Drivers of logistics outsourcing: examining transaction costs, core competences and planned behavior

Abstract

PurposeThis study aims to investigate the extent to which psychological factors and the agency of decision-makers drive outsourcing decisions. Arguments based on transaction cost economics, the core competence approach and the theory of planned behavior are used to explain logistics outsourcing.Design/methodology/approachThe literature was reviewed to identify constructs that are antecedents of logistics outsourcing intentions, and corresponding measures were developed. The data were gathered through a survey of supply chain professionals in Finnish manufacturing companies. A measurement model was reviewed to ensure reliability and validity and converted into a structural model for analysis. The analysis was based on partial least squares (PLS) structural equation modeling.FindingsSupply chain managers objectively consider the characteristics of their organization's logistics identified in previous research as requiring assessment during the outsourcing process. However, and surprisingly, they also tend to rely on behavioral subjective factors such as positive attitudes, encouraging subjective norms and competence. Moreover, it seems that firms do not outsource logistics activities despite the high strategic importance of the function, but because of it.Research limitations/implicationsThe constructed model is limited to the constructs chosen to represent drivers of logistics outsourcing. Further application with more samples would improve its reliability.Practical implicationsThe factors proposed here with respect to assets and the capabilities of third-party partners could facilitate decision-making related to logistics outsourcing.Originality/valueThe findings emphasize the role of behavioral factors in the procurement function and therefore enhance the understanding of behavioral supply chain management.