversity on innovation. Therefore, functional diversity is chosen for the simulation model as being the most controversially discussed diversity attribute. By applying a simulation model to the problem and adding a dynamic component to teamwork, we are contributing to the explanation for the contradictory findings in literature.

The primary objective of this paper is to discuss whether complexity science can help overcome management's dilemma of how to balance efficiency and innovation.

Complexity science provides an interdisciplinary theoretical approach for studying complex adaptive systems (CAS), which exhibit adequate combinations of both emergent efficiency and emergent innovation. Based on prominent models from complexity science, a generic framework of CAS is proposed that shows the design levers of such systems. This framework then serves to assess recent literature on applications of complexity science to firms. Applications cover a broad range of objectives and four organizational levels: the individual resource, the organizational sub‐unit (SU), the organizational, and the network levels. The generic framework is used to classify the applications' objectives in terms of efficiency and innovation, and to identify the design levers they use.

CAS offer a valuable theoretical perspective on efficiency and innovation. However, the proposed framework shows that these systems are not utilized to their full potential when applied to firms. Typical applications address either emergent efficiency or emergent innovation and thus fail to balance both.

The paper does not provide an exhaustive literature review on management applications of CAS, but selects exemplary literature.

The paper gives a comprehensive overview of the CAS' perspective in management science. For further research, the proposed generic framework of CAS may serve to analyze, evaluate and integrate applications in order to overcome the efficiency‐innovation dilemma.

In view of a lack of understanding of the consequences of performance‐based contracting (PBC), this paper aims to reveal deeper insights into the mechanisms inherent to PBC and explore which benefits and uncertainties may result for providers and customers.

Conducting a comprehensive literature review and drawing on insights from agency theory as a framework, the auhtors analyzed a broad range of academic publications on the benefits and uncertainties of PBC and developed testable propositions from the provider's and the customer's perspective.

With PBC, in comparison to the conventional selling and supporting of machinery or equipment, the manufacturers are more likely to acquire customers for highly innovative technologies, to increase their profit, and to improve customer loyalty. Manufacturers, however, have to deal with uncertain revenues and costs which affect their profit. The customers are more likely to receive increased performance at decreased costs. Concerning the performance, however, the customers enter into an uncertain relationship of dependence.

This is the first paper to analyze the benefits and uncertainties of PBC in manufacturing industries systematically from an agency theory perspective. The paper further develops extant research by outlining the mechanisms of PBC and relating the benefits and uncertainties that are scattered over a broad body of literature. The paper proposes several promising avenues for further research.

Although performance‐based contracting (PBC) is gaining importance in manufacturing industries, corresponding research is still in its infancy. In order to provide a basis for future research on this emerging topic, thus paper aims to propose a specific conceptual model.

Conducting a comprehensive literature review, 39 academic publications dealing with this topic in‐depth were analyzed. To structure the various approaches of PBC in manufacturing industries, existing preliminary conceptual models in the form of morphological boxes were built upon and developed further.

Focusing on manufacturing industries, the review reveals a comprehensive view on PBC, with three topics that are important to PBC but have been largely neglected in research: even though research considers PBC foremost regarding manufacturers, independent service providers can also offer PBC; closely related to ownership, financing constitutes an essential issue in PBC; and PBC may include maintenance as well as operation.

First, the paper systematizes existing literature and clarifies the concept of PBC in manufacturing industries. Second, it presents a specific conceptual model for analyzing this topic in more depth. Third, it reveals promising avenues for future research.