Power in Third-Party Logistics

Abstract

The aim of acquiring competitive advantage by concentrating on core activities and outsourcing non-core activities has increased the demand for third-party logistics services. Therefore, the relationship between the third-party logistics providers and customers is important. This study examined the role of switching costs in the relationship between third-party logistics customers and providers, and the effects of power exercised by third-party logistics providers over thirdparty logistics customers on trust and commitment in the UK. An analysis of 192 completed questionnaires showed that switching costs had a negative relationship with coercive power and a non-significant relationship with legitimate power. Switching costs were positively correlated with non-coercive power (information, referent, expert and reward power). There was a significant negative correlation between coercive power and normative commitment, whereas coercive power had a non-significant correlation with instrumental commitment. The effect of coercive power on trust was negative, but non-coercive power was positively correlated with trust. Non-coercive power (information, referent, expert and reward power) was positively related to both normative and instrumental commitment.