Environmental uncertainty and cross-buying in logistics outsourcing arrangements: a resource dependence perspective. Issue 3 (24th December 2020) - Hofer, Adriana Rossiter
Abstract : Purpose: This study follows the tenets of the resource dependence theory (RDT) to investigate the effects of four dimensions of industry-level environmental uncertainty – munificence, dynamism, complexity and innovative intensity – on a shipper's cross-buying (i.e. outsourcing across multiple service categories) in logistics outsourcing arrangements. Design/methodology/approach: Negative binomial regression was used to test the hypotheses with a sample of US manufacturers. Measures were developed through information acquired from a proprietary database of 3PL companies obtained through Armstrong and Associates, Inc. and publicly available industry measures from the US Manufacturing Census and Compustat. Findings: The findings indicate that individual dimensions of environmental uncertainty exhibit distinct influences on shippers' cross-buying in their logistics outsourcing arrangements. Specifically, the growth and initial innovative intensity of shippers' industries lead to an increased number of logistics service categories outsourced to 3PLs, while industry dynamism and exceptionally high innovative intensity drive the opposite effect. Practical implications: These findings provide valuable guidance to 3PLs with respect to decisions related to the acquisition of specialized transportation, storage, information systems and personnel assets to serve specific industries. The findings highlight industry conditions that are more likely to lead shippers to outsource across a wider array of logistics service categories and, as a result, potentially yield higher customer retention and profit margins. Originality/value: While extant 3PL literature posits that shippers' individual strategic orientations and capabilities impact their outsourcing strategy, this study contributes to the literature by providing a theoretical-based empirical examination of the industry-level influencers of such behavior.