Explaining the competitive advantage of logistics service providers: A resource-based view approach
Introduction
Since recognised as a new industry in the late 1980s, the logistics service industry has been experiencing growth (Sheffi, 1990). However, the reality is that not all logistics service providers (LSPs) manage to become competitive (Min and Foo, 2006). A recent survey conducted by Langley and Capgemini (2007) indicates that many users are, overall, dissatisfied with services provided by their LSPs. The survey reported that many LSPs failed to deliver the expected cost reduction, trustworthy relationship, and increasing needs for wider portfolio of logistics services and geographical coverage and advanced information technology (Langley and Capgemini, 2007). Consequently, logistics service contracts typically change hands every 2 years and many contracts are limited to only transport and warehouse services (Langley and Capgemini, 2007). The logistics service industry needs theories and solutions to achieve sustainable competitive advantage.
Some early logistics studies suggested that logistics performance can be explained by firms’ resources including physical resources, technology resources, and managerial competences (e.g. Chiu, 1995; Larson and Kulchitsky, 1999; Alshawi, 2001; Myers et al., 2004; Beinstock et al., 2008). However, these studies were predominantly concerned with the resources of users but ignored those of service providers (Gunasekaran and Ngai, 2003). Instead, some scholars have argued for the need for studies based on the perspective of provider resources in order to enhance the understanding of LSP competitive advantages (Gunasekaran and Ngai, 2003; Panayides, 2007; Ellinger et al., 2008). Such studies will contribute to the logistics industry because logistics service ability or competence could contribute to the market share of LSPs indirectly (Daugherty et al., 1998).
The role of resources in the competitive advantages of LSPs can be easily traced from the strategies of most LSPs. In the past decades many LSPs have been engaging in a mixture of organic expansion, merger, acquisition and alliance. Through these activities, LSPs acquire or gain access to resources such as logistics hubs, aircraft, skilled workforces, track and trace software, logistics expertise and knowledge in order to achieve growth and competitive advantage. Also, different LSPs have different portfolios of assets. Some LSPs are asset-heavy (property-based) whereas some are asset-light but knowledge-based (Das and Teng, 2000). Such behaviour can be explained by the resource-based view (RBV) theory. According to RBV theory, firms gain sustainable competitive advantages by ensuring appropriate access to a bundle of idiosyncratic resources which are valuable, rare, inimitable, and non-substitutable (Penrose, 1959; Wernerfelt, 1984; Barney, 1991; Eisenhardt and Martin, 2000). RBV theory appears to be able to provide a key theoretical foundation for explaining the competitive advantages of LSPs.
The main objectives of this article are to identify different types of logistics resources and their characteristics, and based on empirical evidence explore how different logistics resources can be bundled together to achieve LSPs’ competitive advantages. It attempts to answer three questions: (1) what logistics resources are accessed by these LSPs? (2) How are different resources bundled together? (3) What are the characteristics of resources accessed by the successful LSPs? Answers for the first question will contribute to the development of the constructs of logistics resources as well as the establishment of the measurement scales for each of these constructs. Answers for the second question will further provide insights to logistics managers on how logistics resources may be bundled together to gain competitive advantages, knowing the fact that the possession of resources does not always warrant success (Rubin, 1973; Barney, 1991). Finally, answers for the third question are paramount to ascertain the specific characteristics of resources accessed by successful LSPs.
To answer the three research questions, comprehensive content analyses of company profiles of 15 LSPs are carried out. The protocol of the content analysis is established based on a theoretical framework of resource-based competitive advantages derived from the RBV theory and some recommended best-practices for content analysis (e.g. Barelson, 1952; Holsti, 1969; Krippendorff, 1980; Guthrie et al., 2004). The article is organised as follows. Section 2 develops a theoretical framework which tentatively explains the competitive advantages of LSPs based on RBV theory and some relevant logistics literature. Section 3 describes the chosen methodology. Section 4 analyses findings pertinent to the three research questions. Section 5 critically discusses the findings and their implications to theory and practice. Finally, Section 6 concludes the research and provides suggestions for further research.
Section snippets
Resource-based view theory
Traditionally the competitive advantage of a firm has been explained by referring to the firm's strategies, process capabilities, and resources (Porter, 1985; Prahalad and Hamel, 1990; Barney, 1991; Persson and Virum, 2001). The asset-light and asset-based strategies (Murphy and Poist, 1998) applied by different LSPs indicate that resources (assets) can be one of the explanatory factors for the competitive advantages of LSPs. Edith Penrose was one of the first scholars who recognised the
Content analysis
In order to identify different types of logistics resources and their characteristics and explore how different logistics resources can be bundled together, document (content) analysis is applied. Content analysis is a research technique for the objective, systematic and quantitative description of the manifest content of communication (Barelson, 1952; Holsti, 1969; Ellinger et al., 2003; Krippendorff, 1980). Content analysis has been proven effective in analysing research approaches in
Findings
This section presents key findings pertaining to the three research questions. The findings are summarised in four appendices. Appendix A summarises resources accessed by each of the 15 LSPs. Appendix B highlights different types of resources (and their characteristics) accessed by all the LSPs. Appendix C provides examples of how LSPs bundled resources. Appendix D summarises the long-term financial performances for each of the 15 LSPs.
Discussion and implications
This article identifies the five strategic resources (e.g. physical, human, information, knowledge and relational resources) accessed by the studied LSPs. These findings are valuable for the development of the constructs of logistics resources and their measurement scales. Physical resources include tangible assets required to perform logistics tasks; they are for example logistics service centres, logistics hubs, warehouses, lands, road vehicles, and aircraft (Closs and Thompson, 1992; Karia
Conclusion and further research
This research analyses empirical evidences in order to explain the competitive advantages of logistics service providers. The research draws theoretical foundations from the resource-based view (RBV) theory and relevant logistics literature to establish a theoretical framework which comprises of resource structuring, access and bundling as the main stages of achieving resource-based competitive advantages. The research identifies five strategic resources (i.e. physical, human, information,
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