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The Impact of Dependence and Relationship Commitment on Logistics Outsourcing: Empirical Evidence from Greater China
- 1. The Impact of Dependence and Relationship Commitment on Logistics Outsourcing Empirical Evidence from Greater China -Article by Baofeng Huo, Chen Liu, Mingu Kang, Xiande Zhao International Journal of Physical Distribution & Logistics Management, 2015, P- 887-912
- 2. Developing a theoretical framework involving dependence, relationship commitment, logistics outsourcing and service quality & showing the factors involved in logistics outsourcing and their outcomes Purpose
- 3. Third Party Logistics (3PL) playing an important role in improving customer service and market share Negative influence of dependence for inter-firm cooperation can be managed by relationship management 3PL users are becoming increasingly dependent on 3PL providers’ resources Extensive dependence may easily trigger the 3PL provider’s opportunistic behavior
- 7. Guanxi China’s national culture is considered to be a high power distance, collectivist and long-term- oriented culture based on specific guanxi (i.e. strong personal relationship) networks As China has become a world manufacturing workshop, demand for 3PL services has grown tremendously A guanxi network intensifies the social ties between companies In the West, relationships grow out of deals. In China, deals grow out of relationships
- 8. Relationship Flexibility in a 3PL Context Given by- Haozhe Chen, James E. Zemanek Jr. Source:https://www.researchgate.net/profile/Haozhe_Chen/publication/288025032/viewer/AS:315127662874624@14521 43697437/background/4.png
- 9. Trust, relationship commitment and dependence, which enable 3PL partners to develop long-term orientation and cooperation. Guanxi has been widely recognized as a critical resource for 3PL users to maintain long-term 3PL relationships. This study proposes that cultivating proper relationship commitment is important in understanding how to effectively manage dependence and obtain a desired 3PL outsourcing performance.
- 10. Research Questions How do 3PL users cultivate relationship commitment to effectively manage their dependence on 3PL providers? How do dependence and relationship commitment influence logistics outsourcing? How does logistics outsourcing influence service quality?
- 11. Switch dependence The extent of the difficulty 3PL users perceive as involved in replacing their 3PL providers Goal dependence The extent to which 3PL users rely on their relationships with their providers to achieve organizational objectives Dependence
- 12. Normative relationship commitment One party’s emotional drive to maintain mutual and long-lasting relationships with other parties Instrumental relationship commitment A relationship driven mainly by extrinsic rewards and calculative considerations Relationship Commitment
- 13. Basic Outsourcing Transportation, warehousing and delivery services Advanced Outsourcing The high-level operational or strategic logistics outsourcing Logistics Outsourcing Customized Outsourcing Consolidation, Custom clearance, Express delivery of documents
- 14. Hypothesis Test Results H1a: Switch dependence → normative relationship commitment Supported H1b: Switch dependence → instrumental relationship commitment Rejected H2a: Goal dependence → normative relationship commitment Supported H2b: Goal dependence → instrumental relationship commitment Rejected H3a: Normative relationship commitment → basic outsourcing Supported H3b: Normative relationship commitment → customized outsourcing Supported H3c: Normative relationship commitment → advanced outsourcing Supported H4a: Instrumental relationship commitment → basic outsourcing Rejected H4b: Instrumental relationship commitment → customized outsourcing Rejected H4c: Instrumental relationship commitment → advanced outsourcing Supported H5a: Switch dependence → basic outsourcing Rejected H5b: Switch dependence → customized outsourcing Supported H5c: Switch dependence → advanced outsourcing Supported H6a: Goal dependence → basic outsourcing Supported H6b: Goal dependence → customized outsourcing Rejected H6c: Goal dependence → advanced outsourcing Rejected H7a: Basic outsourcing → service quality Supported H7b: Customized outsourcing → service quality Rejected H7c: Advanced outsourcing → service quality Supported
- 16. Managing dependence through relationship commitment in the 3PL field 3PL users prefer to develop normative relationship commitment to manage switch dependence effectively In particular, developing normative relationship commitment can intensify the relational ties or guanxi networks of partners in China 3PL users in China are more likely to use normative relationship commitment to decrease opportunistic risks and the switching costs derived from switch dependence 3PL users in China are still willing to develop instrumental relationship commitment even when they rely highly on their providers to achieve their operational goals
- 17. Improving logistics outsourcing through the dependence-relationship commitment Switch dependence contributes to customized and advanced outsourcing Goal dependence leads only to basic outsourcing The more differential services are outsourced, the more specific assets are involved
- 18. Improving service quality through logistics outsourcing Although basic and advanced outsourcing can directly enhance service quality, customized outsourcing cannot.
- 20. Managing Dependence and Recognizing Relationships Cultivating Normative Relationship Commitment
- 21. Leveraging Additional Strategic Resources Indicating the Importance of Resource and Value- based Relationships
- 22. Summary • Both normative and instrumental relationship commitment are necessary for third party logistics (3PL) users to cope with their goal dependence on 3PL providers. • However, only normative relationship commitment is necessary when users perceive switch dependence. • Normative relationship commitment also plays a more important role than instrumental relationship commitment in facilitating the adoption of 3PL logistic outsourcing. • In addition, both basic and advanced outsourcing practices have a positive effect on service quality.
- 23. Prepared by and thanking you, Md. Kamran Hasnain