Partnership Determinants in Logistics Outsourcing:
A Relationship Marketing Perspective
Adriana Rossiter
Robert H. Smith School of Business
University of Maryland
2318 Van Munching Hall
College Park, MD 20742
301-345 5038
As pressures have grown to simultaneously reduce costs, increase customer service levels, and operational flexibility, the nature of the arrangements between shippers and third-party logistics providers (hereon 3PLs) have changed. Organizations have found that, moving away from the traditional arms-length, transactional relationships, and engaging in partnerships with their 3PLs can be a solid source of competitive advantage. This trend has attracted great attention from supply chain management researchers, and many have investigated the dynamics of 3PL – customer relationships, emphasizing the importance of nurturing close, long-term, interactive relationships between 3PLs and customers in order to achieve satisfaction and higher performance. However, the analysis of what factors lead firms to engage in these partnership-type relationships is still lacking in the 3PL literature.
In this matter, based on the relationship marketing and inter-organizational relationship literatures, this study develops a comprehensive model that identifies, for firms already outsourcing logistics, what factors impact their partnership behavior in the relationships with their 3PL providers. The present model proposes that:
1. First, a firm’s degree of partnering with its 3PL is a function of its dependence on the 3PL, which is influenced by several factors, such as: environmental uncertainty, complexity of logistics operations, transaction specific investments, and perceived internal logistics competencies;
2. Second, the level of a firm’s trust in its 3PL will also affect a firm’s degree of partnering. Reputation of the 3PL, transaction-specific investments, and firm satisfaction with previous outcomes are hypothesized to affect the level of trust in the 3PL;
3. Third, firms might have a history of relationships with other 3PLs. According to the premises of network theory, these experiences are likely to develop a capability that may impact firms’ partnering behavior with their 3PLs in the present;
4. Finally, according to the relationship marketing literature, firms have particular strategic orientations towards engaging in relationships with main trade partners that might also influence the decision to engage in partnerships with their 3PLs.
In order to empirically test the model, the customers of the 2nd largest Brazilian 3PL provider will be surveyed, and the model will be tested using structural equation modeling. The results of this research can shed some light on the importance of the relative impact that a firm’s specific characteristics, such as experience and strategic orientation, have on its partnership behavior, up and beyond interorganizational factors, which is advocated by traditional behavioral models.