An Examination of the Nature of Trust in Logistics Outsourcing Relationship

Document Type

Article

Publication Date

2008

Department

Coastal Sciences, Gulf Coast Research Laboratory

Abstract

Purpose - Using China's burgeoning logistics industry as a backdrop, the present study focused on how to build trust between logistics users and third-party logistics (3PL) providers, and the antecedents and consequences of trust. Design/methodology/approach - A questionnaire-based mail survey was conducted in mainland China. The conceptual model was tested using structural equation modeling. Findings - The findings indicate that logistics users' satisfaction with prior interactions with logistics providers, 3PL provider's relationship-specific investment, 3PL provider's information sharing, and 3PL provider's reputation are key determinants of logistics users' level of trust towards 3PL providers. Additionally, logistics users' trust may facilitate their loyalty behavior towards 3PL providers. Research limitations/implications - The findings were drawn from a Chinese setting in which logistics outsourcing is in a relatively early developmental stage. The uniqueness of Chinese culture may also limit the findings' generalizability. China's transitional economy was not considered in the study. Different company ownership may significantly influence relationship formulation, maintenance and consequences. Practical implications - The findings demonstrated how logistics providers can improve customers' trust in logistics outsourcing relationships. The study also revealed how logistics providers can improve customers' loyalty. Originality/value - This paper was a pioneering study that investigates the logistics outsourcing relationship in China, a rapidly growing economy. The results offered valuable managerial insights regarding how to cultivate trust and loyalty in logistics outsourcing relationships.

Publication Title

Industrial Management & Data Systems

Volume

108

Issue

3-4

First Page

346

Last Page

367

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