Logistics capability, logistics outsourcing and firm performance in an e‐commerce market

Abstract

PurposeEffective and efficient supply chain management is critical to the success of firms engaging in e‐commerce. The purpose of this paper is to examine the impact of logistics capability and logistics outsourcing on firm performance in an e‐commerce market environment.Design/methodology/approachThis research examines the relationship between firm's logistics capability, logistics outsourcing and its performance. Multiple‐item constructs are used to measure the strength of logistics capability and firm performance. The use of logistics outsourcing is represented by a dichotomous variable. Data obtained via a survey were analyzed to investigate relationships among constructs and various hypotheses were tested.FindingsStudy results revealed logistics capability to be positively related to firm performance in the e‐commerce market. However, counter‐intuitively, logistics outsourcing and firm performance were not found to be positively linked. Further, the association between logistics capability and outsourcing was not supported. Finally, the interactive effect of logistics outsourcing on the relationship between logistics capability and firm performance was not sustained.Research limitations/implicationsResearch findings are constrained, as the study was limited to the computer and consumer electronics retailing industry. However, the importance of logistics capability was confirmed in the e‐commerce supply chain for this segment. And the benefit of using third‐party logistics (3PL) to enhance firm performance was not fully established.Practical implicationsLogistics capability is critical for superior firm performance in e‐commerce. However, study findings lead to the presumption that firms should avoid logistics outsourcing if performance is predicated on competitive advantage due to internally strong logistics capability and competencies.Originality/valueThis research contributes to the study of logistics capability and 3PL in e‐commerce. The development of a logistics capability measurement construct in e‐commerce originated with this research. Also the impact of logistics outsourcing on firm performance is tested for the first time in an e‐commerce market environment.

Logistics outsourcing and performance of manufacturing small and medium-sized enterprises in Nairobi

“…There are several studies that have investigated logistics outsourcing and firm performance (Cho, Ozment & Sink 2008;Kotabe & Mol 2009;Solakivi et al 2011). However, the actual effect of logistics outsourcing on firm performance remains unknown as there is no consensus among the researchers as to whether the practice leads to improved firm performance (Kotabe & Mol 2009;Lahiri 2015).…”

“…Some studies have claimed that logistics outsourcing has no effect on firm performance (Hsiao et al 2010;Töyli et al 2008). Cho et al (2008) argued that logistics outsourcing can affect firm performance negatively, whereas Parashkevova (2007) claimed that it results in improved firm performance. Based on the divergent views among researchers, this study highlights that little is known about the relationship between logistics outsourcing and the performance of manufacturing SMEs, specifically in Nairobi.…”

An Integrated-Empirical Logistics Perspective on Supply Chain Innovation and Firm Performance

“…For e.g. Cho et al (2008) in their empirical explo ration found a positive effect of logistics capability on firm performance. Flynn obtained a positive effect of integrating internal and external operations across the supply chain of a firm on its performance.…”

“…Esper et al (2007) categorized logistics capabilities into five broad labels: (a) customer focus capability(also known as demand management interface capability and aims for providing differentiated products and services to customers in a way exceeding their expectations), (b) supply manage ment capability (aimed at reducing the cost of total manu facturing or service generating system, optimal utilization of resources and minimizing total distribution cost), (c) Integration capability (aims to achieve unification of effort among different activities both inside and outside the focal firm), (d) measurement capability (degree to which a firm monitors internal and external operations), and (e) infor mation exchange capabilities (indicates the effectiveness with which a firm collects, stores and distributes tactical and strategic information both internally and externally). Cho et al (2008) empirically examined the relationship between firm's logistics capability, logistics outsourcing and its performance in an ecommerce market environment.…”

An Analysis of Third Party Logistics’ Performance and Customer Loyalty

“…For this reason, it is appropriate to consider cost as a separate factor from operational performance in this study which the sample was selected in Turkey. in customer position (Cho et al, 2008). So, that relationship is a very important issue for both sides.…”