Performance-based contracting (PBC) is an outcome-based product support strategy that provides efficient performance solutions for buyers. Suppliers under performance-based contracting are rewarded after achieving desired performance objectives. While current scholarship has deepened our knowledge of the benefits of PBC, the particular factors behind effective and efficient performance-based contracts (PBCs) are still vague. Thus, this dissertation will focus on essential dimensions for the successful PBC. There remains a great deal that is not understood about the success factors for effective PBCs. When looking at the critical criteria for the selection of suppliers in the context of PBC, even less is known. This dissertation contains three essays with the purpose of: (1) investigating the effect of supply chain collaboration and upfront investments on the benefits of the PBC; (2) exploring supplier selection criteria for successful PBC; and (3) examining the effect of contract length and fleet size on upfront investments for effective and efficient PBC. These three essays offer a solid foundation for theoretical and practitioner understanding for effective PBCs.