Customer-side governance in engineer-to-order procurement: Evidence from capital equipment projects

Engineer-to-order (ETO) procurement of complex production machinery requires customer organisations to integrate engineering, production, operations, maintenance, and procurement functions under conditions of high uncertainty. While ETO research has extensively examined supplier-side coordination and engineering complexity, customer-side governance remains underexplored. This paper analyses how customer organisations govern ETO procurement and how internal misalignment shapes procurement project execution and the stability of supplier-facing inputs. Drawing on three capital-equipment procurement projects at a global manufacturer, supported by cross-functional project workshops and triangulated with supplier-side interviews, four recurring customer-side governance mechanisms are identified: role overload and coordination bottlenecks, requirement equivocality and weak stabilisation, gate inconsistency and premature maturity signalling, and cross-functional fragmentation and boundary misalignment. These mechanisms explain how unresolved uncertainty is generated, stabilised unevenly, and propagated within customer organisations before becoming supplier-facing instability. A propagation model is developed that links customer-side governance routines to supplier engineering and downstream coordination outcomes, thereby extending ETO theory and complementing research on procurement organisation and external governance. The study highlights customer-side governance as a critical but understudied determinant of ETO project performance and offers practical guidance for organisations procuring complex capital equipment under conditions of uncertainty and interdependence.