Logistics Outsourcing Impact on Business Performance

An Overview of the Study

In view of the development of the internet, the business world has found a new life. The term “electronic commerce” was introduced, and a virtual marketplace was created, providing a brand new and unique medium for organizations and their clients to connect with each other (Cho, Ozment, & Sink, 2008, p. 337). With the emergence of Wi-Fi, e-commerce gained even more power. Now, it is available in almost every place where there is a notebook. This change has had a significant influence on every company and the way it runs its business, and logistic support is not an exception.

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A firm’s success in e-commerce is highly dependent on the quality of distribution services it provides, that is, its ability to deliver the client’s order directly to their doorstep precisely at the agreed date and time (Cho et al., 2008, p. 337). Additionally, the modern e-commerce environment requires organizations to seize the opportunities related to third-party logistics: using external suppliers and warehouses, outsourcing transportation, bill payment, distribution, etc. With this in mind, it is evident how both logistics capability and logistics outsourcing are important for organizations operating in this field.

Nevertheless, the impact of these two factors has never been researched enough. A lot of studies proved that there was a link between logistics capability and excellent firm performance. Some of them showed how logistics activities could reduce costs and increase revenue; others demonstrated the influence of logistic support on competitive advantage (Cho et al., 2008). However, none of them addressed the field of e-commerce. The same is about logistics outsourcing. That is why Cho et al. (2008) have decided to explore the effects logistics capability and outsourcing has on organizational performance in this sphere.

The Methodology of the Study

The research aims to investigate the influence of logistics capability and outsourcing on organizational performance. In this context, the outsourcing of logistics is supposed to have direct and indirect effects, which is why it is also considered a mediating variable in the study (Cho et al., 2008, p. 339). To explore the subject, the researchers have developed four separate hypotheses, which can be reformulated as four research questions. Those are:

  • Can the internal logistics capability of an organization be considered as a factor that enhances the positive performance of this firm in the virtual market?
  • Can logistics outsourcing be considered as a factor that enhances the positive performance of an organization in the virtual market?
  • Is there a link between the strength of the organization’s internal logistics capability and the fact that this company outsources its logistic activities?
  • Is the influence of internal logistics capability on organizational performance more notable for firms that outsource their logistic activities?

The research described in the article is quantitative. The research design is descriptive. As Mitchell & Jolley (2012) state, descriptive research is relatively easy to do. To understand how independent variables (logistics capability and outsourcing) affect dependent one (organizational performance), the study takes a sample, measures variables accurately, and then evaluates the association between them (Mitchell & Jolley, 2012, p. 232). To collect the data needed for the study, questionnaires have been used.

For the sampling, the researchers chose the computer and consumer electronic retailing industry. They selected 1,232 firms to be the participants and sent questionnaires to their logistics managers or the presidents. 123 questionnaires were returned, and 117 were analyzed by the researchers (the remaining ones were missing some information, which is why they were eliminated). To analyze the data collected, the researchers used such methods as SPSS, LISPEL, confirmatory factor analysis (CFA).

The study results show that the internal logistics capability does influence the organizational performance while outsourcing of logistics does not. Additionally, there is no stable connection between the strength of the organization’s internal logistics capability and the fact that this company outsources its logistic activities. Finally, the influence of internal logistics capability on the organizational performance in the case of firms that outsource their logistic activities is not any stronger than for those who do not.

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An Evaluation of the Study

Analyzing the article and the research conducted, I would say that the design of the study adequately addresses the problem statement and research questions. A descriptive design is appropriate since it enables the researchers to check if there is an association between independent and dependent variables relatively easily and quickly (Mitchell & Jolley, 2012, p. 232).

To gather the information, questionnaires have been used, and this is an appropriate data collection tool in this case. To check the hypotheses formulated in the study, the researchers needed as much information as they could get, and questionnaires let them collect it. Using questionnaires, it is possible to choose a large sample but still get the response really quick (Webb, 2002, p. 78). In addition, this approach is cheap.

Nevertheless, the authors admit that the response rate is very low (only 123 out of 1,232 questionnaires have been returned). Using other research methods and data collection tools (for instance, observations or interviews), the researchers could have more information. However, since the sample is big enough, the low response rate is not critical. As for the chosen data analysis methods, they let the researchers structure the information, which gave the answers to the research questions quickly, so they are also sufficient for the study.

I have not noticed any weaknesses in the study. As for its strong sides, I would mention the structure and preciseness. The authors clearly formulate hypotheses and methods of data collection and analysis, accurately describe the process of sampling, etc. In the results section, every hypothesis is discussed separately, which is very convenient. It should also be mentioned that the authors of the article have sufficiently explained the importance of the research questions, providing the background for the study in the introduction. Additionally, the study conclusions are realistic and accurate. In the long run, only one of the hypotheses formulated in the research was supported.

Finally, no ethical research principles were violated by the researchers. The study did not disclose any commercially sensitive information and provided confidentiality and anonymity to all human participants.

What I Have Learned from the Study

Analyzing this article, I was once again convinced of the usefulness of questionnaires. Perhaps, they do not provide so many details as case studies or interviews do, but they enable us to collect the information from much more participants. By choosing a bigger sample, we can get a complete picture of a particular problem, while smaller samples provide only insight on the issue.

References

Cho, J. J., Ozment, J., & Sink, H. (2008). Logistics capability, logistics outsourcing and firm performance in an e-commerce market. International Journal of Physical Distribution & Logistics Management, 38(5), 336-359.

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Mitchell, M., & Jolley, J. (2012). Research Design Explained (8th ed.). Belmont, CA: Cengage Learning.

Webb, J. R. (2002). Understanding and Designing Market Research (2nd ed.). London, Great Britain: Thompson Learning.

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